Statement by
Norka Ruiz Bravo, Ph.D.
Deputy Director for Extramural Research
Office of Extramural Research, NIH/DHHS

The Small Business Innovation Research Program – Opening Doors to New Technology
The Subcommittee on Workforce, Empowerment
and Government Programs, Small Business Committee
United States House of Representatives

Tuesday, November 8, 2005

Good Morning, Madam Chairwoman and Members of the Committee. I am Dr. Norka Ruiz Bravo, Deputy Director for Extramural Research at the National Institutes of Health (NIH), part of the U.S. Department of Health and Human Services (HHS).

The NIH is the nation’s premier medical research agency. Our mission is the conduct of biomedical, behavioral, and clinical research to improve the health of the American people. Thank you for giving me the opportunity to provide you with an overview of the NIH Small Business Innovation Research (SBIR) Program. Today, I would like to focus on two areas of SBIR: first, the role it plays in the NIH research agenda; and second, several benefits of the program.

The NIH is the principal operating component within HHS participating in the SBIR program. We constitute about 98% of the Department’s entire SBIR program activity and contribute the second largest amount of SBIR funding available across the Federal government. In FY 2005, the NIH made 1,668 SBIR awards amounting to over $626 million. About 21% of all Phase I SBIR applicants (Phase I determines scientific or technical feasibility and commercial merit.) and about 46% of all Phase II SBIR applicants (Phase II continues promising Phase I results.) were funded.

Across the NIH, there are 24 Institutes and Centers that reserve 2.5% of their extramural research and development (R&D) budget for SBIR awards. Each of these awarding components has a research mission with well-defined priorities. Examples of the breadth and depth of research we support include biotechnology, pharmaceuticals, therapeutics, medical devices, nanotechnologies, bioengineering, and behavioral research.

The SBIR program has become fully integrated into the overall scientific programs and goals of the NIH, particularly with respect to the goal of translating scientific findings and advances into tangible products and services. Through a competitive, phased award system, the SBIR program supports a wide array of innovative biomedical and public health R&D projects by small firms. The SBIR program stimulates technological innovation in the small business research community and enhances collaborative efforts with the academic research community. The program encourages small businesses to explore their technological potential and provides the incentive to profit from its commercialization. The Nation benefits from the small businesses’ entrepreneurial spirit, the end result of which is high technology innovation to meet specific R&D needs.

Program Benefits and Enhancements
The NIH SBIR program has evolved over two decades into a robust program of medical research awards. When President Reagan signed the SBIR legislation into law, he stated, “We in government must work in partnership with small businesses to ensure that technologies and processes are readily transferred to commercial applications.” For more than twenty years, NIH has embraced the letter and the spirit of this law. We are pleased that our SBIR program has resulted in benefits to our agency as well as the medical research community and the American people. The NIH is currently coordinating with the Office of Management and Budget on an assessment of the effectiveness, management, and performance measurement of the SBIR/STTR (Small Business Technology Transfer) Programs at the Small Business Administration (SBA), the Department of Defense, the National Science Foundation, the Department of Energy, and the National Aeronautics and Space Administration. We expect to use the findings of the assessment to address any shortcomings in our program, and primarily to develop robust outcome measures.

Today, the NIH serves as a keystone for translating scientific discoveries into tangible benefits. NIH research is paying enormous dividends: Americans are living longer, more productive lives; infant mortality rates have been reduced; and the quality of life has improved, as evidenced by the steady decline (1%-1.5% per year over the last two decades) in the number of elderly experiencing developmental, physical, and mental disabilities. The following are just a few examples of successful innovative SBIR projects that the NIH funded in the areas of vaccine development, surgical procedures, and medical devices that were deemed to have scientific merit and commercial potential under the NIH’s rigorous, external peer-review process:

Vaccines. AVANT Immunotherapeutics (MA) has used the SBIR program to advance a revolutionary vaccine, designed to prevent or treat atherosclerosis (the hardening and narrowing of the arteries), into clinical trials. SBIR funds helped finance experiments demonstrating the feasibility of this vaccine concept. Following the success of those early experiments, significant additional work was done with this vaccine, both in research and development, and it has now entered into Phase I clinical trials. If clinical trials are successful, this vaccine has the potential to greatly enhance the clinical management of atherosclerosis.

