Forum Summary: Commercial Opportunities in Space (October 5 - 7, 2005)

Good morning. I want to clarify that we are trying to make ACES a national program. This is not a California forum just because we're holding it here. We have national representatives from New York and Texas present here and we want it to expand. To make this work, it has to be a national program. It can't be just one company. We need to have diversity. We need to have different voices. Now that it's Friday, take the ties off and let's get some work done. Let's see what we can do together for the next steps. let's make this a productive day.

Did anyone have interesting dreams last night? I dreamt of being in a big bubble with white fizz and rolling around. Over night we have incubation of ideas and that may have gone on last night.

We're going to continue working the exercises we did yesterday but we're going to combine the teams. You'll synthesize the work of the teams and then we'll have a report to the whole group from the four combined teams.

We picked the items from the four quadrants and tried to put them in a high or low ROI and availability access. We translated those into an area and saw the baseline as low ROI and low access. We want to move into high ROI and high access. We may have to run through the other two quadrants before we get there.

We want to stay out of the death zone which is consolidation. We listed what we thought were strategies that work in the 3 quadrants we're willing to stay in. We were given a free space. This morning we coalesced the strategies into three. The business plan is know what you're going after and understand the customer. You need an exit strategy for your customers and yourself. We believe the government should encourage and not inhibit commercial space.

We should give credit for skin in the game. They should purchase services and not products. NASA could invest in the demand side.

Q: Did anything come up about how to fund human capital development? It's a funding issue and if it's not integral to any business plan it won't happen.
A: We didn't talk about that. We talked about making the flights available to the schools. If you do things that are exciting and good, people will want to be involved. I'll add that to the board. Every business plan must include this.

We had to make a lot of assumptions that got challenged when we combined the two teams.

When you're a business who tries to do everything you generally fail. We realized that we're talking about the mainstream business. In our pretend company for which we did the strategies we make Glob. It's made on earth, but someone has found that you can make it better and purer in space. We take an existing product with existing demand but it can be done better in space. We sell this upstream to medical companies. We don't do anything to make it into a drug or a supplement. We have traditional customers. We're not creating new customers. We recognize our basic partners. We need a terrestrial supplier of something similar.

We need launch services as a partner in order to get better deals from them. We looked at vendors and we have to make sure that we're not held hostage to any single supplier. Our competitors are the terrestrial makers of Glob. We have some critical technologies. We utilize them but we don't try to control them. We worry about it because the terrestrial processes always get better. That's why need a partner who does similar stuff on the ground.

Some of the technology doesn't change very fast, like the launch and return. Terrestrial processing is extremely fast.

We need strategies to be a successful business. We need reasonable R&D investment We partner with similar research interests. Because things change so fast, our Glob is probably not going to be necessary for very long. We have an existing customer base and we can test a lot of things in microgravity to prove the concept before we make the biggest investments.

Our entry barriers are getting a launch provider. Maybe we can pre-sell some orders of our Glob. We need some entry strategies. Since we're the first ones out there that will help, but we also need an incredible team, get vendors involved, establish the right board,

We decided this is commercials space forum opportunities. We wondered if it is a question of intelligent design or perhaps we should just go for the big bang theory.

This is all about advocacy and promotion. We listed what the group does, who does it, when, and how they do it. We also listed what problems might crop up. ACES as a leadership organization should focus on two primary areas, as an advocacy group and as a broker.

We had some antics with semantics. Education and outreach is what we do to everybody and tell them how wonderful space is. We also want to go to the biotech and aerospace companies and tell them what's available in space. We need to get these industries to support us in our goals We need to also go to politically powerful organizations to get their support.

The research partnership centers are in existence and they are university based and have a number of powerful corporate affiliates. Some of them are restricted and some are not.

What about the media, such as PBS or the Discovery Channel? This could be very effective. We also need the internet. Google is right here. Maybe we could brainstorm with them about some collaboration.

Existing commercial businesses know how to promote. Emerging business could be a good partner. The Silicon Valley Space Club and others like that would be valuable partners. As well as local area economic development agencies and chambers of commerce are also a good source.

