Optogenetics Explained Simply for Investors

November 3. 2016. 7 mins read

Optogenetics is a technology that most investors probably haven’t heard of. The first time we heard of it was while researching the top emerging technologies as listed by four leading authorities in this space. The World Economic Forum listed optogenetics as one of the top 10 emerging technologies of 2016. The first thing that we do when encountering a new technology is to try and explain it in layman’s terms which is a prerequisite to being able to invest in it. We also found out that there is some fascinating drama created around the inventor of this technology and the whole thing just turned out to be a really interesting topic.

What is Optogenetics?

Optogenetics is the use of light to control cells in living tissues. This is made possible by using photosensory molecules that are found everywhere in nature. Photosensory molecules very simply function by turning light into electricity. If you took a photosensory molecule and shined a light on it, it would start to generate electricity. This is similar to the way that photovoltaics is used to turn sunlight into electricity. We can then use gene therapy techniques to implant these molecules in cells and then activate them. Optogenetics technology is synonymous with the name Dr. Karl Deisseroth who is widely considered to be one of the leading authorities on this topic and (subject to some controversy), one of the inventors as well:


Dr. Deisseroth first started working on optogenetics in 2005 and 5 years later he had sent protocols or genetic constructs to over 500 labs around the globe. His time at Stanford has had him working with some of the minds behind the most transformative emerging technologies out there. This excerpt from a 2013 article by Nature best describes the sort of company that this man keeps:

When Karl Deisseroth moved into his first lab in 2004, he found himself replacing a high-profile tenant: Nobel-prizewinning physicist Steven Chu. “His name was still on the door when I moved in,” says Deisseroth, a neuroscientist, of the basement space at Stanford University in California. The legacy has had its benefits. When chemistry student Feng Zhang dropped by looking for Chu, Deisseroth convinced him to stick around. “I don’t think he knew who I was. But he got interested enough.”

So he’s moved into the office of a Nobel prize winner and the guy who practically invented CRISPR pops by and they start having a chat. The amount of awards that Dr. Deisseroth has achieved at the young age of 44 is simply incredible, and he is now working on another method called  CLARITY which enables “see-through brains” like the mouse brain image seen below:


These same CLARITY methods used to produce the above image could be used on any organ, but that’s a topic for another article. Before we move on though, there’s more than meets the eye behind Dr. Karl Deisseroth and optogenetics.

Optogenetics, Karl Deisseroth, Zhuo-Hua Pan

While doing research for this article, we came across a fascinating piece of journalistic work titled “He may have invented one of neuroscience’s biggest advances. But you’ve never heard of him” that suggests perhaps optogenetics was invented by someone who is not receiving the credit for it. This article is a long read, but what it suggests is that a Chinese researcher named Zhou-Hua Pan who works at Wayne State University in Detroit may have invented optogenetics first, and then stops just short of trying to suggest that race comes into play here. Here’s our take on this after reading the very long and excellently written article.

The two Americans hailed as inventors of optogenetics are Karl Deisseroth at Stanford University and Ed Boyden at the Massachusetts Institute of Technology and they are both expected to win a Nobel Prize for the “invention” of optogenetics. These researchers come from two of the best universities in the world. When you’re rubbing shoulders with one of the investors of CRISPR who “pops by your office”, you’re in a world-class establishment. Wayne State University has an endowment of $313 million. Stanford has an endowment of $22 billion. Here’s how the three institutions stack up:


Researchers working at world-class institutions have more resources at their disposable and are perceived as being more legitimate. Right or wrong, that’s how the world works. This is the same reason that graduates from Ivy League colleges go into investment banking and graduates from most other universities don’t. Here are some other excerpts taken from that article:

