Neurogenomics isn't yet on the radar of most top investors. But it will be next year. The emerging field--the blending of functional genomics, proteomics, genetics, and neuroscience--will provide useful insights into the fundamental causes of central nervous system (CNS) disorders, spawning one of the hottest new drug therapy sectors in biotechnology.
"Every doctor knows that the brain is the final frontier of medicine, but VCs are just now starting to sniff opportunity," says A. Barr Dolan, a general partner at Charter Ventures. "There'll be a lot of opportunities to play this sector because there are just so many problems that fall under the heading CNS."
CNS disorders fall into two broad categories: neurodegenerative (Alzheimer's disease, Parkinson's disease) and psychiatric (depression, schizophrenia, anxiety). Pain, stroke, and head-and-neck trauma span both categories. Stem-cell therapies will benefit from neurogenomics, too, but most money and research will be aimed at drug therapies.
For the first six months of 2001, VCs had invested more than $250 million in CNS-focused companies, compared with $223 million for all of 2000 and $127 million for 1999, according to BioCentury, a biotech research firm. The average VC investment in CNS-focused companies climbed from $9.8 million in 1999 to $17.2 million in 2001. BioCentury also predicts that in 2001 nearly 20 percent of all biotech-related VC funding will go toward genomic-based startups focused on CNS disorders, up from 5 percent in 1996. By 2004 that figure could top 25 percent. David Stone, founding partner with the VC firm Applied Genomic Technology Capital Funds, says that with this increased funding will emerge drugs that will have unparalleled success against CNS disorders. However, Mr. Stone cautions that these drugs (like all experimental drugs) are years away from market.
Bogus concerns have been raised that if a CNS cure were discovered, pharmaceutical companies would be hesitant to market the drug because doing so would erase any potential of a consistent profit through long-term treatment of patients. However, like nearly everyone involved in healthcare, Christoph Westphal, principal with Polaris Venture Partners, flatly dismisses this idea as improbable, saying a discovery of this magnitude would overshadow any concerns about "stringing the patient along to garner a sustained profit."
Seventy-three million people in the United States suffer from CNS disorders. Alzheimer's disease alone, which affects 5 million Americans, costs the health care system (Medicare/Medicaid and private insurance spending in the United States) $100 billion; depression afflicts 20 million and costs the health care system $30 billion. The direct cost of CNS disorders to the health care system comprised nearly 20 percent of all health care spending. Last year, the first-generation depression drug Zoloft brought in $2 billion in the United States for its maker, Pfizer. Eli Lilly's first-generation drug, Prozac, produced $2.7 billion. Both drugs treat only the symptoms of the disease, not the root cause. Medicare and health insurance pay for drugs like these, but tend to switch to generics as first-generation drugs lose patent protection.
Current CNS therapies are covered by Medicare/Medicaid and most insurance companies. They would willingly pay even more than they're now paying for drugs like Prozac and Zoloft if it meant returning a patient with a CNS disorder to a productive life.
San Diego-based Neurogenetics is but one example of a startup combining genetics and genomics with neuroscience to produce a better Alzheimer's drug. The company's science is based on the pioneering work of Rudolf Tanzi, a noted Alzheimer's neurogeneticist at Massachusetts General Hospital and professor of neurology at Harvard Medical School. The company has deals with the National Institutes of Health and the Japanese drug giant Eisai. To date, it has raised $17 million from AltaPartners, Advent International, Novartis Venture Fund, and S.R. One.
Other notable neurogenomics startups are Avant Immunotherapeutics, Interneuron Pharmaceuticals, MitoKor, NeoTherapeutics, Neurocrine Biosciences, and RepliGen. Big pharma and biotech firms that are driving collaborations and merger-and-acquisition activity in this field include Roche, Eli Lilly, AstraZeneca, Pfizer, Novartis, and Bristol-Myers Squibb.
Like every new technology trend, neurogenomics will face its share of ethical hurdles. Taking tissue samples from the liver, pancreas, or skin are standard surgical propositions. Not so with the brain--at least not in a living patient. Likewise, molecular diagnostics are just around the corner, but what to do with the information we begin acquiring as we amass predictive data on a person's likelihood of developing Alzheimer's later in life? How do we keep it safe from employers and insurance companies? These are questions that technology alone cannot answer. Additional reporting by Christopher Locke.