Dear Members of the Weizmann Institute Family,

When friends of the Weizmann Institute—and of Israel—ask me for some good news from our region, I have no difficulty in responding. The irrepressible energy and boundless ingenuity of Israeli inventors and entrepreneurs are there for all to see, but to none are they more evident than to those of us immersed in science and research.

Israel is home today to about 500 communications technology companies, 200 in medical instrumentation, 100 in fabless circuit design plus a number of circuit production giants, and 50 in digital printing and imaging. It has become a veritable superpower in data security, with some major companies in the field and about 80 start-ups. There are hundreds of companies developing an impressive range of programming applications—for trading in foreign currency options, for Internet applications, and a great deal more. In my own field of plant science, the long tradition of Israeli innovation is being carried forward by a growing number of biotechnology companies devoted to advanced crop improvement and the production of plant-derived products. In drug design and development, Teva Pharmaceuticals leads as a major player in the world arena and is Israel's largest and most successful commercial company ever. All this, and more, in a country of less than 6 million people!

What drives this phenomenal technological dynamism and entrepreneurship? Of the many reasons I could cite, one is most relevant to our endeavor: the strength of Israeli scientific education and technological training, in which the Weizmann Institute of Science plays such a dominant role—through its emphasis upon basic research (the root of its multivaried achievements since its earliest days), its practical inventions, its science education programs, and its network of graduates throughout Israel.

Clearly, the cultivation of our only abundant natural resource, our brain power, is critical to our economic and social well-being. At the Weizmann Institute we also believe that this cultivation is of value in itself, beyond its immediate utilitarian impact. We believe that knowledge and its pursuit are the crowning achievements of every society, and should always be a priority.

Put in this perspective of aspirations and achievements, the past year has been a good one for the Weizmann Institute. Let me touch on some highlights.

Following his earlier astounding development of the world's smallest biological computer consisting of DNA, the material of genes, Prof. Ehud Shapiro took a dramatic step into futuristic medicine by showing how this molecular device, of which about a trillion can fit in a drop of water, might one day function as a tiny medical kit. Made entirely of biological molecules, this computer was successfully programmed to identify—in a test tube—changes in the balance of molecules in the body that indicate the presence of certain cancers, to diagnose the type of cancer, and to react by producing a drug molecule to fight the cancerous cells. It may well take decades before this concept of "a doctor inside the cell" can be converted to a system operating inside the human body, but its potential is thrilling. This research was supported, among other sources, by the M.D. Moross Institute for Cancer Research.

Having obtained FDA clearance last year, Prof. Hadassa Degani's work in magnetic resonance imaging (MRI) for the non-invasive diagnosis of breast and prostate cancer is now being developed commercially for clinical use. Recently, she directed her attention to an entirely different application—kidney function. Standard MRI scanners found in hospitals and clinics work by imaging water molecules in the body, but in water-logged kidneys, the image may not distinguish between different functional parts. By scanning sodium ions rather than water, Prof. Degani's method may enable tomorrow's doctors to pinpoint exactly where a problem lies, reveal a disease before symptoms occur, or evaluate how a drug affects a patient. Prof. Degani's work was supported by the Willner Family Center for Vascular Biology and other generous donors.

Prof. Yair Reisner's breakthrough research in inducing porcine stem cells to grow new kidney tissue in a mouse stands to benefit from Prof. Degani's innovation, which could greatly facilitate the difficult task of assessing how well such kidneys are, in fact, functioning. Other aspects of Prof. Reisner's pioneering work, namely in bone marrow transplantation, are featured in the 2004 Annual Report. Again, both Prof. Degani's and Prof. Reisner's research benefited from the support of the M.D. Moross Institute for Cancer Research. Prof. Reisner also received major support from the Gabrielle Rich Center for Transplantation Biology Research and other generous donors.

It is a pleasure to acknowledge here, with thanks, the generous gift of the Skirball Foundation of Los Angeles for its challenge grant of $1.5m toward the purchase of a new MRI machine for Prof. Degani and half a dozen additional research groups. The new equipment will give a great boost to a significant segment of our biomedical researchers. We have received a number of matching gifts, most notably from Mrs. Rita Markus of New York, Mr. Hans Rausing of the UK and the Harry M. Ringel Foundation of California. We are still looking for additional donors to come forward with funds that will help meet the Skirball Foundation's challenge.

