Rex Health Ventures Announces Inaugural Investment in N.C. Firm, Aerial BioPharma

Funding to Support Clinical Research of Promising Narcolepsy Drug, Other Products

RALEIGH, N.C. – Rex Health Ventures, one of the nation’s only venture-capital funds managed by a community, nonprofit hospital, is pleased to announce its first investment, a $500,000 equity placement in Aerial BioPharma.

Aerial, a Morrisville, N.C.-based company, was formed in January 2012 by a team of successful, veteran biopharmaceutical entrepreneurs. Aerial’s investigational narcolepsy treatment is currently in Phase 2 clinical trials, and initial data shows promise for controlling the symptoms of the chronic, neurological sleep disorder.

In addition to providing the financial investment, Rex may use its five sleep centers across Wake County as clinical trial sites for future studies of Aerial’s narcolepsy drug.

“This is precisely why we created Rex Health Ventures and Rex Strategic Innovations: to find and support promising companies with exciting products that could improve the lives of thousands of patients,” said Rex President David Strong. “We look forward to a long and successful relationship with the very capable team at Aerial.”

Rex Health Ventures’ investment is part of an initial $3.8 million equity financing, which Aerial will use for further clinical studies, as well as to pay for research and drug manufacturing. Other participants in the funding round include a group of experienced angel investors based in Chattanooga, Tenn., led by Dr. David Adair, and 3G Capital, led by Rakesh Govindji.

Aerial also is developing an early-stage biologic to treat acute and chronic pain, a product licensed from the University of North Carolina at Chapel Hill. Aerial was started by the management team behind Addrenex Pharmaceuticals and Neuronex, two successful Triangle-based start-up companies. The team includes CEO, Dr. Moise A. Khayrallah, President Steve Butts, and Dr. Gary Bream, executive vice president of Clinical Affairs.

“Partnering with Rex Health Ventures, which provides access to the resources of a premier healthcare provider like Rex Healthcare, is a unique opportunity for a company like ours,” Khayrallah said. “We look forward to tapping into Rex’s network and expertise as we continue clinical work that will lead to new treatments.”

Rex Health Ventures is part of the broader initiative known as Rex Strategic Innovations that has the mission of spurring healthcare innovation, improving healthcare delivery and services, and fostering job creation. The fund was started in the spring with an initial $10 million investment from Rex Healthcare.

For more information, visit rexstrategicinnovations.com and rexhealthventures.com.

About Rex Healthcare Rex Healthcare, a member of UNC Health Care, is a private, not-for-profit health care system with more than 5,300 co-workers. Rex Healthcare has 660 beds (433 general acute beds and 227 skilled nursing) and treats nearly 34,000 inpatients each year. Rex offers dedicated centers for cancer, surgery, heart and vascular, post-acute rehabilitation and skilled nursing care, wellness and women’s care plus dedicated services for bariatric, heartburn, pain management, sleep disorders, diabetes education, wound and emergency care. Rex’s medical staff includes more than 1,100 physicians and 1,700 nurses. Rex provides various health care services throughout Wake County with facilities in Apex, Cary, Garner, Holly Springs, Knightdale, Wakefield and downtown Raleigh. Rex was the first hospital in the Triangle to receive Magnet Recognition, placing Rex nurses among the top 6 percent in the nation. Rex was named one of the top 100 Best Places to Work in Healthcare by Modern Healthcare magazine in 2008, 2009 and 2011, and was highlighted as one of the Top 50 Hospitals in the U.S. by Becker’s Hospital Review in 2011. Visit rexhealth.com for more information.

About Aerial BioPharma Aerial BioPharma is a development stage biopharmaceutical company focused on developing biologics and small molecules for conditions in the Central Nervous System. Aerial is a privately held company, founded in January 2011 by the management team from Addrenex Pharmaceuticals and Neuronex, two successful start-up companies founded in the RTP region of North Carolina. Aerial currently an exciting drug-development pipeline, including treatments for narcolepsy and acute and chronic pain. Aerial has eight permanent employees at its headquarters, located at 9001 Aerial Center Parkway, Suite 110, Morrisville, NC 27560. Visit aerialbio.com for more information.


Rex Healthcare Launches Rex Strategic Innovations to Advance Health-Care Innovation

Novel Effort Aims to Improve Medical Care and Support Promising Ideas

RALEIGH, N.C. – Rex Healthcare is proud to announce the creation of Rex Strategic Innovations, a unique effort to spur healthcare innovation, improve healthcare delivery and foster job creation.

