Good morning. I want to thank you all for coming. I am with InnovationLabs and we're helping to facilitate this session. You'll notice that some of the content and process of this forum will be familiar and some will not. We will have presentations today and then have some collaborative sessions over the next couple of days for you to participate in.

You'll notice some people around the space who are taking pictures, typing, and making video. We are capturing this session so that it will be available to you afterwards. If it helps you to listen by taking notes, then please do so, but know all the material, including the presentations, will be available to you on the website after the session.

Good morning! I think you will be rewarded for the time and effort you'll put in here. At the end of this we want to achieve some development plans. There will be learning that happens here but we want to move forward. This program is about implementation.

Here is some history of how this group developed. This is the second of three currently planned forums. The Silicon Valley Space Club, which has members from space as well as biotechnology, were interested in engaging a nexus of three elements that they wanted to bring together. As you know, there are many people investing in the commercial space industry and there are also great advances in biotechnology, such as defining the human genome. As a group of citizens, we wanted to make sure our tax dollars are being spent wisely, and as a space group we want to have a hand in steering that.

We identified three action items we want to achieve:

1. We want to summarize past successes in micro-gravity research that we could use as a springboard for other opportunities.
2. We want to establish a fair broker, either by finding an organization or creating one who could bring all the elements together and would act as a catalyst as well as a facilitator.
3. We want to identify some opportunities that we could forward with in the near-term.

During the first session, we did summarize the successes. You'll see these in the drawings that Jay from InnovationLabs did over here, in the document you received, as well as on the website.

Our past successes are significant. The biotech cases are profound in their impact. The potential for the future is great. This group identified several areas where we could develop a new industry. We're not going after the business models that were talked about 20 years ago such as developing stations in space. We're not going after space platforms and big power generators. We're going after intellectual property and not necessarily cargo.

We did a reality check. For those of you who know the venture capital market, you know how easy it is to have that be the end of the idea. We decided it was important to invite them in early and get their advice early on so we can be successful. We're not going to limit our ideas to biotech but you'll see by the people who are here, that will be a focus we start with.

We also want to develop an entrepreneurial space industry. In order to do this the VCs told us first off to bring down the costs. We need to distance the government from what we do. We need to do this truly commercially. THere are public policy people here today and you'll hear about what we need to do in terms of regulations. For example, the FAA approved a space for the hybrid launch vehicle. That provides a lot more opportunity for us to do some experimentation. There was enough of a pony in the process that we were encouraged to continue.

We didn't find a suitable organization to be the fair broker, so we formed a group that we call the Alliance for Commercial Enterprises in Space. We are talking about low earth orbit. We want to have commerce on earth for development in space.

We're hoping to be able to announce something tomorrow, but if not, we'll at least be able to talk about it. As part of what we're doing in the workshop, we're going to focus on how we as a group are going to be able to benefit this entire industry.

You will hear from experts in the field today. There are industry experts here, from space scientists, and engineers to biotech experts to venture capitalists. We want to take advantage of this co-mingling.

There is a group called ATWG who will be meeting here next week. They're going to take up the results of this forum and if you're interested in attending, please talk to Ken Cox.

We have a very impressive group of individuals here. This is a great networking opportunity as

The results will be summarized on Friday and a lot of the lessons learned in the work groups will be made available to the entire group.

I want to thank several people. The Silicon Valley Space Club, the Space Development Partnership Program, NASA - Ames, Edward James Olmos who has agreed to be our education ambassador, California Space Grant, and so many of you who I cannot name all here.

Where do I start to acknowledge our next speaker? He is a Nobel Prize winner. He spans many fields including anthropology, He has contributed one of the greatest life saving advances in history.  He earned the Nobel Prize in Physiology or Medicine for his work on the hepatitis B virus.   In 1993, he and his co-inventor, Dr. Irving Millman, were elected to the National Inventors Hall of Fame for their invention of the hepatitis B vaccine and the diagnostic test for hepatitis B.  Dr. Blumberg's life saving hepatitis B vaccine is the most widely used vaccine on Earth: more than 500 million persons have been vaccinated worldwide. There are a substantial number of people who owe their lives to him.

Dr. Blumberg is one of the world's greatest explorer scientists.  His research spans many fields and many countries and includes clinical research, epidemiology, virology, genetics, anthropology, and astrobiology.   He has taught in various places in the U.S and around the world. He was Master of Balliol College, Oxford University, Senior Advisor to the NASA Administrator, Associate Director for Clinical Research at Fox Chase Medical Center and on the staff of the National Institutes of Health.  He was the first Director of NASA's Astrobiology Institute headquartered right here at the NASA Ames Research Center.

Please join me in welcoming Dr. Blumberg.

It is great being back here at Ames and seeing old friends, it's like coming home. In 1743, Benjamin Franklin wrote a treatise about settling new colonies. He recognized the value of basic scientific knowledge in inventing practical objects. We recently developed a logo for the Exploration badge of the American Philosophical Society and you'll notice that we've chosen Franklin as the icon for it. Franklin's intense curiosity about the natural world led him to many commercial ventures. He showed how the lightning from the sky were the same as that which they were developing in the laboratories. He was celebrated around the world for his invention of the lightning rods and how many lives he saved through this device.

He took several trips across the Atlantic and in 1785 as he was coming back from France, he took temperatures and depths at several places across the sea and as a consequence of this he was able to convince mariners of which course to take based on these measurements. This saved them a month on their voyages.

These achievements indicated the success of the marriage of natural observations, basic scientific knowledge and practical application. From discovery of new phenomena whole new industries are born. If you're looking at things that no one has ever seen before you have the opportunity to discover things that no one has ever thought of. I am influenced a great deal by my own research experience.

When I first got into this work, I was not encumbered by any knowledge of astrobiology. I was interested in why some people get sick and why some don't. I was curious about the makeup of their serum proteins which were controlled by the genes. If you study enough variation in populations and you know the disease problems, you'll come across the genetic differences and susceptibilities which will lead to preventative measures or cures. We studied a great deal of many populations and found great differentiation. We looked at the serum of people who received many transfusions. If they had not inherited a serum protein, then they would develop an antibody. We could use this antibody to find the variant. There is a susceptibility factor that is very important not only to this but also to diabetes and Alzheimer's. We found another antibody that identified an entirely different protein. The antibody had developed in the transfused patient who had been exposed to the Hepatitis B virus.

We were able to make a vaccine by separating the small surface antigen from the whole virus particles. This surface antigen particle was used as the vaccine. The molecular biological revolution was in swing then and through the use of yeast and such, the first recombinant vaccine was made.

The research had started off in quite a different direction. We had a general direction we were going and we knew we would find something, but we didn't know exactly what we would find. The diagnostic industry itself is a multi-billion dollar industry.

Space is the most exciting place for discovery. President Kennedy in a speech at Rice University referred to space as a new ocean for a place of exploration and discovery. This exploration has been funded by the governments of the U.S. and other places.

Going into space is like the invention of the telescope. We can see places we never could before. The encouragement of this is essential to the advancement of commercial opportunities.

NASA has always encouraged commercial application. The National Aeronautics and Space Act of 1958 declares that the general welfare of the U.S. requires that NASA seek and encourage, to the maximum extent possible, the fullest commercial use of space.

The range of projects include things that I have never thought about before. A large part of the commercial communications industry, such as GPS, is a consequence of the ability to get into space. Also, monitoring techniques were developed for the astronauts as well as transmitting congruent information through satellites. The telemetric devices are incorporated in the medical community that are direct developments from that.