RPC's cannot lobby but some of their partners can. They all need to know what we do and what we need.

There is also a Japanese-US forum (JUSTAP) that works on coming up with ideas about space. They promote research and benefits both countries.

The last thing ACES needs to do is to develop the standards but we can raise issues about them. We could call ourselves a trade organization but we didn't think that was necessarily appropriate.

Education and outreach is essential after we have a story to tell. When we have something to sell and preach then let's get out there. There is work to be done today. ACES cannot be a gate. It can be a resource to encourage the market.

We need an organization that takes over the administrative responsibilities. We're well on the way with the vision statement and we should get that out as soon as possible.

NASA needs to like us and we need to have a cooperative relationship. We need to define our domains right off the bat.

Q: Did you have any international perspective?
A: WE need to focus on one thing first which is to establish a national collaboration and then expand. If we could get scholarships at the university level then the advocacy of the leadership of this group would help this area. They also provide a customer base that we wouldn't normally expect.

We had a really interesting discussion and saw things that had potential for the future and chose two of them. We decided we work through in a flow to make these happen. Who are the people who need space? We don't really know, so we need to identify the customers. We need to find out what the critical success factors are when they go to space.

To make it happen, we need seed funding so then we need a plan. We'll talk to potential customers and allies. If we took the pharma industry, there is a spin-off from SRI whose sole role is to reduce the time of getting a drug to market.

We also need independent verification. Several of us are novices here and we need an outside point of view. To make this happen we need to get some small successes and deliver milestones.

We identified some dates when we can have some of these bits finished, perhaps even by the meeting in January.

Do we have to go to space for every protein? Supposing that we get so good at doing it here that we may not have to go back to space. So we need to have other options.

One category of tourist might be scientists on sabbatical just so they can play. We need to encourage scientists to go into a jaw-dropping environment just to see what's possible.

We need allies and catalysts. There are people who will do this with or without us. People like Branson is going off and doing this. Can we involve this?

To make this happen, we need funding, government as a catalyst, users, and suppliers. To get the government behind us is to answer what's in it for them and for other people who we want them to get involved. No funder will take us seriously unless we nail down our intellectual property.

There is a little editorial. We need low cost access to space. If you were to take a census and find out how many people are involved with low cost access to space, you'd find that it was minimal.

We looked only at the negative side. The positive speaks for itself. We need clear simple regulatory environment. Seem that the FAA is already doing a good job with it. They've come up with a wonderful new permit system for launches.

Airspace for launch without having to pay range fees. In New mexico, they are recruiting heavily in Los Cruces. Can you fly east from there over White Sands? We don't know but it's probably no.

The third party liability insurance is a big issue. The FAA, which is part of the DOT, mandates having it but they don't mandate that it be available. A more suitable analogy might be nuclear power plants where you have to cover it up to a point and then the government covers the rest.

Let's just say that insurance is an issue and we need to deal with it.

The cost of licenses are a barrier. When Mojave applies for it, it will be problematic. Space vario has not been done.

Looking at biotech which also include crystallography, there is a phase in here that we need to define products for real. We need to see what the economic impact is. One of every seven dollars for healthcare is spent on diabetes. Limbloss and dialysis are also a problem of diabetes.

We have to find the money here that we can actually use to do the proofs of concept. THis is where there is the greatest shortfall. Once you can do this and get a flagship proof of concept, you can define requirements, get the alignment of intellectual property and see how we're going to acquire the various things we need in order to do that. This will allow us to negotiate. At this stage we're willing to partner with anybody.

We may have some legal and insurance aspects to take care of. We need to get a proof of concept that deserves a business plan. Then the real fine money comes in.

We need to execute the product development and then sell lots of stuff.

When we looked at protein crystal growth, we think it's done. There's an infrastructure in place. That doesn't need to be worked. But now we need to put the building on it to create a place to showcase it. We don't need to sell crystals, but sell high resolution drug design. We now have taken the drug design to a new level and higher level of specificity. There is prospect of few side effects. If we have high volume throughput, we can chase the dragon, which is the resistance to the drug, whether by microbes or by the disease process. It's a continuing business.

