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March 02, 2015

Mayo Clinic-linked NeoChord looking to drum up $1.5 million

NeoChord, a medical device firm I first wrote about in 2007, filed with the SEC in February to raise $1.5 million in funding. So far it has pulled in $457,000 or so of that.

I need to give a nod to the intrepid Katharine Grayson of the Minneapolis/St. Paul Business Journal for first pointing this out. I'm always impressed by how closely she tracks Form D filings for financing.Portfolio-neochord-260x138

The Eden Prairie-based NeoChord surfaced locally in 2007, when it licensed technology designed by Mayo Clinic cardiac surgeons Dr. Richard Daly and Dr. Giovanni Speziali. Speziali was named as the company's chief medical officer in 2013. 

Beside licensing its technology, Mayo Clinic has also previously invested in NeoChord. I'm checking to to see if that is still the case.

Neochord deviceThe NeoChord DS1000 device is used to treat a heart condition called mitral regurgitation. Mitral regurgitation means the valve or leaflet that controls the flow of blood from the left atrium to the left ventricle is not working properly.

Treatment typically consists of “cracking the chest,” stopping the heart and doing surgery. NeoChord's approach is much less invasive and can be done on a beating heart.

A tool is inserted between the ribs and into the heart. Then it is used to attach a chord to the faulty valve leaflet, which is tethered to the heart.

The market for less invasive techniques for mitral valve repair has been estimated at more than $2 billion. There are 50,000 surgeries done in the U.S. each year. An estimated 2 million patients are treated due to the risks of surgery.

Since it formed in 2007, NeoChord's lifeblood has been venture capital funding. By 2008, it had raised $3 million. It raised another $5.1 million in 2011 to finance the European clinical trial. In March 2013, it raised $3 million through the sale of its series B-2 preferred stock.

 

February 26, 2015

Rochester senior apartments sell for $1 million

In the wake of the sale of Rochester's Maple Manor Health Care, the senior apartments next door now have been sold for $1.01 million.

The 18-unit Maples Senior Apartments at 1893 19th St. NW was purchased by Kurt Luschen, of Maynard, Minn., on Feb. 17. The Blum family, which owned Maple Manor until it was sold in January, sold the complex.

Maples senior apartmentsPat Blum, the former administrator of Maple Manor, said it made sense to sell it after the sale of the senior-care center.

Having the apartments next door, Blum previously easily could manage the apartments and handle his duties at Maple Manor. Now that he has left Maple Manor, it wasn't practical for him to continue managing the apartments.

"It's a good fit," he said. "I'm happy we found a buyer for it so quickly."

Darci Fenske, of Rochester's Paramark Real Estate, represented the Blums in the deal, while Cory Magnuson, of Edina Realty, represented the buyer.

Luschen, the new owner, also is pleased with the deal.

"It's an investment property for me. I plan to keep it fairly the same," he said. "I think it's good to invest in Rochester. It's a fairly stable community down there."

Luschen is in talks with Pritok Capital, of Skokie, Ill., which bought Maple Manor, about working out an agreement to provide some services to the apartments' tenants. Pritok bought the center at 1875 19th St. NW for $3.5 million in mid-January.

February 25, 2015

City to lease former Mayo Clinic space to Cardio3

This has been in the works for quite a while. It looks like it's now a done deal, at least on the city, RAEDI and DEED side.

We'll see what happens next. After following this for more than a decade, it will be interesting to see how it plays out. I'm particularly fascinated with how the China piece of this, including Medisun and Danny Wong, turns out.

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After amending its original lease, Belgium-based Cardio3 BioSciences is now finally cleared to take over the entire fifth floor C3BS_may_spotlightof Rochester's Minnesota BioBusiness Center.

In December, the Rochester City Council originally approved a five-year agreement with Cardio3 for the 14,963-square-feet of space to use as a prototype manufacturing facility. However, the company then asked for "an early termination provision" in the lease.

The deal is being driven by the city, Rochester Area Economic Development Inc., Mayo Clinic and the Minnesota Department of Employment and Economic Development to make Rochester more attractive to Cardio3, so that the company will build a major manufacturing plant here.

