Although short, this case contains some key turning points that reveal some of the decisions successful entrepreneurs have to make. Students could be asked to start by building a timeline of the company’s key decisions and their results.

Some important turning points:

1. The decision to apply enzyme technology to biofuels development
2. The struggle to create a demonstration plant
3. The next big hurdle: scaling up
4. The move to the US

Each of these decisions should be weighed and all alternatives developed and considered. Students can form A and B teams to develop arguments pro(A) and con (B) for each of these stages, and then debate with a view to developing a persuasive business plan for the company’s advance. Instructors can help students develop appropriate weightings for the decision elements (such as Decision-Trees, Optimal Cash Flow, and methods for evaluating future returns, such as Net Present Value (NPV) and Internal Rates of Return (IRR) ) while also looking at government support programs for R&D, locational subsidies, etc..

In the conversations about the company, some other controversial issues can arise which may also be exploited by the instructor. Two in particular present themselves: Energy policy and the use of biofuels, Enzymes and the Biodiversity Safety Protocol. There is also a third legal technicality to address, that of Canada-US patenting.

1. Energy policy and the use of biofuels.

US National security concerns, in particular the need for geopolitical reasons to reduce its dependence on Middle East oil, as well as environmental concerns, in particular the impact of using hydrocarbon fuels on global warming have combined recently to encourage policy makers to turn to alternative "biofuels" as a substitute for gasoline. Current US policy and progress on biofuels can be tracked on the US Department of Energy Website (http://genomicsgtl.energy.gov/biofuels/index.shtml).

As interest in biofuels accelerates, the UN Food and Agricultural Organization has become alarmed at the possible policy implications for the world's food supply, especially as it may impact populations that rely heavily on crops that can be used for biofuels. These concerns are expressed in a report published in June, 2007, "Sustsainable Bioenergy: A Framework for Decision-Makers" , downloadable from this FAO website:(http://www.fao.org/newsroom/en/news/2007/1000553/index.html)

2. Enzymes and the Biosafety Protocol.

The enzymes in the case are genetically modified and so would fall under the provisions of the biosafety protocol, especially if transborder shipment is involved. For an overview of the biosafety protocol and its application to transborder shipment, see the short Wikipedia review here.

Of particular interest is the possibility of conflict its assertion of the precautionary principle raises with the phyto-sanitary provisions of the WTO which state that risk must be scientifically demonstrated. In this particular case, however, these concerns are more theoretical than real as Canada and the US did not ratify the Biosafety Protocol. Nevertheless more than 50 countries have ratified it so that it has become a part of international law and will apply should production move to signature countries.

3. Canada-US Patenting

The Iogen biofuel enzyme does not in fact have a patent in Canada, but it does in the US. As such, it is not unusual for a great many Canadian innovations to be patented in the US and not Canada. There are a number of reasons -- most generally, the market most innovators aim at from Canada is the US, for which a US patent is the best protection against illicit copying or use of the invention. An added factor however is whether a GMO enzyme can be patented in Canada. Unicellular life forms are patentable in Canada. But more complex life forms themselves are not, although the method of producing them may be.

• CIPO Manual of Patent Office Practice Chapter 12, subsection 04.01 "Living Matter", available on the web at http://strategis.ic.gc.ca/sc_mrksv/cipo/patents/mopop/chap12-e.html#12.04.01.

• Iogen's patenting strategy in Canada is described on the Innovation in Canada website (text, audio and video versions) at http://innovation.gc.ca/gol/innovation/site.nsf/en/in04724.html

The case also contains some key points of value for entrepreneurs and students of innovation.

A. What is Iogen's technical knowledge base?

The case on the Innovation Canada website makes clear that it is the technical development process in which the engineering process and the enzymes influence the development of each other. Knowing how to combine science and engineering is a signficant part of Iogen success. The patenting strategy reinforces that competence.

B. Finding Development Partners

This has been a crucial struggle for the company. Ultimately, it has been government funding with some support from industry, aided by a new sense of urgency on the part of the US government in the wake of the 9-11 attack and the subsequent war in the Middle East.

Some issues in innovation theory and macroeconomics lurk behind the events leading to the construction of a demonstration plant in the US, especially the role of government in promoting innovation. Although in this case, the stimulus seems to have been concern about finding alternative fuels in the light of new national security priorities, there is a consensus among economists now that innovation's role in economic growth is more significant than early growth theorists recognized. Spillovers of knowledge from education and employment in the high tech industries, and their re-enforcing clusters of clients and supporting services promote technological upgrading leading to higher levels of economic performance.

A recent paper from the C.D. Howe institute provides a concise introduction to these new theories of economic growth, known as Endogenous Growth Theory.

• The study, by Peter Howitt (April 2007) Innovation, Competition and Growth: A Schumpetarian Perspective on the Canadian Economy, is available on line at: http://www.cdhowe.org/display.cfm?page=publications&yearToUse=2007

There remains the question of why expansion capital is so hard for entrepreneurs to find in Canada, especially since its capital markets are so closely interlinked with those of the US.

• For a look at that question by tax specialists Stephen Hurwitz and Louis J. Marette (Feb., 2007) see Financing Innovation: Why Canada Should End the Road Blocks to Foreign Private Equity, also on the C.D. Howe website. It is available at: http://www.cdhowe.org/pdf/commentary_244.pdf.
• A description of the problem as encountered by biotech companies is also available on the web in the commercialization chapter of the Canadian Biopharmaceutical Technology Roadmap, at http://www.strategis.ic.gc.ca/.