With Neuralink‘s Valuation Soaring to Sky, St...

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BEIJING, June 13 (TiPost) -- The brain-computer interface technology has become popular again.

Neuralink, a brain-computer interface company founded by Elon Musk, recently announced that it has received approval from the US Food and Drug Administration (FDA) for human clinical studies. It is reported that the current valuation of Neuralink has reached $5 billion (approximately RMB 35.561 billion), and Musk is also selling his shares on a secondary trading platform at a valuation of $7 billion.

The company's valuation has almost tripled in two years, and Musk's Neuralink has become the largest company in the brain-computer interface industry.

Meanwhile, China's Ministry of Industry and Information Technology has also identified brain-computer interfaces as a key industry for future development. As a result, A-share brain-computer interface concept stocks have risen sharply.

However, compared to the booming secondary market, many brain-computer interface start-ups in the primary market are relatively calm.

Several industry insiders told TiPost App that compared to Neuralink, although brain-computer interfaces are an important frontier technology for global competition in the future, the valuation and financing scale of domestic brain-computer interface companies are generally low, the market is still in its early to middle stages, and commercialization will still take decades, which poses greater investment risks.

"When Neuralink was first launched two years ago, many investment institutions contacted me and said that Neuralink's work was good, and that we could also do it. Some even said, 'The homework has been done, let's copy it quickly.'" On the 2023 Zhongguancun Forum held on May 29, Li Xiaojian, a senior engineer at the Shenzhen Institute of Advanced Technology of the Chinese Academy of Sciences and founder of Weiling Medical, bluntly stated that the FDA's approval of Neuralink only allowed for experimentation with human subjects, and it had not yet reached the clinical trial stage of medical devices. Brain-computer interfaces are a long-term research and development industry, and commercialization is still far away.

Han Bicheng, founder and CEO of BrainCo, recently told TiPost App that most of the brain-computer interface companies that have emerged in the past decade focus on some real, unresolved brain diseases and interactive applications. After decades of silence, brain-computer interfaces are now experiencing an industrial outbreak.

During this year's Zhongguancun Forum, TiPost App personally experienced the mind-controlled brain-computer interface technology displayed by a domestic company:

Wearing a head-mounted hoop device, focusing attention on the virtual butterfly on the screen in front of me, and then imagining catching the "butterfly", the glove will automatically move my hand to make a fist-grabbing motion.

The above operation is achieved by using the brain-computer interface device worn on the head to real-time sense the electrical signal situation in my brain, thereby allowing the glove to automatically grab, which can help many patients with rehabilitation training.

In fact, brain-computer interface (BCI) refers to a direct connection created between the human or animal brain and external devices to achieve information exchange between the brain and the device. Brain-computer interface technology can be divided into non-invasive, semi-invasive, and invasive.

Gao Xiaorong, Dean of the Medical College of Tsinghua University, said that brain-computer interface is a scientific field formed by the intersection of many disciplines. It is a hardcore technology, not a technical extension of other fields, but an important technology convergence. He believes that brain-computer interface will be an indispensable frontier technology in the future.

Currently, brain-computer interface technology has been able to complete tasks such as spelling words, device control, game interaction, and animal experiments such as pigs and monkeys. Moreover, there are companies laying out the industrial chain of brain-computer chips, brainwave acquisition platforms, products and applications, medical institutions, etc. Gao Xiaorong mentioned that the development of brain-computer interface devices in China is on par with that of international counterparts.

According to research firm IMARC Group, the global market size for brain-computer interfaces reached $1.5 billion in 2021, and is expected to reach $3.3 billion by 2027. China Securities predicts that the brain-computer interface market could reach $70 billion to $200 billion between 2030 and 2040.

Although research on brain-computer interface technology began when electroencephalography was discovered in 1924, it was Elon Musk's establishment of Neuralink in 2017 that brought brain-computer interfaces from the laboratory to the public eye, making it a hot investment industry and attracting high attention from the industry and governments around the world. Tech giants such as Google, Alibaba, and Tencent have invested in or laid out business in this field.

Zhang Qian, a senior engineer at China Information and Communication Institute, mentioned that in recent years, the capital market is very optimistic about the development of neurotechnology represented by brain-computer interfaces, and the amount and number of related investments have been increasing. Data shows that as of April 2023, there have been 1394 brain-computer interface-related financing events worldwide, mostly seed and Series A rounds.

