There is a wealth of good news in our report on the outlook for
venture capital funding for neurotechnology firms. Our report indicates
that VC firms actively involved with the healthcare and biomedical
industries are very receptive to funding neurotech start-ups. Although
the amount of funding for manufacturers of neurodiagnostic and neurostimulation
firms has to date been dwarfed by the amount thrown at biotech,
genomic, and pharmaceutical firms, there are finally signs that
this situation is about to change.
Probably the most useful step this new industry can take to increase
VC funding is to ask for it. As the number of neurotechnology device
firms requesting funding increases, the likelihood of getting more
attention from the financial community will rise significantly.
This will hold true particularly as new clinical data supporting
the efficacy of neurostimulation treatments becomes available over
the next two to three years.
Still, it is worth examining some of the perceived disadvantages
that neurotech devices have in the eyes of some VC firms, compared
to bio/pharma technologies. One of the most salient drawbacks, the
invasiveness of implanted devices, should be diminished as new forms
of stimulation, new types of electrodes, and new procedures for
installing devices emerge. A good example is Advanced Bionics
BION stimulator, which can be injected by a clinician during a routine
Also promising are new microminiature electrode arrays being developed
at a number of research institutions in the U.S. and Europe and
new biopolymers that will further blur the distinction between live
tissue and artificial devices within the central nervous system.
As the density, compatibility, and selectivity of new neural-silicon
interfaces continue to increase, the flexibility and functionality
of new neurotech devices will expand beyond what is available today
with any device or compound. And invasiveness is hardly an issue
at all for the bulk of new neurodiagnostic products, particularly
as new functions emerge from software and signal processing developments.
Perhaps harder to deal with is the lack of a recurring revenue stream
for neurotech devices, an advantage bio/pharma approaches enjoy
within the financial community. Vertis Neuroscience has made some
headway here with the disposable electrodes used in its percutaneuous
neuromodulation system. Other stimulation and recording device manufacturers
may be able to look to software and firmware upgrades as a potential
annuity stream, a strategy that has served Microsoft Corp. well
over the years. Of course even if theres no income to be made
after a neurotech device is sold, a strong case could be made to
medical insurers that the lack of a future revenue stream makes
the device compellingly cost-effective in the long run, compared
to drug treatment regimens that can cost insurers thousands of dollars
per patient per year.
In the end, the strongest argument for expanded funding for neurotech
start-ups may be that stimulation and recording technologies are
not alternatives to, but in fact are adjuncts to, chemical, genomic,
and molecular approaches to neurological disorders. To the extent
that all nervous system activity is regulated by chemical messengersand
vice-versathe question of which approach is better may someday
soon be a moot point.
Editor and Publisher