The initiative will include Rex Health Ventures, one of the only venture-capital investment funds in the country started by a community, nonprofit hospital. The fund is being launched with an initial $10 million investment from Rex Healthcare and will help finance the most promising innovations among new medical services, tools and technologies.

“For more than a century Rex has been a leader in striving to improve the medical care and services we provide to thousands of patients every year,” said Rex President David Strong. “This exciting new program is another way Rex will encourage and participate in innovation.”

Other components of Rex Strategic Innovations include:
  • Rex Impact Grants: a program to provide grants to a wide range of businesses and organizations that are working to help improve patient care or community health status.

  • Rex Innovation Facilitator: a formalized way for Rex co-workers and thought leaders in the community to submit innovative ideas and receive technology commercialization and company-building services for promising concepts that could lead to new products or services.

  • Rex Joint Ventures: a program to partner with thought leaders in the local and regional technology, research and entrepreneurial communities. The goal of such partnerships will be to team up to develop new products and services that can improve healthcare technology and delivery.
“Rex’s efforts fit well with the city of Raleigh’s commitment to find new ways to increase job creation by supporting innovation and small businesses,” said Raleigh Mayor Nancy McFarlane. “We welcome Rex’s initiative and expect that this community and beyond will enjoy the benefits for years to come.”

Rex Health Ventures will invest in researchers, entrepreneurs and inventors that share in Rex’s vision to provide quality care for patients and improve overall health. By creating the fund, Rex will provide more opportunities for advancements in care and support start-up companies that will help spur new job creation.

“This effort will allow Rex to become a key innovation player in the Triangle and help make this region an even more attractive place for entrepreneurs to grow and succeed,” said Joan Siefert Rose, President of CED, the southeast’s largest entrepreneurial support organization. “Rex is uniquely qualified to help drive healthcare innovation and CED looks forward to working with Rex as it moves forward.”

In some cases, Rex will serve as an incubator or laboratory for new concepts and as a customer for new products and services. For healthcare practitioners, Rex Health Ventures will provide the opportunity to consult and play an active role in bringing new advances in medical care to patients.

“This is an important endeavor for Rex, and an exciting time for innovation in the Triangle. This effort will create new opportunities to advance research and develop breakthrough products and treatments,” said Dr. Ravish Sachar, an interventional cardiologist with Wake Heart & Vascular, one of the Triangle’s largest specialty physician practices. “As a physician, I look forward to helping important innovations and concepts become a reality.”

Rex Strategic Innovations and Rex Health Ventures will be overseen by a team that includes David Strong, President of Rex; Steve Burriss, Chief Operating Officer of Rex; R. Erick Hawkins, UNC Health Care System Vice President of Heart & Vascular Services; and Don Esposito, General Counsel of Rex. Robert Helmedag will serve as Director of Operations and handle day-to-day business. W. Merrette Moore, managing partner with Raleigh-based investment firm Lookout Capital and a veteran early stage venture capital investor, is acting as a key advisor.

In addition, that team will receive guidance and direction from an advisory board that brings deep technology, research, business and investment experience. That group includes:
  • Tom Darden, the CEO of Cherokee and founder of Cherokee Investment Partners, Cherokee Property Foundation and Cherokee Sanford Group.

  • Jim Hyler, a member of the Board of Trustees at Rex Healthcare since 2007 and a retired banking executive with First Citizens Bank in Raleigh.

  • Dale Jenkins, Rex Board Chairman and the CEO of Medical Mutual Insurance Company of North Carolina.

  • Dr. Tift Mann, an interventional cardiologist who co-founded Wake Heart & Vascular, one of the Triangle’s largest specialty physician practices.

  • Champ Mitchell, who currently serves on the Board of Directors for the 41st Parameter. He is the former Chairman and CEO of Network Solutions.

  • Dhruv Patel, a Program Director, Senior Manager of Life Science Programs and Senior Manager of Capital and Technology Development at the Council for Entrepreneurial Development.

  • Dr. Cam Patterson, chief of cardiology and associate chair for research in the UNC Department of Medicine, physician-in-chief of the UNC Center for Heart and Vascular Care and associate dean for medical entrepreneurship at the UNC School of Medicine.