This is the second phase of deal funded by $1.2 million from the city of Rochester's economic development sales tax fund. The first phase was developing little more than 5,000 square feet of unused space on the third floor of the BioBusiness Center to build a special manufacturing lab for Cardio3.

Mayo Clinic and Cardio3 have collaborated for years on the cardiopoiesis technology the company uses to repair patients' hearts by re-programming their own stem cells to regenerate cardiac tissue. Mayo Clinic owned 2.96 percent of the company as of Jan. 21. It's also managing a clinical trial for Cardio3.
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On Wednesday, city council members voted to add an early termination provision to the deal that allows Cardio3 to end the five-year lease after just two years in the space. That provision kicks in only if Cardio3 decides to "construct or lease a larger production facility in Rochester" or the clinical trial on its regenerative heart treatment is not successful.

To leave early, Cardio3 will need to notify the city six months ahead of time. Under the modified lease, the earliest that the regenerative medicine firm could pull out is April 30, 2017. Cardio3 would need to pay the city $269,334 if it did leave earlier than five years. That amount equals about one year of base rent.

If Cardio3 does leave before its lease is up, all of the city-funded fixed equipment and improvements will become the city of Rochester's property. The city agreed in the lease to pay for $600,000 in equipment and improvements to the space.

The final version of the lease calls for Cardio3 to pay a rent of $18 per square foot or $22,444.50 a month.

Mayo Clinic, which leases the fourth through eighth floors of the BioBusiness Center, moved its employees out of the fifth floor earlier this year. At one point, Mayo Clinic Global Products' corporate accounts had offices on the fifth floor.

In earlier discussions about this project, RAEDI estimated that Cardio3 will need 30 to 50 employees to staff the proposed prototype manufacturing facility on the fifth floor.

The ultimate goal of this project is to convince Cardio3 to build a 100,000-square-foot manufacturing facility with 350 employees in Rochester. That's what Cardio3 anticipates it will need if the Federal Drug Administration gives it a green light to take its stem cell treatment to market.

RAEDI President Gary Smith calls it "the big enchilada."

February 12, 2015

Prosthetics lab complex sold for $4.51 million

The Rochester commercial complex that houses a prosthetics firm and a veterinarian clinic recently sold for $4.51 million.

02122014prostheticslabcomplexRochester developer Gus Chafoulias sold the 13-year-old building at 121 23rd Ave. SW  to Mace Holdings LLP of Billings, Mont. Chafoulias developed and owned the 28,000-square-foot facility through his company, ACG Second Street LLC.

Prosthetic Laboratories of Rochester, Inc. and Affiliated Emergency Veterinary Service are tenants in the center, which stands in front of the Shorewood Senior Campus along Second Street Southwest. Chafoulias was invested in Prosthetic Labs until it sold to Hanger Inc. last year.

Michael R. Mace, managing partner of Mace Holdings, says the purchase is simply an investment for he and his wife.

"We think Rochester, Minn. is a dynamic community with wonderful people. We just think it's a great place to be doing business," said Mace.

January 27, 2015

Mayo looks to attract more patients from China

To take advantage of the rapidly growing medical tourism market, Mayo Clinic has deepened its relationship with a Hong Kong firm to bring more Chinese patients to Rochester.

Medisun Holdings Ltd. announced Monday it has signed a collaLogoborative deal to "Ensure efficient referral of patients" to Mayo Clinic. The agreement also calls for Mayo Clinic "to provide health care consulting services to aid Medisun’s work" in Hong Kong and mainland China.

This will allow Mayo Clinic to enlarge its patient pipeline from China. It has added a Web page in Mandarin Chinese and has hired interpreters, the article notes. The Wall Street Journal recently reported increasing numbers of Chinese residents are going overseas "in search of treatment that is either unavailable or ineffective in China."
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Mikel Prieto, medical director of Mayo Clinic's international office, told the Wall Street Journal that "China, probably of all countries, is the one where we see the greatest growth right now."

