Computer chips are coming to a brain near you – and sooner than you think.
At least that’s according to a report from investment bank Morgan Stanley, which estimates that the brain-computer interface (BCI) market could be the next opportunity for investors, with a total addressable market of $400 billion.
“This is the next big opportunity for us in medical technology – and that’s rare,” Morgan Stanley analyst Kallum Titchmarsh told Yahoo Finance. “BCIs have essentially been in development for 100 years. When you’re five years away from full commercial launches, I think it’s time to get excited and get ahead of the curve.”
Titchmarsh covers medical technology stocks such as Inari Medical (NARI), Penumbra (PEN), Sight Sciences (SGHT), Irhythm Technologies (IRTC), Nevro (NVRO), Inspire Medical Systems (INSP) and Embecta (EMBC). Morgan Stanley. The report, published last month, estimates the commercial launch of BCIs in about five years.
“Based on our numbers, we expect that just under $1.5 billion in revenue will be generated from BCI implant procedures through 2035 (north of the annual run rate of $500 million in 2036), and that the annual run rate of $1 billion by 2041 will be achieved.” report said. “To us, these numbers seem very plausible, especially when compared to existing medical end markets…”
Analysts told Yahoo Finance that several neurotech companies are vying to become the Apple (AAPL) of their industry.
Titchmarsh estimates that penetration will be limited in the first 20 years after launch – probably less than 3% by 2045. “But still, this is such a large target group that you don’t really need too much penetration to generate decent penetration . significant revenue,” he says.
Morgan Stanley divided the market into two categories: enabling BCIs and preventive BCIs. Turning on BCIs would help patients who have already lost their ability to move or speak due to severe neurological disease or traumatic injury. Preventive BCIs could stop conditions such as depression and epilepsy.
The first applications will help people with motor neuron disease and amyotrophic lateral sclerosis (40,000 and 30,000 people), spinal cord injury (300,000), stroke (900,000), multiple sclerosis (1 million), cerebral palsy (500,000), limb amputation (2.5 million) . ), epilepsy (3 million) and depression (21 million, 2.5 million with severe treatment resistance).
“In the future there will be no more phones, only Neuralinks,” says Elon Musk posted on Xformerly Twitter, in June. Musk co-founded BCI company Neuralink in 2016, which is now valued at a reported $8 billion.
There are several others making great progress and supported by the richest people in the world.
Synchron, a company that implants its chip through blood vessels without drilling into the skull, is getting its Series C funding round backed by Microsoft (MSFT) co-founder Bill Gates and Amazon (AMZN) founder Jeff Bezos. The company has an estimated value of approximately $400 million.
Palantir (PLTR) co-founder and venture capitalist Peter Thiel has put at least $10 million into Blackrock Neurotech, which has a reported valuation of $350 million. German billionaire Christian Angermayer is on the board of Blackrock Neurotech and is also an investor.
Titchmarsh focuses on four players he believes are currently in charge: Neuralink, Synchron, Precision Neuroscience and Paradromics.
“I think it’s super important to be the first,” Titchmarsh said, adding that whichever company gets to market first will get a foothold in the reimbursement space. “It’s rare to see four or five players in the medical field competing. More likely, we’ll probably see three.”
He expects that within the first few years of a commercial launch, the market will be narrowed down to three major players. In addition, the chance of takeovers by public companies is high.
Precision Neuroscience CEO Michael Mager (left) shows off his company’s brain implant technology at the Yahoo Finance Invest conference.
“Three major companies have neuromodulation businesses: Medtronic, Abbott and Boston Scientific,” Titchmarsh said. “But this seems very unique to a market, and perhaps in the hands of these companies it might be better as kind of pure plays for now so that it doesn’t get lost in the broader development pipeline. Would I be surprised in ten years? if one of these big medtech companies had a BCI?
Last month, Precision Neuroscience closed a $93 million funding round, valuing the startup at around $500 million.
“We see brain-computer interfaces as a key innovation in the life sciences that is important for generations and that will truly… be applicable today in paralysis, tomorrow in a number of different areas,” said Michael Mager, co-founder and CEO of Precision Neuroscience. , told me at Yahoo Finance’s Invest conference (video above). “We have tried to build this company from the very beginning to go above and beyond.”
Watch more in-depth conversations at Yahoo Finance’s Invest conference
Precision temporarily implanted its device, called the Layer 7 Cortical Interface, in more than 20 patients during clinical trials. The company uses a minimally invasive approach that does not penetrate the brain like its competitors.
Precision Neuroscience co-founder and chief science officer Benjamin Rapoport (formerly of Neuralink) said the technology goes beyond medical technology.
“There is an aspect to it that is new manufacturing techniques,” Rapoport, a practicing neurosurgeon, told Yahoo Finance. “There is an aspect that is related to the supply chain. There is an important aspect that is driven by artificial intelligence and machine learning. We’re pushing so many boundaries on all these fronts that there’s not really another area or area out there to date. technology in medicine that required innovation on so many levels at once.”
Precision is awaiting FDA approval to implant the chip in patients for up to 30 days. Rapoport expects the cost of a BCI to reach six figures.
“If you look at the economic impact on a young person, who probably has 50 years to live and may have to work another 35 years, you give him and his family a level of independence and economic self-sufficiency,” Rapoport said. . “And that’s worth a year or two’s worth of salary, I think most people would agree with that.”
Yasmin Khorram is a senior reporter at Yahoo Finance. Follow Yasmin on Twitter/X @YasminKhorram and on LinkedIn. Send newsworthy tips to Yasmin: yasmin.khorram@yahooinc.com
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