Investment in neuroscience has ebbed and flowed over the years, but the field is gaining renewed attention. And it’s getting a boost from technological advances in areas such as human genetics, multi-omics, imaging and neurophysiology, said Dr. Bruce Leuchter, president and CEO at Neurvati Neurosciences, a company focused on advancing drugs for neurological and psychiatric disorders.
“All of that will bring more innovation success and more approved drugs,” he said.
Recent scientific wins drove two recent high-profile acquisition deals, Bristol Myers Squibb’s $14 billion deal to acquire Karuna Therapeutics and AbbVie’s $8.7 billion with Cerevel Therapeutics, which may hint at M&A to come.
“We're going to see more capital flowing into neuroscience. We're going to see more strategic engagement,” Leuchter said.
Despite this momentum, investing in neuroscience is still a high-risk, challenging endeavor. Neurvati believes it might have one solution.
A Blackstone Life Sciences portfolio company, Neurvati is hoping to fill neurological and psychiatric disorder treatment gaps by generally throwing its investment weight specifically behind assets in mid- to late-stage development.
“The neuroscience waterfront is vast,” Leuchter said.
Navigating a challenging market
The company also boasts that its specific expertise in psychiatric and neurological disorders will drive its problem-solving approach to the space. For example, challenges differ between areas like psychiatry and monogenic neurological disease, even though they fall under the same neuroscience umbrella, Leuchter said.
Clinical trials in psychiatry are often large, long and capital-intensive. In monogenic neurological diseases, caused by a single gene variant, studies are typically small, but a trial with only five or six participants may be enough to inspire confidence with a strong efficacy signal, he said.
“The best way to make a distinction between us and the classic venture investor is the classic venture investor plays earlier in development."
Dr. Bruce Leuchter
CEO, Neurvati Neurosciences
Overall, the field for genetic disorders is benefiting from a rare-disease-friendly FDA, and an increasing understanding of the biological underpinnings of these diseases, Leuchter said. And while the market is smaller for mono-genetic neurological disease, there’s a critical need for new treatments. To this end, Neurvati launched GRIN Therapeutics in 2021 to advance treatments for neurodevelopmental disorders driven by mutations in the GRIN gene and other types of pediatric epilepsy.
Meanwhile, the psychiatric drug market is awash in generic drugs, but there's still significant room for branded therapies because of immense unmet need, Leuchter said.
In general, Neurvati’s investment model will aim to avoid the riskiest point in drug development when failures are most common.
“It's not as though focusing on mid-and-late-stage development inoculates you against risk and inoculates you against the challenges of clinical development. But it does allow for us to take a look at a preclinical data packet, clinical data package and then make a determination that the probability of technical and regulatory success is sufficiently high that we can allocate substantial sums of capital,” Leuchter said.
The approach offers advantages to companies who need to gain late-stage capital to drive promising programs through clinical development and approval — without siphoning cash away from other programs in their pipelines or putting strain on company finances.
“In some of our deal structures, we enable a return of that asset to the partner,” he said. This is an advantage for companies reluctant to relinquish their top-line growth potential from product commercialization.
“The best way to make a distinction between us and the classic venture investor is the classic venture investor plays earlier in development,” Leuchter said. “We play later in development, and it can be a synergistic existence.”
Neurvati is coming into the space at what could be a particularly fruitful moment in pharma history.
“We've heard for a long time now that this is the decade of the brain, we’ve heard that across multiple decades. But it does feel more real now than it has in the past,” Leuchter said.
