The R&D Tax Credit Aspects of Cryogenics
Cryogenics
Recent developments in cryogenics research
have shed light on a promising duet: low temperature, high
performance. Capable of modifying the physical properties of
various materials, preserving living systems, and controlling
temperature during a wide range of industrial processes,
cryogenic systems can serve as the basis for innovation in a
virtually unlimited number of areas. The present article will
discuss the potential applications of extremely low
temperatures and present the R&D tax credit opportunities
available for companies investing in cryogenics.
The Research &
Development Tax Credit
Enacted in 1981, the Federal Research and
Development (R&D) Tax Credit allows a credit of up to 13
percent 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 $250,000 per year in payroll taxes.
Cryogenic Research
& Cryopreservation
Cryogenics is the science that studies the
production and application of very low temperatures. Cryogenic
temperatures are significantly lower than those normally
experienced in everyday physical events, usually ranging from
-238°F to absolute zero, or approximately -460°F - a
theoretical temperature at which molecules reach their lowest
energy state.
Temperature reduction has two contradictory effects. On the
one hand, there is a decline in the rate of deterioration of
biological systems. On the other hand, however, there is an
increase in their rate of destruction, as the same systems
lose their abilities to sustain self-maintenance functions.
Designed for surviving at higher temperatures, living systems
are susceptible to low-temperature injuries, which can include
phase changes in membrane lipids or cold-induced protein
denaturation. These kinds of destructive effects are limited
to a range of hazardous subzero temperatures, variable to each
system, beyond which preservation effects predominate.
Cryobiological preservation technologies aim to limit the
damaging effects of low temperatures during cooling as a means
to letting the protective effects of even lower temperatures
to prevail.
In
other words, cryogenics intends to explore the benefits of low
temperatures while protecting cells from freezing and thawing
damage. It does so through a process called vitrification,
which is based on the fact that temperature is a measure of
internal energy in physical systems and indicates the
intensity of molecular motion. In most systems, reduced
temperatures are accompanied by decreased molecular mobility,
which leads to solidification. Other systems, however, do not
experience solidification even at extremely low temperatures.
Instead, they loose fluidity through a process called
vitrification and become “solid liquids”, also known as
“glasses”. After reaching glass-transition temperatures, these
systems remain liquid but their molecular arrangements stay
virtually unchanged.
In
systems that do not vitrify naturally, the process is made
possible by an extremely fast drop in temperature combined
with high concentrations of cryoprotective agents, as
explained by Fontana, California-based 21st Century Medicine
(21CM): “When a cell is permeated by cryoprotectants in
concentrations high enough to allow for vitrification, all of
the cell’s molecular constituents become locked into the glass
as it forms and therefore become unable to change over time.”
Vitrification is key to avoiding the potential damages of ice
formation, as it allows water, which normally freezes, to
vitrify. It is a well-known fact that water expands when it
freezes. This gain in volume can have several damaging
consequences to adjacent tissues, such as the mechanical
disruption of extracellular structures. Since most living
systems contain water, preventing ice formation is crucial to
taking advantage of the protective effects of low temperatures
while preserving the system’s viability.
Cryopreservation is
already used for some medical purposes, including the
preservation of sperm, red blood cells, and even early-stage
embryos. Future applications could revolutionize the worlds of
drug discovery and organ transplantation, as discussed below:
Cryopreservation and Drug
Development
For biopharmaceutical companies, cryopreserved tissues can
extend the viable period in which to test investigational
treatments. Cryopreservation technology is particularly
helpful when it comes to absorption, distribution, metabolism,
excretion (ADME), and toxicology studies, which are used to
define how a drug compound interacts with the body. So-called
ADME/Toxicology profiles are traditionally constructed using
any number of in vitro and in vivo model systems, which are
generally unstable, expensive, poorly preserved, and unfit to
be kept in inventory. Even though billions of dollars are
spent in ADME/Toxicology profiles every year, inaccuracies in
these studies are among the most common causes of failure for
new drug candidates. According to the U.S. Food and Drug
Administration, liver toxicity is the leading cause for
discontinuation of clinical trials as well as for the
withdrawal of drugs from the marketplace.
