Creating, financing and growing companies.
A patient’s clinical problem profile, assembled in seconds from voluminous electronic medical records. A laser-activated lotion that ameliorates severe acne without the need for a systemic drug. An antibody that could one day prevent joint destruction in patients with rheumatoid arthritis.
These are a few of the many innovative ideas brought to life with help from the Partners Innovation Fund, a core asset of Partners Innovation.
Since its inception in 2007, the Fund has worked with Partners investigators to launch 22 new companies embodying therapeutics, devices and health care software technologies originating from the Partners research community. Founded with an initial commitment of $35 million from the BWH and MGH, the Fund has had substantial success – current aggregate Internal Rate of Return is greater than 20%, comparable to the top quartile of life science venture capital funds. Returns on investment are used to refresh the Fund’s capital for additional investments, through an evergreen model.
“The fund was created to enhance the process of spinning out companies from Partners institutions through investment,” says Roger Kitterman, Managing Partner of the Partners Innovation Fund. “It’s the process of taking raw ideas that come from great science and transforming them into successful companies that will benefit patients and impact health care.”
“This performance for an academic venture fund, doing the earliest stage investing, is truly remarkable,” said James Mawson, founder and publisher of Global Corporate Venturing, the leading entity tracking corporate and academic venture.
The Innovation Fund Team typically begins with a dialogue regarding the venture potential for a biomedical product opportunity. From there, the Fund’s managers – representing more than 60 years of combined experience in early-stage venture capital, start-up management and product development – help the investigator to determine if the technology can be the basis for a company.
“For the technologies that have the potential, putting these companies together is a complex process. It’s not something done casually,” Kitterman says. “We spend a lot of time conducting due diligence to understand the technology risks, the product value proposition, the addressable market, building a management team, critiquing the business plan and pulling the financing together. We tend to sit on the boards of the companies to help guide them and their growth.
In an average year, the Fund team reviews more than 50 technologies for venture potential but invests in just 3. The Partners Innovation Fund’s early commitment of capital is often catalytic to the company’s ability to attract additional funding.
Co-investors have contributed more than $500 million from some of the industry’s leading players, including Atlas Ventures, Third Rock Ventures, Polaris Partners, Johnson & Johnson Development Corporation, SR One, MPM Capital, Matrix Partners and Novartis Ventures.
A spin-off in the health care IT space, QPID – acronym for Queriable Patient Inference Dossier, or more informally “Quick Patient Insights Delivered” – was conceived by Michael Zalis, MD, an interventional radiologist at the Massachusetts General Hospital (MGH). Zalis, a co-founder and now Chief Medical Officer of QPID Health, once devoted hours to manually troving through hundreds of pages of electronic patient medical records, extracting the bits of information relevant to interpretation of each imaging study. Determined to find a more automated solution, Zalis and MGH collaborators developed the QPID technology platform.
“It’s not enough to have the data available electronically,” Zalis says. “Clinicians and administrators require a way to quickly and easily see what is relevant. QPID provides a clinical reasoning tool that finds and synthesizes this relevant information. For example, a surgeon making a decision about whether or not a procedure is appropriate for a patient will need to understand a whole range of factors – from prior surgeries to lab values to patient reported outcomes. Typically these are located throughout the record, across multiple free form notes and data fields. QPID pulls it all together based on its knowledge of how a clinician thinks.”
QPID’s clinical reasoning platform, which boasts more than 7,500 active users in the Partners Healthcare system alone, pulls information from multiple sources and presents it as a concise organized report.
The Fund also invests in therapeutic devices, like the acne-fighting microparticles developed by Rox Anderson, MD, Director of the Wellman Center for Photomedicine at the MGH. Commercialized through Sebacia Inc, these gold-plated microparticles are massaged into the facial hair follicles then heated by dermatologists using a standard laser that is common in their offices. The laser pulse creates a heating effect in the sebaceous glands to reduce their activity and the subsequent inflammatory lesions that result in acne.
Sebacia is pursuing FDA approval for the first physician office treatment to offer acne patients relief. It recently raised $22 million to complete its U.S. pivotal trial, submit to the FDA and start its U.S. launch.
A number of innovative therapies have spun out of Partners through the Fund’s efforts, including SDP051 – an antibody drug commercialized by Adheron Therapeutics that could potentially provide a powerful tool in the fight against diseases like rheumatoid arthritis, fibrotic pathology, and a number of cancers.
SDP051 acts by inhibiting a protein called Cadherin-11 (Cad-11). This protein acts as an adhesive between cells that compose connective tissue in the skin and lungs, and between similar cells in the joints. By disrupting this adhesion, SDP051 could potentially alleviate joint destruction in patients with rheumatoid arthritis, and aid in the treatment of a variety of other diseases.
“Targeting cadherin-11 has proven effective in animal models in treating fibrotic diseases involving the lung, skin and gut. It alters the development and function of myofibroblasts which are the final common pathway for excess collagen deposition,” says Michael Brenner, MD, Chief of Rheumatology, Immunology and Allergy at the BWH, and the Theodore Bevier Bayles Professor of Medicine at Harvard Medical School.
Results of a recent Phase 1 clinical trial suggest the therapy is well tolerated in healthy humans.
“Every once in awhile, you can take great science and turn it into a start up, and then turn that startup into a product that reaches patients,” Kitterman says. “That process – thinking about the science and the idea, exploring the options and planning its evolution into a company – is exciting. And then someday the company starts to have a real impact on health care, creating jobs and patient benefit. And that’s what makes it all worthwhile.”
Partners Impact Investing Fund
Since 2000, it is estimated that inventions conceived by Partners’ investigators have generated more than $75 billion in commercial sales revenue. The Partners Innovation Fund plays a important role in this process, attracting external investment capital and creating returns for the hospitals and their inventor/investigators along the way.
Soon, every investment that Partners makes through its own high-performing Innovation Fund will be leveraged by additional capital from the Partners Impact Investing Fund (PIIF) via pairing of the impact investing fund and the Partners Innovation Fund. The PIIF aims to generate long-term capital appreciation for external investors while buttressing Partners’ societal mission to improve by accelerating medical innovation.
The PIIF offers a unique opportunity for eligible investors to make private equity investments, alongside the Partners Innovation Fund, in technologies emerging from Partners HealthCare System’s flagship hospitals: Brigham and Women’s Hospital (BWH), Massachusetts General Hospital (MGH), and McLean Hospital. It will be managed by the same dedicated team that powers the Innovation Fund. The Impact Investing Fund is targeted to be a minimum of $50 million in aggregate investor commitment. It will allow private investors to be part of every investment Partners makes for itself and to take unprecedented advantage of the proprietary knowledge resident inside Partners and among the Partners Innovation team.