June 17, 2009 Ottawa, Ont. New Models for Commercialization FPTT 2009 Annual Conference

2 AAFC activities and financial programs work together along the Innovation Continuum ADOPTION/ COMMERCIALIZATION PHASE Agri-Foresight, Innovation Fora - Enhancing capacity to anticipate challenges and opportunities and to proactively take collaborative action Promoting Agri-based Investment Opportunities - Bringing entrepreneurs and investors together – Innovation Symposia Science to Support Commercialization of New Agri-Based Products - Mobilizing science capacity to address pre- commercialization challenges Agri-Science Clusters - Industry-led applied science Greater Government Funding Jointly Funded Greater Industry Funding Public-Private Collaborations INNOVATION CONTINUUM DISCOVERY PHASE PRE-ADOPTION / PRE-COMMERCIALIZATION PHASE AAFC in-house Science Research Strategic alignment with government and sector priorities Public good and high-risk discovery science Applied/Production Science Growing Forward Collaborations Innovation Commercialization Centres - Enhancing the access and delivery of commercialization services that support business development activities of agri-based entrepreneurs Supporting Innovative Capacity of Farmers - Supporting innovators and early adopters of new technologies and practices Agri-Opportunities - Accelerating Commercialization of new market ready products, processes and services ecoABC – Biofuels production Advancing Canadian Agriculture and Agri-food – Path finding, new opportunities, responding to emerging issues and knowledge transfer ABIP - Interdisciplinary, multi-sectoral collaboration along the innovation chain for the development of non-traditional products from agricultural feedstocks CAFI - International Market Development FCC Venture Capital - for growth to commercialization

3 AAFC research works across the food value-chain; we pursue an integrated system-based approach to R and D for supporting innovation

4 Current active licenses for commercialization AAFC has 689 active licenses which together generated $7.6 million of royalties in

5 AAFC Transfers Technology to 100 Canadian Companies (location of licensees)  Alberta13  British Columbia 3  Manitoba12  Nova Scotia 3  New Brunswick 2  Ontario 26  Prince Edward Island 5  Quebec23  Saskatchewan12

6 Distribution of variety licenses by crop  Cereal245  Fruit 80  Forage 55  Oilseed 36  Ornamentals 10  Other 15  Pulse 79  Vegetable 21

7 Technology Licenses  AAFC also develops technologies in areas of biotechnology, food products, animal health, grain quality assurance, food processes, biocontrol products, health food products, monoclonal antibodies, proteins.  Currently, there are 79 technology licenses; 32 of them generated about $ 1 million in royalties

8 How we’ve done tech transfer for commercialization Formal competitive RFPs based on the most anticipated benefit to Canada arising from the investment proposal for the IP right The MII Program which commenced in 1994 stimulated the use of CRDA’s incorporating either an option to a licence for FIP (results are pre-sold), or ownership vested with the other party –About 25% of our gross direct patent costs were recovered last year. –About 48% of our 441 patents are encumbered The PICO precedent.

9 The AAFC-BCTFA-PICO partnership AAFC has possibly the only sweet cherry breeding program in the World (it takes about 15 years to develop a new variety) Our cherries are self fertile, producing large firm fruit that matures later than that of the main N.A. commodity cherry producer (Washington); they command premium prices around the World History 1990 Canada introduces PBR. Act The N-F-P BCTFA creates F-P subsidiary Plant Improvement Corporation of the Okanagan (PICO) and a licence agreement is signed (renewed and expanded in 2005). –Over 90% of new BC plantings since then have been to AAFC varieties, which have also been commercialized in complementary southern hemisphere markets –Cherry exports have increased from $1 million to $20 million; cumulative royalties exceed $2 million. –PICO generates revenues from sale of fruit as well as from budwood.

10 The Growing Canadian Agri-Innovations Program components support the innovation continuum and build on existing programming Agri-Foresight - Enhancing capacity to anticipate possible challenges and opportunities and to proactively take collaborative action Promoting Agri-based Investment Opportunities - Bringing entrepreneurs and investors together – Innovation Symposia Developing Innovative Agri-Products - Mobilizing science capacity to address pre-commercialization challenges Canadian Agri-Science Clusters - Industry-led applied science Greater Government Funding Jointly Funded Greater Industry Funding Public-Private Collaborations INNOVATION CONTINUUM DISCOVERY PHASE PRE-ADOPTION / PRE-COMMERCIALIZATION PHASE AAFC in-house Science Research Strategic alignment with government and sector priorities Public good and high-risk discovery science Applied/Production Science ecoABC – Biofuels production ABIP - Interdisciplinary, multi-sectoral collaboration along the innovation chain for the development of non-traditional products from agricultural feedstocks ADOPTION/ COMMERCIALIZATION PHASE Growing Forward Collaborations Agri-Opportunities - Accelerating Commercialization of new market ready products, processes and services New Growing Canadian Agri-Innovations Program Initiatives Existing AAFC Programs

11 Canadian Agri-Science Clusters Not-for-Profit (NFP) Agricultural Corporation develop and submit the proposal sign the Contribution Agreement with AAFC - Innovation sign one Collaborative Research and Development Agreement with AAFC – Science be the eligible recipient that will be reimbursed for eligible expenses Board of Directors (BOD) represents management consists of agri-industry stakeholders Industries nationally assembled into a NFP Finance Science Tech Transfer / Commercialization Applications are industry led meaning that applications must come from industry clients

12 Developing Innovative Agri-Products Scientific Expertise and/or Industry Applicant (Farmers, agricultural organizations entrepreneurs and agri-business) University Research Industry and other NGO Research AAFC Research Developing Innovative Agri-Products Initiative Applied S&T Pre- commercialization Projects Agri-Sector Profitability and competitiveness Development of new agri-products, processes and practices

13 Federal Canadian S&T funding comes in different colours Departmental Appropriations (Vote 1) Environment Canada Other Departments & Agencies Health Canada Natural Resources Canada Industry Canada Agriculture and Agri-Food Canada Department of Fisheries & Oceans NSERC Genome Canada National Research Council Canada Foundation for Innovation Canadian Institutes of Health Research (CIHR) Public Health Agency of Canada Extramural Grants & Contributions Clusters/DIAP Agri-Science Clusters/DIAP Vote 10 Canadian Food Inspection Agency Atlantic Canada Opportunities Agency (ACOA) Western Economic Diversification (WD) IRAP Technology Partnerships Canada (TPC)

14 Developing Innovative Agri-Products * CRDA – Collaborative Research and Development Agreement or service contract $ - Federal Government Contribution Funding $$ - Private Cash Funding (=>.33$) Developing Innovative Agri-Products Initiative $ AAFC Research Industry, NFedGOs, Universities Non AAFC Federal Labs Agricultural Industry Applicant (farm groups, agri-business) provides at least 25% of the direct project costs ($$) CRDA CRDA $$ CRDA $,and/or$$ Applied science, technology development and pre-commercialization projects leading to the development of new agri- products, processes and practices. Contribution Agreement Vote 1 - NPO $$

15 The benefits of these new models These programs will support technology transfer and commercialization –Focused business management of technology projects –Governance framework allows for better access to early stage financing, and R and D tax credits –Robust risk management rather than simple risk transfer.