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									Spin-Offs at the Cleveland Clinic

November 17, 2006
Christopher M. Coburn
Executive Director, Cleveland Clinic Innovations
                                                   “…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.
Innovation (inventions per year)

               Innovation (inventions per year)


      2000     2001    2002      2003      2004       2005      2006

         CCF      National Average / $100MM Research ('05 & '06 Est.)
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 CCF’s place in WW market
Assume region will remain sub-critical for next 5-10 years (e.g. HR)
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
20+FTE BD team
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
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
Spin-off Activity

6                                                                  20
3                                                                  10
0                                                                  0
    2001      2002        2003     2004      2005       2006

      CCF Spin-offs/yr               Nat'l Avg./ $100MM Research
      CCF Spin-offs (Cumulative)
  Spin-Off Process

     Business Case                Spin-off Formation         Portfolio Management
     Development                  & Development              & Governance
      Ohio BioGel
      Quantum Dots                                    CSF Therapeutics
      Education Concept                               Merlot OrthopediX
      Ridgeway                                        RegenRX
      Semantic Database                               VitalStream
      Sharepoint (CRS)                                Tolera Therapeutics
      Go Beyond Learning                              Zin Medical
      Ophthalmology NewCo                             ReVasc

Technology Assessment              Term negotiation               Compliance
Patent Landscape                   Execution of Legal Docs        Financial Analysis
Market Research                    Compliance                     Supermajority rights
Competitive Analysis               Management Recruitment         Maintain Board Position
Fundability (Grants, Investors)    COI Management Plan            Reporting to CCF Sr. Mngt
Executive Summary                  Supermajority
                                   Financial Analysis
                                   Capital Raise
                                   Fair Market Value
 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
CCF Spin-off Funding   Amount ($000)

Individual                      6,650

Strategic                      14,739

Seed/Venture                   52,200

IPO                            10,200

Total                          83,789
CCF Spin-off          Formed/          FTEs    Funding
                      Location                  Status
Cleveland BioLabs     2003/Cleveland      30     Public
CleveX, Ltd.          2003/Columbus       1     Series B
IntElect Medical      2005/Cleveland      6     Series B
Merlot OrthopediX     2004/Cleveland      -      Seed
OrthoMEMs             2005/Cleveland      1      Seed
PeriTec Biosciences   2002/Cleveland      4     Series B
PrognostiX            2004/Cleveland      15    Series B
Company Background
•Cleveland Clinic awarded $7.6M State of Ohio
grant to form Brain Neuromodulation Center in
•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
•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

•   Managing expectations       • Increased COI
                                  management needs
•   Recruiting talent to NEO
•   Appropriate governance
                                • Building local investor base
•   Preserving organizational
                                • Space close to institution
    boundaries while            • Institution reluctant, high
    leveraging institution        risk investor
                                • Monetization delay vs.

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