1 Health Care I ndustry and Overview of Cleveland’s BioEnterprise I nitiative November 14, 2007
Overview • Regional Health Care Base: 2002 • Transformation: Role of State • BioEnterprise and Entrepreneurship • Lessons Learned 2
Cleveland Health Care Base Nationally-recognized leaders in clinical care and research … > $450 Million in annual research • Numerous nationally-distinctive • programs including: Cardiovascular • Cancer • Neurology • Orthopedics • Surgery • Pediatrics • Medical imaging • Biomedical engineering • Stem cells & tissue engineering • Advanced materials • Molecular diagnostics • Anti-infectives • Prions • Destination for innovation and care • 3
Cleveland Health Care Base … a broad industry base… ~ 500 health care • Biopharma- companies in region ceutical 16% Five > $1 billion companies • Device/ or divisions Equipment Other 68% Over 20,000 employees 6% • Health Care Services/IT 10% 4
W eak Com m ercialization …How ever, few com panies w ere attracting grow th equity CLEVELAND AREA CLEVELAND AREA HEALTH CARE VENTURE INVESTMENT HEALTH CARE VENTURE INVESTMENT $ Millions Companies Financed 6 5 33 8 1 2 2001 2002 0 0 0 0 2 2 5 Source: Dow Jones Venture Wire; Venture Source; BioEnterprise
Broad Effort Required • Community- People wide effort Pipeline • Collaboration Grow th • Connectedness Clinical … regionally Capital and nationally 6
2 0 0 2 : Com m itm ent to Grow th • Private • Renewed focus on entrepreneurs and innovation • Technology transfer culture capabilities significantly enhanced • Investment firms and professional services • Public • $ 1 .6 Billion in Third Frontier program • Philanthropic • Fund For Our Economic Future: $60 million • Investments for capital formation 7
Third Frontier I nitiative • $1.6 Billion, 10-Year Initiative • Funding for: • Research distinctiveness and translation • Capital formation and attraction (seed and venture) • Entrepreneurial infrastructure (inc. BioEnterprise) • Company acceleration • Characteristics of program: • Multi-institution collaboration required • Nationally competitive and nationally assessed • Leverage (9: 1 ratios) 8
BioEnterprise I nitiative Mission Be the leader in biosciences industry growth focused on recruiting and attracting entrepreneurs, creating, accelerating, and retaining start- ups , and nurturing and promoting a vibrant business environment Approach Market-back catalyst, consultant, and funding connector Results • Over 60 companies accelerated • > $565 million in new growth funding raised by companies • Technology offices have completed over 160 deals and collected more than $65 million in licensing revenues 9
Approach Choose/ create …position …from targeted, opportunities that com panies to raise interested are fundable… capital… investors • Regional • Experienced entrepreneurs management support • Access to capital • Clinical and research • Institutions Venture/ equity • collaborations Strategic • • Foreign recruitment Debt • • Business Grant • development • Company creation • Network of bioscience capabilities Market-back Approach 10
Role 1 : Connector • Institutional Technology • C-level talent • Regional Start-ups • Service firms: • Foreign Start-ups People technical, • Existing Companies professional (PE) • Contract individuals (e.g, reg., reimb.) Pipeline Clinical • Equity firms: venture, PE • Clinical sites Capital • Debt sources • Advisory boards • I-banks • Angel groups • Grants 11
Role 2 : Catalyst … Through Collaboration • Technology Offices and Enterprise Groups • National networks • Business attraction People groups • “101” courses • JumpStart • Events Pipeline Clinical • New funds • Angel groups • SBIR training • National networks Capital • Investment banking networks • Conferences 12
Entrepreneurship I nfrastructure • Skilled and Resourced Intermediaries • BioEnterprise Initiative • Institutional Technology Offices • Combined > 40 professionals • Regional Healthcare Equity Environment • 11 venture firms (regional and national) • 4 Seed funds • 3 Angel groups and funds • 5 private equity groups • Funded by private, philanthropic, and public sectors 13
Venture I nvestm ents A vibrant, bioscience start-up environm ent… COMPANI ES FUNDED EQUI TY I NVESTMENTS $ Millions 2 3 4 1 7 1 2 4 2 2 2 1 1 6 8 7 1 3 6 1 6 33 3 2 5 8 2001 2002 2003 2004 2005 2006 1 2 3 4 5 6 YTD07 7 0 0 0 0 0 0 0 0 0 0 0 0 0 D 2 2 2 2 2 2 T Y 14
I nvestm ent Destination …W hich has attracted national investm ent dollars EXTERNAL EQUITY INVESTORS IN CLEVELAND COMPANIES, 2004-Present Midw est Boston • Beecken Petty • Ampersand Ventures • Blue Chip Venture • Bain Ventures • CID Equity • Boston Scientific • Medtronic • Capital Resource Partners • Ohio Tech Angel Fund • Morgenthaler Ventures • Reservoir Ventures • MPM Capital • Thomas McNerney Partners • Norwich Ventures $ $ $ $ • Triathlon Medical Ventures • Polaris Ventures $ $ • RA Capital New York Area Cleveland Area • Accipiter Capital Com panies • Behrman Capital W est Coast • Cowen • Angiotech AAdvance $ $ $ $ $ $ • Domain Associates • Compass Group • DSM Venturing • DW Healthcare • Greatbatch • Hambrecht & Quist • Investor Growth Capital • Palo Alto Investors • Johnson & Johnson • SV Life Sciences $ $ $ • Jordan Capital • Vivo Ventures • LSKW Investments • Western Technology • MSD Capital • North Peak Capital • Oak Investments South • Orbimed Advisors • ExOxEmis • Psilos Group • MB Ventures • Radius Ventures • Pappas Ventures • Sunrise Equity • River Associates • Welsh Carson • Texas Pacific 15
16 Midw est Health Care I nvestm ents, 2 0 0 7
Related Developm ents • Global Conferences • CCF Medical Innovations Summit • IBF Global Healthcare Investing Conference • Clinical conferences • Global Medical Mart (2009) • Permanent and temporary exhibition space for medical technology companies • Trade and clinical shows 17
Key Success Factors: BioE • Small, invested Board • Single metric with targets based on aspirational benchmarks • Simple model, easy to communicate • Private-sector approach • Strong support and complementary developments 18
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