Further clinical progress in cancer therapy was achieved by the team of Profs. Avigdor Scherz and Yoram Salomon, who conduct (Phase I/II) clinical trials for prostate cancer in collaboration with Steba Biotech (France). They have developed a novel substance for use in photodynamic therapy (PDT), which effectively destroys tumors by destroying the blood vessels that supply them with oxygen and nutrients. The work is presently carried out in medical centers in Canada, England, France, and Israel.

In neuroscience, sophisticated use of MRI techniques is yielding insights into the mechanisms of perception and visual experience. Prof. Rafael Malach showed volunteers a segment of a movie while they were undergoing brain scans with functional MRI equipment. Interestingly, the brain scans revealed that in viewing a movie, the various regions of the brain each actively view different movies. Each area is activated by a specific kind of visual cue, and therefore only picks up on those bits that "speak" directly to its specialized preference. For instance, a region known to be involved with face recognition lit up only when close-ups appeared on the screen, whereas scenery elicited a response from the part of the brain that helps us navigate in three-dimensional space. The scientists noted a third area that seemed to be activated when delicate hand motions were performed; this area, they think may be part of a network of brain regions used to understand the actions and intentions of others. Thus the unified percept we experience is, in fact, the coordinated result of a tremendous "jam session" played out by our different, highly specialized brain regions.

Also in Neurobiology, Prof. Amiram Grinvald—widely regarded as a world leader in functional optical imaging and, as such, of having exercised a tremendous impact on brain research—was awarded the prestigious Dan David Prize for 2004. Prof. Grinvald's method of intrinsic optical imaging on the molecular level makes it possible to visualize electrical activity in the living brain. This technique is currently advancing clinical applications in neurosurgery operating rooms in the US, Europe, and Japan. Both Prof. Grinvald and Prof. Malach are supported by the Murray H. and Meyer Grodetsky Center for Research of Higher Brain Functions.

Another possible future application of Institute research in neurosurgery comes from an entirely different direction. Prof. Elisha Moses of the Physics of Complex Systems Department, postdoctoral fellow Dr. Stephan Thiberge, and Institute graduate Dr. Ory Zik have devised a method to view samples of biological materials under the beam of the scanning electron microscope (SEM) in their natural, untreated (i.e. "wet") state. The SEM's superb ability to distinguish the delicate structure of a living cell could thus be utilized, for example, in making a quick decision during brain surgery as to the borders between a malignant tumor and healthy tissue, or between a malignant and a benign growth.

Since the discovery was made, Dr. Zik, in cooperation with Yeda, the Institute's business arm, has founded a company, called QuantomiX, based on this technology. The findings of the team were published this year in the Proceedings of the National Academy of Sciences (PNAS) USA. This is just one fine example of the Institute's leadership in advanced imaging and microscopy techniques, a field that is of vast importance for science, medicine and industry. I urge the Institute's friends to support our efforts in this sophisticated—and costly—endeavor through such projects as the proposed Electron Microscopy Center or the Bioimaging and Diagnostics Center.

Gratifying acknowledgement of our work in nerve regeneration was recently received from the Christopher Reeve Paralysis Foundation (CRPF), which awarded its first grant in Israel to Dr. Michael Fainzilber. "The Weizmann Institute, as I saw first-hand when I visited Israel last year," said Christopher Reeve, "has established pre-eminence in the field of paralysis research." Applying a unique peptide, Dr. Fainzilber will identify changes in genes that are activated very early in the regenerative process, in order to modulate injury-induced changes. The data generated using this innovative model has the potential to identify new molecules important for regenerative growth in patients with nerve injuries.

In the coming year, our work in neuroscience will be significantly enhanced by a major gift from Mrs. Nella Benoziyo toward the establishment of a new research center dedicated to neurological diseases. This is in addition to the existing Nella and Leon Benoziyo Center for Neurosciences, from which Prof. Malach's work has benefited, and the Y. Leon Benoziyo Institute for Molecular Medicine, which has supported Dr. Fainzilber's research. In appreciation of this magnanimity, the brain research building has now been named the Nella and Leon Benoziyo Building for Brain Research.