Aiming to optimize costs and accuracy of ADME/Toxicology
studies, various innovative companies are working on
cryopreserved liver slices that reproduce in vivo human
hepatic function. Achieving consistent cell quality upon
thawing remains, however, remains a challenge. American
multinational biotechnology company Thermo Fischer Scientific,
for instance, provides ready-to-use human and animal
cryopreserved hepatocytes for in vitro metabolism testing.
Cryogenics allows for high viabilities, in vivo-like enzyme
expression levels, and proper cell morphology, which opens the
way for more accurate in vitro/in vivo correlations. The
company underlines that, if properly stored, cryopreserved
hepatocytes remain viable for several years, making them ideal
for series of experiments.
Cryopreservation is also important to enable the development
of “organs-on-a-chip”, a groundbreaking technology that is
expected to allow for significantly more accurate predictions
of drug responses than those provided by commonly used cell
culture systems and animal models. “Organs-on-a-chip” consist
of microfluidic chambers containing human cells cultured under
conditions that mimic native tissues or organs. Their
viability, however, is dependent on long-term cell storage, a
field in which cryogenics can play a revolutionary role.
A
widespread implementation of cryopreservation technology will
require advancements in various areas, including the toxicity
of cryoprotectants. Though crucial to the preservation
process, these substances can be highly toxic, potentially
damaging or killing the very cells they are intended to
protect. In November 2015, researchers in the College of
Engineering at Oregon State University unveiled a new approach
to vitrification that minimizes negative effects. It begins by
exposing cells to low concentrations of cryoprotectants and
allowing them time to swell. This initial process is then
followed by a rapid addition of high concentrations of the
protective substance. The optimized procedure has raised
healthy cell survival rate to more than 80 percent, from only
10 percent in conventional approaches.
Organ Transplantation
According to the U.S. Department of Health and Human Services,
an average of 22 people die each day waiting for organ
transplantation. Data from the World Health Organization show
that, at a global scale, less than 10 percent of the demand
for transplantable organs is being met. The absence of
long-term storage capabilities is one of the most significant
obstacles to a more effective system. Currently available
technologies limit the life span of donated organs to a few
hours, condemning precious resources to waste.
Innovative cryopreservation techniques could revolutionize the
world of organ transplantation, allowing for the creation of
actual organ banks, capable of responding to the exact needs
of each recipient with off-the-shelf availability. In addition
to extending the lives of harvested organs, cryopreservation
could give doctors the necessary time to repair otherwise
non-viable donations. Also, it could allow for
transplantations to be planned in advance, enabling recipients
to gradually acclimatize to the new organ’s cells thus
reducing the incidence of rejection.
On
January 15, 2015, the Department of Defense (DoD) launched
three programs devoted to advancing organ-banking research.
According to the Organ Preservation Alliance (OPA), a
non-profit organization located in NASA's Research Park in
Silicon Valley, this pioneering initiative could fund over 20
research teams, which could potentially receive $3-3.5 million
in business innovation grants. Dr. Sebastian Giwa, CEO of the
OPA underlines that “35 percent of all deaths in the U.S.
could be prevented or substantially delayed by organ
transplantation, and this exciting move by the DoD could be a
true game changer.”
Aiming to advance the field of organ cryopreservation, with
particular focus on preventing the damages of ice formation,
researchers at the Institute of Biomedical Technology at
Binghamton University are trying to emulate species that
naturally “freeze” and thaw. This is the case of the North
American wood frog, which “freezes” several times during an
average winter. It does so by substituting most of the water
in its body with glucose, thereby allowing its insides to turn
into glass and preventing the damages of ice formation.
Also inspired by this amphibian example, Dr. Mehmet Toner of
Harvard Medical School has pioneered the use of trehalose,
which is also a sugar, as a vitrifying cryoprotectant. In June
2015, Dr. Toner and his colleagues were able to “freeze” and
subsequently revive rat cells using acetyl groups that made
trehalose more absorbable.
