By Nancy Dahlberg
Orthopedic robotics innovator Mako Surgical fetched $1.65 billion in its sale last December, nine years after it launched. Mako, now owned by Stryker, continues to employ hundreds in South Florida, and it has spawned new startups in robotic technology, a growing slice of the Miami area’s sizable medical device industry.
The CEO of Miami-based Bioheart, which develops stem cell therapies, is not only seeing success at his own company, but he sees a real future for this niche in South Florida, an area more known for sun and fun than R&D. He’s working with a cluster of regenerative medicine companies that collaborate and feed off one another.
And while life science and medical device companies are plowing through long development cycles, those feisty health-tech companies — from telemedicine and electronic health records platform providers to consumer apps — are ramping up quickly and already spinning out jobs.
Indeed, South Florida’s healthcare ecosystem has a healthy heartbeat.
Building an ecosystem
Miami houses the second biggest health district in the U.S. after Houston, with three universities, eight hospital facilities with 30,355 beds, nearly a dozen research institutes such as the Miami Project to Cure Paralysis and the Diabetes Research Institute, and dozens of early-stage companies operating in a 25-square block area just north of downtown Miami.
In the counties to the north, Broward and Palm Beach, medical device firms and life science research flourishes, helped by the opening of Scripps Research Institute in 2004 and the fast growth of Mako. In Miami-Dade and Broward counties alone, there are nearly 1,000 life sciences companies, according to the counties’ economic development agencies, and that doesn’t include health-tech companies classified under different categories.
Could healthcare-related entrepreneurship be the prescription needed to treat an economy overly dependent on tourism? Many business leaders think so.
eMerge Americas, an organization committed to turning Miami into a tech hub, chose healthcare as key areas of focus in its inaugural conference. “I’m truly excited about what eMerge started,” says Mike Tomás, CEO of Bioheart and a serial entrepreneur. “I really think there is a huge opportunity to expand on that and help expose what we have here.”
To be sure, the life science and health-tech ecosystem is widely dispersed throughout the 100-mile-long, three-county metropolitan area. There isn’t a strong, focused cluster like in Boston or the Bay Area but there is history here – many of the area’s device companies trace back in some way to Cordis Corp.’s once-huge presence in South Florida, where one of the first pacemakers was invented. In pharma, serial entrepreneurial billionaire Phillip Frost has the golden touch, including founding and selling generics maker IVAX to Teva Pharmaceuticals for $7.9 billion in 2006. Now he’s innovating again with Opko Health.
Tomás heads Bioheart, a developer of stem cell therapies to treat cardiovascular diseases; its cutting-edge treatments are used in 35 countries, though not yet in the U.S. This summer in a first-of-its-kind procedure, it treated a patient in Honduras with two different kinds of stem cells.
Along with Bioheart, there’s Global Stem Cells Group, with companies that help patients get treated in other countries, training physicians and selling equipment and services. Bioheart recently acquired a venture that focuses on regenerative medicine for animals, and there are at least six or seven other companies that are quite advanced, including one for ocular medicine, says Tomás.
“And on top of all that you have one of the best research universities for stem cells in the country and that is the Interdisciplinary Stem Cell Research Institute of the University of Miami run by Dr. Joshua Hare,” says Tomás.
Dr. Hare also founded Vestion, a startup developing cell therapies that can be delivered to the heart via a minimally invasive catheter technique. Find Vestion at the University of Miami Life Science and Technology Park, a 252,000-square-foot building in the Miami Health District that houses research organizations and companies.
One of the park’s newest tenants is the Biomedical Nanotechnology Institute, says William Hunter, leasing director of Wexford Science + Technology, which developed the building. In addition to UM doctors and research offices like U Innovation, UM’s tech transfer division, the park houses The Innovation Center, with co-working space, offices and wet and dry labs for 31 life science and health-tech companies. They include Cirle, which develops products such as a three-dimensional surgical navigation technology for cataract surgery; STS, operator of a 24-hour response center providing teletrauma services around the world; and Entopsis, creator of a universal diagnostic platform.
“The beautiful thing that we do in building knowledge communities is that these doctors see patients, teach, do their research here, and then when they want to translate their technology to build a company that creates jobs, they are able to do that in this building,” says Hunter. Indeed, a third of the companies in The Innovation Center are founded by doctors.
Noted physicians starting companies while maintaining their practices is a trend around South Florida. “Dr. Joe Lamelas at Mount Sinai, one of the most successful cardiothoracic surgeons in the country, started Miami Instruments in order to create and build the instruments he needs for procedures he is pioneering in minimally invasive heart surgeries,” says Tomás.
“We’re becoming a hub for eye health, we are becoming a hub for cardiac and vascular health,” adds Tomás. “I am seeing more of these related companies. And what happens when you have a large innovative entity, like Mako, that’s when you started seeing offshoots.”
