Neuroprosthesis vs. Neuromodulation – Why it Matters
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This may be the single most boring title for an article we’ve ever chosen, but we promise you that it’s an interesting and relevant topic. In some recent articles, we introduced a small niche of technology under brain-computer interfaces called neuroprosthesis in which devices can substitute your brain’s motor, sensory or cognitive functions that might have been damaged as a result of an injury or a disease. In other words, we’re talking about augmenting the human brain with technology. How cool does that sound? In our articles, we explored a future where we can control things with our minds using brain-computer interfaces and we listed ten start-up companies to watch in this space. Three of these ten start-up companies are into neuroprosthesis and are challenging conventional technologies:
- Kernel Co. – Putting chips in your brain for storage
- NeuroLutions – Robotic prostheses that are controlled with the mind
- BrainRobotics – Robotic exoskeleton for stroke victims
Before you start typing the keyword “neuroprosthesis” in Google to find out more about these start-ups, we need to give you a heads up that some companies may inadvertently be listed under neuroprosthesis when in fact they are not. There is a difference between “neuroprosthesis” and “neuromodulation” and you can’t just use these two terms interchangeably.
Neuroprosthesis vs. Neuromodulation
We’ve already defined neuroprosthesis, so now let’s define neuromodulation which is also referred to as neurostimulation. The technology behind neuromodulation medical devices precedes neuroprosthesis and is defined as follows:
Therapeutic neuromodulation is the alteration of nerve activity through targeted delivery of a stimulus, such as electrical stimulation or chemical agents, to specific neurological sites in the body.
These devices, which function much like pacemakers, stimulate the nerves of certain organs through programmed electrical signals and are classified as devices that:
- Alleviate or manage pain;
- Prevent seizures or tremors brought about by diseases; and
- Restore functions of internal or visceral organs.
Let’s take a look at some of the companies working on neuromodulation or neurostimulation.
Medtronic Inc. (NYSE: MDT) of Dublin, Ireland, is currently marketing devices under all of the categories above. The Company is marketing Neurostimulators for alleviating pain, Activa for Deep Brain Stimulation Therapy to address tremors from Parkinson’s disease, and the InterStim® System for bladder dysfunction. The InterStim® System was a result of the $42 million acquisition by Medtronic of NDI Medical’s MEDSTIM® system in April 2008. MDT posted revenues of $28.8 billion in 2016. About 25% ($7.2 billion) of net sales are attributed to restorative therapies which include neuromodulation. Not a pure-play by any means, but MDT is certainly looking like the market leader in neuromodulation. They’re also a great stock to own for a dividend growth investing (DGI) portfolio.
Companies into the neuromodulation market for alleviating pain are Boston Scientific Corporation, Nevro Corporation, and St. Jude Medical.
$35 billion medical device company Boston Scientific Corporation (NYSE: BSX) markets “spinal cord stimulator systems” under the Precision trademark for pain relief. The Company reported $8.39 billion in revenues for 2016. Of those revenues, about 6.55% were attributed to neuromodulation based on this last quarterly earnings report (about $138 million for the quarter). BSX appears to be investing in neuromodulation given their acquisition of Cosman Medical made in summer of last year.
$2.7 billion medical device company Nevro Corporation (NYSE: NVRO) has developed and commercialized a neuromodulation platform for the treatment of chronic pain called the Nevro® Senza® SCS System currently available in the United States, Australia, and Europe. This pure-play neuromodulation stock has performed quite well returning +280% since their IPO in 2014. Revenues have been growing rapidly with 2015 bringing in $69 million. Costs have been growing equally as fast and NVRO has yet to achieve profitability.
Medical device maker St. Jude Medical (NYSE:STJ) was acquired by $78 billion healthcare company Abbott Laboratories (NYSE:ABT) just last month. The acquisition of St. Jude Medical allowed Abbott to get into the neuromodulation market with the External Pulse Generator (EPG) for pain relief) and the Deep Brain Stimulation (DBS) System. In their last quarter of reporting, STJ brought in $141 million in neuromodulation revenues. Last quarter, ABT had $5.3 billion in total revenues which means the acquired neuromodulation products are merely a drop in the bucket for ABT.
