Updated 4:36 p.m.
Cleveland Clinic Innovations — the corporate venturing arm of the nation’s top heart hospital — is entering its second decade with a first-of-its-kind venture ranking, a brand-new incubator building and a growing portfolio of spin-out companies.
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Perhaps most impressive, those companies — 33 in all — have attracted more than $340 million in follow-on funding from other investors. “That’s a darn good number” for a 10-year-old innovations group whose average spin-off is about five years old, said Harry Rein, chairman of the group’s Industrial Advisory Board and a veteran venture capitalist.
Cleveland Clinic Innovations (CCI) commercializes the inventions and discoveries of the Clinic’s doctors, researchers and professionals. The group’s activities include everything from investing a small amount of money to help an inventor validate a technology to prototyping a medical device to launching a company that makes a medical product to partnering with a health information technology firm to distribute its software.
It’s also the group that decides whether an idea should be spun out from the Cleveland Clinic as a company or licensed to another organization to develop.
“At root, its role is to be a facilitator for entrepreneurs and innovators,” said Rein, who also is general partner of Foundation Medical Partners, the Connecticut venture capital fund in which the Clinic is strategic limited partner. “If you’re an innovator, if you’re an inventor, it gives you the ability to present your ideas to somebody who has the resources to help you develop them.”
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Medical institutions like Mayo Clinic and John’s Hopkins have similar commercialization groups. However, Cleveland Clinic Innovations was the only major academic medical center to make the first Most Influential Healthcare Corporate Venturing Divisions list published by Global Corporate Venturing last month.
“We were thrilled” with the ranking of 75 corporate venturing units, which were chosen by peers, said Chris Coburn, executive director of Cleveland Clinic Innovations. “It validated what we believe about ourselves — we’ve accomplished a lot, but a great deal is going to occur in a very short time.”
As for its accomplishments, CCI has launched more than three-dozen companies since its start in 2000.
AxioMed Spine Corp. in Garfield Heights, Ohio, is developing next-generation spinal disc replacements. Clear Catheter Systems in Bend, Oregon, and Cleveland recently received European approval to sell its active catheter-clearance system PleuraFlow. Tolera Therapeutics Inc. in Kalamazoo, Michigan, last month raised more than $4 million to continue developing a drug that fights organ rejection in transplant patients.
Clinical-stage regenerative medicine company Juventas Therapeutics Inc., initially called AccelleRX — has started enrolling patients in a Phase 1 clinical trial to evaluate the safety and efficacy of its leading stem cell factor for treating heart failure.
“We’ve got 10 companies that are in clinical trials or will be in clinical trials this year,” Coburn said. “Going into the clinic is a huge milestone.”
That’s because clinical trials often necessitate collaborations with large corporations, which are good relationships to have, he said. And getting into the clinic is the “key discriminator” for many potential strategic or venture investors.
For Explorys Medical Inc., which was spun out of the Clinic last year, CCI has meant contacts. Lots of contacts.
“They helped us with contacts with different government organizations, healthcare providers, life sciences organizations and industry networking groups,” said Steve McHale, the health IT company’s chief executive and a data management company veteran.
Explorys is using some of those contacts to build its application that assembles, manages and leverages burgeoning medical data to speed research discovery and bridge clinical information gaps. The company got its bio-research application, intellectual property rights and data related to the application from the Clinic.
Some of the Clinic’s spin-off companies, like Explorys, are moving into the Global Cardiovascular Innovation Center (GCIC) — the $19 million, state-of-the-art incubator building at East 101st Street and Cedar Road. Enabled by a $60 million grant from the Ohio Third Frontier program, the GCIC hosts wet laboratories and offices, conference rooms and informal meeting areas, artwork and sophisticated teleconferencing and audio-visual technologies.
It also hosts Coburn’s office, and the offices of his 25-or-so Innovations colleagues.
As for exits, Cleveland Clinic Innovations has had two in its first 10 years. One exit — Cleveland BioLabs (NASDAQ: CBLI) — happened through a tiny ($14 million) initial public offering in 2006. Another company, ReVasc, was sold in 2007 to Micrus Endovascular Corp. (NASDAQ: MEND) in San Jose, California, for $1 million, with the potential of $5 million more in future milestone payments.
What could the next 10 years hold for Cleveland Clinic Innovations? Opportunity.
“I think there will be tremendous opportunity for organizations like the Cleveland Clinic and Cleveland Clinic Innovations,” Rein said. “For people who are … willing to get involved in things that aren’t minor incremental improvements but rather serious game-changers, I think there’s going to be lots of opportunity. And that’s where CCI has to stay focused.”