Space travel requires stuff you don't need on earth. As a consequence, the engineering demands are much greater than terrestrial applications. Lynn Harper and I researched the Micro-Electro-Mechanical Systems (MEMS) systems. The accelerometers, pace makers, less vibrating of washers and dryers are all direct developments of that.

Also in that list are the early detection and prediction of hurricanes as well as the rotating wall vessel, developed to simulate low gravity here on earth. We'll hear about that from Dr. Pellis.

There may be some showstoppers in this venture, but humans have an insatiable need to explore and discover. The current difference between the way humans and robots think are quite great. Robots can answer questions well but hard for them to ask questions. It is difficult for robots to process stuff that they have no experience of. The human brain is organized with various cognitive processes. If humans see an event that's never been visible before, they have the ability to try to comprehend, analyze and order it; that would be extremely difficult to program into a computer.

Harrison Schmidt wrote a piece called "A Field Trip to the Moon" The last Apollo mission to the moon, Apollo 17, left Earth on December 7, 1972 to land near the southeastern edge of Mare Serenitatis in the Valley of Taurus-Littrow. For 75 hours, Gene Cernan and the author lived and worked in the valley, performing extensive geological studies of the volcanic rocks that partially fill the valley, the boulders that rolled into the valley from the surrounding mountains, and the meteor impact generated soils that cover the valley floor and walls. Successful exploration of Taurus-Littrow capped a six mission investigation of the materials and history of the moon. At the conclusion of these studies, science had gained a first order understanding of the evolution of the moon as a planet. Humankind had gained knowledge of new resources in the soils of the moon that may help solve many energy problems on Earth and help initiate the exploration and settlement of Mars.

Harrison is very interested in Helium 3 which is very abundant on Mars but not so much on the earth.

He goes on to say: Questions often arise as to whether robotic exploration of the moon or any other planet would be less expensive than human exploration and provide all the essential scientific return. This question, of course, can never be answered to everyone's satisfaction if only because of sincere disagreements over what constitutes "essential science.". Clearly, robotic systems will and must make increasingly important contributions, however, the spontaneous human observation, integration, and interpretation of the total dynamic situation involved in space activities, and a calculated human response to that situation, will be as irreplaceable in the future as throughout the past.

I come from Philadelphia and we tend to look at the past, maybe too much. In 1804, Lewis and Clark made the largest federally funded exploration trip. Similar to our national space program, Jefferson gave them a very specific mission statement in which the majority of the purpose of the trip was scientific. Jefferson was also the President of the American Philosophical Society. Clark was an excellent map maker and Lewis learned a lot about celestial navigation and between the two of them they were able to chart territories never charted before.

There was also a commercial interest in the venture, which was to find the northwest passage. It turned out the Rockies were a big deal. They established good commercial relations with many partners, such as with the fur trade. They also had a foreign policy role. The Oregon Territory was claimed loosely by Spain and Russia and they developed relationships to make arrangements to incorporate it into the United States.

We're going to hear about potential markets and how this effort can lead to cheaper and more frequent space travel and how we will have much more access to space for various research.

We have to find customers and that is the most important part. In 2004 there were 19 launches to support the industry. Four were NASA, and ten were commercial. If there was double or triple demand what would that do? If you could order 5 at a time what would that do to the business case?

The demand panel is to introduce some of the new players. Flight experience, proven track record, reason to go into space. The demand panel will describe what a successful program will look like to them. The speakers have 20 minutes and will answers questions after that. And you can talk to them informally after the talks.

The first speaker is David Gump. Space tourism is a reality. Dennis Tito went to space, Mark Shuttleworth and Gregory Olson is carrying a bunch of experiments. He's doing scientific work on the space station. It's an interesting return to the "private scientist". Scientists were often wealthy and it's a return to those times. Darwin never got paid a day in his life.

Transformational Space Corporation works on commercial services supported by federal resources. David Gump founded Lunencorp and did the first TV commercial on the ISS. Threw the ceremonial first pitch on the ISS for 2002 world series.

Low cost access to space is possible. Tourism is the only hammer that can bring down the costs that bio-tech needs to make their business cases viable. We have designed a crew transfer vehicle to be used once the shuttle is retired.
We're leading to create a low cost vehicle to transfer people to the space station. We would own the IP and vehicle when it's done.

Transformational Space staff: Brett Alexander wrote the US gov't space policy for the white house. Jim Voss, former astronaut is leading the systems development. CIA chief who worked on high tech exports for the gov't. Darpa designed low cost launch vehicles.

NASA wanted to get people to orbit for $20million per flight. $65million for Soyuz. $1billion for shuttle launch. $5million per person is the target number.

Self orienting capsule, Booster is reusable and has been developed already. Aircraft and capsule are reusable. Booster CXV has been flight tested. We use the plane to orient the capsule, not wings. This has been proven to work.

The market...participants need six months of training and they have to learn Russian. Our plan calls for a $1-5million price tag and a month of training
and no need to learn Russian. This sparks a new industry and brings economies of scale to launch costs. It can be a very large market by 2025 and could bring billions of dollars of revenue. This industry can be the shoulders on which NASA's moon and mars missions can stand. The impact of this session is to show how that can happen.

Lance Bass couldn't swing it but maybe Angelina Jolie could.

The major problem that we have is that there is a shortage of wealthy people. 6000 people in the world are as wealthy as Tito and Shuttleworth. Five to seven percent of Tito/Shuttleworth's net worth had to be liquidated to make the trip.

We did extensive market studies on what the market potential is and here's what we found: 10% of the target market will spend 50K+ on discretionary purchase. That represents 5% of their net worth. If the number dropped to 1.5% of net worth, the number goes to 40%.

At 5% the pool goes way up if the tag is $2.5mm. At $1MM/ticket, the pool of people available to go up to accommodate the market goes way up. So while the average age of people able to afford is high but their overall fitness level is low.

We also told them that the experience in space would have a lot of side effects, such as dizziness, nausea, the window to see the earth would be small and asked them again, "would you go?" At what price? At 5MM there are 907 people
who are potential customers....but the number goes way up as the price drops to $1mm.

There is an adoption curve and at 5mm there will be close to 100 people at around the time that NASA wants to return to the moon. As the price drops, many more people will go to orbit. About 12 people per year when it starts and then it goes up to 36 by 2013 and then the price will drop and participation numbers start to go way up.

Pharma companies can't make progress if there is a space mission every 6 months. Pharmaceutical companies that have used space research in the past don't progress more quickly than companies that used terrestrial methods. Why? They were beaten by terrestrial labs because terrestrial labs could work every day. If the flights are more frequent, the cost goes down and you can send the experts to space, not an astronaut who is trained to be a biologist. You can send the actual biologist.

Conclusion: industry revenue will go way up, people start to get an excitement over space to generate further excitement. Space tourism becomes more attainable and influential

I'm very grateful to the organizers for including this work in the program. Showcasing biotech as a potential thrust is very exciting. I think that the oldest written record of science is biotechnology. The Sumerian records describe the brewing of a fermented drink. THey probably didn't have a lot of federal regulations. That was about 60-70,000 years ago. We want to bring these back as a new level of interest.

