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The R&D Tax Credit Aspects of Concussion Technology



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Concussion-Technology

        The Centers for Disease Control estimates that 1.6 to 3.8 million concussions occur each year, which is an all-time high for the United States.  It is also reported that the majority of fatal sports-related brain injuries occur in children 18 years old and younger, and that 47% of athletes do not report feeling a concussion’s symptoms.  Therefore, substantial new technology is being developed in an attempt to prevent concussions in younger athletes. Additionally, pharmaceutical treatments are being developed to mediate post-concussion symptoms. These new technologies experience a direct relationship with the increasing number of concussions reported per year. Now, companies can utilize research and development tax credits to support these innovative efforts. 
 

The Research & Development Tax Credit

        Enacted in 1981, the federal Research and Development (R&D) Tax Credit allows a credit of up to 13% of eligible spending for new and improved products and processes. Qualified research must meet the following four criteria:

  • New or improved products, processes, or software
  • Technological in nature
  • Elimination of Uncertainty
  • Process of Experimentation
 
        Eligible costs include employee wages, cost of supplies, cost of testing, contract research expenses, and costs associated with developing a patent.  On December 18, 2015, President Obama signed the bill making the R&D Tax Credit permanent. Beginning in 2016, the R&D credit can be used to offset Alternative Minimum tax and startup businesses can utilize the credit against payroll taxes.
 

Concussion Prevention Technologies

 
Reebok Checklight™
        Reebok teamed up with electronics design firm MC10, located in Boston, Massachusetts, to create a new monitor that detects significant head injuries. The "Checklight" is a black skullcap embedded with sensors to be worn beneath a helmet . The sensors are optimized to detect dangerous impacts. The tail end of the cap dangles just below the base of the helmet with a green LED light  which is the standard color of the Checklight. If the sensors detect a stronger impact, the light turns yellow or red.
 
        The device is lightweight and does not appear different from other skullcaps. Inside the cap is a thin, pliable band of sensors encased in a strip as thick as a stick of gum. The two most important sensors are an accelerometer, which measures linear motion, and a gyroscope, which detects rotational forces. As of now, the device does not have wireless capability. Therefore, to retrieve data, it needs to be plugged into a smartphone, tablet, or computer.
 
        The device went on sale in July, 2013 at a retail price of $150. The benefits of Checklight were demonstrated when a 13 year old football player tackled a quarterback. He felt no pain other than a "slight buzz" in the head. The Checklight flashed yellow, so he was taken out of the game. Moments later, he began experiencing concussion symptoms. Without the Checklight, this player most likely would continue the game, thus worsening his injuries.
 
 Jolt Sensor
        Ben Harvatine, a former wrestler at MIT in Cambridge, Massachusetts, created the Jolt Sensor. Harvatine suffered many concussions during wrestling practices. These concussions went unnoticed until he began suffering additional, unusual impacts. In response, Harvatine constructed a wearable sensor  that allows parents and coaches to examine head trauma from different impacts.
 
        Jolt is a strong and flexible aftermarket clip that can be attached to any athletic equipment, including helmets, headbands, and goggles. This versitality helps it accomodate to many sports, including those that do not require helmets. Jolt is charged via a micro USB charger, and its full charge lasts over two weeks. The sensor retails at $99 and can connect to iPhone and Android apps  via Low-Energy Bluetooth technology. This way, a parent can receive wireless alerts to his phone with notifications about his child’s condition in real-time.
 
Riddell SpeedFlex & InSite Impact Response System
        The most common injury incurred by a football player is a concussion.  Especially in recent years, thousands of former professional football players with diseases including dementia, Alzheimers, Parkinsons, and various brain disorders sued the NFL, claiming they knew about the long-term health risks associated with brain trauma during football games. Riddell helmets develop a new technology to incorporate sensors in helmets to reduce concussions.
 
        Last season, two-thirds of NFL players wore Riddell helmets to better track concussions. Their SpeedFlex helmet is designed to disperse energy to reduce the risk of trauma. Its InSite Impact Response System software alerts coaches when a player suffers a significant hit to the head. The sensor inside the helmet uses the InSite Impact Response System software to measure HITsp. HITsp is a head-impact metric that encompasses how violently a player's head moves after contact, impact duration, and location. Similar to the Jolt Sensor, if the impact falls outside an acceptable range, the sensor issues a wireless alert to bereceived by a coach or other staff member.
 
 FITGuard™
        Force Impact Technologies and i1 Biometrics developed mouthguards to help prevent and alert coaches and players about potential head traumas. Force Impact Technologies is co-founded by Anthony Gonzales, a former rugby player, and Bob Merriman. They developed the FITGuard, a mouthguard with LED lights that alert players about their condition.
 
        The LEDs are programmed to flash green, blue, or red. The color changes depending on impact. Red indicates severe impact while green indicates low impact. If the impact is not dangerous, the mouth guard remains blue. The device can also connect to a mobile device  via Bluetooth. Users can input their information and track data. The mouthguard stores data from impacts and moves it into a cloud. The FITGuard comes with a rechargeable case and is currently sold for $99.ii
 
 Vector Mouthguard
        i1 Biometrics developed the Vector MouthGuard to measure intracranial impact data and accelerations that a player's brain experiences during playtime. The mouthguard connects to a smartphone or laptop to give real-time notifications to the user. The software in the mouthguard indicates the location and severity of each hit. It also displays patterns  that coaches can track to prevent further injuries to the players. Major division sport universities, such as Louisiana State University in Baton Rouge, Louisiana and The University of Kansas in Lawrence, Kansas, already implement the Vector MouthGuard.  It is expected that more universities will follow this trend to ensure the safety of their athletes.
 