When you look at biotech generically, we need a flagship portfolio and we're not at the level of proof of concept yet. We can't give the biological equivalent. All we have are the observations.

I see two things emerging as leads. These are things that you can sell inside and outside the science market. This would need no FDA approval. You have a longer lead with pharmaceuticals.

THe kinds of stuff that would come through are smallish. THere all sorts of things that have been done. We need to get a good assessment of this. We have seen conifer cells and put them in the bioreactor and they create taxins, which is used for chemotherapy. We could also include vaccines, antibiotics, and other chemotherapeutic drugs. Some of the are secretory. Bacteria do the same thing. There is good research behind this at MIT and we now know that without the gravity conditions there are different kinds of development. We don't know if the same group of organisms when they're on the ground might not make sauerkraut.

There is currently in process an initiative from the U.S. Health Service that is in the hundreds of millions dollars in regenerative medicine. Instead of doing prostheses, you would end up with replacement of the original organ.

There are a number of sensors that look at physical forces. Stem cell research is not trivial. Going into space, they are quite responsive.

We could also develop extra-corporeal support devices to support patients while they wait for a transplant.

Once a mutation occurs, 99.9% of them are lethal to the cell. They don't become tumors or anything else. Of the ones that survive, what happens in a microgravity environment is highly virulent.

I ask students this: would you choose to be infected with a staph virus from something i find in a dumpster behind KFC or one from a hospital. Always pick the one from the dumpster. The ones that survive in the other environment are always way more virulent. THere's already a name for it: MRSA.

When you talk about growing our portfolio, you don't need a lot of human tending.

Team 3 - Communication to the Government about Commercialization
(Sean Casey, Ken Cox, Don Smith, Jim Grady, Allan DeLuna, Francine Gordon, Ryan Ishizu, Mark Newfield, Phil Smith, Don Smith)

We started by listing the organizations we have to talk to. It is not an exhaustive list. We then looked at what we want to do. We need to define commercial space, then determine what we want from the government. We want to focus on what we want that enables us to have successful commercial opportunities in space.

We want to get prioritized servicing of space station. Create markets for private industry. Waive some requirements. There are so many agencies without a lot of experience will get lost in the maze. The idea is to think about what we want and not to complain. We need to ask for specifics and have priorities.

Then we need to figure out which agencies and who within the agencies. We might get an initial hit and find someone who is on our side in this. As we get this clear, there needs to be a common message that everyone gets.

I would like to give Dan Bland some credit. He made a suggestion to NASA to go back to where they hit up the commercialization part. I'm going to hit up the old NASA types to find out what worked and what didn't.

We were working on the action plan for a fair broker. One of the things we noticed is that we need more leadership structure and have it more formalized so everyone knows what's going on. We need to figure out who the core membership is. We need a steering committee for ACES. We need to bio's up on the website by the first of next month. We volunteered Phil for that.

We'd like to create an online survey to find out some additional information. We need to pin this down and then codify it.

• What should ACES do and be?
• What is in it for your organization?
• What can you bring to the table?

We've assigned two people for this and email out in the next couple of weeks.

There are 4 categories that we thought ACES should focus: fair broker, advocacy, and outreach. We should define working groups that go out to different conferences and bring back the information. Over the next month or two, let's flesh out these working groups and decide who will chair these and the communication flow. We should also base the next meeting on the work of these groups.

This has been excellent in getting a foundation and now it's time to take the next steps.

We need to define two case studies by the next session. We suggest cell biology and protein crystallography. Larry DeLucas has offered to do the latter by next time.

Let's figure out who is in the department of commerce that we need to be speaking to. They are very eager to help here.

For ACES we want to catalysis, collaboration and communication. Catalysis has the highest area for payoff. It's the most unique. It is the fair broker bit.

Q: What's the vision of the group in terms of what ACES is for you?
A: It is the organizer of the communication in the industry. They take the needs and work with groups outside. A place where you bring together the demand and supply. We have a vision and mission statement that we can put up as a strawman and have people comment on it.