Melissa Goodwin, Mayo Clinic's manager of global referrals, told China's Caixin Media this summer the number of Chinese people going to Mayo has climbed to 200 in 2013. That's up from just 30 in 2008 and 100 in 2012. She estimated that number would reach 400 by the end of 2014. 

H3-treesDetails of the new Medisun/Mayo Clinic arrangement still are being hammered out, according to Dr. Jason Zhang, of Medisun.

Zhang did confirm that a $1 million office being built in Titan Development and Investments's new H3 Plaza complex on South Broadway will house Medisun's Rochester operations. It's being built under the name Alphaomega Healthcare, though Zhang said he expects it to eventually change to Medisun.

He explained the office will be used to support Chinese patients traveling to Rochester for treatment.

"The medical service will be provided by Mayo, and everything else will be provided by Medisun," Zhang said.

The Medisun office is expected to open in March or April in the west corner of H3 Plaza at 300 S. Broadway, he said. The office will occupy parts of the second and third floors of the seven-story complex, which is being developed by Titan's Andy and Gus Chafoulias.

“Consulting with Mayo Clinic, and leveraging Medisun’s top-quality medical institutions in Hong Kong … Medisun’s experienced medical team will facilitate access to Mayo Clinic’s world-class model of care in order to provide patients in China and Asia with superior medical services,” Medisun's Chairman Danny Wong said in Monday's announcement.
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Wong visited Rochester this summer in connection to his company's investment in Cardio3 Biosciences. Cardio3, a Belgium company with deep business and scientific ties with Mayo Clinic, is negotiating a lease deal with the City of Rochester for the fifth floor of the Minnesota Biobusiness Center.

While in Rochester, Wong had his photo taken at the clinic with local leaders, including Gus Chafoulias and Mayo's Lisa Clarke, who leads the Destination Medical Center initiative.

Wong recently showed his interest in Rochester by buying two large estates here. On Oct. 31, he bought an estate at 2515 Crest Lane SW for $1.4 million. Wong followed that up by buying a Pill Hill house at 615 10 Ave. SW for $1.31 million.

January 20, 2015

Rochester's Maple Manor sold for $3.5 million

The Blum family's history has been interwoven with Rochester's Maple Manor Health Care and Rehabilitation since its doors opened in late 1964. 

That changed last week, when Pat Blum retired after 36 years as an administrator, and the family sold the nursing home at 1875 19th St. NW for $3.5 million. Pritok Capital of Skokie, Ill., purchased Maple Manor. Pritok now owns seven small senior facilities across the country, including one in St. Cloud.

"It's time to step aside, but it's a sad goodbye," said Blum. "I have mixed feelings obviously. You're talking about moving on from something that has really defined me for 50-plus years of my life."

MaplemanorIt all started when Pat's parents, David and Dorothy Blum, with the help of their six sons, began managing the facility on the first day its doors opened. In fact, the whole family lived and worked there for a year as it was getting going.

"It was all hands on deck back then," said Pat Blum, laughing as he remembered telling school friends that he lived in a nursing home. "Nursing homes used have a lot more families involved in running them."

After he graduated from college and earned his administrator's license, Pat began working at Maple Manor in 1978. His parents retired in 1981.

A new administrator, Karl Swedberg, took the reins last week. He has known the Blums professionally for 17 years and is familiar with Maple Manor.

"We're really excited to be in Rochester. I don't expect any big changes immediately for residents or the staff," Swedberg said.

Maple Manor has more than 100 full-time and part-time employees on staff.

"This is a good match for us. They really 'get' it," Blum said of Pritok.

Pritok is coming into the Rochester market during a senior living building boom, with several new facilities, such as River Bend Assisted Living and The Waters on Mayowood, opening and almost all of the existing ones in the area expanding. Being near Mayo Clinic makes Rochester very attractive to the more than 77 million baby boomers, born between 1946 and 1964.

While the Blums are no longer involved with Maple Manor, that doesn't mean they are done with senior care. In 1981, the Blum brothers realized when residents were discharged, "They weren't getting enough support," Pat said. That drove them to start Comfort Health, one of the first home health-care programs in the area.