Basic science is the heart and core of our work, and is particularly characteristic of young scientists in the early stages of their careers. This issue of the Annual Report features outstanding work in structural biology by two young scientists, Dr. Deborah Fass and Prof. Gideon Schreiber. Dr. Fass, whose work was recently featured in the prestigious journal Cell, is applying x-ray technology to study newly-discovered enzymes taking part in protein folding—the fateful process by which "newborn" proteins fold into precise three-dimensional structures to become functional. Proteins are also a central theme in the work of Prof. Schreiber, who is applying both theoretical and experimental techniques to examine how cells "talk" to one another. Amongst his findings, Prof. Schreiber has achieved valuable insights into how interferons, proteins serving as the body's first line of defense, convey their messages into the cell.

We are eager to promote this vigorous activity in structural proteomics. Elucidation of the 3D structure of proteins—so critical for understanding their function in health and disease—is an enormously complex process. When Sir John Kendrew and Sir Max Perutz received the Nobel Prize in 1962 for the first solving of a protein's 3D structure, they had spent over 20 years on the task. Though some aspects of the process have since become more efficient, scientists may still spend months, sometimes years, in similar efforts.

Having received initial support for a pilot project in this area from Israel's Ministry of Science, the European Union, and a visionary private Israeli donor—Board member Yossi Hollander—we now seek to establish an endowed research institute that will serve Israeli science as a whole. The institute will serve researchers from the Weizmann Institute as well as from other scientific research institutes and the biotech industry in their attempts to elucidate the structure of proteins involved in disease. Their findings might prove essential to future applications in drug design, diagnostic tests, biosensors, agrochemicals, and more.

Providing a boost to the efforts of all such researchers is an outstanding new facility for visualizing proteins three-dimensionally, in their enormously complex structure and internal movement: The Jean Goldwurm Scientific 3-D Visualization Theater in the Wix Auditorium building.

Prof. Israel Rubinstein of the Faculty of Chemistry has demonstrated how minuscule particles of gold, silver, and other materials can serve as building blocks of tiny cylinder-shaped structures called nanotubes (a nanometer is one millionth of a millimeter). Characterized by unique electrical and optical properties, these nanotubes can be tailored for diverse applications, such as future nanosensors, catalysts and chemistry-on-a-chip systems. This work was supported, among other sources, by the Clore Center for Biological Physics.

Our efforts in nanoscience received an important boost this past year through the magnanimous gift of Helen and Martin Kimmel of New York establishing the new Helen and Martin Kimmel Center for Nanoscale Science. Additional notable support ($2.9m) for nanoscience, in particular for the renewal of equipment in the Braun Submicron Center, but also for research in the Faculty of Chemistry, has been assured by the TELEM (acronym for National Science Infrastructures) Committee of the Israel Academy of Science. More than two years ago, the Wolfson Foundation had committed a large seed gift toward this fund, to be matched by the Israel Academy of Sciences and Humanities and five institutions of higher learning, including the Weizmann Institute, with the aim of making a significant investment in Israeli nanotechnology. We continue to seek donor assistance in this mega-project for advancing the Institute's world-class nano-electronics research.

The Physics Faculty celebrated its 50th anniversary this year with a rich record of achievements. This Annual Report features the work of two young theoreticians, Profs. Micha Berkooz and Ofer Aharony, who both work in the most fundamental area of string theory. This generation of young scientists is propelling us toward more focused efforts in particle astrophysics, where we hope to attract additional talent and establish a dedicated research center. The Physics faculty also has a strong tradition of commitment to science education—we are proud that this year's EMET Prize is being awarded to Prof. Haim Harari for his outstanding leadership in this area.

I mention with pride that Prof. David Harel, Dean of the Faculty of Mathematics and Computer Science, received this year's Israel Prize for his work in several diverse areas of computer science, including the invention of languages and methods for developing complex systems and his widely-acclaimed expository writing. The citation described him as "one of the leading computer scientists in Israel and in the world." Prof. Adi Shamir, co-inventor of the famous RSA encryption system, and his student Eran Tromer have been busy listening to computers. They are working on a system that could enable certain kinds of encryption techniques for securing classified information to be cracked by analyzing the faint sounds produced by tantalum capacitators on the motherboard. Additional achievements in mathematics and computer science are highlighted later in this Annual Report.