I was happy in the laboratory looking at the lymphocytes and how they infect the melanoma. There a number of different ways to culture them. We tried a number of systems and we didn't get what we wanted. Often we pursue one thing and we end up finding something else. We found that lymphocytes become stones when you put them in a situation where they do not experience gravity. This is what took me from the lab of the cancer center to the space program.

Why do we bother conducting cell culture in space? We're going to take stuff with us to low gravity environments, both intentionally and unintentionally. In the mid-60s there were observations that e.Coli develops in novel adaptations. This gave us a foundation to build on for our further work on it.

The kinds of things you can get in biological technology, you get unique processes in micro-encapsulation. There are a whole host of approaches because of the novel adaptation mechanisms.

Why do we do this in space? You'll see from slide here that looks like eggs, although they are cells. You'll see that de rigueur this is how the cells behave in low gravity. There are very different with nonsedimentary force.

It's these kinds of adoptions that will not provide instant gratification but will give us foundations to build on. We need to build the foundation at the same time that are trying to commercialize. Outside the space agency we've been building that knowledge for 200 years. It's a huge foundation but in space it's much thinner. As we move into applied science we have to build that foundation.

Opportunities in space include: cell culture, biomaterials, microencapsulation, host of apps due to low gravity, biopharm, agri-tech...still places to look at microseparation techniques. You can see that cells march along the plastic and fluid phase. There are a few non-anchorage cells. When you take gravity away, the remaining forces are re-ordered and the attractive forces become more dominant. Cells undergo metamorphoses. We tried to seek analogues on earth. We tried to stir the cell cultures, but that is not so easy to just stir them. Hydrodynamics don't work well with cells. For example when a tumour metastasizes a lot of cells get killed by hydrodynamic shearing.

The other option is freefall. Then you have either a soft fall or a hard fall. Both of those negatively affect the quality of the experiments.

The rotating cell culture machine spins and blows air. The space between the lexan and silicon can be filled with liquid. There is no air phase in the column and it becomes a surrogate lung for the system. In a short period of time the fluid is rotating at the same rate as the cylinder. This means that the experiment is similar to micro gravity. It was discovered by accident when NASA had built a similar machine but in a vertical orientation and they were using fins. The technician accidentally turned it horizontal. The particles remain suspended in the fluid. There is a small differential in gravity between the cells and the fluid. It is an analogue state of microgravity. Like a KC-135 without ever pulling out.

If two dissimilar cells are put in a Petri dish, you can tell who will win. In the rotation device those two dissimilar cells will co-exist. There is a favor toward differentiation. cells from breast cancer patients are easy to find but growing primary cells is difficult. Continuous cells from cetaceans were created in the lab. The whales are highly resistant to heavy metal toxicity. What can we learn from the cetacean physiology about their resistance to heavy metals?

We have 19000 in circulation. 31 patents, 19 licenses, and the highest revenue streams. Given this, is there an opportunity? There is, but there are a lot of requirements. Market driven, commercially led, privately supported, ground based analogues, slight situation is where it has to take notice.

The ideal situation would be a lab in space in pair with a lab on the ground. Continuously working equipment in space as well as on the ground all the time. We would need the storage of specimens and tissues on board at all times. We would need monthly access to space that would be consistent with product development and part of the overall product development cycle.

Larry DeLucas - NASA Research Partnership Center

This presentation will be a summary of my sense of protein crystal growth and where we're at today. Microgravity can play a big role. My centre is comprised of many different disciplines. the centre has a lot of scientists and engineers and when we think of solutions to problems, the engineers can test them.

It costs about a billion dollars to take a drug to market. Anything that can reduce the costs and time of taking a drug to market has potential. Protein structure was not used to make drugs because it used to take 30 years to build a crystal. You have to have good structure to make that happen. All of the new age drugs were used using hundreds of strucutures. There is a wealth of need for structural needs. The syncotron is needed to create data so we bought one at the University of Oregon.

We're working with pharma companies and getting $3M for a university. As the capability is developed on the ground they get that data as quickly as possible. Along the road we're sending proteins to space but it's not costing anything extra for pharma companies. They wouldn't pay the extra for space costs launch.

We have spent $50B in research every year on drug research over 20-25 years. That's a big market. Saving a year is tens of millions of dollars. Challenges for the drug industry include that only 20% of drugs go to clinical trials, and only 50% of those make it to market. Structural information will help bring that to market. They all want protein structure and they're willing to pay for it. Gene sequences are figured out, but now we need to know gene function and how it interacts with protein (inhibited or augmented). NIH is putting $240 million into high throughput structures. Roadblock: getting the protein. We clone and express 100 genes a week. The roadblock is getting good proteins.

For soluable proteins, 50K genes are cloned, and 24K are expressed, and 1300 proteins solved. 1/3 success. This represents a small percentage of acutal disease proteins. But now the technologies can get to those proteins. Equipment now exists to send proteins into microgravity. They have flown on a number of issues. Convection of molecules doesn't work on earth. In space there is no sensation of "heavier" or "lighter". The more often you fly the better off you'll be. Flying in space increases your chance of good proteins. Better than everything on earth. We know if we could fly every two weeks the resolution would increase to the point where the crystals can improve the chances of bringing drugs to market.

Crystals from space bring back detail that can't exist on earth. Data is much better from space and the molecules are more perfectly oriented. You can see features that you can't see on earth. Insulin research was much better.

Marketing PCG. Spacehab from Merck tried to do experiments in space and got nothing back. They went in and told them that they would have crystals from earth.

Space becomes the frosting on the cake. You need a good facility on the ground. We can grow inorganics on the space station and make jewellery on the space station. NASA wasn't interested.

Our success rate is less than 1%. Anything that can increase that rate would be successful in market. But it has to be a constant supply.

It's hard to make proteins in gravity and man of the attempts to characterize are thwarted because you can't make good crystals. The ability to do this is very important for rational drug design.

What carbon based payloads offer is a way to do that cheaper. We should remember that we've been flying people to space since cars had fins and televisions had vacuum tubes. Everyone has been exposed to the product, but not everyone has had the opportunity to buy it. Those tickets will get sold. The space community doing 3000 flights a year is tremendous.

If the rotating wall vessel is so good on the ground, why do you need to go to space?

Neal: The ability to assemble and the nature of the assembles is much different. We were able to show clearly the nature of the tissue morphogenesis and you do better in space for these cancer models. We got it there very quickly and metabolically we got the answers we were seeking. We need to know the more definitive nature of prostate cancer and bone marrow. We need to know why they grow there. We need to understand that more fully. We can do that on SDS170 very easily.

There is both metabolic data and direct morphological observable data to show this.

Comment: Much of what i heard this morning is functional product for earth. In the longer time, the market is going to be doing things in space for having people in space. The real economy will be in space. In the next decade or so this may not have a big impact but we need to look at the long term.

Q: If the rotating vessel is so good on the ground why do you need to go to space?

A; When you go to space the nature of the assemblies is much better, much faster. STS107 photos show clearly that the spontaneous assembly takes place and the tissue morphogenesis. Cancer researchers got what they wanted and got the answers they were seeking. On 101 we learned what the
relationship is between prostate cancer and bone cancer. A short mission on STS107 told us what we needed to know quickly.There is metabolic data and observational data that shows it clearly.

Comment: The market for space research is going to be a space colony. Space to space marketing. That's what Mike Griffin said.

Q: How much volume do you need in the lab? How much volume before the market is saturated?