The family still owns Meadow Lakes Senior Living in Rochester and Prairie Meadows Senior Living in Kasson. Pat still has responsibilities at Comfort Health, which is run by his brother, Chris Blum. Another brother, Pete Blum, still handles the finances of Meadow Lakes and Prairie Meadows.

"I'm still working toward being totally retired," Pat said. "The irony is that my wife just recently graduated as a nurse."

January 15, 2015

Roch. start-up licenses virus to pharmaceutical giant

An international pharmaceutical giant has signed a deal to license a cancer-killing virus from Rochester drug company.

MedImmune, which is owned by London-based AstraZeneca, is licensing a genetically engineered strain of the vesicular stomatitis virus from Omnis Pharmaceuticals. Omnis is a Rochester start-up founded by Dr. Stephen J. Russell, Dr. Kah-Whye Peng, Shruthi Naik and Mark Federspiel, who all work at Mayo Clinic in Rochester. A fifth founder, Glen Barber, is based at the University of Miami.

The companies now will collaborate to combine the Omnis virus with a check point inhibitor created by MedImmune. The goal is to eventually create a treatment for types of cancer affecting the liver, but potentially could be developed to treat a broad array of cancers.

"For us, it's a very big and very important step forward," Omnis CEO Russell said. "Essentially, we have AstraZeneca/MedIummune saying, 'We love this lead product of yours. We want to pick it up, cover the development costs and run with you to bring it to market.' That's a huge accelerator for this development program."

He explained that oncolytic viruses, similar to the one MedImmune is licensing from Omnis, have been found to be effective in destroying cancer cells. Many companies, in the U.S. and internationally, are working on their own treatment based on viruses.

"That's why they're excited about this virus. They can inject it directly into a tumor and kill tumor cells. That wakes up immune system, which adds to the attack," Russell said. "Then if you get the check point inhibitor antibody, the hope is that will lead to major tumor destruction."

This collaboration could mean a lot to Rochester. The US cancer vaccine market was estimated in 2012 to be worth about $14 billion. With about 1.5 million Americans being diagnosed with cancer every year, that market could possibly grow to reach $20 billion by 2020.

While the companies declined to release any financial details of the deal, it's clear the upfront payment portion of the agreement has given Omnis a boost to pursue its own goals, parallel to MedImmune project.

"Our obsession, if you like, is to develop viruses that could be given as systemic intravenous anti-cancer therapy," Russell said.

This virtual start-up, which was founded in late 2013, is "based" on the first floor the Minnesota BioBusiness Center in downtown Rochester in the facilities of Imanis Life Sciences.

Imanis is a related company that was founded by Russell, Peng and Dennis E. Young. It launched in the Mayo Clinic Business Accelerator on the second floor of the building and soon leased 1,736-square-feet of space for its offices and a "wet lab." Imanis makes genetic tracking agents for use in medical research. It also does medical imaging and conduct experiments for clients.

Russell said while Omnis has a lot of potential to break new ground scientifically, Imanis is the more likely candidate to grow into a economic driver and job creator in Rochester.

"That company (Imanis) will probably grow to occupy a fairly large footprint. This company (Omnis) is less likely to arrive at that point," he said.

In 2015, Peng said, "We hope to build it faster to up to 30 to 50 people as we do more manufacturing. We hope to be able to keep it in downtown Rochester. This is our home."

The group also has a third virtual start-up company called Magnis Therapeutics, which is working on a cancer treatment based on the measles virus.

Having three companies with names that end in "-nis" seemed like a good idea at first, said Russell with chuckle. But now, he admits it might be a bit confusing.

January 07, 2015

Cardio3 buys cancer-fighting firm for $10 million

Cardio3 BioSciences, which works closely with both Mayo Clinic and the City of Rochester, has paid $10 million for the oncology division of a New Hampshire firm.

The Belgium-based Cardio3 agreed to pay Celdara Medical $6 million in cash and $4 million in new shares for the division called OnCyte. Celdara could receive up to $50 million, if its lead product in-development CM-CS1 hLogo_cardio_3its specific development and regulatory milestones.