Young scientists

Of the six scientists featured in this report, you will note that four belong to the young generation of recently-tenured professors. This young face of the Institute is a genuine emerging trend, following a few years of difficulty in recruiting a sufficient number of young scientists, due mainly to the political and economic situation. It is heartwarming to witness young people's eagerness to join the Institute.

One of our most important tools for the successful recruitment and absorption of young scientists is our ability to provide them with equipment for their research needs. Such equipment costs may run into the hundreds of thousands, in some cases, even millions, of dollars. The Institute's major source of equipment funding, the Israel Science Foundation, has drastically reduced its support in the past few years, as part of the overall cut in government allocations to research and education. Our dream is to establish a large endowed fund that will enable us to respond effectively and quickly to such needs.

Recruitment of young scientists, particularly women, could be further boosted with greater attention on our part to the work/family balance. Specifically, we would like to expand the recently-established childcare facility, which has proven highly successful but is unable to meet the demand by Institute staff and scientists. We are seeking a donor gift for this project.

Major issues resolved

I am pleased to report that three of the four issues that have been hanging menacingly over our future during the past few years have been satisfactorily resolved. Of grave concern, primarily to our sister universities in Israel, has been the Ministry of Education's requirement to change the governance of Israel's institutions of higher learning. We have successfully convinced the Ministry that the Weizmann Institute's structure was already largely in line with the new requirements, principally, the unification of responsibilities for the organization's fiscal and academic functions. Thus, we have not been called upon to change our governance structure.

This year, it was officially confirmed that we would not be subjected to any tax liability for our income stemming from Yeda royalties. The State Comptroller General had for some time been questioning the fact that this income was not taxed. After a lengthy process of presentations and clarifications to the State Comptroller and the income tax authorities, the Institute succeeded, with the invaluable aid of our Board Member Moshe Gavish, in making a compelling case for its position, resulting in confirmation by the tax authorities of the accepted position that a not-for-profit organization like the Institute should continue to maintain this tax exemption. Needless to say, the individual scientists who receive royalty income do pay taxes on it.

A third major issue that was resolved this year was our six-year-long disagreement with the State Comptroller on reporting procedures for external grants. Having now obtained the Comptroller's agreement to a reporting procedure that takes into account the inherently fluid nature of cash flow from external grants, our scientists can continue to compete for international grants with a reasonable degree of flexibility. Regrettably, the dispute with the Municipality of Rehovot regarding tax payment is still pending, notwithstanding the considerable progress we have made.

Financial situation

The Israeli government has continued to impose cuts on the national budget. For us, this meant that in 2003/4 the government's share in our operating budget fell to 36 percent, necessitating a further reduction in expenses from the previous year's budget. Even though governmental cuts were announced twice in mid-year, we continue to maintain a balanced budget, thanks largely to the discipline and cooperation of the Institute's scientific and administrative staff. My warm thanks also go to the Institute's loyal friends, who have continued to give generously to the President's Contingency Fund—a resource the importance of which I cannot exaggerate. Part of the shortfall in government support was also made up for by an increased injection of funds ($15m, or 8.5 percent of our budget) from Yeda's royalty income. All this has enabled us to maintain an acceptable level of support for research and infrastructure and, most importantly, not to be forced to reduce our support for new scientists and graduate students.

The Institute's income from Yeda is based primarily on three products: two drugs for multiple sclerosis (Copaxone® and Rebif®) and the satellite television encryption card. In keeping with the Institute's far-sighted policy, this highly volatile income—the dependability of which is entirely outside our control—was not used to increase expenditures. Rather, as indicated above, it partially offset the shortfall in the operating budget created by the government's drastic cuts in support of basic research. The rest was put toward future-oriented purposes: the development and maintenance of our infrastructure, facilities and equipment, and the enlargement of our endowment.

Yeda's earnings testify to the talent and enterprise of Institute scientists. Given that all three products listed above have a manufacturing base in Israel, they also point to the coming of age of Israeli industrial, financial, and business capabilities. We can be proud that with only 250 principal investigators, we lead all Israeli institutions of higher education in technology transfer, and that even on a global scale, our successes are remarkable. It is also most gratifying that the basic research behind Rebif® was recognized this year by the award of the EMET Prize to Prof. Michel Revel.