A: We grow crystals in the lab. We can package 1000 experiments and could probably pack as much as 10K with the robotic technology we have now. This wouldn't be 10K different proteins. As long as we're doing the combined ground base, we could probably charge the companies for the spectrum.

Q: What's the length of time for growing perfect crystals? And frequency?

A: About 70% of the crystals that came back on the shuttle were too small to use. If we could do this for 6 weeks, we would dramatically improve that success rate. About once per month would be perfect.

Q: NASA has expressed antipathy to my area of basic life sciences research. Can you say what is the impact of losing the research community of the feeder stream in terms of expert deprivation?

A: Is the glass half full or half empty? I'm the kind of person that thinks the glass is twice as big as it needs to be. The vast opportunities for commercial development in space and we work hard to do what i think is the driver for this. Most of us have an interest in basic science, but right now the agency is seeking people who are interested in applied science. Instead of seeing it as a loss, we just need to see how we can redirect our efforts to serve the greater good.

Everything you've seen right now is the big stuff. The reactor you saw is about the size of a Campbell soup can. We're working those as a living reporter system for long duration missions. We're at the micro-level where they can survive for about a month and a half We're looking to get real small, like Steve Martin said.

Unless you freeze the crystals, you need robotic systems which got an incredible review from elite review groups.

Q: In your survey of the millions, what about dumping them in the ocean and letting them rowboat back to land, what do they say?

A: The study was based on the Soyuz trip. There will be a shift to capture in that and hopefully we will not be splashing around the ocean too much.

We're going to talk about living without gravity. You might think I'm going to talk about space. Maybe a little bit. But I am going to talk about a very serious weighty subject.

Gravity is one of the major forces of the universe. It holds us firmly on the ground. Because we have evolved on the surface of the earth it determines how we look and how we function. Although we have mass, it determines what we weigh. That is a very important aspect in the law of gravity.

We go into space to explore our limits and we want to see what's out there. We want to know what's beyond us but also want to explore our inner universe. A less known reason for going into space is something that we scientists know is how gravity affects us here on earth. The only way we know how to get away from gravity is to go into space.

We have very different postures in microgravity. There is no up and down in space. Exercise is not the same. It became obvious that we must secure bodies to the machines that they were exercising on. It is painful. You wear a harness and bungee cords so you don't float away. Invariably you get bruised. If it worked it would be great, but it doesn't really work to prevent the changes that occur in space flight.

The official word is that we have no problems in being in space so we might as well explore the moon and Mars, but I'm here to tell you differently.

Usually astronauts arrive home in blackout, have to be carried away on gurneys. This is seen in about 50% of the people who have come back. When you try to stand up you have a tendency to faint. The heart has to pump harder because the veins and arteries have become lazy from not having to work so hard.

Here are some of the changes we've observed and documented over the last 40 years of space flight. THere are changes during flight and some after you come back to earth's gravity. There is a readjustment in fluids. The sensors in the neck sense increased volume. The response is to pee to get rid of the excess volume which causes a net reduction in volume of blood level. There is no dehydration except in comparison before the flight.

There is an effect of anemia. The muscles are looser. Muscle mass and strength is lost. Very quickly muscle which is the energy factor of the body which takes up sugar and convert it into energy. Insulin helps this process. There is more than plenty of insulin but it cannot get into the muscle. That explains the weakness and decrease in stamina that is seen in the return from flight. The resistance to insulin can be seen within 3 days.

Calcium is lost from the bone. NASA hopes that they will be able to learn more about osteoporosis. There is also problems sleeping, which is strange because the EEG readings seem to be normal. They do not feel rested when they wake up. Related is that astronauts who pedal as much as they can, do not feel fatigued as soon as they stop. When asked what the worse part of space flight is, an astronaut said that never feeling that I get to put my head down.

Bladder infections and herpes flared quite easy because the immune system is suppressed.

When astronauts come back from space, there is a loss of balance. Just as we've seen in rats who have gone up in space, there is a tendency to drag the foot instead of picking them up, which can lead to tripping easily. They can also run into walls when negotiating a turn. Just after 14 days in space, an astronaut fell forward without putting his hands out to catch himself because he had no sense of falling.

There are more of these changes that happen. In animal research we see that wound healing is delayed. Nutrients are not absorbed well and the effectiveness of drugs diminishes. There is poor temperature regulation.

I would expect skin allergies because of the lack of convection in space and the water droplets on the skin that do not evaporate would create an environment for many microorganisms to prosper.

There are reports of vision changes, emotional and cognitive problems, and other gastrointestinal problems.

What do these symptoms remind you of? Do you know someone who has these problems?

• My grandfather.

Right, these symptoms are related to aging.

I used to get asked two basic questions: Do astronauts must grow old in space? and what about sex in space?

The second I'll not answer right now. And wWe would say no to the first. Because they recover and do not get any of the diseases common to elderly people.

The answer came from earth. The crystals and bio-reactor on the ground. We cannot do all the research we want to do on all the individuals we fly in space. We need simulation models. We tried lying in bed without getting out for anything for 90 days in both men and women and a broad range of ages we've come closer to understanding these changes.

Russian cosmonauts said they couldn't get a good night sleep because they felt like they were slipping off the end of the bed. We raised it a foot and that helped them. They took a cue from this and decided that you're closer in simulation to what it's like for being in space. In this way we can see what the effects of gravity are on the body.

My subjects saw themselves like this after 7 days in bed. (depiction of strong man on the left and skinny old man on right) It's an interesting concept.

What is the relationship between these symptoms and what we see in the elderly? There may be no relationship at all. Maybe these changes are not associated with the number of years and the passing of time. Maybe they have to do more with your lifestyle.

Space, bed rest and aging all show the same composite of symptoms. We cannot see them as individual things. In space we have microgravity; in bed we have reduced gravity; and in aging we use gravity less but over a long period of time. The question then becomes if the changes in space in bed rest are reversible then perhaps the effects of the passage of time will also be reversible. I am convinced that these symptoms can be prevented or delayed.

We have a chart that shows the hypothetical rate of decline in bone density over a period of time. You lose about 1% of bone a year. In space you lose about 1% of bone every one or two weeks. Space is telescoping the rate of change as you have on earth. Of course, genetics plays a big part and lifestyle as well.

What can happen if you are more sedentary or spend a lot of time in space, you increase your loss of bone density. We could hypothesize of shifting the curve upwards by delaying or preventing the downward slope by using gravity more.

Where the development peaks even if you assume the rate of decline is the same, if you vary the rate of development, you will hit the risk zone at a lower point even assuming nothing else changes.

To summarize, the message I'd like to leave you with is that using gravity should be a way of life. Today's 70 is but 50. How did we get to the sorry state of affairs that we have 1% rate of decline of bone density a year? And what can we do about it? From my point of view is that modern technology has deprived us of the usual use of gravity. We have reduced our activities with these objects that supposedly make our lives easier. Gyms are a relatively modern thing. We have been robbed of all these motions and have replaced them with those of the gyms. What I have found that since I moved from a stick shift to an automatic car, I lost my left leg. When I tried it again, I felt muscles I didn't know I had.

Actually, every time we stand up or hold our arm up. If I allowed gravity to have its way, I would be crumpled on the floor. We use muscles to keep ourselves up and the more we do it, the more we can do it. We are using gravity. Posture and balance is one of the first things to go. If you start putting your socks and shoes without sitting down you will gain strength. If you walk with a book on your head, not to mention a plate of eggs, it will force your posture to be much better. You're going to get out of your waist and go against gravity. Just as important is getting blood to your head. As you get older it is harder to get blood to the brain.

