SpinOffs at the Cleveland Clinic

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Spin-Offs at the Cleveland Clinic
November 17, 2006 Christopher M. Coburn Executive
Director, Cleveland Clinic Innovations www.clevela
ndclinic.org/innovations
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• every time I see a resurrection here and
  there are many and I realize that each
  resuscitation owes its life to a little dingy
  dirty laboratory in Cleveland our laboratory at
  that. We assembled it we ran it we paid for
  it and now many times every day it is all paid
  back paid back in the invisible coin of
  infinite satisfaction.

George Crile, Sr., in a 1917 letter home from
the front lines during World War I.
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Innovation (inventions per year)
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Commercialization Model

• Build from can-do clinical culture and group
  practice foundation
• Innovation key to every aspect of CCF future
• Directed more corporate than academic
• Leverage CCFs place in WW market
• Assume region will remain sub-critical for next
  5-10 years (e.g. HR)

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Highlights

• Active advisors (IAB and Commercialization
  Council)
• Entrepreneurs in residence
• Validation fund
• Translational research cores
• Targeted IP development
• Pre-clinical animal studies tied to clinical
  requirements
• Broad clinical trial capability (e.g. C5)
• 15k sq. ft. accelerator abutting development
• Seed investment and operating support for
  spin-offs
• Close relationship with key VCs
• 20FTE BD team

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Why Spin-offs?

• Create Innovation Environment
• Retain and recruit staff
• Build local good will
• Economic development
• Expand funding sources
• Increase financial upside
• Bayh-Dole Act

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Spin-Off Model

• Hands on staff are employees
• Participate in raising Series A (and beyond)
• Recruit Management
• Provide on-campus incubator
• Often hold majority stake in company post-Series
  A (CCF holds for staff) 100 at launch
• Provide packaged newco IP, fund-raising,
  research base, admin services

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Spin-off Activity
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Spin-Off Process
Business Case Development
Spin-off Formation Development
Portfolio Management Governance
Ohio BioGel Quantum Dots Education
Concept Ridgeway Semantic Database Sharepoint
(CRS) Go Beyond Learning Ophthalmology NewCo
CSF Therapeutics Merlot OrthopediX RegenRX VitalSt
ream Tolera Therapeutics Zin Medical ReVasc
CBL CleveX IntElect Peritec PrognostiX VioQuest Or
thoMEMS
Technology Assessment Patent Landscape Market
Research Competitive Analysis Fundability
(Grants, Investors) Executive Summary
Term negotiation Execution of Legal
Docs Compliance Management Recruitment COI
Management Plan Supermajority Financial
Analysis Capital Raise Fair Market Value
Compliance Financial Analysis Supermajority
rights Maintain Board Position Reporting to CCF
Sr. Mngt
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Cleveland Clinic Spin-Off Highlights

• CBL - First Biotech IPO in more than a decade in
  Ohio
• Four Companies in Series B
• 2 have Term Sheets
• 1 under due diligence for possible acquisition by
  2 multi-billion cos.
• Three Companies in Series A
• Will close 4M Series A in next 10 days
• Executed investment contract
• Joint development agreement in place
• Total employment nearly 200

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• Company Background
• Cleveland Clinic awarded 7.6M State of Ohio
  grant to form Brain Neuromodulation Center in
  2004
• IntElect Medical founded by Ali Rezai, M.D. and
  incorporated in April 2005
• Executed license with the Clinic for 33 U.S.
  patents and applications, based on six years of
  research
• Closed 3M Series A financing in September 2005
  and hired initial staff
• Licensed 3 U.S. patents for Traumatic Brain
  Injury indication from Cornell Weill Medical
  College in March 2006

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Challenges

• Managing expectations
• Recruiting talent to NEO
• Appropriate governance
• Preserving organizational boundaries while
  leveraging institution

• Increased COI management needs
• Building local investor base
• Space close to institution
• Institution reluctant, high risk investor
• Monetization delay vs. licensing