The same type of payments for milestones could also reach $21 million per product for others in the pipeline. If CM-CS1 reaches market and net sales top $1 billion, Celdara will receive up to $80 million in payments from Cardio3.
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This is Cardio3's second acquisition in recent months. In November, it purchased a virtual company called CorQuest Medical Inc. Corquest is developing a sheath to provide a minimally invasive way to insert therapeutic devices. The CorQuest technology platform is complementary with Cardio3’s C-Cathez and C-Cure systems. Financial terms were not released.

The OnCyte expands Cardio3's reach beyond regenerating cardiac tissue by entering into the rapidly growing immuno-oncology cancer treatment area using chimeric antigen receptor (CAR) T cells. OnCyte's CM-CS1 uses (CAR) technology to destroy cancer tumors. The Federal Drug Administration has cleared CM-CS1 to begin a clinical trial using patients with acute myeloid leukemia /advanced myelodysplastic syndrome and multiple myeloma. Juno Therapeutics, Amgen and Kite Pharma and others are developing products based on this concept.

In an interview with Bloomberg News, Cardio3 CEO Dr. Christian Homsy described acquiring OnCyte as “Our first foray into an area that is of very high interest… It opens a new reach, a new broad area of growth for the company that is of very high value to us and our shareholders.”

Those shareholders include Mayo Clinic, which held 3 percent ownership of Cardio3, as of Aug. 4. Mayo Clinic first acquired equity in Cardio3 in 2007, when it licensed stem cell research by Mayo Clinic's Dr. Andre Terzic and Dr. Atta Behfar. The cardiopoiesis technology uses to repair patients' hearts by re-programming their own stem cell to regenerate cardiac tissue.

When announcing the acquisition, Homsy said that four of Cardio3's top shareholders supported the move. A Belgium family-owned holding company called Tolefi SA is the lead shareholder with 32.23 percent of the shares. The Hong Kong-based Medisun, which is building an office in Rochester, owns 8.08 percent.

In the years since 2007, Mayo Clinic has developed a close working relationship with the Belgian company. Mayo Clinic is leading the U.S. clinical trial of Cardio3 and is using a lab in the Minnesota Biobusiness Center in downtown Rochester.

A possible deal is in the works for Cardio3 to occupy the entire fifth floor of the city-owned Minnesota Biobusiness Center. Gary Smith of the Rochester Economic Development Inc. said the company has not signed a lease yet and some financial details still need to be worked out.

If Cardio3 does decide to occupy the fifth floor, Mayo Clinic will need to move its staff that currently fills the space.

December 18, 2014

Mayo, former exec settle lawsuit

Mayo Clinic has withdrawn its trade secret lawsuit against Dr. Franklin R. Cockerill III, the former CEO of Mayo Medical Labs, as part of a settlement agreement.

The settlement was reached Wednesday, and Mayo Clinic withdrew "with prejudice," meaning it cannot pursue the matter again.

5480ab685c6ed.imageCockerill denied any wrongdoing in the settlement, as he has since the case began in October.

“Although preserving his integrity and professional reputation is of great importance to Dr. Cockerill,” said Nancy Vollertsen, one of Cockerill’s attorneys at Lindquist and Vennum, "the distraction and expense of further litigation became too burdensome for Dr. Cockerill and his family.”

Bryan Anderson of Mayo Clinic also issued a statement about the settlement this morning.

"Mayo Clinic did not take this action lightly. However, we firmly believe that legal action was necessary to protect our confidential and trade secret information against improper disclosure," the statement says.

As part of the settlement, Cockerill agreed not to work or consult for Mayo’s largest competitors for two years. He also agreed to return all information he took from Mayo Clinic and pay a portion of Mayo Clinic's legal expenses.

In October, Mayo Clinic filed suit against Cockerill, of Rochester, alleging misappropriation of trade secrets and breach of contract. The suit alleged Cockerill covertly accepted a job in June with Quest Diagnostics, a major competitor of Mayo Medical Labs. He had told Mayo Clinic he was retiring at the end of September to help his 85-year-old mother run her fertilizer business in Nebraska. On Oct. 1, he took the position of vice president and chief laboratory officer at Quest.