  • Dr. Jay Yadav, an interventional cardiologist and entrepreneur. He is the founder and CEO of CardioMEMS Inc. and a consulting cardiologist at the Piedmont Heart Institute in Atlanta.

  • Ted Zoller, a practicing entrepreneur, the Director for UNC’s Center for Entrepreneurial Studies and Associate Professor of Strategy and Entrepreneurship at UNC’s Kenan-Flager Business School.
For more information, visit rexstrategicinnovations.com and rexhealthventures.com.

About Rex Healthcare Rex Healthcare, a member of UNC Health Care, is a private, not-for-profit health care system with more than 5,300 co-workers. Rex Healthcare has 660 beds (433 general acute beds and 227 skilled nursing) and treats nearly 34,000 inpatients each year. Rex offers dedicated centers for cancer, surgery, heart and vascular, post-acute rehabilitation and skilled nursing care, wellness and women’s care plus dedicated services for bariatric, heartburn, pain management, sleep disorders, diabetes education, wound and emergency care. Rex’s medical staff includes more than 1,100 physicians and 1,700 nurses. Rex provides various health care services throughout Wake County with facilities in Apex, Cary, Garner, Holly Springs, Knightdale, Wakefield and downtown Raleigh. Rex was the first hospital in the Triangle to receive Magnet Recognition, placing Rex nurses among the top 6 percent in the nation. Rex was named one of the top 100 Best Places to Work in Healthcare by Modern Healthcare magazine in 2008, 2009 and 2011, and was highlighted as one of the Top 50 Hospitals in the U.S. by Becker’s Hospital Review in 2011. Visit rexhealth.com for more information.

Investment Criteria (cont.)

  • Management Team — At least one person currently with the company or opportunity around whom a team can be built. Previous small company or entrepreneurial experience preferred.

  • Strategic Fit — We will only invest in companies where we feel there is a strategic fit with Rex Health Care and where we can be a value-add investor.

  • Time to Exit — We target investments where there is a realistic possibility of exit within 5 to 7 years.

Legal Disclaimer

Statements in the materials (“Materials”) or any other information (“Other Information”) presented or made available on this website are made as of the date the Materials or such Other Information was prepared or as of such other date as may be specified therein, and neither the delivery of the Materials or any Other Information at a subsequent date nor the issuance to you of an interest in any product sponsored by Rex Health Ventures, LLC shall create any implication that the information contained in the Materials or in any Other Information is correct as of any subsequent date.

The delivery of the Materials or any Other Information (except for the formal offering documents for a specific Rex Health Ventures product) does not constitute an offer to issue or sell any securities. Any investment in an investment fund or similar product sponsored by Rex Health Ventures will only be made based on formal offering documents (typically a formal private placement memorandum, a partnership agreement or other primary governing document, and a subscription agreement) provided specifically in connection with such investment opportunity.

If the descriptions in or terms of the Materials or any Other Information are inconsistent with or contrary to the terms of the formal offering documents for a specific Rex Health Ventures product, then the terms in the formal offering documents shall prevail.

Investment Criteria

RHV uses the following investment criteria in considering investment opportunities:
  • Stage Focus — Stage Agnostic – We will consider pre-revenue opportunities, but we generally like companies demonstrating market traction that Rex Healthcare can evaluate from an end-user perspective.

  • Sectors of Interest — Healthcare IT, Healthcare Services, Medical Devices, BioPharma Technologies

  • Investment Size — Initial investments of $250,000 to $500,000; Total Per Company Investment of $500,000 to $2 million

Portfolio

Aerial BioPharma
Aerial BioPharma is a development stage biopharmaceutical company focused on developing biologics and small molecules for conditions in the Central Nervous System. Aerial is a privately held company, founded in January 2011 by the management team from Addrenex Pharmaceuticals and Neuronex, two successful start-up companies founded in the RTP region of North Carolina. Aerial currently an exciting drug-development pipeline, including treatments for narcolepsy and acute and chronic pain. Aerial has eight permanent employees at its headquarters, located at 9001 Aerial Center Parkway, Suite 110, Morrisville, NC 27560. Visit aerialbio.com for more information.

Awarepoint Corporation
Awarepoint is a healthcare IT company focused on asset management, temperature control, and patient/hospital staff workflow management. Awarepoint delivers the healthcare industry’s only cloud-based, Real-time Location System (RTLS) on a single platform of integrated software, technology, and managed services. By enabling predictive workflows to better manage assets, patients, and personnel across the enterprise, the aware360°Suite allows administrators and care providers to advance the quality, efficiency, experience, and economics of care. Visit awarepoint.com for more information.