External research-funding sources constitute 25.6 percent of the budget, a figure that has remained steady in the past year. But steady-state in this case is by no means trivial news. If we bear in mind that major Israeli funding entities, such as the Israel Science Foundation and the various government ministries, have severely reduced their support in the past two years, it is clear that the continued high level of external support sources can only be ascribed to increased funding from abroad. Grants from the NIH have been increasing steadily and today reach $1.8m, and grants from the European Union, where we have done better than any other Israeli institution of higher learning, have reached $6m.

I would like to mention here an $8.5m competitive grant awarded by the Flight Attendants Medical Research Institute (FAMRI) of the US to a Weizmann Institute team working with the Chaim Sheba Medical Center on the harmful effects of passive smoking.

Our success in obtaining such large external grants may be partially attributed to the leverage afforded by philanthropic sources, notably in this case, the M.D. Moross Institute for Cancer Research. This success in the highly competitive world science arena can surely be taken as an objective indicator of the high quality of Weizmann Institute researchers. This quality was again reaffirmed this year by the comparative study of the "impact factor" of scientific publications: Israel ranks third, after the US and Switzerland, in its number of scientists cited (in relation to the country's population). Of the 37 Israeli scientists most often quoted by others (out of 250 worldwide), 11—nearly one third—are at the Weizmann Institute.

As to ongoing (not endowed) donation income, we have been experiencing a declining trend in the past five years, from a high of close to $24m in 2000/1 to an estimated $17m in 2003/4. This is partly due to the fact that during the Jubilee Campaign, we concentrated our efforts on increasing our endowment, as opposed to raising consumable funds. Thus, both the endowment itself has grown, currently standing at close to $600m, and the annual yield it provides to the Institute has risen, from about $18m five years ago, to close to $29m today. W-GEM, the Institute's arm for the professional management of its investment portfolio, has yielded excellent results in the past year.

Campus infrastructure and development

We are moving forward with our plans for constructing a major new transgenic plant growth facility, which should give a significant boost to our research in plant science. This project is still seeking donor support and I would like to take a moment to make the case for it once again.

Making a Mark

Eleven of the world's 250 most quoted scientists are at the Weizmann Institute:

-Prof. Moshe Oren

-Prof. Oded Goldriech

-Prof. Benny Geiger

-Prof. Ehud Dochovni

-Prof. David Harel

-Prof. Ilan Chet

-Prof. Irun Cohen

-Prof. Giora Mikenberg

-Prof. David Peleg

-Prof. Amir Pnueli

-Prof. Itamar Procaccia

We are justly proud that Israel has been a powerhouse of agricultural development—surely one of the most amazing features of Israel's rebirth in its arid land. We are witnessing exciting new trends in this field. Since the 1980s, it has become clear that it makes little sense for us to engage in intensive agriculture, where (fortunately) we no longer can or wish to compete with the low wages that prevail in less developed countries; nor do we have the large land and water reserves required. Instead, Israelis have identified the enormous potential of advanced agricultural research—a kilogram of seeds sells for 1,000 times more than a kilogram of fruit—and are developing new crop seeds with high added value, such as resistance to disease, adaptability to various climate conditions, increased yields, improved nutritional value, etc. Being myself in the field of plant biological control, I can personally affirm that such characteristics have enormous impact globally in protecting the environment (fewer pesticides, fewer fertilizers) and in their potential for feeding a hungry world.

Most of this research in Israel is carried out by academic institutions, rather than by industry, and there can be no doubt that Israel's innovativeness in plant science owes much to this fact. We must give the Institute's plant researchers the advanced high-tech facility that their talents and efforts so fully merit.

We are also finalizing plans for a new facility for pre-clinical research, scheduled for construction in the northern campus area recently acquired from the Jewish Agency. This is an enormously costly project, for which we are seeking donor support. Our major existing facility was built in the 1960s and is now obsolete beyond our ability to refurbish it. International standards of ethics—to which the Institute adheres strictly—and the technical capabilities for housing, treating, and monitoring of mice and rats undergoing pre-clinical experiments have improved dramatically since then. In addition, there are many new research projects today in cancer, genetics, and immunology that require upgraded facilities.

The clean-up and refurbishment of the Arnold Meyer Building is progressing well, and should be completed by mid-2005.