Another attempt to avoid the damages of ice formation is the
use of an alternative method called isochoric cooling.
Developed by researchers at UC Berkeley and the U.S. Military
Academy at West Point the innovative approach “lowers
temperatures in a preservation chamber by increasing pressure
while retaining the same volume.”
The ability to prevent the hazardous effects of low
temperatures is, however, just one side of the coin.
Researchers must also face the challenges of “reviving”
organs, which can include potentially irreversible damages
caused by thermal stress. Paradoxically enough, ice formation
remains an obstacle during the thawing process and, therefore,
the heating up of cryopreserved tissue must be done rapidly
and uniformly. Aiming to overcome these hurdles, researchers
at the University of Minnesota are experimenting with an
innovative cryoprotectant, which is infused with magnetic
nanoparticles. When exposed to radio frequency waves, the
vibration of these particles would warm the cryopreserved
organ from within, heating it up by over 212°F per minute and
preventing damages to the tissue. Recent experiments have
shown great promise in applying this method to heart valves
and arteries.
A
growing number of innovative companies are also engaged in
organ cryopreservation research. Based in Charleston, South
Carolina, Tissue Testing Technologies (T3) is working on
ice-free and stress-free cryopreservation methods for complex
systems. Among other innovative efforts, the company proposes
the combination of synthetic ice modulators (SIMs) with
established cryoprotective agent (CPA) cocktails to create
more favorable conditions for cryopreservation in the
vitrification process. T3 advocates that “The application of
SIMs enables lowering the CPA concentration, thereby reducing
the toxicity potential, while decreasing the critical cooling
and rewarming rates, thereby reducing the risk of structural
destruction to the tissue as a consequence of
thermo-mechanical stress.” This initiative was recently
awarded $149,999 in funding by the DoD.
Also dedicated to advancing cryopreservation technologies,
Sylvatica Biotech, focuses on the development of innovative
cryoprotectants. Founded in 2015, the Brooklyn, New York-based
company was also awarded a DoD grant to develop a non-toxic,
multi-component, next generation cryostasis cocktail. With the
objective of accomplishing storage times of several months,
Sylvatica is working on a protocol for organ preservation in a
frozen state using high subzero cryogenic storage temperatures
combined with metabolic depression.
Located in San Francisco, California, X-Therma is using
biomimetic nanoscience to develop unique peptidomimetic
polymers that will emulate the ice-inhibiting effects of
naturally occurring antifreeze proteins, found in
cold-resistant creatures, such as hibernating mammals. The
innovative nanomaterial is intended to become a non-toxic,
hyperactive, cost-effective alternative to conventional
cryoprotectants.
Industrial
Applications of Cryogenic Technology
Most industrial applications of cryogenic
technology are made possible by the use of liquefied gases,
also known as cryogenic liquids or cryogens. With boiling
points bellow -238°F, cryogenic liquids are extremely cold and
can thus be used as refrigerants. Examples of commonly
liquefied gases include nitrogen, helium, oxygen, and
hydrogen.