  • Pan said he might have mentioned the timing of his experiment to Boyden once several years ago, but, Pan said, “I didn’t want to take too much time to talk about this because people feel uncomfortable.” That sentiment is in keeping with Pan’s wider approach — diligent, reserved, outside the limelight.
  • Pan heard the news from a colleague who emailed him the paper. “I felt terrible. I felt terrible,” Pan said, pausing. “We didn’t feel very lucky.”
  • After Boyden’s paper came out, Pan wrote to the editor at Nature Neuroscience asking how they could have rejected his paper but published Boyden’s. In her response, the editor replied that while the papers were similar, Boyden et al. presented theirs as a new technology rather than as a scientific finding.
  • Asked whether he deserves the recognition that Boyden and Deisseroth have enjoyed, Pan declined to answer. He later told STAT that Deisseroth “also did a very excellent job, no doubt. But he’s also very lucky because if our paper was ahead of him, the story would be different. We would have gotten more credit.”

The above excerpts support the theory that the only reason Karl Deisseroth and Ed Boyedn are now considered to be the inventors of optogenetics is that they had more resources, were better networked, and were more ambitious about what they wanted to accomplish with it. Now let’s get back to talking about optogenetics and its use in studying the brain.

Optogenetics and Brain Research

One possible application for optogenetics is in studying the complexity of the brain, an organ so complex that we’re having a hard time trying to understand how it works. As far back as 1979, Nobel laureate Francis Crick suggested that “the major challenge facing neuroscience was the need to control one type of cell in the brain while leaving others unaltered”. Optogenetics may help us do just that and here’s how a 6-step diagram showing how:
6-steps-to optogenetics
Source: Nature – “Neuroscience: Illuminating the brain”, 30 June 2010

Using tricks from the field of gene therapy, we can put these molecules into brain cells (also called neurons). The brain is a massive network of neurons that communicate using electricity. What we’re doing is putting molecules that convert light into electricity into brain cells. Then we shine the light on the neurons, and light gets converted to electricity so we can turn brain cells on or off. In this way, we can achieve our goal of controlling activity in some brain cells but not others. The majority of usage for optogenetics is in the area of research like this but there are some startups that are already trying to commercialize it.

Optogenetics Startups

We didn’t find a whole lot of startups working in the Optogenetics space but the ones we did find are notable. Here is a list of three companies working in the area of optogenetics.

Click for company website

Founded in 2009, Retrosense Therapeutics licensed a patent from Dr. Pan to use optogenetics to treat blindness. In August 2015, the company received FDA approval for human trials of their lead gene therapy candidate, RST-001, to treat blindness. In March 2016, RetroSense initiated a Phase I/IIa clinical trial to evaluate the safety of RST-001 in patients being dosed, and in August 2016, the low dose cohort of patients had been safely dosed. That trial must have been a success because just two months ago, Retrosense was acquired by Allergan (NYSE:AGN) for the sum of $60 million. AGN is a $78 billion company so don’t expect to get any sort of exposure to optogenetics by buying shares in AGN.

Founded in 2010, Circuit Therapeutics wants to begin clinical trials for an optogenetics therapy to treat chronic pain. Claiming to be the “world leader in optogenetics”, Circuit Therapeutics was co-founded by none other than Dr. Deisseroth himself. Last year the Company was awarded a 2.7 million dollar contract from the Defense Advanced Research Projects Agency (DARPA) to pursue optogenetic therapies for peripheral nervous system indications.

We also came across another Texas-based startup that’s working in this area as well called Optologix which has developed a light-controlled gene expression technology called “LITE switch”. Also referred to as the EL222-based gene regulatory system, at present these tools are being evaluated by almost 60 academic and industrial laboratories. We managed to find this ridiculously technical paper on Optologix’s technology for those of you with the mad skills needed to make sense of this stuff.


Now you know all about Optogenetics and you can participate in informed debates about who invented optogenetics. The other takeaway for investors is that there are not a lot of players in this space at the moment but the technology seems to have a lot of potential. If you know of any other startups working in the field of optogenetics that we missed, then please drop us a note in the comments sections below.


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