Interesting Times

by James Cavuoto, editor

The first two months of 2025 have presented a mixed bag of events and trends to the neurotechnology industry. On the one hand, investment in neurotech startups has remained strong and a steady stream of new and enhanced products has reached the market.

But on the other hand, a series of ominous decisions from the new Trump administration have raised concerns among many industry observers that the economic engine that has driven so much growth and commercial activity in the last two decades may be drying up. Federal agencies like the NIH, the FDA, and the NSF have been hit with budget cuts, layoffs, funding interruptions, and travel bans. The absence of key government employees at the recent NANS conference in Orlando was a telling reminder to startups in this space that some key sources of nondilutive funding in the past may not be as reliable in the next few years.

Even among more established neurotech firms, a large degree of uncertainty remains. At the i3 preconference workshop [see Conference Report, p18], executives from several strategic firms considered whether the current climate in D.C. would be helpful or harmful. With Republicans in charge of the White House and both chambers of Congress, there was hope that regulatory burdens on medtech firms might be reduced. But that hope was offset by the prospect that staffing shortages at the FDA might actually lengthen the time that it takes for new neurotech products to gain approval.

The fact that Neuralink founder Elon Musk currently wields considerable influence in the Trump administration may lead some to hope that neurotech funding may fare better than other disciplines. But that hope is offset by the presence of new HHS secretary Robert F. Kennedy Jr., who is not often regarded as a booster of new medical technologies.

Other notable neurotech commentators have been less sanguine about the current clampdown on U.S. healthcare funding agencies. In his keynote address at i3, University of Wisconsin professor Kip Ludwig, who has held key positions in industry and the NIH, sounded the alarm about the damage indiscriminate budget cuts could wreak on the neurotech industry. “Change being implemented by those completely unfamiliar with the history is also not new. The only thing new here is the unbelievable arrogance to not even talk to those with expertise, the unethical blatant lying/misinformation, and lack of compassion/humanity in which these massive cuts to health and science have been done. The layoffs at the NIH, FDA, CDC, NSF, etc will directly cause deaths, hamstring our economy, and cost us world leadership in science,” he later opined on LinkedIn.

Justin Klein, managing partner at Vensana Capital, also expressed his concerns. “Very concerning news of layoffs impacting FDA and its medical technology division, CDRH,” he wrote. “At best, this feels like indiscriminate reductions where more informed approaches could have a better impact; at worst this suggests that specific groups within the agency were targeted because they presented friction for special interests who may have been directly involved with the layoffs.

Former Axonics CEO Ray Cohen pointed out the irony of Musk’s efforts at DOGE. “Elon Musk’s business empire is built on $38 billion in government funding to help Tesla and SpaceX flourish ($6.3 billion in 2024 alone), boosting Musk’s personal wealth,” he pointed out.

University of Pittsburgh professor T.K. Kozai urged his followers to call their representatives in Washington six to eight times per day. “The indiscriminate firing of thousands of federal employees—including experts at the FAA, FDA, NIH, CDC, and even nuclear security staff—puts lives, the economy, and long-term healthcare at risk. This is not just about government jobs; it’s about safety, public health, and American competitiveness,” he wrote.

While the current outlook for U.S. government funding looks bleak, we prefer to remain optimistic that the situation will improve as legislators and industry leaders continue to weigh in. The neurotech industry has faced challenges like this in the past and recovered nicely. We hope and expect that tradition to continue in 2025.