Typically supported by an on-site liquid gas supply, cryogenic
systems use different thermodynamic techniques and cycles to
maintain interior temperatures of about -238°F or less. Demand
for cryogenic equipment has increased considerably due to a
growing number of potential applications in a variety of
sectors, including energy, military, healthcare, aerospace,
and transportation. According to a recent report by Grand View
Research, the global cryogenic equipment market will be worth
$25.5 billion by 2022. Examples of industrial
applications of cryogenic technology include:
Cold Chain Logistics
Transportation of temperature-sensitive material is an
important field for cryogenic technology, particularly when it
comes to the life sciences industry. For instance, Irvine,
California-based Cryoport, Inc. provides worldwide cryogenic
logistics solutions to the biopharma, reproductive medicine,
and animal health markets. The company’s proprietary Cryoport
Express uses liquid nitrogen dry vapor shippers that maintain
below -238°F temperature for up to 10 days of dynamic
shipment. This technology is arguably superior to those used
by many other cold chain logistics suppliers, which often
resort to dry ice (and are thus unable to reach cryogenic
temperatures). Cryoport works with a range of biologic
materials such as immunotherapies, stem cells, CAR T-cells,
and reproductive cells. Its list of clients include
points-of-care, CRO’s, central laboratories, pharmaceutical
companies, contract manufacturers, and university researchers
With a 34 percent year-over-year revenue growth, 28 new
clients in the biopharmaceutical industry, and $3.5 million in
new funding for growth and development initiatives in the
first quarter of FY 2017, Cryoport is a vivid illustration of
the fast-paced expansion of cryogenic logistics. The company
offers increasing support to biopharmaceutical innovation,
currently assisting 23 out of the 28 leading clinical-stage
CAR T-Cell programs and more than 90 clinical trials,
including 14 phase III projects.
Recent innovative efforts from Cryoport shed light on some
promising ways in which cold chain logistics can move forward.
Examples include a biostorage solution for comprehensive
storage and fulfillment services, as well as a monitoring
system that provides real-time conditions and location data on
critical biological commodities.
Cryogenic Machining
Temperature is a major concern in cutting tools. Tool wear is
often accelerated by heat. Even the slightest dulling
intensifies friction and consequently raises temperatures.
Higher temperatures mean softer tool materials, which are more
prone to degradation. More dulling means more friction, and
the vicious circle continues.
Though intended to prevent this self-accelerating phenomenon,
traditional coolants, which work at about 70°F, offer limited
effectiveness due to their common inability to reach the exact
spot where heat is generated. Cryogenic machining, on the
contrary, delivers liquid nitrogen through the tool directly
to the cutting zone. They work at -321°F, a difference of
nearly 400°F that turns the tool into a thermal sponge and
significantly increases productivity. According to MoldMaking
Technology Magazine, cryogenic methods not only enable more
parts to be cut in the same amount of time with the same
machine but increase tool life by up to a factor of 30.
Virtually all machines can be retrofitted to incorporate cryo
functionalities, serving as a means to increase productivity
without requiring investments in new machinery.
German machine tool supplier MAG underscores that even though
the use of nitrogen itself is not a new technique, previous
methods required a much higher volume of the cryogen - as they
often involved spraying the tool or submerging the entire work
area. Using a through-tool approach, MAG’s solutions are
classified as “minimum quantity” cryogenic machining, in
other words, they maximize the cryogen/cooling ratio.
Headquartered in Cincinnati, Ohio, 5ME has developed patented
cryogenic machining technology with programmable flow rates of
liquid nitrogen that can fit different cutting tool types. In
2015, Lockheed Martin acquired 5ME’s cryogenic system to
perform roughing and finishing operations on large titanium
airframe components. In addition to improved surface integrity
and part quality, initial tests revealed a 52 percent increase
in cutting speeds (21 hours with 5ME cryogenics vs. 44 hours
with coolant), with equal cutter consumption. The new
technology is expected to reduce part costs by 30 percent.
Cryogenic machining can be particularly beneficial for mold
suppliers, who must respond to a growing demand for more
durable and reusable molds. Made of metals and alloys,
longer-lasting molds are harder and more expensive to cut.
Also, the production of reusable molds requires a careful
control of temperature, as excessive heat can cause tool
failure, which increases tooling costs and downtime. Cryogenic
technology is an innovative way to overcome these challenges
and increase efficiency and affordability of mold making.
Military
Examples of applications of cryogenic temperatures in the
military sector include infrared sensors installed in night
vision-based systems, satellite-based surveillance, and
missile guidance. In July 2016, officials of the Space and
Naval Warfare (SPAWAR) Systems Center Pacific in San Diego,
California announced contracts with two companies as part of
the Emerging Cryogenic devices, Electronics, and Systems
program. Mountain View, California-based Out of the Fog
Research LLC and Elmsford, New York-based Hypres Inc. will
carry out research and development activities aimed at
advancing cryogenic radio frequency technology for tactical
signals intelligence (SIGINT) systems. Together the
contracts are worth $90.8 million and, with options, can reach
up to $159.1 million.