Magnet Technology

        Raymond Colello, a professor at Virginia Commonwealth University School of Medicine in Richmond, Virginia, developed an alternative solution to prevent brain injury. Rather than using a sensor to detect brain trauma, Colello's method consists of putting magnets on the outside of football helmets as a type of force field. Since magnets have a repulsive force, Colello acquired one of the strongest magents commercially available and found it was ideal for short range applications. 
 
        The magnet is comprised of a rare earth element called Neodymium, which can lift up to 600 lbs and repulse up to 130 lbs of force starting at 1.5 inches away. Colello’s design consisted of thin, curved magnets that can be modified and placed inside the polycarbonate shell of a helmet in high impact areas—mostly the front and sides.
 
        The magnets weigh approximately one-third to half a pound each. Therefore, the amount of magnets put on the helmet must be retrofitted to comply with regulation. Using magnets is a unique and different approach to preventing major head injury. It can better prevent brain damages to athletes.
 

Concussion Tracking

        NYU Langone Medical Center in New York City released a new study for an eye tracking method that enhances diagnosis of concussion severity, enables testing of diagnostics and therapeutics, and helps asses recovery. The technology was developed by Dr. Samadani, an assistant professor in the Departments of Neurosurgery, Psychiatry, Neuroscience, and Physiology at NYU Langone.
 
        As part of the study, patients watched a music video for 220 seconds while their eye movements were tracked via a camera. They tested the system on 255 subjects. 8 of them had concussions. The system found that 7 of the 8 had 88% accuracy rate in the eye tracking test. The biggest challenge, according to Dr. Samadani, for any technology is a biomarker that defines a concussion. It was noted, however, that eye tracking technology can overcome this challenge, because "of its objective appraisal of a complicated process of coordination that may be impaired."
 
        Concussions are the most common form of truamatic brain injuries. The study indicated that approximately 90% of concussion patients demonstrate dysfunction in eye movement. Consequently, eye tracking technology is a better, non-invasive technique that can more easily track concussions.
 

Concussion Treatment Technologies

        Dr. Jacob Vanlandingham, associated with the University of Florida and Florida State University, developed a new concussion treatment with his company Prevacus. The treatment is administered nasally, which allows the drug to reach brain-injured sites. The drug starts treating the injury at the moment of impact by reducing swelling, inflammation, and oxidative stress. This facilitates a player to recover faster. Brett Favre, former quarterback for the Green Bay Packers, endorsed this novel treatment. The drug can be of great benefit in concussion treatment because of its proactive and speedy approach. 
 
        Recently, the National Football League Players Association, National Institutes of Health, and Alzheimer's Association funded research into an experimental pill for concussion treatment. The treatment was experimented on mice  that sustained severe concussions. The pill is supposed to restore normal brain structure and function in the mice. Kun Ping Lu, a professor of medicine at Harvard Medical School in Cambridge, Massachusetts, led the research. He found that brains of people suffering from chronic traumatic encephalopathy (CTE) are characterized by fibrous tangles of a protein called tau. CTE is a degenerative disease linked to concussions. It is also commonly found in professional athletes. The researchers indicate that the misshapen form of tau appearing in the brain after a blow to the head can be eliminated by a protein that binds to the misshapen tau and marks it for destruction.
 
        The end goal is to "humanize" the antibody currently made for the mice so the drug can deter brain damage and prevent chronic traumatic encephalopathy after traumatic brain injuries. The drug may also address tau-related pathologies that characterize Alzheimers and other neurodegenerative disorders.
 
        Dr. James Lechleiter, a professor of cellular and structural biology at the UT Health Science Center in San Antonio, Texas, also researched a concussion pill. The medication is intended for players to consume after a blow to the head to prevent brain damage from developing. Through his research, Lechleiter discovered a class of compounds called astrocytes, which protects neurons in the brain after a traumatic brain injury.
 
        The medication stimulates the astrocytes in the brain to stop further injury. It should be administered immediately after suffering the injury to prevent long-term brain damage. Lechleiter states, "One of the greatest injuries after a trauma is increased swelling also known as a brain edema. It turns out that the astrocyte is a very important cell type to control that swelling". The drug is currently undergoing early testing and clinical trials. Lechleiter hopes it will hit the market within the next five years.


Concussion Research

        General Electric (GE) and the National Football League (NFL) teamed up to donate $3 million to six studies or organizations conducting research to identify concussions and its treatment. Each winner will receive $500,000 to continue research efforts.
 
        Three of the winning projects include Banyan Biomarkers Inc. of San Diego, California, the University of Montana, Missoula, and Quanterix of Lexington Massachusetts. These three are examining blood for biomarkers that detect different characteristics of a concussion. The other three winners, BrainScope Company Inc. in Bethesda, Maryland, Medical College of Wisconsin, Milwaukee, and the University of California, Santa Barbara, are focusing efforts on neuroimaging tools and EEG-based traumatic brain injury.
 

Conclusion

        As development for concussion technologies continues to grow, research and development is continuously being funded to facilitate preventing and treating concussions. Federal and state tax credits are available to support the innovative efforts in concussion technology.

Article Citation List

   


Authors

Charles R Goulding Attorney/CPA, is the President of R&D Tax Savers.

Jennifer Reardon is a Project Coordinator with R&D Tax Savers.

Lauren Chin is a Tax Analyst at R&D Tax Savers.


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