Neurosciences –Need is Growing, but not Investments: Part #1

Neurology- The new Oncology?

Cancers are being cured, heart disease is being addressed, and we are living longer. So, what is the next medical frontier we need to conquer? Neurology, our own brains.

• “The burden of almost all neurological disorders increased from 1990 to 2017”  JAMA Neurologic Disorders Article (JAMA Neurol. 2021;78(2):165-176. doi:10.1001/jamaneurol.2020.4152).
• “The number of people diagnosed with PD (Parkinson’s Disease) increases with age.” (Parkinson's Statistics).
• Traumatic Brain Injuries (TBI), aka concussions, impact our younger population. Multiple, repetitive sports concussions can lead to neurologic issues later in life. Concussions have generated prominent headlines for the last 15 years.

So, is “Neurology is the new oncology?”, as Harris Kaplan, a highly respected medical strategy consultant, recently declared?

Given the growing need, one might expect investments in neuroscience to be growing. A general buzz heard in networking/round table sessions of late is just that, that the neurosciences are attracting more capital. The big news of Elon Musk’s $100 million investment in Neuralink surely influences this perception. (Neuralink: tiny electrodes, small enough to be attached to specific sites/neurons in the brain to stimulate brain function to that damaged/abnormal part of the brain.)

The data, however, does not support this thesis.

To find substantive investments outside of the Neuralink headline, I researched the internet, Pitchbook (great resource, but my access is limited) and in conjunction with my own experience, created a list of 68 companies in the neuro device/ diagnostic and neuro-functional measurement space. The majority of these companies are private, so there is little information without a lot of digging. Interestingly, many of these companies are trying to raise $5-15 million. I know of few successes.

Pitchbook data on the number of deals and dollars invested in the neuro space over the last ten years, shows 2016 and 2020 as peak investment years. The number of VC investments made were about equal and the average deal size consistently, about $15-16 million. Ninety percent are investments in drug development, hence few investments in devices or diagnostics

Searching the web for neuroscience headlines for other data suggesting that neuroscience investment is growing, I Googled: 1) “neuroscience investing”; 2) “neurofunctional testing”; and 3) “recent investments in neuroscience companies”. [A humorous side note: many of the hits were on the “Neuroscience of investing”, rather than on “investing in neurosciences”. (Maybe Google AI algorithms have me pegged…. “who in Pittsburgh would care about who is investing in neuroscience technologies?”)].

Articles reporting increases in neuroscience investing were dated either 2013 and 2018. Again, these investments were primarily in drugs for neuro-degenerative diseases, like ALS, Parkinson’s, and dementia. The subsequent retreat each time seems well described by the title of Jacob Bell’s article, “Big Pharma backed away from brain drugs. Is a return in sight?”, published January 2020 in BIOPHARMA DIVE. The recent 2020 surge in neurologic investing, is likely just another high amplitude moment such as described by Dr. Harry Tracy in his article, “The Neuro Funding Roller Coaster”.

Pharma attracts large pools of investors. The outsized rewards frequently realized from an approved drug, usually more than offset any failures. Unless, it seems, one is investing in the neurosciences.

The success rate for clinical trials and FDA approvals in the neuro space is consistently poor. As reported in “Clinical Development Success Rates and Contributing Factors 2011-2020”, a study funded by BIO, PharmaIntellegence and Quantitative Life Sciences, the “Likelihood of Approval from Phase 1[trial]” for Neurology (5.9%) and Psychiatry (7.3%) are both below the average approval rate for all drugs of 7.9%. Additionally, neurology has the third longest timeline (11.1 years) to approval. [“Clinical Development Success Rates and Contributing Factors 2011- 2020”]. Low success rates and long timelines diminishes returns making it hard to justify such high-risk ventures.

Regardless, hope springs eternal. The pharma and investment communities forget the past hoping the future is here and that things are different. They get excited and invest in new neuro-drug trials, only to fall short. After the failures of a given cycle, investing slows dramatically, sort of like a “Neuro Funding Roller Coaster”.

The question is…, “Why do neuro drugs fail more than others?”

It seems… In science we trust, unless, it seems, it is neuroscience…