Veran Medical
Veran Medical is a FDA approved medical diagnostic / device company focused on the interventional pulmonology market based out of St. Louis, MO. Veran’s technology provides physicians with “GPS” to pulmonary nodules (potential tumors) and currently allows for biopsy but the plan is to offer treatment via laser in the near future. Veran is primarily focused on the lung oncology market (via bronchoscopy or percutaneous), but also has a product offering for interventional radiology (liver, kidneys and pancreas). Visit veranmedical.com for more information.

Board of Advisors

Members of our Board of Directors are actively engaged with Rex Health Ventures and provide invaluable knowledge, strategic insight and a deep understanding of the investment business.

Dale Jenkins
Dale has served on the Rex Board and is currently the Rex Board Chairman. He is the CEO of Medical Mutual Insurance Company of North Carolina. Previously, Dale worked at Ernst & Young in North Carolina. He graduated from Wake Forrest University with a degree in Accounting.

Jim Hyler
Jim has served as a member of the Board of Trustees at Rex Healthcare since 2007. He is a retired banking executive with First Citizens Bank in Raleigh where he worked for 28 years as CFO, President, Vice Chairman and COO. Jim has served on many other boards and was President of the United States Golf Association, Chairman of the Raleigh-Durham Airport Authority, Chairman of the Greater Raleigh Chamber of Commerce and Chairman of the Rex Healthcare Board of Trustees. Jim graduated from Virginia Tech with a Bachelor’s Degree in Accounting.

Champ Mitchell
Champ currently serves on the Board of Directors for the 41st Parameter. He is the former Chairman and CEO of Network Solutions, Executive Vice President and General Manager of the Mass Markets Division of VeriSign and Executive Vice President and COO of R.J. Reynolds Tobacco Company. Champ also founded and managed two successful start-up companies specializing in Voice over Internet Protocol. He earned his Juris Doctor with highest honors from the University of North Carolina at Chapel Hill.

Tom Darden
Tom is the CEO of Cherokee and founder of Cherokee Investment Partners, Cherokee Property Foundation and Cherokee Sanford Group. He is on the boards of Woodberry Forrest School, Shaw University, the Environmental Department of the University of North Carolina and Governor’s of Research Triangle Institute. He has a Master’s in Regional Planning from the University of North Carolina at Chapel Hill, Juris Doctor from Yale Law School and earned his undergraduate degree from UNC Chapel Hill as a Morehead Scholar. Tom also worked in Seoul, Korea under a Luce Scholarship.

Dhruv Patel
Dhruv is a Program Director, Senior Manager of Life Science Programs and Senior Manager of Capital and Technology Development at the Council for Entrepreneurial Development. He is also a former Director of Research and Roundtables at Piedmont Triad Entrepreneurial Network. Dhruv graduated from the University of North Carolina at Greensboro.

Ted Zoller
Ted is a practicing entrepreneur and experienced educator. He is the Director for the Center for Entrepreneurial Studies, where he oversees teaching and outreach programs, and Associate Professor of Strategy and Entrepreneurship at the Kenan-Flager Business School at the University of North Carolina at Chapel Hill. Ted was a founding director of Economic Development at the College of William and Mary, and founded CommonWeal Ventures, a venture accelerator and private equity firm. He serves on the Boards for Idea Fund Partners, Southeast TechInventures and CollectiveIQ Private Equity. He earned his Doctorate Degree at UNC Chapel Hill, his Master’s Degrees at Syracuse University and the University of Virginia, and a Dual Bachelor’s Degree at the College of William and Mary.

Jay Yadav
Dr. Yadav is an interventional cardiologist and entrepreneur. He is the founder and CEO of CardioMEMS Inc. and a consulting cardiologist at the Piedmont Heart Institute in Atlanta, GA. Dr. Yadav has written two books and over 200 publications. He also serves as the Co-Chair of the Metro Atlantic Bioscience Leadership Council, Chairman of the Medical Device Committee and Atlanta Heart Ball 2013 and Director of Georgia Bio and The Indus Entrepreneurs. Dr. Yadav earned his medical degree at West Virginia University Medical School, Bachelor of Science at Yale University and completed his post graduate medical training at Duke University and the University of Alabama at Birmingham.