In May 2004, we had the pleasure of dedicating "Oasis," a lovely water sculpture given to us by our former graduate student, Dr. Barton Rubenstein of Washington, D.C. In November 2004, we will dedicate three new campus installations: the Ruthie and Samy Cohn Student Residence, the Joe Weinstein and Major Max L. Shulman EcoSphere in the Clore Garden of Science, and the Jean Goldwurm Scientific 3-D Visualization Theater.

The campus and the community

This year, with abatement in the fury of suicide bombings inside Israel, we saw an increase in the number of visitors from abroad, as well as an increase in the number of scientific gatherings held on campus. In May alone, we held ten conferences with international participation, including one in honor of former Institute President Prof. Michael Sela's 80th birthday.

Educational activities for young people are as dynamic as ever. The annual Shalhevet Freier Physics Tournament, where youngsters must figure out how to crack safes, had a record number of participants, including, for the first time, two teams from Canadian schools. Our Science Mobile traveled extensively this year to schools and centers in peripheral areas, partly thanks to the Rehovot-based Israeli division of Applied Materials, Inc., which not only gave financial support but also actively involved its management and staff. Our most public event, the Science Festival held during the Passover holiday, attracted some 15,000 participants.

We have initiated a number of appealing lectures for wider Institute audiences: the Helen and Martin Kimmel Center for Archaeological Sciences had standing-room-only attendance at its series on the civilizations of the eastern Mediterranean; Prof. Itamar Procaccia of the Chemistry Faculty offered an illuminating talk on Zen and the Arts of East Asia, featuring a number of scrolls from his own collection; and the Faculties of Biology and Biochemistry began a series of noon lectures "Biology at Eye Level," where Institute scientists present their work to the campus community.

On June 10, 2004, the Feinberg Graduate School celebrated its largest ever graduation ceremony: 117 Ph.D. and 146 M.Sc. degrees were conferred. At this year's ceremony, the keynote speaker was Mr. Benny Landa, founder and former chairman of Indigo, a world leader in digital color printing. Benny and Patsy Landa are enthusiastic supporters of education in Israel, with a particularly attentive eye for students whose economic background has made higher education a difficult goal to reach. Earlier this year, we opened the Ruthie and Samy Cohn Student Residence to help relieve the demand for on-campus student housing for singles and couples. The school continues to attract the best students in Israel in Mathematics, Computer Sciences, Physics, Chemistry, and Biology. The large number of applications and their exceptionally high quality led us to increase the size of the M.Sc. class entering in October 2004.

Under the banner "Administrative Excellence in the Service of Scientific Excellence," we have launched an organizational development program for Institute personnel. Initially, we are focusing on enhancing management skills. This effort goes hand-in-hand with our implementation of an ERP (Enterprise Resource Planning) program. Together, we expect these initiatives to significantly increase the effectiveness and efficiency of our administration.

The Global Partnership Campaign

For the past year, we have been preparing to launch the Global Partnership Campaign, perhaps our most important fundraising initiative since the Jubilee Campaign. The Global Partnership Campaign is intended to bring together our lay leadership, our administration, our committees, and our scientific community for the purpose of ensuring the excellence of scientific research and education conducted at the Institute. We have put together a dynamic Campaign leadership group under the gracious and talented team of Gershon Kekst, Global Chair, and Bob Drake, Executive Chair, and will be sharing the Campaign's goals with our Governors during our meetings on campus in November. Under the banner "Partners through Time," we will discuss how each of us can make a difference in ensuring the future of the Weizmann legacy.


For their friendly cooperation, good counsel, and steady support, I thank Stu Eizenstat, Chair of the Board of Governors, Abraham Ben-Naftali, Chair of the Executive Council, Deputy Chairs of the Board, Chairs, and members of the Board committees, and the entire Board membership; Prof. Michael Kirson, Chair of the Scientific Council, the Institute Vice Presidents, Deans of the Faculties and Department Heads.

I am particularly grateful to the Weizmann Institute family of scientific, technical, and administrative staff, who have given me their generous support and friendship.

I am indebted to our supporting committees at home and overseas, who work unflaggingly for the Institute's welfare throughout the year—the devoted lay leaders, the outstanding Executive Directors, and all the enthusiastic members of their professional staffs.

I thank all of our friends in Israel and abroad for their interest, devotion, and generosity over the past year. May the Institute's scientific and humanitarian achievements continue to fuel our aspirations and efforts in the year ahead.