Tough competition places emphasis on sustainability and governance issues

Majority of original CECRs fail review

A new fiscal reality and a strict emphasis on commercialization and sustainability have dramatically reduced the original slate of Centres of Excellence for Commercialization and Research (CECR) with just four out of 11 receiving extended funding. A recent competitive review cut the portfolio of CECRs from 22 to 15 and it could shrink further to 10 once more recently established CECRs come up for renewal, reflecting reduced federal funding combined with rigid enforcement of modified criteria.

The review selected four health-related centres for additional funding (see chart on page 2) while the review of the four pilot Business-Led Networks of Centres of Excellence (BL-NCE) yielded just one successful centre (see page 3).

"We can't carry a portfolio of 22 going forward. If they all met the criteria they would all continue but we would have to reduce the funding per centre," says André Isabelle, the recently appointed associate VP of the NCE secretariat. "I wish we had more resources. It was difficult to winnow this down."

The original CECR competition in 2008 selected 11 centres that received $163 million over five years. Some of the CECRs funded in that competition were aimed more towards end-stage research. The program has evolved since that time, however, with recent changes to program criteria placing greater emphasis on commercialization and sustainability.

The most recent competition also allowed the original CECRs to apply for different funding periods, during which time they had to demonstrate a pathway towards sustainability.

For MaRS Innovation, it was awarded $15 million (the same amount it received for its initial five-year run) by successfully convincing the Private Sector Advisory Board (PSAB) and NCE selection committee that it could more self-sustaining within three years.

"They gave us $15 million and with leverage of $25 million over three years we will achieve sustainability. Governance is king. We will develop and execute high-value licences, support new and existing spin-offs and deepen our industry engagement ," says Dr Rafi Hofstein, MaRS Innovation's president and CEO. "We've developed a framework fund which we've built up over time which has gotten us on the radar of global industry."

MaRS Innovation also receives funding from the Ontario government and is currently lining up future commitments from the Ministry of Economic Development and Innovation (which recently switched back to the Ministry of Research and Innovation).

"That will kick in in two years. That's when we need it as a safety net when our NCE funding runs out," says Hofstein. "It's very exciting for us. The feedback from the NCE was very encouraging but still challenging as we are viewed as bridging the valley of death."

The Centre for Drug Research and Development (CDRD) is another successful CECR, although its extension funding ($8 million) was just over half of what it received in 2008.

"We were surprised that the success rate (of the competition) was only four of 11 and that CDRD received only half of what we asked for but money is tight (and) my suspicion is that it was the total sum of money that dictated the result," says Dr David Dolphin, a veteran health care research, entrepreneur and chair of the CDRD board of directors. "I don't think we will have to re-tool or slow down but we'll have to look for more funds."

CDRD has thrived and expanded primarily due to the generous support of the British Columbia government, allowing it to establish a for-profit subsidiary (CDRD Ventures Inc) that plows profits back into CDRD. Since its inception, CDRD has received $120 million from all sources including $40 million from industry partners. Dolphin says its success in attracting substantial sums from a variety of sources could be why the PSAB recommended a lower level of NCE funding.

"The PSAB said CDRD can be sustainable over the time period with the $8 million being given. You can interpret that any way you want but I believe we have the resources and the strategy to do it."

review knocks out promising cecrs

The results of the CECR?competition sent shock waves through many centres that believed they were on the right trajectory towards sustainability and were performing well. Several of the unsuccessful centres had made significant progress attracting industry partners and financial support and had the performance measurement data to prove it.

The Sarnia ON-based Bioindustrial Innovation Centre (BIC) was one such high-performing CECR. A BIC official says it received a stellar review for all aspects of its operation except for its governance. Its proposal to expand beyond Ontario had secured million of dollars in commitments and it was in negotiations with the federal government to establish national bioproducts network through the agriculture department's Growing Forward 2 initiative. Still, it's application for extended funding was rejected.

"Everything happens for a reason, we just don't know what the reasons were," says the BIC official.

Another CECR that was expected to pass the review with flying colours was the Centre for the Commercialization of Research (CCR), which is managed through the Ontario Centres of Excellence (OCE) program. Late last year it released the results of a study that demonstrated its considerable economic impact and financial leverage and submitted it as part of its proposal to expand nationally (R$, October 24/12). But questions emerged about CCR's sustainability despite having lined up commitments from five provinces to match NCE funding. That appears to have been the dominating factor in rejecting its bid for renewal.

One official says applicants were told prior to the competition that they would be facing a tough competition, which substantially raised the bar. What is "a bit baffling" he says, is that the NCE is launching a competition to launch new CECRs rather than working with those that were already successful, essentially ghettoizing a $15 million investment.

"It will leave a gap in the continuum in moving companies forward. It will be missed," says Dr Tom Corr, OCE's president and CEO. "We were shocked. We think we did a good job with CCR but they made their decisions on deploying those funds. We may keep the name — I don't know."

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