Medical Innovation Acceleration in Northeast Ohio

8 May 2014

• Ohio top state in Midwest for venture capital investment in 3 of last 4 years (last 2 years both over $290 million)

• Biomedical start-ups in NEO raised $200 million of venture investment in 2012 and 2013

• Record numbers of NEO companies raising venture capital for each of last 4 years including 50 in 2013

Lots of good news lately…

…

• Economic recession

• Disproportionate impact on Cleveland due to heavy exposure to industrial and manufacturing

• Civic recognition of structural changes, not just cyclical, in regional economy

• “Quiet Crisis”

…but in 2001:

National healthcare leadership…

• Healthcare systems

• Largest industry sector

• Growth driven by demographics and

international patient care

• Distinction driven by innovation

• Broad industry

• In 2001, ~250 companies

• Majority in medical devices

• Some industry leaders (Steris,

Invacare, Philips/Picker),

many small companies

…but weak in commercialization

2001 2002

8

33

HEALTHCARE VENTURE INVESTMENT

$ Millions

COMPANIES FUNDED

5 6

2002: Commitment

• Private/Institutions

–Focus on entrepreneurs and innovation

–Technology transfer

–Venture firms and professional services

• Philanthropy

–Fund For Our Economic Future: $90 million

–Investments for capital formation

• Public

–State of Ohio: $2.3 Billion+ Capital, Operating Support, Business Attraction

2002: Setting a Collective Goal

• Nationally-recognized center for healthcare innovation

• Benchmark against Research Triangle, Minneapolis

• Single measure: venture capital invested in regional healthcare companies

– Starting point ~$30 million per year

– Goal: >$150 million per year

BioEnterprise Partners and Funders

8

9

Choose/create opportunities that are fundable

• Regional entrepreneurs

• Institutions

• Foreign recruitment

• Company creation

Position companies to raise capital

• Experienced management support

• Clinical and research collaborations

• Business development

• Network of bioscience capabilities

From targeted, interested investors

• Access to capital

• Venture/equity

• Strategic

• Debt

• Grant

Market-back Approach

Market-Driven Approach

10

10+ years later: Healthcare Innovation Destination

• $700 M in annual sponsored research at Case Western Reserve University, Cleveland Clinic, University of Akron and many others

• $500 M invested to start new centers of excellence in biomaterials, regenerative medicine, cardiovascular innovation, neuro-stimulation, and medical imaging

• Over 700 healthcare companies

–Several billion-dollar-plus companies and major divisions such as STERIS, Invacare, Philips Medical and GE Medical

• World-class healthcare systems recognized for providing exceptional patient care and conducting leading-edge clinical research

–Cleveland Clinic (#1 heart and heart surgery for 19 years in a row; #4 overall)

–University Hospitals (Nationally ranked in 21 specialties, #18 overall)

• Over 230,000 workers employed by biomedical companies and clinical and research institutions

10+ years ago…

2001 2002

8

33

HEALTHCARE VENTURE INVESTMENT

$ Millions

COMPANIES FUNDED

5 6

…and today

Notable Exits

• EdgePark Surgical - $850 M

– Clayton Dubilier & Rice/Goldman Sachs

• MemberHealth - $630 M

– Universal American

• Theken Spine - $200 M

– Intergra LifeSciences

• Orthohelix Surgical - $135 M

– Tornier N.V.

(40+ total exits over 10 years)

13

• Originated from Picker International (Philips)

• One of the three centers in the US for medical imaging technology

• Every Tier 1 medical imaging equipment company has a significant presence in Northeast Ohio

• Comprised of 60 mid-market and early stage companies

Strengths: Imaging

Strengths: Orthopedics

• Orthopedic industry can be traced back to AcroMed, a local startup company that became the world’s second largest producer of spinal implants

• Over 50 companies directly related to the orthopedic industry in the region

• Austen BioInnovation Institute in Akron launched as regional leader in biomaterial applications in orthopedics and wound healing

• Case Western Reserve University Medical School ranked top 10 in Orthopedic Research by NIH and top 25 by US News and World Report

Strengths: Cardiovascular

• Starting with the development of coronary angiography in the 1950’s

• Cleveland Clinic ranked #1 in the nation in cardiac care for the last 18 years

• Global Cardiovascular Innovation Center provides companies with critical resources for research, commercialization and business development

Strengths: Neurostimulation

• In 2010, NeuroInsights Industry Report named Northeast Ohio a “neurotechnologyregion to watch worldwide”

• $175 M invested in companies since 2003

• 75 issued and over 100 pending neurostimulation patents

• Over 30 world-renowned neurotech scientists including Dr. Hunter Peckham, Dr. Kevin Kilgore, Dr. Andre Machado, Dr. Cameron McIntyre

Cleveland Health-Tech Corridor

The Health-Tech Corridor brings together public and private investment to create a vibrant concentration of biomedical and technology assets that covers 1,600 acres, spans 3 miles, and includes:

• 80 biomedical companies • 40 technology companies • 8 business incubators & accelerators• $450 M in annual research expenditures• Over 4,000 clinical trials underway• 500,000 square feet of incubator and commercial space • 4 world-class health care clinical and research institutions• 4 higher education institutions dedicated to health and technology education, research,

and workforce training

Global Center for Health Innovation

• Tenants include:

–Cisco, GE Healthcare, Cardinal Health, Forbo, Siemens, Philips and Steris

–Cleveland Clinic, CWRU, University Hospitals, MetroHealth

• HIMSS

–Globally, lead endeavors optimizing health engagements and care outcomes through information technology.

• Attached Convention Center

–225,000 gross square feet of Class A exhibit space, divisible into 3 exhibition halls, 35 state-of-the-art meeting rooms, and a 32,000-square-foot ballroom

• In partnership with MAGNET, Northeast Ohio’s Manufacturing Extension Partnership (MEP) Center, Tom Shaughnessy hired as Director of Medical Manufacturing to:

• Assist regional medical device companies in understanding their manufacturing requirements

• Connect them to the appropriate Ohio-based resources

• Engage manufacturers to align them with the growing biomedical opportunity

• Identify gaps in the biomedical manufacturing chain and secure the appropriate resources to fill them

• Areas of growth related to plastics and polymers include scaffolding, 3D printing, bioabsorbables and wearable medical devices

Medical Manufacturing

• Build on strong growth in biomedical sector over last decade

• Leverage growing role of plastics and polymers in medical devices

• Support collaboration between industry and regional clinical/research institutions

• Continue to develop biomaterials-specific resources

• Focus engagement on growth and economic impact

The Next 10 Years…

22

Aram NerpouniPresident & CEO

BioEnterprise

Phone: (216) 658-3975E-mail: anerpouni@bioenterprise.com

Thank you!