For preventing seizures and tremors brought about by diseases like epilepsy or Parkinson’s disease Cyberonics, NDI Medical, and Aleva Neurotherapeutics SA stand out in this segment.
UK company LivaNova PLC (NASDAQ:LIVN) operates through three segments: Cardiac Surgery, Cardiac Rhythm Management (CRM) and Neuromodulation. The Company’s technology is something called “Vagus Nerve Stimulation” or VNS which is offered to patients who have drug-resistant epilepsy. Products are marketed under the brand AspireSR®. In their last quarterly earnings report, neuromodulation made up 30% of total revenues.
NDI (Neuro Device Innovations) Medical is a medical device incubator that has received a total of $22.11 million of funding since 2011. They’re also the company that sold MEDSTIM to Medtronic back in 2008 which we mentioned earlier. Nowadays, NDI markets the proprietary Temporally Optimized Patterned Stimulation (TOPS™) technology through a company they funded called Deep Brain Innovations. NDI provided a seed investment of $250 thousand to Deep Brain Innovations in May 2012, formally launching the startup a year later. They are also invested in a company called SPR Therapeutics (Stimulation for Pain Relief) which is marketing a neuromodulation pain relief product called SMARTPATCH. SPR has taken in $8.65 million in funding so far.
Aleva Neurotherapeutics SA develops neurostimulation technologies and devices for deep-brain stimulation (DBS) therapy. It offers directSTIM, an intelligent electrode compatible with existing Aleva Neurotherapeutics DBS systems; spiderSTIM, a solution for intra-surgical and long-term neuromodulation therapy; and cortiSTIM, a device for cortical stimulation. The Company has taken in 4 rounds of funding totaling $44.05 million that started in 2011 culminating in a Series C funding round that took place in May 2016. The recent round of funding is supposed to obtain the CE mark for directSTIM™ Directional Deep Brain Stimulation System in 2017.
Conclusion
Now, you know how to differentiate a company into neuroprosthesis and a company into neuromodulation. So why are we focusing in on semantics here? Because investing in neuroprosthesis and investing in neuromodulation are two entirely different animals.
In the first case, we’re investing in a technology that lets you control things with your brain and do things like communicate with computers a million times faster instead of pecking away on keyboards like cavemen. In the second case, we’re investing in technology that has been around for a while and serves to stimulate nerve activity using any number of ways for any number of reasons. That’s cool and all, but we’re more interested in technology that will improve our relationship with computers exponentially – like brain computer interfaces and neuroprosthesis. That’s the technology we want to be investing in right now.
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Surprised to see a list/overview like this with no reference to Galvani, the bioelectric medicine spinoff from GSK. How do you see bioelectric medicine fitting into the world of neuromodulation and neuroprosthetics?
Thank you for the comment Christopher!
Galvani Bioelectronics is led by Kristoffer Famm (also GSK’s Vice President of Biolectronics R&D) who published an article in Nature entitled “Drug discovery: A jump-start for electroceuticals” (Nature 496, 159–161 [11 April 2013] doi:10.1038/496159a). The concept of electroceuticals fits the definition of neuromodulation but Famm explains the distinct difference. His concept targets specific interconnected cells, fibre tracts, and nerve bundles to introduce electric impulses to the specific cluster of cells. The paper is more of a “proof of principles in animal models” rather than a report of clinical trials. It may start getting attention once it presents clinical trial results. In theory, the article presents a compelling framework for an emerging technology if it can hurdle the current limitations of the power source. We will keep an eye on Galvani because it was created through a collaboration with GSK and Verily Life Sciences LLC (formerly Google Life Sciences).
Abbott has a much greater pull on the Neuromodulation market. Higher revenues then Nevro. This article only mentions a EPG they have both internal and external and partnered with Apple to be one of the first bluetooth medical technologies. Expected to surpass the big players in upcoming years considering how much they’ve invested in the market and the clinically superior technology with the launch of BurstDR. The only reason Boston bought Cosman was to compete with Abbott due to there high loss of market share after the formally St Jude Medical bought Neurotherm.
Thank you for the added detail Janette!