Rune Labs

The era of brain data - neurotech after the turning point

10.16.20

| By
Brian Pepin

If Silicon Valley has a favorite economist, it might be Carlota Perez. Her 2002 book “Technological Revolutions and Financial Capital” has been heavily influential at top VC firms as a framework for understanding the relationship between technology and financial capital at different stages of the economic cycle, and neatly predicted the frenzied period in investment and politics of the last decade. More recently, Perez has argued that the economic crisis precipitated by COVID-19 could be the “Turning Point” for the current Information Age economic cycle. If true, this means we are about to see a reorganization of our social and regulatory environment that enables a fuller spectrum of society to capture the benefits of information technology. We should expect the change to be especially profound in areas like education, transportation, government, housing, and healthcare which have seen relatively slow adoption of new technology over the last several decades.

Healthcare, in particular, seems poised for a significant period of innovation post-COVID-19. Healthcare costs have steadily increased as a share of US GDP over the last decade and so the way we regulate, deliver and provide access to, and pay for healthcare was already under increased scrutiny. That this dynamic will be amplified 10x in the post-COVID environment has not been lost on the venture capital community, who sense the potential for startups to make a massive impact (below announcements from last quarter alone):

The coming information technology revolution in healthcare will create mini-revolutions in many individual niches. The niche I think the most about is the “neuro” part of healthcare, since my company Rune Labs provides software for neuromodulation, neurotech, and neuroscience therapeutics. As healthcare evolves over the next decade to fully incorporate information technology— and as society makes the necessary changes to enable this process — we see the demand for neuro healthcare products growing rapidly along with trends in telehealth, increased demand for universal healthcare access, and a renewed focus on mental health. In this article, I’ll outline three theses about how the neuro industry will grow and adapt through this current Turning Point, which I hope can be helpful as a guide for patients, clinicians, researchers, and companies who are invested in development and delivery of neuroscience therapies in the years to come.

Thesis #1 —The need for remote monitoring of brain function will increase as more elements of clinical practice are forced into a telehealth environment

Perhaps the most obvious change in the healthcare environment as a result of COVID-19 is the surge in telemedicine use, brought on by a rapid spike in demand coupled with relaxed regulations. Healthcare investment bank BTIG outlined a few key examples of these forces in a recent update on the digital health market:

CARES Act allows Medicare to temporarily reimburse telehealth services in any location (not just rural areas) and by any provider (no pre-existing relationship).
The Federal Communications Commission (FCC) is launching a new telehealth program aimed at using $200 million in new federal funding to improve broadband connectivity for connected health services.
From Teladoc Press Release (March 13, 2020) — “Patient visit volume spiked 50 percent over the prior week and continues to rise. The company had been handling visit demand consistent with peak flu volumes, but on Wednesday began to see that number accelerate to as much as 15,000 visits requested per day.”
Janie Jun, Ph.D., associate director of quality and provider strategy at Lyra Health, told FierceHealthcare that demand for video visits has nearly doubled as the pandemic stretches on. Jun said that 85% of Lyra’s mental health visits are now conducted via secure video or telephone calls.
Providers will increasingly seek solutions to keep patients away from healthcare facilities in the medium term until a vaccine is approved (“healthcare at home”).

Some of the largest public digital health companies help provide effective “healthcare at home” for diabetes and cardiac disease using wearable medical devices, and neurology and psychiatry are not far behind. Over the next few years we will see the first companies using wearable neurotech to manage chronic neurodegenerative and psychiatric conditions get significant market penetration and scale.

Thesis #2 — Adaptive and closed-loop (AI-powered) neuromodulation therapies will become more attractive as doctors and hospitals are challenged to increase efficiency to meet demands for more universal healthcare access

The combination of a public health crisis and large-scale unemployment caused by COVID-19 seems likely to increase the urgency around a more universal form of healthcare in the US, with concrete changes in this direction already happening at the state and federal level. This increase in demand will not be met with an adequate supply of healthcare workers on the other side unless those healthcare workers can be given access to tools which increase their productivity substantially.

Thesis #3 —There will be a resurgence in demand for neuroscience therapeutics resulting from understanding and awareness of the costs of poor mental health and a post-COVID rethink of the role of nursing homes in our healthcare system

The first two decades of the 20th century have largely disappointed anyone hoping for new treatments for neurodegenerative and psychiatric disease, and have left patients burdened with these conditions with the highest unmet needs in medicine today. Promising candidates for new neuroscience drugs have repeatedly failed Phase III clinical trials, and meanwhile a data revolution coupled with a favorable reimbursement environment in oncology and rare disease has made it more lucrative for pharma companies to spend on these elements of their pipelines instead of on neuroscience.

So, we have promising new science on which to base new potential therapies for neurodegenerative and psychiatric disorders, and society is changing in ways that is going to massively increase demand for these products. Still the question remains of how to actually develop the new therapies, given the challenges and failed clinical trials of the last few decades. This is where neurotech provides hope — leveraging neuroimaging, in particular EEG and fMRI, as intermediate endpoints in clinical trials.

The COVID-19 crisis has dramatically accelerated changes in behavior, regulation, and expectations around healthcare in ways that have unlocked a new wave of opportunity for neurotech enabled therapies and products. As these come to market, millions of people can look forward to greater relief from seizures and debilitating depression, non-addictive alternative treatments to chronic pain, and years of life back from neurodegenerative disease.