Let's change subjects: Let's talk about the commercialization of space. What I heard in Neal's and Larry's presentation is that yes, we could do these experiments on the ground, but we can get a better and more real product in space. We can telescope what happens over years into a very short period of time.

It can produce understanding on the gravity-deprivation disorders. Right now we see that they are reversible, but what about when they become irreversible. Instead of doing rats, we can begin to see the evolution and progression of the disorders before it happens. We can understand why it goes into the other side of the ledger which is irreversible.

In early development, mapping the pathways of the brain is done depending on your exposure to environmental factors. When you reach a state of development, in humans it's about 2 years and about 21 days in rats, there are permanent changes that are irreversible. Even in short exposure to space, but during the critical time, there were some permanent problems. If we can understand why this is then we could treat nervous disorders better.

Space enables us for the first time the gravity sensor. If we can understand the nature of the sensor we can develop nano-technology as replacement parts to implant in people who lose their ability to sense gravity, such as in spinal cord injuries.

In 1963, the U.S. population over age 65 was about 17 million people. In 2050, the count will be about 102 million. There is a movement in the young because they are deprived of the opportunities for physical activity. There are no PE classes in schools anymore except in Illinois. They spend much more time in front of TV, computers, video games.

There are many health benefits and commercial applications, so that we can stay healthy and independent. It would reduce the national medical cost burden. We could avoid nursing homes. We may not need them anymore. We might live longer, but it doesn't necessarily follow. We have no evidence about that yet. There are some well-characterized models for aging and it is not a difficult problem. The specimens can be housed in very small modules.

Some commercial applications include therapeutic gravity-devices which would benefit people with things that might benefit from higher gravity, such cerebral palsy, where brains need more stimulation for G's.

I foresee a gravity-enhancing behavior modification training industry. This could help you cope with stress. What activities can I reintroduce into my life that will help me stay gravity adaptable? Gravity can either be our enemy or our friend. And it's free.

There is some weight training already happening but the trainers don't know why putting weights on while exercising works. There could also be gravity gyms.

I read Popular Science and I am featured in one of their articles on the future about homemade centrifuges. There are a whole host of gravity devices. And they have to fun.

Be a child again. Go on a roller coaster. Dance. Jump on a trampoline for all ages suitably designed to stimulate gravity.

When we looked at why we weren't doing more in space we asked where the wheels come off the wagon. You can't get the stuff up, you can't get it to do what you want, you can't get it back down.

The first speaker we have is Gene Meyers who will bring the right people together to have the re-development of the space shuttle in order to create the right vehicle.

Gene Meyers - Space Island Group

I've seen a lot of things in my life and am not surprised by much. However, today my surprise is that the powerpoint didn't show up today. I'm not a rocket scientist. I worked as a VP of non-aerospace companies in industrial design. automotive, air bags in particular. My last position was with TRW.

This is a much larger scale project. You cannot reduce the cost of the tank but you can end up with another revenue stream that brings the shuttle to profitability. I left TRW a couple of years ago to explore this. We looked for corporate clients who could lease these interiors. What appealed to me about a shuttle-derived vehicle is that you have a good database of what it costs to build this. The costs are so high because the production rates are so low. This is a multi-billion dollar program and I'll show you where we can get the money to fund this. This the kind of tank that Mike Griffin is proposing.

This is the hydrogen tank which could be set up as a laboratory before launch. The whole structure is launched together and the two tanks are left in orbit and left up there. Part of it can return to earth and land on its own retro rockets. You don't have to fill the whole vehicle with fuel which means it can carry up to 25-30 people. We don't see a market for 2 or 3 of these but 5000 of these tanks over the next 20 years. If the tank is laying on its side, it's circumference would be about the size of this room and about 4 times the length of this building. You get 150K cubic feet. About half of this is for life support systems and other things we need. So you end up with about 75 compartments and lease each of them about $25 per cubic foot a day and recover all our launch costs within 9 months. If this was set up as a cargo carrier and we carried 100 tons to orbit, we'd get our revenues back after our second launch. We could carry people up for about no charge and rent out the spaces as a hotel suite or laboratory.

Another thing a manufacturer gets from this is that they could calculate what it would cost them to make their materials. They could make their materials for about $25/ounce. We haven't had a rush of companies getting on board the space station because NASA wanted to charge about $2500 per cubic foot per day and charge for the astronaut to make the observations.

You could run the experiment, take it to be measured both in the lab in space and send the results back to earth then run it again in a couple of hours as opposed to a couple of years that it takes on the space station.

About 6 months ago we fixated on solar powered satellites. The most expensive part is the launch. We could carry the materials to space and have them assembled in space at no cost except for the cost of the materials.

Instead of bringing this to the clients in the U.S. we've brought it to the government of India. Both India and China are the most desperate for energy right now. The state department just came on board. India uses about 2 trillion kilowatts of energy. If we sell in advance, we can get $2B. We're asking for 2% of it in advance which will give us enough for the construction and launch of the vehicle. We suggested to them also to contact the World Bank for help because they're very interested in getting them on board.

We were not going public with this information until November or December but we want the community here to know about this. We can join three of these external tanks into a straight line and three others here to create a cross. With this we would have about 50 stories. We could test humans and plants behave and react to 1 or 1.5 G to simulate the gravity on the moon in low earth orbit. These entire stations can be sent to earth's orbit. There are different section on our website with the stories and studies about these external tanks and the research facilities that can be contained within them.

One of the things that is true about our company is that we're small but rapidly growing in Mojave. We started about 5 and a half years ago. The CEO is a guy who used to work at Intel and taught him everything he knows about rocketry.

How do you create a small companies and keep it alive on a big idea, which is suborbital travel doing microgravity experiments. Business plans that don't work is "give me a billion dollars and I'll go do something." We want to do something in the real world so we want to do things that produce revenue. We'll take investment to move us a step further but we'll do some revenue-generating work. We're doing well right now, even paying health insurance for our employees besides paying them.

We develop technologies and people who can take us further down the road. I was the first investor and all our money has been raised from angels. It's hard to convince a VC funder to invest other people's money. There are very few groups that have taken money and produced an exit. Most of them get bought out by companies like Boeing. There are no comparisons with what we're doing, which makes it harder and will need people who are willing to invest their own funds.

Mostly people invest in the team. The best example of this is Yahoo. The reason they make money is that they're smart. You have to have a business plan that leads to a market that has sufficient size that the investor feels good. VCs do not invest in things that have less than $1B market. You got to have intermediate milestones and not the big bang.

We develop technologies that are useful to other people. There are resources available from government. There are small business incentive grants. Use these contracts to build technology that can be adapted by someone else which will help keep the lights on while you're getting the next investment.

Be open to any kind of offers. We had an interesting experience at Oshkosh in that we sold a rocket to a skywriter who wanted the rocket noise when he flew by the crowds.

You want to be doing fixed price contracts so you don't have to document all your costs. The private world sells like this. You want to buy a Makita drill you don't ask how much it costs and then give them 10% more. You buy it for whatever it's on sale for. If you're a government agency, and you want to develop small companies you don't ask what the costs are.

The big lesson of the X-Prize is that the company who won got the money first. A space product is something you can sell to billionaires. If you're thinking about prizes, they make a lot of sense in something smaller that is a breakthrough technology and can be leveraged a lot down the road. The NASA glove prize is a great example. Or an IVA suit. They are very expensive because there are not that many made and they're only used by the airforce and they don't care how much they cost.

