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January 30, 2018 01:00 AM

3D printing may provide a lifeline for medical research nonprofit

Lydia Coutré Crain's Cleveland Business
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    Chuck Soder/Crain's Cleveland Business
    The Austen BioInnovation Institute is shifting its focus as it seeks new sources of revenue.

    After a promising launch, the Austen BioInnovation Institute in Akron, Ohio, founded in 2008, finds itself 10 years later having never seen a profitable year.

    Buoyed for years by philanthropy, membership fees and some support from Summit County, ABIA is looking at new sources of revenue as the nonprofit quickly erodes its fund balance, which, as of the end of 2016, was $4.6 million. That's down from $11.6 million at the start of 2013.

    Recent tax forms show year after year of deficits, most recently a deficit of more than $1.5 million in 2016.

    With dwindling grant support and only one remaining founding member (Akron Children's Hospital), the organization tasked with turning Akron into a hub of biomedical innovation is turning to three new sources of revenue: leasing out three floors of its building that have been vacant since the county left in May 2016; offering 3D printing services; and commercializing two medical technologies.

    "Progress is being made and revenue targets related to rental of open building space, development of technologies and fee-for-service projects have to be hit to ensure future operations," Scott Rainone, director of communications and governmental relations, wrote in an email to Crain's Cleveland Business.

    ABIA's annual budget in 2014 was close to $10 million. Today, it's in the range of $2 million, according to Rainone. A few years ago, the institute had 40 full-time-equivalent employees. Today, it operates with just four: executive director Joe Randazzo, Rainone and two engineers.

    Rainone noted that all four work with a "startup mentality" and wear multiple hats.

    "We continue to be lean, scrappy and resilient," Randazzo wrote in the email. "Like all reorganized businesses, we developed a strategic plan and we continue to make progress and grow revenue."

    Initially, much of ABIA's funding came from the Akron-area hospitals and universities that created the nonprofit. Randazzo said the economy forced ABIA to move from its membership-fee model in 2014 after most founding members — Summa Health System, Akron General Medical Center, the University of Akron and Northeast Ohio Medical University — didn't renew their memberships.

    Today, Akron Children's is the only founding member still partnering with ABIA. It conducts simulations and training sessions at its Austen Simulation Center for Safety and Reliability at ABIA.

    Relying on grant funding and founding members proved to be "shaky," Randazzo said. The focus now is to become self-sustaining.

    ABIA has engaged commercial real estate agents to help lease out floors four through six at its building in Akron. Getting that space occupied will provide a "good foundation" of revenue, Randazzo said.

    The second primary revenue source would be offering 3D printing services, in which engineers can take CT scans and convert them into 3D models. For instance, ABIA is working with a physician at Akron Children's to model 3D versions of a pediatric heart he is going to work on.

    "It's anecdotal at this point, and at some point we would like to partner with a physician and develop a white paper," Randazzo said. "But we've been told that it reduces surgical time, which saves the hospital money. It increases patient outcomes; it's safer for the patient. So at some point, once we get that established, that's something that we want to partner with one of the physicians and demonstrate."

    Though they're initially working toward cardiac applications, Randazzo said he believes, "quite frankly, the sky's the limit" for how else the service could be used.

    The third source of revenue ABIA is focused on is commercialization of two medical technologies at ABIA.

    Apto Ortho is a pediatric spinal device to address early-onset scoliosis that allows for implanted rods to be adjusted from outside the body as a child grows, eliminating the need for repeated invasive surgeries. ABIA is in negotiations with a national medical company to license the technology, which ABIA owns in conjunction with Akron Children's.

    ABIA has sole ownership of the patent for the other technology, Micro Matters, which is a disposable, ultra-low volume syringe that provides users in a research laboratory more accuracy and resolution of low-volume fluid injections. ABIA also is looking to license that technology to a national medical company.

    Summit County has been a key backer of ABIA, working with the institute on what became its headquarters, on which the county still holds the mortgage. The county also guaranteed the debt that was taken out by ABIA to make improvements to the building and buy the equipment.

    Jason Dodson, the county's chief of staff, said that investment was important to Summit County because of the "promise" ABIA brought at the time, and he maintained it still "has the potential to realize now." That promise was creating jobs, advancing the medical and biomedical community and bringing additional business and investment into the community.

    "I think as a lot of startup entities go through, they had ambitions, they had plans, designs as to where they thought they could be, where they thought they could take the organization," Dodson said. "For various reasons, numerous reasons, those did not materialize in the way I think that anybody thought they were going to."

    At that point, startups have two choices, he said — close up shop or downsize and refocus. ABIA choosing the latter is why it's still here today, Dodson believes.

    ABIA continues to get some philanthropic support. For instance, the Burton D. Morgan Foundation supported BioInnovation Academy student scholarships with grants of $20,000 in 2016 and 2017.

    The Knight Foundation supported ABIA with operating grants of $1 million each in 2015 and 2016. The funding from the Knight Foundation in particular provided "runway" for ABIA.

    "We're seeking funding for additional runway," Randazzo said. "We can see the finish line. We have these two medical devices that can provide a substantial amount of money. … We're working toward that. It's certainly not as quick as we would like, but you know, we're just like any other startup. Every business has to focus on revenue, and you've got to increase that revenue to grow and continue. That's the phase we're at right now."

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