NCInnovation (NCI), a private nonprofit that was appropriated $500 million in taxpayer funds by the North Carolina General Assembly last year, approved $5.2 million in pilot grants this month for eight research projects at seven North Carolina public universities.
The nonprofit’s leaders state the pilot grants will be critical to test processes and procedures and to inform additional program development before expanding grant-making operations across the state via “regional hubs” strategically located at UNC System schools.
The stated goal of NCI is to facilitate the development and commercialization of public university research projects that are otherwise at risk of succumbing to the so-called “valley of death,” in which many research projects stall for lack of the capital necessary for further development.
The eight projects awarded taxpayer pilot grants are already “fairly advanced,” according to a release. All eight are also “non-sponsored” research projects, in contrast to company-sponsored research in which the funding company owns all resulting intellectual property. NCI spokesman Pat Ryan clarifies that the focus of NCI is to support only those projects dependent on federal grants, state dollars, and other sources of funds, where the university retains intellectual property and earns revenue when a research product born on its campus advances to commercialization.
The pilot projects range from power-grid efficiency, to cancer research, to lithium battery technology. All eight grantees have already achieved “proof of concept,” meaning their process or invention has been proven at least feasible in the lab, and the projects “show commercial promise.” Some even have licensure agreements in place for their technology.
According to Brian Balfour, senior vice president of research at the John Locke Foundation, the advanced stage of the pilot projects raises questions related to NCI’s original charge: saving promising university research projects from the valley of death.
“Looking at the background of several of the projects receiving the initial round of NCInnovation research grants certainly leads one to question if the NCI funding is even necessary for them at all,” Balfour told Carolina Journal. “Some recipients have a track record of successfully receiving significant federal or other grants, while many are involved in research with countless other funding opportunities.”
Languishing in the valley of death?
One of the eight projects, a lithium-trapping filter technology developed by UNC-Greensboro researchers and established as Minerva Lithium LLC, has raised over $1.5 million, starting with hundreds of thousands of dollars in federal awards and grants in 2020 and 2021. One of the lead researchers has received $3.5 million in federal funding for her research throughout her career, including recent awards from the NASA NC Space Consortium and the US Department of Defense.
New skin cancer fighting approaches developed by researchers at East Carolina University’s Brody School of Medicine was awarded a North Carolina Biotechnology Center (NCBC) Translational Research Grant, back in 2021, for the development and commercialization of its project. Dr. Rukiyah Van Dross-Anderson, a faculty member in the Brody School of Medicine’s Department of Pharmacology and Toxicology, was awarded the $110,000 to “develop a business and commercialization case that includes a manufacturing development plan and a management strategy for the compound.”
“The goal of the grant is to conduct studies that will allow innovative laboratory technologies to be converted into commercial products that solve important biomedical problems,” lead researcher Van Dross-Anderson said in 2021. “To figure out the business side of things, we collaborated with experts in drug development, technology transfer and commercialization funding.”
“For context, this project is in a field — melanoma — that features multiple national foundations that provide tens of millions in research grants along with federal agencies offering millions more for research,” Balfour pointed out.
Two researchers at UNC Charlotte were among NCI’s pilot grant recipients, one with a novel nano-scale water filtration technology and the other working on a solution for power-grid inefficiencies created by intermittent energy sources like solar.
The former leads a research group that boasts of having received financial support from multiple federal agencies, state-based organizations, and private organizations. That same recipient is also founder of a startup company that will likely benefit financially should this research be brought to market.
The latter, Grid Ancillary Services with Uninterruptible Power Supply (“GAUPS”), developed by Dr. Sukumar Kamalasadan, Ph.D, received $3.699 million in grant funds from the US Department of Energy in 2020, with a funding timeline of three years, to advance solar energy’s role in strengthening the grid. Further, Duke Energy and UNC Charlotte have worked together for years on research programs through the university’s Energy Production and Infrastructure Center (EPIC), from which Duke Energy admittedly benefits.
“Another recipient heads up a research lab that has previously partnered with pharmaceutical giants Eli Lilly and Merck, and whose project NCInnovation decided to fund involves a long-lasting flu vaccine, a project for which big pharma would shower money if it shows any promise,” added Balfour.
bridging the gap
Despite the skepticism, NCI officials maintain the grant awards are critical, and necessary, to close the distance between research and real products.
Asked about the advanced stage of the pilot projects, and if research would otherwise be stalled if not for the grants in question, NCI spokesman Pat Ryan told Carolina Journal that the homegrown projects required more support to achieve viability, otherwise they’d already be developing products.
“In general, the pilot grants will support homegrown innovation projects — like lithium refining, cancer research, and PFAS removal — that have already achieved proof of concept but are not mature enough to enter the private market,” Ryan told Carolina Journal. “That is NCInnovation’s role in the university R&D relay race, and that is why NCInnovation funds universities. If a research product were already viable with no remaining work to be done, then it would be in product development, not in a university R&D portfolio.”
Ryan further pointed out the standards by which NCI solicits and approves grants are grounded in state statute. That statute, authorizing NCI appropriations, establishes a legal purpose to “bridge the gap between such research and development capabilities and the application and commercialization of the same, and to support such commercialization and application, along with resulting emerging technologies, to promote the welfare of the people of the State and to maximize the economic growth in the State.”
But the pitch to lawmakers was more plain: If North Carolina (taxpayers) don’t help these projects reach development, another state will. Moreover, that other state will reap the rewards in the form of jobs and economic growth, too.
By way of example, Ryan pointed to the case of Joe DeSimone and the company he cofounded in 2013, Carbon, a high-quality 3D-printing venture. Carbon is venture backed, with board executives from the likes of famous venture firm Sequoia Capital. DeSimone was previously at UNC Chapel Hill and NC State University, but “[h]e, his company, and his entire research portfolio are now in California,” Ryan emphasized, implying the company would still be in the Tar Heel State had a taxpayer-funded entity like NCI been around.
proof of concept
Critics, such as Balfour, have suggested NCI’s mission may have been better served by starting with a full pilot series before asking lawmakers to take $500 million from taxpayers.
“So NCInnovaton spends hundreds of thousands on lobbyists to secure a $500 million commitment in taxpayer dollars and then decides to run a pilot program to ‘test processes and procedures’?” Balfour wrote after the pilot program was announced. “Shouldn’t they have run the pilot program first to demonstrate the viability and value of the program before securing taxpayer funds?”
So far, NCI has only received the first $250 million tranche of the $500 million in total taxpayer funds appropriated by lawmakers last fall. The second tranche — scheduled by statute to be disbursed to NCI this summer, provided certain metrics are met — could be subject to ongoing negotiations as lawmakers work on budget modifications this short session.
“This seems to be more evidence that North Carolina legislators were far too hasty in approving half a billion in taxpayer dollars to this unproven organization,” said Balfour.