The Value of Neurotechnology
Big news comes to the neurotechnology industry only so often. This month, two major events promise to reshape the status of this relatively new industry. The first is Boston Scientific Corp.’s purchase of Advanced Bionics [see article, p1]. And the second was the FDA panel’s recommended approval of Cyberonics’ VNS therapy for treatment-resistant depression [see article, this page], which nearly doubled the value of the company’s stock overnight.
Both events sent strong signals to the financial community that neurotechnology represents a highly profitable and high-growth business activity. At the same time, both events point up the long-term market potential for the players in this field. Some of the most valuable products in Advanced Bionics’ repertoire, including its BION injectable stimulator and a forthcoming deep brain stimulation system, are not only not on the market yet, but new applications are still emerging. The same can be said for Cyberonics, who is known to be looking down the road at several new potential applications of VNS. Clearly, if Wall Street and large medical device firms like Boston Scientific think that young neurotechnology firms like Advanced Bionics and Cyberonics are worth this much now, their value five to 10 years from now stands to be enormous.
This can only be good news for the legions of small neurotech startups and research labs still trying to find the path to commercialization. For better or worse, the investment community is prone to a pack mentality, and once one set of investors cashes in on a gamble they took, others are sure to follow. Of course exuberance alone is no reason to expect the high valuations, merger and investment activity, and conducive IPO climate to continue for neurotechnology firms, a lesson that should be quite clear from events over the last five years.
But to the extent that neurotechnology entrepreneurs, early-stage firms, and more established competitors can point to proven success based on technology that works and is sorely needed by a significant customer base, their case will be easier to make.
This is one of the reasons Neurotech Report has launched a short course on investment for neurotechnology entrepreneurs, to be held in conjunction with the Neurotech Leaders Forum on October 4-5 in San Francisco [see article, p6]. We’re convinced that if neurotechnology start-ups can become as adept at navigating the intricacies of the investment process as they are at solving the complex engineering and biological problems associated with neurological devices, money will flow in, products will become commercialized, and people suffering from neurological diseases and disorders will see their lives improved.
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