STAT: 4 Questions for Neurology Startups as Venture Investors Pour Millions into the Field

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By Kate Sheridan

Republished with permission from STAT. Article originally published August 12, 2020

As pharmaceutical companies stepped back from developing new drugs for neurological conditions, venture capitalists took a big step forward.

Venture investors have poured more than $500 million into early-stage neurology startups this year, according to a recent health care venture capital report from Silicon Valley Bank — more than six times as much money that was invested in the same over the first six months of last year.

That broad category includes startups working on conditions as varied as dementia, epilepsy and pain — conditions that collectively affect millions of Americans — and investors’ increasing interest could herald a renaissance for the field.

Lately, supporting neuro has been a decent bet. Denali signed a deal with Biogen worth up to $1 billion for its experimental Parkinson’s drug last week. And brain-focused Cerevel Therapeutics raised $445 million in July when it merged with a special purpose acquisition corporation, or SPAC; it should begin trading publicly later this year. Sage Therapeutics, which is working on treatments for multiple depression and movement disorders, was worth more than $7 billion as recently as December, though its valuation has since fallen to about $2.7 billion.

But neurology is a massive field, and it can be hard for people looking at brand new startups to know which questions are the right ones to ask. STAT asked three experts about why biotech investors are now paying so much attention to the brain — and what questions any startup in the space should be able to answer.

What kinds of conditions do they want to treat?

Neurology may be one of biotech’s biggest tents. The category includes companies developing drugs for psychiatric or behavioral conditions, for pain, for rare genetic diseases, and for neurodegenerative disorders — which can include subcategories of movement disorders, like Parkinson’s. Some people even consider conditions of the eye to be neurological.

“It’s somewhat similar to the breadth of oncology,” said Adam Koppel, a managing director at Bain Capital Life Sciences and a member of Cerevel Therapeutics’ board. “Oncology is also cell growth and cell development going awry — but there, it’s different organ systems, leading to different types of disease with different outcomes.”

Each category comes with its own challenges. While neurologists may be comfortable doing procedures, psychiatrists are only now coming around to the idea of doing office-based drug therapy — something that’s required for some new depression treatments, like Sage’s Zulresso.

Prevalence matters, too. While anxiety, depression, and Alzheimer’s affect millions of people, new treatments for those conditions could require massive clinical trials. On the other hand, developing a new therapy for a rare genetic disorder could be done with smaller trials — but finding people who would be eligible to enroll in those trials can be more challenging.

“In some of these diseases, they’re so rare that it’s sometimes difficult to actually find those patients for some of the initial studies,” said Mark McDade, a managing partner at Qiming Venture Partners USA.

Do they understand how the disease works?

Each indication will have a different scientific history — and some conditions will have a deeper history than others.

“One of main questions I would ask is, ‘How confident are you that the targets you’re going after are relevant for this disease?’” said Michael Ehlers, who was the head of R&D at Biogen before becoming the chief scientific officer of venture capital firm Apple Tree Partners in October.

Drug developers often answer that question by looking at genetic sequences. If they can identify a malfunctioning gene, the thinking goes, they can understand what exactly has gone wrong — or just figure out a way to fix the gene directly.

In an ideal world, drug developers who want to take aim at neurological conditions could use genetic information to find new targets. However, neurological diseases with clear genetic signatures — like Huntington’s and spinal muscular atrophy — are “few and far between,” according to Qiming’s McDade.

“We have been looking very hard for those companies,” he said. “But the problem is they’re typically in very small diseases, they’re high-risk and may not have easy access to patients.”

Even the most basic information about a disease — like what part of the brain it affects — is important. If neurons in one part of the brain die, that can have dramatically different consequences than if similar neurons in another area die for the same reason or in the same way.

“The geography of neuro diseases is as important as the mechanism of disease,” Koppel, from Bain, said. “When you have a heart attack, you’re generally just hurting the heart’s ability to pump out blood. With the brain, it depends very specifically where the abnormality is. That’s what makes it challenging, in some ways, to develop drugs.”

What kind of animals are they working with?

Engineering a lab animal to mimic a human condition is usually tricky — and for neurological conditions like Alzheimer’s and autism, it is notoriously difficult. So when McDade looks at a neuro startup, he scrutinizes the animals that company is working with.

“Animal models don’t necessarily translate well to human studies. That’s been shown,” he said. So if a company hasn’t yet tested its drug in human beings, “we’re constantly looking for whether there is more than one type of animal study.”

But animal models have their limits.

“I get no comfort out of having five different animal models of something,” Ehlers said. “Those initial studies are just primarily useful in setting doses and maybe helping to define biomarkers that you might measure in the clinic.”

For years, scientists have sought alternatives to animal models — like so-called organs-on-chips. Creating a true facsimile of a human brain on a chip isn’t currently possible, but McDade said that new research on induced pluripotent neuronal stem cells could lead to better tools. “I don’t think we’re quite there yet. But we are getting there,” he said.

How do they define success?

“What are you going to measure in your clinical trials?” is one of the first questions Ehlers and others say they ask anyone developing a drug for neurological conditions.

Lately, some researchers’ answers to this question have been particularly interesting. Instead of relying on clinical observations, like how far a person can walk or whether they need a cane, researchers are turning to imaging tools and cellphones to take objective measurements.

“If an endpoint is highly subjective, you can hit or miss wildly. When you bring in new means of measuring a clinical observation or an improvement in the symptom, that improves your chances of success with a regulatory body,” McDade said.

For example, researchers running clinical trials for multiple sclerosis drugs have measured the presence of a particular kind of lesion that turned up on an MRI. (Scientists, for example, used the technique to test the drug alemtuzumab for multiple sclerosis; Sanofi originally developed alemtuzumab to treat a type of leukemia.)

Figuring out that these particular lesions were clearly correlated with the progression of the disease — and that a drug’s ability to prevent new gadolinium-positive lesions could predict a drug’s efficacy — meant that clinical trials could be done more easily, Ehlers said.

If neurologists can find new, objective ways to measure progress for neurological conditions, “we’re going to be able to unlock a lot of diseases,” Ehlers added.