Another cool thing to do is to take something that weighs 15kg and put it into orbit. If you had a way to demonstrate that, it would be a good source for a prize.

It has been a roller coaster ride and want to give you the evolving milestones of SpaceHab. After the explosion, we focused on developing payloads for research orbiters.

We raised about $25M dollars in both venture capital and debt capital even before any contracts with NASA or anyone else. We were spending money big time on our two single modules. Our first contract with NASA was a fixed price contract. Our first mission was FTS57 and was successful and have flown 19 successful missions since.

We began to look for companies to acquire and found one that provided expendable launch vehicles. We also acquired Johnson Engineering which provided mock-up services and astronaut training. This helped us diversify and increase our revenue.

Once NASA started creating missions back to Mir, we diversified more and added the integrated cargo palette family that flew its maiden voyage on the FTS170. We developed an international client based and successfully contracted research contracts in excess of $170M.

There were more accidents, the space station process is being curtailed, the shuttle being retired and so if we don't further diversify we will be in the Space Museum too.

We lost the prime Johnson Engineering contract as well as our most valuable asset. All coincidentally. Today we are better. Our balance sheet looks better to our investors. We have a positive cash flow. We are happy to be a part of NASA's exploration vision. We've announced APEX.

Looked at other missions besides Mir. We added cargo carriers, double modules, research modules. We developed international client base with other agencies. Our research mission contracts were in excess of $40 million. STS-107 (Columbia) happened and NASA changed missions again. We had to diversify after that. We lost a $100 million asset and a key contract. We had to drop our annual revenue targets. Right now we have positive cash flow and our balance sheet looks good. We just completed a contract with the office of exploration. We have 250 employees and we just announced a 2nd generation research module.

Without NASA's support we would not have survived the last 20 years. Commercialzation and privitizations are not the same. In privitization, government builds an asset and a private company runs it. We have the cost plus revenue model. There are low profit margins but high costs, so the profit is high. Commerical companies operate differently. They have to raise priviate capital, own and maintain their assets and that means taking a lot of risk. capital, performance and they require a gross 30-50% gross profit margin to satisfy investors. Explaining that to a government negotiation officer doesn't go over well. That's the difference between commercialization and privitization.

Your best customer can also be your worst competitor. Such as NASA. Even though NASA says do the most towards the commercialization of space there are many costs that are not built into this. The only marginal costs of using SpaceLab must be included in the costs of SpaceHab. We're on our 4th major contract with the government so we must be doing something right. I don't mean to pick unfairly on NASA, but just warning about the system and some of the things that need changing for all of us to be successful.

Factually, research experiments work done by private and public companies or universities work as well or better than government research.

SpaceHab is building our Apex system which is not dependent on the space shuttle. We're taking a lesson from our single and double module development and increasing up mass capabilities. What will go up on the shuttle will come down on the shuttle. We're going to develop a multitude of launch vehicles that support international missions. We'll get the mass to orbit, do the experiments and get the results home. This is our future. While you may see the SpaceHab module in the Smithsonian in 2011, you will not see SpaceHab employees because we will be working this system.

Of course you need access to space before the ability to have access from space. I give credit to a colleague from Ames for this title.

What has flown already is Corona which is film capsule. You have very little chance of doing the program today if you lost your first dozen. It had a civilian counterpart that flew bio experiments. The last components were donated to NASA-Ames about 20 years ago. The capsules are expensive and heavy and is an incomplete set so is unused. There was a lost satellite launch in the mid-80s.

More recently many planetary probes were successful. The COMET was lost in 1995 after the booster failed and never recovered. The Genesis capsule which had a failure in Utah looks remarkably like a flying saucer. I'm surprised people were brave enough to take a chance on it because of the way it looked. There was a design flaw in the gee-switch. Many times you can't test them appropriately. The chute ejection was difficult.

Some of the non-US capsules include Raduga, which means something like rainbow, also the ARD and IRDT, which failed during re-entry.

What Tether Applications has done is to create a tether reentry experiment vehicle (TREV). It was sized to fit through a small door. The protoflight capsules are about the size of a credit card. The real value comes from frequency of return. When you look at the basic advantages and disadvantages. I decided to see if I could do anything with 6 pounds. This is a softball-size capsule which is about as small as you can get, but we scaled up to the basketball-size.

The general thesis is that there is a good match. You can't trust new capsules or new boosters. You have a better chance of getting your payload back if it's a capsule that robust in design. If the launch fails and doesn't disintegrate your capsule, you may want to launch at a 51 degree parallel. It's just a matter of going a couple hundred miles off the coast to capture your capsule.

When you go for your deal, you want a free re-flight if it fails. This puts them between a rock and a hard place. Capsules are a key component for testing CEV because they don't have the costs associated with having manned operations.

There are some benefits form using capsules for biotechnology. You can reshuffle your payloads using capsules. You still have vertical walls which ease the access. You can have late and early access and you may want to do your integration with the shell and booster the day before the launch and then you may be able to have access within 2-4 hours. You can also get other services such as spin.

You can do an accurate enough re-entry for it to not blow up. We sent a video crew to Mexico to capture the blowup which happened just about where we expected. We do the world longest hammer throw off the coast of Baja.

We did a test as part of the SBIR.The avionics and the structure. The carbon phenolic, afterbody TPS, a lot of dynamics capture. If you can do cat and mouse by capturing then you can. The typical techniques involve damaging the chute. The soft mid-air recovery allows for reuse and ability capture things at different levels. This is probably about as soft as you're going to get, maybe even softer. T

Gliding chutes and GPS can improve ground safety. Tethers are ready for real jobs. The main lesson is that the tether is not the highest risk.

Anybody who has answers to these questions I have here which you will have access to on the website, please contact me.

The big issue that worries me is that the public side is little interested in frequency. The private side is. The public side is not interested in profit.

The throttle that controls frequency must be in the hands of the private party. If the shuttle launch rate is not under your control then you'll have trouble. Frequency is the blood and soul of this work.

i think this could be a viable business. I'm interested in helping a team instigate this business. The company who wants to be in space operations on a regular basis will be the one who will be successful. There is a certain disintegration or boutique services of ships. This may be where some of the specialization and functional operations are best tried out.

We have two parts to supplying the space station. 1) Launch vehicle. Systems are very expensive. Commercial, full cost basis is not realistic. 2) Robotic resupply vehicles.

Many launch vehicles have been done but not many proximity operations vehicles.Pilots are cheap and capable compared to robots. Congress pulled the plug on the OMV/OTV program. Russian "Progress" vehicle has been supplying for 30 years. Russians use a radar system to dock with the station. But no other hooks exist. French ATV (Automated Transfer Vehicle) has been in existence since 1988 but hasn't docked with the ISS. Japanese HTV vehicle was supposed to be arriving a couple years ago but development keeps getting pushed back. Every year the development gets pushed back by 14 months.

Vehicles from 3m apart took 6 months to dock. The target vehicle collided with the desination vehicle and the orbit was changed, as detected by NORAD.

We had 6 week target, but after 4-5 months the closest they were able to get was 1/2 kilometer and it was done from the ground, not autonomously. 900 million euros over budget (HTV). Costs are much higher for robotic as opposed to human. But you need a launch vehicle and a proximity vehicle. Can one company build that?