Surgical Procedures. IntraLase Corporation (CA) recognized the need for greater safety and precision in the first step of LASIK eye surgery. In answer to that, the company used the SBIR program to develop a femtosecond (one millionth of a nanosecond) laser to replace mechanical microkeratomes, the knives presently used in this surgery, to create a more precise and safer corneal flap. IntraLase virtually eliminates the severe sight threatening complications seen with the microkeratome, improving safety and precision while providing predictably better visual results for the patient. IntraLase is the most sophisticated and accurate technology for corneal flap creation available today and has given many patients greater confidence and assurance in choosing laser vision correction.

Medical Devices. Design Continuum (MA) used SBIR funding to create an innovative anesthetic gas delivery system, PediSedate, for children to help reduce the fear associated with medical procedures that require anesthesia. Providing medical treatment to children, particularly emergency procedures to treat trauma, can be exceptionally difficult. The anxiety children feel in such situations can make them uncooperative, and their typical fear of needles makes administration of painkillers challenging. Promising clinical results show that the PediSedate mitigates the traumatic experiences of children during anesthesia procedures.

To grow this long line of successes, the NIH has initiated several enhancements to our SBIR program over a number of years. These improvements are intended to help the small businesses opportunity for success while increasing the efficiency and effectiveness of our own SBIR program:

Flexibility in cost and time. NIH has recognized that not all types of biomedical and public health research can be accomplished through prescribed award levels and time periods, such as those specified in the SBA SBIR Policy Directive. And since once size does not fit all, we encourage small business concerns to propose a realistic budget and project period that is appropriate for the successful, not just timely, completion of the research project.

Fast-Track. To address the congressional encouragement to develop programs to reduce the gap in funding between SBIR Phase I and Phase II awards, the NIH Fast-Track mechanism is designed to expedite the decision and award of Phase II funding for scientifically meritorious applications for projects that have a high potential for commercialization. Fast-Track incorporates a submission and review process in which both Phase I and Phase II SBIR grant applications are submitted and reviewed together. The Phase I portion of a Fast-Track must specify clear, measurable milestones that should be achieved, as assessed by NIH program staff, prior to the issuance of the award initiating SBIR Phase II work.

Phase II SBIR Competing Renewal Awards. Recognizing that some projects such as those involving drug discovery and drug development require many years and hundreds of millions of dollars to complete, the NIH provides an opportunity for small business grantees to obtain a competing renewal of Phase II SBIR projects to address issues related to Federal regulatory processes (e.g., those involving the Food and Drug Administration approval process).

Commercialization Assistance Program. In order to assist Phase II SBIR awardees to advance projects from the research arena to the marketplace, the NIH offers a commercialization assistance program. The Program is designed to help some of the Nation's most promising small, life science companies develop their commercial business strategies, thereby providing them with exposure to and creating contacts within the life sciences industry and the investment community.

Other enhancement features of the NIH SBIR/STTR Programs include multiple submission dates and allowability of amended applications.

These improvements arise from and accommodate many of the needs of the small business research community. Those needs are varied and the challenges are great in trying to accommodate multiple industries, different technology sectors, and diverse product outcomes. For small businesses whose major focus is on technologies in areas such as instrumentation, health/medical education, and research tools, the phased SBIR program process is considered linear: Phase I + Phase II = Phase III. However, for the majority of the small businesses that we support whose major business focus is biotechnology, pharmaceuticals (e.g., drug discovery, drug development) and diagnostics, the phased SBIR program process is not linear, and unique challenges are presented. In these cases, a Phase I and Phase II award do not automatically translate to Phase III commercialization. Due to their early stage development, these projects are not candidates for capital investment, but are well suited for the SBIR program. Often, additional SBIR funding is needed to pursue lines of feasibility research related to the development of the product.

In conclusion, the NIH is very pleased with its involvement in the SBIR program and believes that flexibility is critical to the continued success of the program.

Thank you for the opportunity to appear before you today. I would be happy to answer any questions from the Committee.

Last Revised: November 16, 2005