Regarding the capital market's optimism, Jia Yan, director of the Healthcare and Life Sciences Division of Huaxing Capital, believes that on the one hand, with the gradual maturity of brain-computer interface technology internationally (especially with Neuralink recently approved to conduct clinical research on humans), the industry believes that the technology in this field is about to enter the transformation stage. On the other hand, the emergence of ChatGPT is also believed to allow for the decoding of information from the brain's functional areas to be applied.

However, on the other side of the "capital frenzy" for brain-computer interfaces, the world's largest enterprise for this industry is only Musk's Neuralink, and there are less than six global BCI unicorn companies. Companies in China that specialize in brain-computer interface technology are mainly on the periphery, making smart products rather than actual brain-computer interface products.

At the same time, small scale of brain-computer interface enterprises, confusing development strategies, second market opportunism, and difficulties in obtaining experiment approvals are important challenges for the development of domestic brain-computer interface enterprises.

Firstly, the enterprises are small-scale. NeuroXess, the invasive brain-computer interface company supported by Shanda and Sequoia China, completed a round of financing worth hundreds of millions of RMB at the end of last year, which was one of the highest single-round financing in the industry. However, TiPost App has learned that NeuroXess, which has been established for less than two years, has a total financing scale of less than 600 million RMB, and its valuation has not reached the level of a unicorn. Other companies, including BrainCo and Borui Kang Technology, have also failed to reach the unicorn level.

Earlier, Han Bicheng revealed to TiPost App that BrainCo is currently the only Chinese brain-computer interface company that has raised more than 200 million US dollars in financing, but it took BrainCo eight years to achieve unicorn status.

Secondly, the development strategies are confusing. TiPost App recently learned that Borui Kang Technology, which has raised less than 1 billion RMB in total in less than five rounds of financing, is simultaneously pursuing both non-invasive and invasive routes in Beijing, Shanghai, and Changzhou.

For the non-invasive route, according to the General Manager of Borui Kang Technology, Liu Xiaoling, they have developed a device the size of a coin, which contains ECOG electrodes embedded in the skull but not inside the skull, thus avoiding many risks. Currently, the product on the market has eight leads, and the laboratory's next-generation product with 32 leads has been completed and is in the certification stage.

According to TiPost App, the entire domestic brain-computer interface industry is still in a long-term loss-making state with high R&D costs and low revenue. Therefore, the most advanced brain-computer interface technology development in China is mainly concentrated in universities and institutions, and it requires the support of the National Natural Science Foundation. The cutting-edge research is concentrated in the Chinese Academy of Sciences, and the role of brain-computer interface companies is to assist, apply, and formulate industrial rules.

Thirdly, there is second market opportunism. For example, the five consecutive boards achieved by Xinzhi Cognitive is all due to the word "cognition" in its name, and the company clarified that it does not involve brain-computer interface business. Similarly, companies such as Science and Technology Innovation Medical, Sanbo Brain Science, and Hanwei Technology, which are indeed involved in brain-computer interface business, are currently mainly engaged in research and development, conducting operations, and using foreign equipment. Overall, the number of listed companies involved in the brain-computer interface industry in China is very small.

The last challenge is the difficulty of experimentation. As of now, there are only three companies globally that have entered the clinical trial stage for invasive brain-computer interfaces: Neuralink, Onward, and Synchron. Multiple brain-computer interface industry experts told TiPost App that invasive brain-computer interface experiments are difficult to push forward in China. Patients may not necessarily approve, and companies also need to have certain medical resources and backgrounds.

It is generally believed that domestic companies are still in the early stage of animal experiments in brain-computer interface technology, and there are still key issues such as limited use period of implanted materials, difficult to obtain high-quality neural information, and ethical verification.

Although brain-computer interfaces seem like magical "cyberpunk-style" technology of the future, in reality, large-scale commercialization of brain-computer interfaces has not yet been achieved. So, what are the challenges for brain-computer interfaces to truly land?

At the 2023 Zhongguancun Forum Brain-Computer Interface Innovation and Development Sub-Forum, Chinese Academy of Sciences academician Zhao Jizong pointed out that the six main problems that the industry is concerned about related to clinical applications of brain-computer interface technology are:

1. The brain has 80-100 billion neurons, and each neuron has about 10,000 connections to other neurons. However, analyzing the data collected by brain-computer interfaces is very difficult, and it is not well understood which signals are useful and which are not, and how signals interact with each other.