We took on the challenge of other industries. We had an objective to get to an action plan. In the 13 areas of activities in space and collapsed them to 10 and built a matrix of how they relate. For example, we looked at how energy providers relates to tourism.

The intent was to identify those activities that come first in time and would be synergistic. This way we could build an action plan about what we could go after first.

The general principle of what we came up with is that if NASA does buy space on the Falcon or spaceship 2, they should say that they're prepared to buy flights on the launches we need. NASA needs to not to pick winners. Also, they must not start a program where they depend on the Falcon and kill everybody else.

We need to determine a selection of how we choose payloads. If we go with education, they have a process which includes peer review. Commercial payloads are more difficult because you can't have peer review. It's impossible because of competition. As soon as a peer knows what is happening, they will try to do outdo it. So we need some other mechanism. It has to be capital. We've determined that the final selection should be an auction process and the user should pay something. We could ask for bids for flying.

Another issue which we don't have a good handle on is the payload. We considered having a common bus for payload. If you just go once then the requirements for payload, such as power and reentry, should be the responsibility of the payload owner. If you want to do 50 of them over time, we should develop a common bus. Then we could work out what sort of power and such and have it available as a matter of course. Providing a common bus might be able to be paid for by the auction. A builder of a common bus might be a payload aggregator. This way a lot of different people may be able to get on the flight.

The point is that it is a lot more complicated than it appears at first sight to work out all the details. We'd like to see how can NASA provide a launch at a low cost and not necessarily at no cost.

As far as the worthwhileness of being in the suborbital for 3-5 minutes, the answer is yes. The biotech people don't necessarily find it that useful but they are not the only community. If there is a way to make it longer, that would be useful.

There is still the question of the environment that needs to be determined. They need to carry a suborbital package on a current flight they have right now. NASA should publish microgravity data for their vehicle. That would be very helpful. If NASA is paying for that data, they should require it be published.

One of the reason we're favoring an auction process, is that NASA will run into a legal situation if they fly products that have competition. It might show that the government takes favorites.

To this question of whether this offer should be limited to biotech or not, we had a resounding 'no'. Given the specs they are not even that interested.

The flight on the Falcon is certainly worth pursuing. Commercial enterprises can get some experience. Once again, there are issues about how frequently they fly. The clearer NASA can be about that the better. The people who want 5 small flights instead of 1 large flight, might pay a different price and make it worth the difference. Should that offer extended, then it should be offered to everyone.

If we use an auction process, we have to understand that we're not making a judgment about the content of the payload. NASA cannot make judgments about it. If you want to carry 5 bodies up there, that would be up to the people who choose to go.

If there needs to be recovery, then it needs to be up to the users. That's not up to NASA. If there is recovery it can become a specification of the common bus. Right now we don't know what's needed. We need an RFI to the user-community to find out what we need, such as the telemetry requirements.

I don't know how to boil this all down, but there is quite a bit of work that still needs to be done to know if we can fly.

Because the government is paying for these flights, I think there should be one sorting piece that deals with public welfare. If there is a possibility for a major public benefit that should be investigated. If it's entirely commercial then it could go on the auction.

If you go to the educational side, then the results are public, but on the commercial side, the IP will be retained by the company.

On the commercial side you cannot specify anything, except for safety.

If the government is funding it, it seems unfair to have an auction because it would lean towards only those who could afford it. Maybe a lottery would be better.

If the government is paying for the booster, but a private company paying the rest, then maybe another option is that for an auction, you could sell tickets to raise the money. That way smaller companies could get involved. Or if you have a lottery, then small companies might be able to play.

It must be understood that the government is using this opportunity to develop the pathway for commercialization. It won't continue to offer free launches.

We had a rich discussion on this topic, on the Falcon side we'll make the best use of it. But a one shot on the Falcon will not help the launch industry or many of the other industry. We need more learning cycles.

We want to tell Brant that we love this opportunity, but we need to get to a tipping point. We need frequency without much of a spec. You might even get private capital to subsidize it. From a user and VC perspective, you want to deal with the idea of follow-on finance risk. With one flight, you'll get something done, but not enough for something sustainable. If you get 4 or 5 of these, you might get enough users and develop enough cycles to get a sustainable business.

