There's now an enormous hole in the “soft ceiling” that prevented Cleveland Clinic Innovations from making big investments.
The Clinic's business development team just spent several hundred thousand dollars to turn a doctor's idea into a full-fledged product.
That's huge change: In the past, the Innovations team rarely spent more than $50,000 on any given technology. And it won't be the last time that the Innovations team spends a significant amount of money to shepherd technologies and startups created by the Clinic through the so-called valley of death — a stage where they need a significant amount of capital but aren't yet mature enough to get it from the average venture capital fund.
That's because the valley has become harder to cross in recent years, according to Peter O'Neill, interim director of the Innovations team.
These days, few medical technology companies are willing to license an early stage prototype and then spend time and money turning it into an actual product that's ready to sell, O'Neill said.
Case in point: In 2014, the Clinic and a Japanese manufacturer called Yokowo Co. received a patent on a new coronary guidewire that appeared to have a lot of potential.
Compared to other guidewires — long, skinny wires that doctors use when they want to move a stent through a patient's arteries — the Clinic says this one appears to have several advantages: It's more flexible. It has a strong torque response (when you rotate one end of the wire, the other end rotates simultaneously). And it has a flexible bend in the tip designed to help doctors treat blocked arteries. Medical devices companies told the Innovations team they liked the technology, which is held by a startup called Tatara Vascular.
But they wanted a finished product.
Preferably something that had been tested in humans. Something that was already approved by the U.S. Food and Drug Administration.
Something less risky.
So the Clinic decided to remove some of that risk. Luckily, the Innovations team had hired Kelly Emerton as its senior director of product development shortly after it received the patent.
She previously worked in product development at Medtronic, so she was familiar with the complex series of steps medical device companies go through to get FDA approval for a new product.
Thus, she led the Clinic's effort to develop and test the “Whitlow Wire,” which was invented by Dr. Patrick Whitlow, who recently retired as director of interventional cardiology at the Clinic.
“If we didn't have Kelly,” O'Neill said, “we're probably not doing this deal.”
As a result of that project, a row of thick binders now fills up a shelf next to Emerton's desk at the Global Cardiovascular Innovation Center on Cedar Avenue.
Those documents helped the guidewire win the FDA's 510(k) stamp of approval on Jan. 22.
Combined, the Clinic and Yokowo spent $1.5 million developing and testing the Whitlow Wire.
Though it was a large investment, the Clinic should be able to get a good return on its money, O'Neill said. Multiple medical device companies are now interested in licensing the technology.
“It's fairly shovel-ready. And that's going to cost a premium,” he said.
The binders on Emerton's desk also contain templates that the Innovations team should be able to use in the future.
Granted, they won't push every project this far. Many will remain below the $50,000 level. And technologies that need more capital will only get it if they have a lot of potential, O'Neill said.
But if the market is there, Innovations is willing to write big checks. A $5 million investment isn't out of the question, if the opportunity is big enough, he added.
“We're looking at the same thing in therapeutics, where the dollar amount is a lot more,” he said.
"Cleveland Clinic to make larger tech investments" originally appeared in Crain's Cleveland Business.