2. Invasive electrodes carry surgical risks. The implanted electrodes may cause immune reactions or infections, and the scar tissue surrounding the electrodes can cause neural signals to attenuate.

3. The quality of non-invasive brainwave signals is poor and easily affected by external interference.

4. Brain-computer interface safety. For example, if some harmful or threatening thoughts are detected, should corresponding measures be taken?

5. How to protect personal privacy.

6. To solve the above problems, doctors, scientists, engineers, ethicists, government regulatory agencies, and patient advocacy groups must work closely together to promote the healthy and rapid development of brain-computer interfaces.

Apple's recently released Vision Pro has also been rumored to be more than just MR, but a brain-machine interface 1.0 device. Former Apple researcher Sterling Crispin revealed on social media that without the need for implanted chips, Vision Pro can predict your brain behavior, a true "mind-reading" capability. At the same time, Apple can monitor your eye behavior through algorithms and dynamically redesign the UI to create personalized biofeedback for your brain, which is a basic brain-machine interface achieved through the eyes.

"This (brain-machine interface) is a difficult task," said Crispin.

Guotai Junan Securities research report believes that the possible applications of brain-machine interfaces in the next 10-20 years will be integrated with the metaverse platform. Users can achieve direct information connection through brain-machine interfaces and interact with the virtual world to the point of symbiosis between the virtual and the real, ushering in a true era of the metaverse.

According to the "Overall Vision and Key Technology Research Report for Brain-Machine Interfaces (2022)" released by the China Academy of Information and Communications Technology, neural reshaping, neural substitution, and neural regulation brain-machine interface technologies will have a market space worth trillions. The report mentions that implantable brain-machine interface technology is most likely to be the first to land and bring market benefits in the neural substitution and neural regulation-related technologies and products, while non-implantable brain-machine interface technology can be applied in a wider range of life and production fields, gradually bringing benefits to human beings in rehabilitation training, education and entertainment, intelligent life, production and manufacturing, and many other areas.

At the same time, China is increasing its efforts to focus on the brain-machine interface ecosystem. In February of this year, the China Academy of Information and Communications Technology, the Ministry of Industry and Information Technology, and other institutions jointly initiated the "Brain-Machine Interface Industry Alliance." Ren Aiguang, Deputy Director General of the Department of Science and Technology of the Ministry of Industry and Information Technology, pointed out that brain-machine interfaces are an important component of future industries. The establishment of a brain-machine interface industry alliance is of great significance in terms of the conversion of scientific research achievements, the development of application scenarios, the construction of supply chains, the formulation of technical standards, talent training, and venture investment. The alliance is expected to strengthen technological and industrial exchanges and discussions, explore scientific research and industrial collaboration, enhance the innovation capability of the brain-machine interface industry, and improve the brain-machine interface industry ecosystem.

Huaxin Securities research report believes that brain-machine interface technology may create new forms of entertainment, such as VR games, mind-driven shopping, EEG headphones, etc. In addition, many foreign governments and research institutions are also exploring military applications of brain-machine interfaces. The medical and health field is the initial and primary application field of brain-machine interface technology, which is currently dominated by research institutions, with a focus on non-invasive brain-machine interface research in China.

However, we still have a long way to go before brain-machine interfaces can be successfully implemented. A neuroscientist once compared all knowledge about the brain to a one-kilometer-long road, but we have only traveled less than five centimeters so far.

It has been reported that before receiving approval from Neuralink, the FDA rejected it in March this year due to safety risks. In addition, last year, it was under investigation by US federal agencies for alleged animal abuse during animal experiments, which may have violated animal welfare principles. Kip Ludwig, former head of the neural engineering project at the National Institutes of Health, estimates that it may take more than 10 years for Neuralink to commercialize its brain-machine interface devices.

"In the past 50 years, brain-machine interfaces have gone from science fiction to industrial implementation from 0 to 1, and then from 1 to 2. In the next 50 years, brain-machine interfaces will enter the stage of 2 to 3 and 3 to everything," Gao Xiaorong believes that with the development of technology, the earliest application scenarios for brain-machine interfaces may be centered on healthcare and elderly care.

Gao Xiaorong believes that brain-machine interfaces will enter a new era. (This article was first published on the TiPost App, author | Lin Zhijia)