The analogue is transportation...same sized, standard containers can be moved around even if the pieces change. faster boats, ships, etc. But the pieces remain standardized.

The government should be anchor tenant of ISS. Providers of logistics should be commercial. We can use the analogue of FedEX. FedEx doesn't build planes, but uses them to connect customers. FedEx does not have a single large customer but makes money on volume and process efficiency.

It will have capacity for 7 day orbital expedition. Reliable re-entry mechanism, used by the russians today. Crew will outfit the tanks as habitats before launch. This would fulfill space tourism needs and is a perfectly sealed biological laboratory. It can take a protein crystal harvest into space.

Each launch takes one of the orbital containers to space and can build a linked private space station. We've done a variety of ocean tests. Neptune uses a floating launch. 3/4 submerged and then launched. It can be a true launch on demand. We can launch on a day's notice. We can move the rocket to any place on the ocean. Retrieval, rescue missions are all possible very quickly with our methods. Launching from the oceans means not launching near any population areas. There are many advantages to this model, especially the SeaStar version (subscale). The rocket engine in the movie Serenity is a 3000lb thrustable nitrogen rocket.

Q: How have you verifed its performance at high altitude?
A: Nozzle separation will tell us what the performance is and the flight test is at maximum thrust from the beginning so those tests will tell us.

Q: What is the customer base for APEX?
A: Nasa and international partners and there are interesting discussions with DoD. We expect them to be a repeat customers. We will be in the orbital carrier business, not in the launch business. They have to be technical and economically viable because if the launch costs $500 million and is risky, there will be no market for our products.

Q: Can you talk about the differences between land and sea based regulation?
A: The neptune can launch from land but spaceports cost a lot of money on frills that we don't need so launching from sea is much more affordable. Using proven technology and with some new materials. Low budge operation with readily available propellants. Regulation? We've had good experience with AST. Writing the launch license together. They were helpful in faciliating commercial space launch. We hold the license and we're working to get the license for the sea star.

Q:Venture capitals like to diversify. Have you thought about developing a ground based component to compleiment space as a way of diversifiying.
A: The sea star can provide low cost services to academic as a satellite service.

Q: What's happening on the foreign stage?
A: Impressed with the plans with the Indian space program. Their plans will knock your socks off. The russians can now fund their own programs because of the price of oil. The chinese don't expect to be a major player.

The government in India is very warm to space travel and a broad deep space background moreso than China and Russia.

Jim: There are two distinct markets for bio-tech launches. US and rest of the world. Difference between the two is ITAR. Tito had to go for US money and foreign expertise. ITAR slows down contact between US and non-US people. Who are you going after? Export and contact of technical information is an issue and non US business will go to non US customers even if US companies can deliver.

SpaceHab would sign up for seed projects for universities. Anti deficiency statute requires that gov't have money in escrow so can't put money against it because of annual budget pro process. Spacehab can seed customers but not if those customers can't budget for more than 1 year.

Private company can seed work in universities and would be interested in doing so.

Bruce: We have fifteen hundred automobile companies in the U.S., so who will be the winners in the aerospace. there is a lot to be gained by working together. there is a lot to be gained by working together to make this as a reality. Commercial space has spent over $1B so it's not easy. Kistler had to scale back and couldn't be here but they could be back.

Capital and Public Policy Panel

George French

My background is in politics. I started investing in aerospace companies about 15 years ago, mostly by investing in stocks, then as an angel investor and then as a major investor. I was one of the founders of the space council in Wisconsin. You may not know that Wisconsin has a coast. It's called Lake Michigan. This has given me an interesting perspective on the aerospace industry that only a person with ADD can (as my wife might say).

Over 30 years ago, we had gone to the moon six times and had a suborbital vehicle, the F16. I believe that Griffin would like to leave the space station and shuttle behind, gracefully. Griffin is a president with a new direction and NASA still has the same bureaucracy so it will be an interesting time.

In two years, we will have another presidential race. It may be a democrat, maybe even a woman. The new vice president will have significant influence over NASA. Space generally falls to this position. Cheney very quietly has run space. NASA is a completely political agency.

The direction in the next 10-15 years is in the suborbital market. We've heard a lot of discussion about this today. There is a market coming in satellite constellations. The current ones are getting old and the occupancy and capacity of these is getting eaten up.

If you have $600M you can make a lot of money in this world but not if you're waiting for someone to make a decision. The new space group includes very savvy people. It's a broad and solid base, such as XCOR, Virgin Galactic, SpaceHab, Constellations Services.

There are three or four companies that are vying for the market of getting people up about 62 miles. Some will take 3 or 4 hours to do this; some will take 1 hour to do this. People will ask where is the money in this.

We think by the end of this year between some of these companies we will probably book about $1M. That's not bad.

There have been a number of incentives that have come out. Such as the X-prize and Darpa put out a $1M contest. Robert Bigelow also offered $50M for a vehicle.

I have a couple of maps that show national and global spaceports. There is also a list of people here who have put up money to make space travel possible. If you add this all up that's a lot of money in anybody's business.

Where can we get enough time to do science in orbit? We only have two choices: free flying and space station. If you can attach free flyers to the Bigelow module, that would be a possibility, otherwise it will have to be the space station. The automatic docking systems become a showstopper if they're not better engineered.

There are several investment groups that have had numerous rounds of investors but many have gone bankrupt. Some of them get investors and then try to get a major contract.

A couple of models of how to do this. THere were the GEOs in telecommunications which were very successful. The LEOs were not as successful unless they had government funding.

If NASA was a business and went bankrupt and wanted to get out of it, how could they do that? They could cut their losses, put the space station up for auction. They could maybe get about $500M for it. They would have to buy off the government and their international partners. The Russians will be a continual player, but they have shown entrepreneurially expertise in that they take tourists up there, NASA won't.

You could get $2B committed for maybe 5 or 10 years. You could break that money up into the various expenses for the stations. You could do that for about $1B/year. You could let the owners generate their own revenue streams as well.

If NASA could do this, it could get out of the space station relatively easily.

JP Morgan has an $8B fund which is the largest in the world. It goes into movie theaters in Italy, oil wells in Chile, cell phone semiconductors. It would be fascinating for you to sit in on partner meetings. You would realize it's all about the return. The money is completely agnostic. That's not a good or a bad thing. It's just that VC's are very predictable. They don't show much sense of passion in specific areas.

I'm here because I do have passion for this topic. One of the biggest challenges of investing in space is that there is very little track record in successes. There are also a lot of risks. When you look at the issues of space, the threshold goes up. You really need a home run business plan in order to get the VC community, this means at least a $1B market. You need to show that it's real, that it is proven science and low government uncertainty. You need to have a great management team and to protect our competitive entry barriers.

Space will become a huge market and there is a lot of money to be made. What can we do as a group like this to make it happen. The four areas that need the most attention are space launch costs down to make it more affordable, we need to continue to improve the science, we need to find ways to distance entrepreneurial space from government, and make sure the IP is always protected.

What I say to you today comes through two filters. One is by what I understand of the perceptions of the people in the capital market. They like something you can touch, like real estate, oil and gas. When I mention space, their eyes are going to glaze over, want to talk about it over a beer, but not put their money there.

How do we drag them over? We need to present to them a reasonable side game. It's important to match the game with the investor. When you say to me space infrastructure, i see the federal government and I can't compete with them. When you say space tourism, I see the billionaires club and I can't compete with them. So for us, I think the focus needs to be in biotech.