Healthcare
Cryogenic systems are gaining prominence in the healthcare
sector, particularly due their extensive utilization in proton
therapy, cryosurgery, MRI systems, and liquefaction of oxygen
in hospitals. In cryosurgery, for instance, extreme cold is
used to destroy diseased tissues. It can be used to treat a
variety of conditions, including prostate and liver cancers,
early stage skin cancer, and other noncancerous ailments.
Ongoing studies aim to assess the viability of expanding the
applications of cryosurgery to breast, colon, and kidney
cancer treatment. Researchers also envision its use in
combination with other, more traditional approaches. In
comparison to other treatment options, cryosurgery offers
minimal pain and scarring, lower costs, and faster recovery
times.
Cryogenics also play a key role in enabling advanced MRI
technology and proton therapy, both of which rely on
high-powered magnets that need to be cooled in order to
activate their superconducting properties. Capable of
targeting tumors with sub-millimeter precision, proton therapy
is a type of radiation treatment that spares healthy, nearby
tissues and minimizes side effects. Cryogenic technology has
been crucial to enabling the emergence of more compact and
affordable proton therapy systems that promise to replace
traditional, multi-room equipment that are inaccessible to
many healthcare facilities due to investment and space
requirements. Headquartered in Palo Alto, California, Varian
Medical Systems has developed a single-room proton therapy
system that combines speed, flexibility, and cost efficiency.
With contracts for system installations at 12 locations around
the globe, Varian’s innovative proton therapy technology is
already being used at the Cincinnati Children’s/UC Health
Proton Therapy Center, the Scripps Proton Therapy Center in
San Diego, Maryland Proton Therapy Center in Baltimore, the
Rinecker Proton Therapy Center in Munich, and at the Paul
Scherrer Institute in Switzerland.
Superconductivity
Even though electrical resistance lowers as temperature
decreases, ordinary conductors are unable to reach zero
resistance, due to impurities and defects. A special category
of materials, however, present superconducting properties and,
thus, when cooled below a certain critical temperature, offer
exactly zero electrical resistance.
Superconductivity was initially made possible in 1911 through
the use of liquid helium, which enables extremely low
temperatures. So-called “high-temperature superconductivity”
(HTS) was subsequently discovered in 1986 and raised critical
temperature to around -320°F, allowing for the use of liquid
nitrogen as a refrigerant.
An
increasing number of superconductivity applications underscore
the importance of innovative cryogenic refrigeration systems
that provide economical and reliable long-term
operations. HTS is at the basis of high-impact
technological innovations in various areas, including biology,
condensed matter physics, chemistry, magnetic resonance,
material sciences, particle accelerators, colliders, and
fusion devices.
Superconducting wires are an example of how cryogenics can
enable major technological breakthroughs. Headquartered in
Austin, Texas, Superconductor Technologies, Inc. (STI) is the
creator of the Conductus superconducting wire platform, a high
current carrying coated conductor with 100 times the current
carrying capacity of traditional copper and aluminum wires.
Designed to operate
across a broad range of cryogenic temperatures (from around
-450°F to -321°F) STI’s Conductus offer major performance
improvements, higher power density, smaller size, and
significant cost benefits over their conventional
counterparts. Not only can they revolutionize electric power
transmission and distribution, but they can also enable much
smaller and more powerful magnets for motors, generators,
energy storage, and medical equipment.
Cryogenic Food Processing
Food processing activities can greatly benefit from cryogenic
technology. In addition to contributing to food preservation
and safety, high-efficiency cryogenic systems can help
maintain food quality, while boosting productivity and
streamlining operations.
Advanced cryogenic solutions are much faster than traditional
freeze/chill methods and can thus increase the volume and
speed of production while reducing overall freezing costs.