Mayo Clinic soon filed the lawsuit, alleging Cockerill had misrepresented his departure and had left with clinic-owned memory sticks with data downloaded from his work station. A restraining order was granted that prevented him from working at Quest. The order claimed he could cause "irreparable harm" to Mayo Clinic by working there.

Earlier this month, Cockerill officially resigned from Quest. He had worked for the New Jersey-based multibillion dollar company only from Oct. 1 to Oct. 14.

In a statement from his lawyers following the settlement, Cockerill said he "maintains that he was a loyal Mayo employee throughout his employment and had no intention of harming Mayo, where he had worked for over 30 years and which employs several members of his family. He was dismayed that Mayo did not offer him the opportunity to explain his actions but instead summarily sued him for presumptive misuse of confidential information, forcing him to expend considerable resources to defend his integrity and professional reputation.”

Mayo Clinic defended taking the unusual step of filing a very public lawsuit.

"We understand that our staff members move to other organizations, and, when they do so in a transparent manner, we can cooperatively manage any conflicts-of-interest during their transition, and we can protect our confidential and trade secret information,” it said in a statement.

December 04, 2014

Ex-Mayo exec resigns from Quest, but lawsuit continues

The doctor being sued by Mayo Clinic for allegedly stealing trade secrets has resigned from his job at Mayo competitor, Quest Diagnostics.

CockerillDr. Franklin R. Cockerill III, the former CEO of the for-profit Mayo Medical Labs, resigned from his position as vice president and chief laboratory officer with Quest on Wednesday, according to Nancy Brostrom Vollertsen, a Minneapolis attorney representing him.

His acceptance of that job on Oct. 1 spurred Mayo Clinic to file a lawsuit against Cockerill alleging misappropriation of trade secrets and breach of contract. Cockerill officially worked at Quest only from Oct. 1 to Oct. 14. On Oct. 14, Olmsted County Judge Robert Birnbaum granted a temporary restraining order preventing him from working, because he could cause "irreparable harm" to Mayo Clinic.

Quest filed a motion to withdraw from the case on Tuesday, since it "…No longer has a 'substantial interest' in this litigation that justifies or requires its continued participation." Mayo Clinic issued a statement Thursday saying it had settled with Quest in the wake of Cockerill's resignation.

"Mayo is not pursuing any claims against Quest. We continue to pursue our remaining claims (against Cockerill) to protect our confidential trade secrets against improper disclosure," according to the statement released by Bryan Anderson.
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While Quest is no longer a factor in the case, the Mayo Clinic's lawsuit again Cockerill continues to move forward. A hearing is scheduled for Dec. 22 in Olmsted County Court.

The lawsuit alleges that Cockerill covertly accepted the job in June, but he told Mayo Clinic that he was retiring at the end of September to help his 85-year-old mother run her fertilizer business in Nebraska. From June to September, he continued to work at Mayo Medical Labs, attending confidential meetings and negotiating contracts. The complaint filed by Mayo Clinic also claims that Cockerill was in communication with Quest throughout his final months and he left with clinic-owned memory sticks with data downloaded from his work station.

On Oct. 1, he stepped into the position of vice president and chief laboratory officer with New Jersey-based Quest Diagnostics Inc., a multibillion-dollar public company.

Cockerill released a statement through his attorney in response to Mayo allegations that said, "He opted for early retirement at the Mayo Clinic's invitation and is not subject to any non-compete or other agreement that would limit his activities after leaving Mayo."

He filed an affidavit in November, which was later withdrawn, that stated that Cockerill was "confused and disappointed" by Mayo Clinic's legal action against him. It also stated that he did not tell Mayo Clinic leaders about his plans, because he "feared retribution against himself and his family."

Mayo Clinic responded that Cockerill's case was different than other executives who have left to work for competitors.

"… We understand that our staff members move to other organizations, and, when they do so in a transparent manner, we can manage any conflicts-of-interest during their transition, and we can protect our confidential information and trade secrets," stated Mayo's Anderson by email. "Dr. Cockerill was not transparent and did not report his conflict of interest."