Mako was co-founded by Dr. Maurice Ferré, and in nine years grew to be a world leader in robotic technologies for healthcare. Since the sale to Stryker, Ferré is already at work on his next big thing, which he says will be another transformational technology. He’s also been investing in medical device startups, such as Dermasensor, which is tackling skin cancer. Mako engineers have gone on to start a number of other companies. Orthosensor, which makes intelligent implants for the knee, received initial funding from Mako and has since attracted some $30 million in venture funding.
“I am seeing more business plans over the last year than in the past. There is also a lot of interest in the Latin American market. Florida is now in the top three for device companies,” says Ferré. “I’m committed to staying in South Florida and continuing to build device companies down here. We are working very closely with the doctors, universities and schools to develop these opportunities.”
Ferré and others already see a lot of activity in health software companies. Founded in 2009 by Albert Santalo, CareCloud, a cloud-based provider of practice management, electronic health records and medical billing software and services, serves about 1,200 clients in 48 states and employs nearly 300. It’s been a success at raising venture capital too: more than $55 million so far.
Up the coast in Boca Raton, Modernizing Medicine, which created an EHR application for specialty clinical practices, has been making its own headlines. It was among the first companies in the country to partner with IBM Watson, the famous supercomputer that won at Jeopardy. Watson’s grown up and gone to medical school, and Modernizing Medicine is working on an application that will allow doctors to incorporate Watson’s cognitive intelligence into their practices, a huge development for the company and for the future of healthcare.
Modernizing Medicine’s co-founder and CEO Daniel Cane is bullish on the area’s potential. “South Florida is a spectacular place to build companies … the majority of our hires come out of the healthcare industry and South Florida is an epicenter for healthcare. This is the destination for most of Latin America to get high quality healthcare,” says Cane, who has 17 doctors on his staff.
While progress has been made building a healthcare ecoystem, it hasn’t been easy.
“There’s the perception that Florida is strictly tourism. Our challenge is the perception that companies can’t come here and be viable,” says Todd Holt, who has studied the life science industry for the past eight years, first as part of Enterprise Florida, the state’s economic development organization, and currently as director of business development for the Greater Fort Lauderdale Alliance, Broward County’s economic development arm. “The good news is once we are able to get them here and show what we have to offer, we are very competitive.”
But more work needs to be done, he said. The life sciences ecosystem needs more nurturing than other industries. For instance, in the research stage, companies need investors; as they enter clinical trials, they need contract manufacturing and regulatory support; and after FDA approval they need manufacturing.
One of the biggest needs, he and others say, is funding. “You can have all the research in the world, but unless you have a way to spin it off and manufacture it, there really isn’t a return for the company or community, so one thing we have to focus on is growing investment and venture capital opportunities,” says Holt, who cites the state’s Florida Opportunity Fund and the Institute of Commercialization and Public Research as two helpful resources.
Last year, biotech companies in Florida snagged $107 million in venture capital, about a quarter of the state’s total. When you add in health-tech and device companies, that number jumped to $254.7 million, according to a study by Battelle and the Biotechnology Industry Organization (BIO). But that’s still anemic compared to many states.
Earlier this year, Tyrogenex, a biotech company that develops cancer and ophthalmic therapeutics, received a $15 million VC shot and MDLIVE, a tele-health provider, drew $23.6 million.
Universities step up
Universities are doing their part to fill the future pipeline for VCs. Nova Southeastern University has broken ground on the $80 million Center for Collaborative Research, aimed at expanding NSU research in areas like heart disease, cancer and autism. It will feature one of the state’s largest wet labs and is expected to open in early 2016.
At the University of Miami, Norma Kenyon, Chief Innovation Officer at the Miller School of Medicine, and her team at U Innovation are nurturing more than a dozen startups working on treatments for cancer, spinal cord injuries, kidney disease and asthma as well as early detection of head and neck cancer and heart disease. Still others are health-tech startups, such as MobileCare, which spun out of UM’s Army Trauma Training Center. Noting that UM gets the most NIH funding in the state, she says, “we have a renewed focus on entrepreneurship and commercialization.”
Indeed, there is a big gap between what universities have ready for the market and what the market needs, says Jim O’Connell, director of UM’s tech transfer office. “We are seeing more outreach from big pharma looking for early-stage collaborations.” Developing an ecosystem takes time, but “we have an obligation to build that critical mass and that is what we are trying to do.”
South Floridians can help with that, he adds. “We have an entrepreneur-in-residence program and are always looking for successful businessmen and women who have failed at retirement to come in and help get these university-based deals teed up for the real world.”
Nancy Dahlberg writes about entrepreneurship and startups for the Miami Herald.