There are at least two big healthcare innovation efforts in town—or three, at least until one of them shuts down.
Innovation Institute in La Palma—a for-profit partnership of five U.S. health systems that includes local entries Providence St. Joseph Health in Irvine and Children’s Hospital of Orange County in Orange—is the better known entity. It launched in January 2013 and owns companies that sell products and services to healthcare customers; runs a medical devices and technology lab in Newport Beach; and has a fund that invests in healthcare firms.
The second local entity is MemorialCare Innovation Fund, which “goes back 15 to 20 years,” said Barry Arbuckle, president and chief executive of MemorialCare Health System in Fountain Valley.
The fund was a solo effort—no partners—and wholly owned by the health system, which runs hospitals in OC and Long Beach, as well as doctors’ groups and a health plan.
Arbuckle called it “a quiet asset for the system that brought benefits and began to infuse innovative thinking.” He compared it to internal indie investments by other systems that include Kaiser Permanente in Oakland.
MemorialCare will wind down that fund in favor of Summation Health Ventures, which it launched in 2014. Summation is similar to Innovation Institute, in that it has a partner, Cedars-Sinai Health System in Los Angeles.
Brant Heise runs both of the funds.
“There are four companies in the first one, and they’ll stay there” until MemorialCare exits the investments, he said. The second fund, Summation, has made 10 investments in 18 months, in medical device and information technology companies.
“We’ll take a look at anything that considers a health system or the physicians,” Heise said.
Arbuckle and Heise declined to discuss dollar amounts.
The first fund co-led a $21 million Series D round in September 2015 in PerfectServe, a communications services company in Knoxville, Tenn., according to CrunchBase, which lists MemorialCare Innovation Fund’s participation in seven investment rounds over the last three years totaling $110 million.
Crunchbase shows that Summation raised $20 million to invest, and has participated in $47 million in funding for four companies, including a recent $4.5 million seed round in Hyp3r Inc., a marketing technology firm in San Francisco.
Summation has co-invested in a deal with Providence Ventures in Seattle. Providence is the internal venture capital arm of Providence Health & Services—which through its St. Joseph division in Irvine is part-owner of Innovation Institute.
Nemus Closes Round
Nemus Bioscience Inc. in Costa Mesa sold 500 shares of preferred stock for $500,000 on Oct. 26.
The company is in development on natural and synthetic cannabis-based drugs. Some of its work uses proprietary technology licensed from the University of Mississippi.
It didn’t specify a use for the money.
The preferred shares are convertible into 1.25 million shares at a price of 40 cents a share. Nemus has about 20 million shares outstanding and traded recently for 60 cents and a $12 million market cap.
It lost $4.8 million last year on no revenue.
Nemus co-founder and Executive Chairman Cosmas Lykos was a senior executive at Lake Forest-based eyewear maker Oakley Inc. and other companies prior to helping start Nemus in 2012.
Doug Ingram, who was president of Allergan Inc. prior to its 2015 sale to Actavis Plc and is chief executive of Chase Pharmaceuticals Inc. in Irvine, is vice chair of Nemus’ board.
Roth Capital Partners LLC in Newport Beach placed the funding.
CHOC Gets $150K
Children’s Hospital of Orange County will get $150,000 from the county to help pay for treatment of children affected by a bacterial outbreak at Children’s Dental Group of Anaheim.
The Orange County Board of Supervisors voted to allocate the money on Oct. 25.
At least 43 children were affected by the outbreak, and 10 were admitted to CHOC, a news report said. The children were treated at the office between March and August; reports of infection surfaced in September.
The bacteria is thought to have been present in the office’s water system, which County Public Health Officer Dr. Eric Handler has ordered the dental group to replace.
The money will fund four to six months of intravenous and oral antibiotics, regulatory compliance costs, and staff to administer and oversee the work, a county staff report said.
Bits & Pieces
Prime Healthcare Services in Ontario must pay $7 million in back wages to employees at Garden Grove Hospital Medical Center and a facility in Encino. Prime runs 43 hospitals in 14 states, which include three others in Orange County: La Palma Intercommunity Hospital, West Anaheim Medical Center and Huntington Beach Hospital. It said it plans to appeal the National Labor Relations Board’s decision. … The Medical Device & Investor Forum at Hotel Irvine Oct. 27 to 28 drew about 800 people, host and life sciences company accelerator OCTANe reports.