Other potential benefits include reduced evaporation and
dehydration losses on cooked poultry and red meat products,
texture and freshness preservation in seafood, and structure
continuity in parbaked goods. Cryogenic processing can also
help prevent losses due to bacterial contamination as, when
combined with the necessary hygienic conditions, it acts as a
shield against Salmonella, E. coli, and other pathogens.
According to German multinational industrial gases and
engineering conglomerate The Linde Group, many high-volume
food processors have been able to save $2-3 million per year
due to the adoption of cryogenic solutions, such as tunnel
freezers, individually quick freezing (IQF) freezers,
immersion freezers, spiral freezers, immersion spiral
freezers, impingement freezers, pellet freezers, and
cryo-mechanical freezing systems.
Data from the Cryogenic Society of America show that, in the
bakery industry, production time can be reduced by more than
50 percent. For example, cookies that take 13 minutes to cool
from 130°F to 75°F using traditional methods are cooled in no
more than one minute with liquid nitrogen. Consistent
temperatures also improve product quality, reduce waste, and
eliminate excess moisture, unreliable timing, and labor costs
associated with ice.
In
the case of proteins, which can consist of up to 75 percent
water, challenges involving ice formation are critical.
Conventional methods often lead to uneven freezing as the
location of water molecules influence their freezing
temperature. Also, changes in pressure and crystal formation
can damage cell walls and harm the structure of the meat.
Cryogenic processes overcome these challenges by enabling
virtually instantaneous freezing that is harmless to the
internal fiber structure.
Natural Gas
The liquefaction of natural gas occurs at approximately -260°F
at atmospheric pressure. Once liquefied, natural gas takes up
about 1/600th of the volume that it would have in its gaseous
state.
For decades, the cost of production and the need for
sophisticated cryogenic storage have hampered a more
widespread, commercial use of liquefied natural gas (LNG).
However, both economic and environmental issues have led
natural gas to gain prominence all over the globe, and
particularly in the U.S. energy supply. Though more commonly
used for transportation and storage purposes, LNG is rapidly
finding its way into new applications. Examples include the
LNG bunkering (or marine fuel) market, which is expected to
experience a 20 percent compound annual growth rate between
2016 and 2023, according to Global Market Insights Inc.
Headquartered in Allentown, Pennsylvania, Air Products &
Chemicals has been at the forefront of cryogenic natural gas
liquefaction technology and equipment. On September 9, the
company rolled out the first LNG cryogenic heat exchanger
produced in its Manatee County, Florida facility. Aiming to
achieve economies of scale, Air Products produces heat
exchangers as large as over 15 feet in diameter and 180 feet
long. The production and transportation of such large
equipment requires innovative efforts, which included the
construction of the 300,000-square-foot Florida facility. Jim
Solomon, Director of LNG at Air Products underscores that “as
the world's energy needs continue to increase, demand for
cleaner energy is at the forefront, and natural gas is the
cleanest of all the fossil fuels. In order to achieve the
greatest economies of scale, even larger capacity LNG heat
exchangers for LNG plants are being required."
The potential benefits of LNG use have spurred innovation in
various related fields. Working in partnership with Japanese
producer of cryogenic LNG tanks Hitachi High-Tech AW Cryo.,
the Alaska Railroad Corporation will soon became the first
railroad in the country to ship LNG. Even though moving LNG by
rail has been common practice for decades in countries as
Japan, it has never been done in the U.S. This innovative
means of transportation could significantly reduce the prices
related to LNG use, therefore opening the way for more
widespread applications.
Low Temperatures, High
Impact
Cryogenic systems can change the way
various industries work. From healthcare and the military to
logistics and food processing, cryogenic technology has
already enabled major technological breakthroughs in a variety
of fields. Ongoing R&D efforts point to an exciting future
with revolutionary applications that include organ banking.
R&D tax credits are available to support companies engaged
in low-temperature, high-impact innovation.