The investment needs to be intuitively viable. If you look at Paul Allen and see that he invests $30M in order to win $10M, that's not a good investment. But if you look at Richard Branson and his offer to Burt Rhutan, that makes a lot more sense. Some of your ideas may be no more than packaging, but I think we can get to it.

If we're going to get some investments, we need to get government help. Most of your businesses have high barrier to entry because of the amount of money. The role of government may need to be to get this business to the break-even point. There is a way to do this that is good for everybody.

Who wants the job of managing the government? Dan Bland did a great job of speaking to this. If my investors see the government as an impediment to doing business, we're in trouble. We need to have multi-year commitments. The final people is the promote. You need somebody to help bring all the pieces together. This is the role for ACES. All the pieces are probably in this room right now but somebody has to bring it all together. When we get the agreement of the government, we go to the private sector and get them signed up. If we do this right, we're going to change the way government does business and that's exciting.

There is nothing magical to capital. When you go to a restaurant, you choose whether you want a big steak or a small one. Capital is boring. It is simply functional. NASA has a lot of value there, but the investors don't know it, the taxpayers don't see it.

I don't think someone here has to come with a business plan with a $1B market. It's the value that the mind shares.

What is the most experienced risk capital organization in the world, in terms of total risk and value? It is NASA. I think they have to see what they have done and look at the entrepreneurial spirit within it. You have the taxpayers willing to pay for your efforts. We are facing a new paradigm today so we have to employ new tools. You should be very proud of what you've done.

NASA Ames is the key to the new NASA with the way they have incorporated the Silicon Valley entrepreneurs.

I went to school back in Norway, and the NASA vision was the most inspiring. To improve life here, to extend life to there and to find life beyond. In order to fulfill this mission, it requires work with your international partners. Please be true to that vision.

In Europe, we trust NASA more than you guys do here. We're not so afraid of government. It can act bad, but it is not necessarily bad. There's a lot of trust with what NASA have done and how much risk they take on. If you can apply some of those attitudes with the new things you're trying to do, I think you have great potential.

Not to be critical, but it seems that there is a lot of confusion within NASA right now. You have to be true to your vision. I believe NASA and its leadership can bring together the right talent. You have this capacity inside. You probably have some of the brightest guys and it's unbelievable what you can do.

When you go into the commercial world, it should be done on your premises. I know that at the end of the day every business plans looks like this: you invest, you lose, you invest some more, and so on until there is a value at the other side, you hope.

There is no magic with business plans either. There has to be a value at the other side of the fence. They all start with a precise market assumption. It is not always dollars. Don't be fixated on the quantity. Figure out how to create value.

You cannot always know before you start. You have to bring different people to the table and you hope there will be a gain at the end. Keep building. You don't always know who's going to be the winner.

When you build something, you have three start-ups within one start-up. You build an organization, a product, and a market. In order to realize value you have to do this in parallel.

There is so much money there looking for opportunities, such as hedge fund, mutual funds, cross-over funds, just waiting for the right team from NASA saying "we have a plan." Money is boring. It is there. It is the least of your problems.

I tried to put together the Silicon Valley NASA model to scale it down into a small team that is trying to build something. You guys should have some advisors, some corporate partners. You need deal flow.

What I'm going to say next is not meant to be a political statement. Please understand it rightly. I believe space has tremendous opportunity. For every dollar spent in space explorations rather than defense forces and systems, you probably get more safety, homeland security, international acceptance for each dollar.

How can you hate a country that through space explorations fuels every child or senior curiosity not matter what religious belief or national origin. The world stands still during the ISS mission. It's like sports for us and is very exciting.

I must express that I think to consider about what this or that country is doing is not helpful in driving the direction. The U.S. space is more advanced than anyone else. It is time now to speed it up.

I feel that I must defend the government stance but I've worked on the other side so I understand the frustrations. The government wants to get out of the way of your businesses.

Dr. Griffin doesn't want to be in the business of choosing winners but rewarding them. They want to explore space, the moon, and Mars. When there are things that you want to do cheaper than they can do it. They are happy to step back and wash their hands from it. They'd rather get out of it. They don't want to put the taxpayers dollars at risk.

Congress wants nothing to do with this. They want to protect businesses from getting sued if they are accidents. The FAA will regulate commercial space travel for the next 8 years in order to keep NASA out of the way. The only place where the FAA should get involved is in death, injury or close calls.

The government will get involved if I start seeing big space billboards and instead of seeing bright golden sunshine, I see gigantic golden arches.

The one thing that government needs to do is to incentivise businesses. NASA's budget is being cut and will continue to be cut going forward. The space side of things is doing well if you look at it in comparison to say, the aeronautics side.

The government is not the enemy. They're trying to get out of the way, even though they might be tripping over themselves to do so.

Comment: I want to thank Petter for bringing a humanitarian aspect into what we're doing today.

Q: What are the regulations for international aircraft right now? The risks are typically far higher for commercial aircraft.
A: If you get certified by the U.S. government, then they take on the risk. If we get certified by AST or FAA, we can fly anywhere and the U.S. will cover us.

Q: I don't understand the marketshare. I see NASA as a major vested interest in the large aerospace companies and shuttle-derived everything. Keeping the big aerospace infrastructure going, backing out of R&D as fast as they can. I see space tourism as something the government not wanting to get into. The rest of it I don't see it as a real opportunity.
A: Government has forced the merger of most aerospace companies into two or three. They have a vested interest in making sure they are viable and funded.

Comment: While watching the shuttle, we heard the narrator talking about the 14 committees deciding whether or not they could take off or when they could fly again. NASA has grown to such a huge bureaucracy that the state cannot let go of this. Texas, Alabama, Florida have such a vested interest that they won't let it die. They'll have to kill all the bureaucrats first.

Q: To go against the agnostic view, one of the things I've heard about investors is that they like sizzle. Is there any sizzle in space? If you have an opportunity between dog food and space with the same ROI, will space get any perks because it's sexier?
A: No. Of course, there's the Bezos of the world, but with most investors, they're looking at numbers. Go through the rigor of writing a business plan even if you get angel investors. Sizzle will not make a successful business.

Q: What is the biggest impediment to the commecial space industry?
A: Part of it is regulatory and we've kind of cleared that hurdle recently. NASA is an approach/avoidance kind of thing. Sometimes they take a good idea and replicate and you can't compete with them. Investment money, technology, the ability to not have NASA in your market.

A: Let me draw some analogies between nanotechnology and space. It's a huge market and there are products that are very compelling. It's hard science to do in a high quality repeatable way at low cost. There is a lack of management teams who have done entrepreneurial work in these areas. There aren't a whole lot of people like George who have the intuition to do this kind of development.

Q: This morning we heard about universities that are funding projects. Are there intellectual property issues for a cmpany who goes through universities? If the research is at all diluted with federal funds will that be an issue?
A: Over the last 3 years, the state of California has put into place Science and Innovation. We started with that one third of the money came from the feds, one third from the state, and a third from private industry. They have worked out how this works and have come to very solid agreements. Now the industry investors are even more than a third and they're happy with the arrangement.

I bring greetings from Hawai'i. They're dealing with Katrina issues. Surprising until I understand that they meant it in regards to the price of gas. They are hosting a session of which we have information about in the foyer.

I invite you to continue to join us over the next couple of days. We will have an announcement of an opportunity that we will perhaps