One of the objections is about what NASA thinks of the business idea. We all understand that if you're going to get to space, you're going to cross paths with NASA. This is a time when NASA is offering something to us. If we can make the most of this offer, it might be a good first step.

If you put yourself behind a one flight Falcon, there are a lot of downsides because you won't be able to produce anything substantial.

Then what if we make it available to a nonprofit and keep it out of the commercial side?

Brant is working with a lot of people who don't want commercial opportunities. He has put out his neck a lot to get this. It might be advisable for us to take advantage of it.

Yes, let's go forward with this opportunity and set the expectations. Acknowledge that this is the first step in a program plan. The overall plan can only succeed if these steps are taken. We need to manage expectations so that this is a positive experience.

Let's say to Brant that we're eager to use the first launch they've bought but tell him what the problems are. I don't think we can bring a simple answer to this.

I'd like to recommend that we ask for at least 5 successful launches, not just 5 launches and that the terms for the launches include free re-flight.

We talked about that we cannot have anyone go forward unless this is a basis for commercial space. This orbital and suborbital industries don't exist yet. We can't know that they're going to be successful.

We need to recognize that Brant is trying to incubate commercial space. He might not be able to incubate both the payload and launch vehicle side. He may have some opposing needs and drives.

NASA must not pick winners in the launch vehicle or the commercial side.

They might be more successful if you specify payload and put them out there. A microlauncher will not put up 1k pounds. So even with that information there is already a selection. I'm not sure you can do this arbitrarily. The RFI must come first. They may be specify no microlaunchers.

Rather than wait for the government to put the RFI out, why don't we put a blog out, put all the concerns out there and get comments back. Then the government doesn't find out later in the process that there was some miswording. We could take a proactive stand and get ahead of the game.

The worst thing that could happen is that 15 voices start giving different solutions. That would be the perfect opportunity to do absolutely nothing.

I'd like to hear from all over the country on how we should do the selection.

Getting away from micromanaging the RFI issue, we might not have cheap access to space in the next 3-5 years. If U.S. providers don't arise today, then we may not have another opportunity. If they all fail, the experiments are going to move offshore. The train has left the station, the question is where is it going to go. We can have a say in that.

You might ask who writes the RFPs. I can tell you that it's whoever walks into the office at the wrong time. One thing that would help NASA is to have good information on how to write these things.

How many people think that ACES should write it? Who is leading this effort? Right now it's Phil. But as you see from the hands up in this room, he also has a lot of volunteers to help now.

We're going to use your collective experience and we want to use this as a focal point. We want our community to see all your ideas. We will not pre-judge by what the government or end users want to see. We'll put up our query on the website by the first of the month. We'd have almost 30 days to get input and then they'll have access to it.

I wrote 7 RFPs and I can tell you that you look out to the community to get help. Brant doesn't have help. It will be someone who doesn't know the community. If we do what you just suggested in the next couple of weeks, it will become the document that is used to go forward.

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Langdon: I'd like to thank you all for the hard work you let me push you towards. I also want to thank Deb and Dana for all the support in getting the conference pulled all together.

Phil: I also want to thank InnovationLabs for pulling this off and capturing the work.

Bruce: I want to thank all of you for participating because this is how we're going to make things happen.

Phil: There is a broad team of individuals who are going to carry this forward. We're going to sit down and filter through all of your good ideas.

• We want the survey for the purpose and structure of ACES.
• We want to get some RFI input back to Brant.
• We want to create a board of directors.
• We'd also like to have the working groups get busy in the next couple of months and have some results ready for the next meeting.

Whoever wants to be an active part of this, let me know. We're going to drive to the next forum and get this done. Maybe we should meet in DC.

I was given the opportunity to come in to ACES about 3 months ago. In that time, I've gotten to know individuals and the market, and we've been able to put something together in a very short time.

We also appreciate that Dr. Pellis was willing to accept the award from ACES in order to take this work further also. The people who are involved in this are so passionate about the work that even if you take their paychecks away, they keep going.

So thank you all and hopefully we'll see you all next time.