Fueled by advances in biomarkers, brain mapping, and AI, investment in neuro and CNS innovation shows no signs of slowing, even amid costly setbacks. BioSpace spoke to investors at JPM26 to get their take on recent bets in new therapies and neurotech.
Neuroscience and the central nervous system (CNS) space are areas of keen investment interest in 2026, according to venture capitalists interviewed on the sidelines of the recent J.P. Morgan Healthcare Conference.
In addition, under the neuro umbrella, neurotech is a hot space, investors said, with particular attention paid to the explosive growth of neuromodulation and neurostimulation devices and models.
VCs Bet Big on the Brain
The neuro/CNS drug development space is primed for additional capital infusions due to the considerable advances in recent years of nuanced biomarkers, including plasma-based indicators and cerebrospinal fluid, as well as imaging agents, said Gurdane Bhutani, managing parter at New York-based MBX Capital. These capabilities have allowed developers to segment patient populations more thoroughly, potentially leading to better results.
The landscape is at a stage where improvements in pathology and disease understanding have allowed scientists and biotech to understand the brain better than ever, VCs agreed.
In the past year, many of the companies that applied or participated in the Endless Frontier Labs, a nine-month mentorship program at New York University, have targeted neurodegenerative conditions specifically because of biomarker capabilities and growing investor interest, said Nikki Aaron Ward, associate director of the programs’ Life Science Track.
Several investors also noted betting on the neuro space makes sense considering a rapidly aging population in the U.S. and other markets, with growing incidences of Parkinson’s and Alzheimer’s disease. As these conditions truly impact quality of life and work productivity, payers are more willing to reimburse, which also underscores an investment decision, said Kumaraguru Raja, senior biotechnology analyst at New York-based Brookline Capital Markets.
“Overall, sentiment across both the Alzheimer’s space and the broader biotech sector has improved markedly,” wrote one investor in a November 2025 LinkedIn blog post. “Renewed investor confidence, coupled with strong scientific progress and active deal-making, suggests that 2026 could mark a turning point for sustained growth and innovation in biotechnology, creating real opportunities to advance cutting-edge science.”
Big Pharma is paying attention, as evidenced by the slew of deals in the CNS space in 2025: Johnson & Johnson’ $14.6 billion acquisition of Intra-Cellular Therapies and its forecasted Caplyta blockbuster therapy for bipolar I and II depression, schizophrenia and major depressive disorder; Sanofi’s $470 million buy of Vigil Neuroscience, with an Alzheimer’s disease treatment in development; and Roche’s $55 million collaboration with Manifold Bio to develop multiple next-generation brain shuttles for neurological diseases.
“Following the approvals of (Esai/Biogen) Leqembi and (Eli Lilly) Kisunla, several large pharmaceutical companies are re-entering the Alzheimer’s field, validating the unmet patient need and the transformative potential of early investments in the neurodegenerative disease space,” the investor wrote in the blog post. “This is simply too big of a market opportunity for Pharma to sit out.”
That said, investors agreed the space can be a risky venture. There have been notable failures in 2025 alone:
- Novo Nordisk’s GLP-1 receptor agonist, semaglutide, failed in two Phase III Alzheimer’s trials in November 2025;
- GSK and Alector halted development of their dementia drug latozinemab after it didn’t slow the progression of frontotemporal dementia in a late-stage study;
- Cobenfy, the core asset in Bristol Myers Squibb’s $14 billion buyout of Karuna Therapeutics, failed to show efficacy as an adjunctive treatment for schizophrenia in early 2025.
The Neurotech Boom
The CNS interest has also extended to the neuro device space, and especially in the neuromodulation and neurostimulation, VCs said. Similar arguments to the therapeutic sector concerning better understanding of the brain, such as mapping of the brain’s circuits, have spurred device innovation and investment, they added.
There has been an explosion of prototyping models and start-ups, said Satori Neuro Chief Investment Officer Amy Kruse. The global neurotechnology market size is anticipated to reach around $52.86 billion by 2034, up from $15.30 billion in 2024.
Kruse said she expects to see more neurotech along the lines of Swedish startup Flow Neuroscience’ FDA approval in December 2025 for the first brain stimulation device for home use in treating depression. As devices become smaller, more easily deployable, and generate clinical data, consumer and investor interest will grow, she added.
Neuro devices generally have an easier regulatory pathway, through the 510(k) premarket submission pathway, thus allowing for quicker exits and ROI, explained René Baston, venture partner at the NY-based Covenant Venture Capital.
The intersection of AI and brain data, known as neuroAI, as evident for Elon Musk’s Neuralink, spurred interest in the neurotech sector, agreed Kruse and Sadakatali Gori, an advisor to San Francisco-based Chaanakya Capital, which invests in early stage U.S. neurotech startups. Musk posted on X on January 2: “Neuralink will start high-volume production of brain-computer interface devices and move to a streamlined, almost entirely automated surgical procedure in 2026.” The concept behind this is to make AI systems safer but also harness human cognition and thought, Kruse added. also harness human cognition and thought, Kruse added.
Like CNS therapeutics, investors also note there are caveats to neurotech capital deployment. There is a lack of adequate animal or translational models in the field, that makes success rates challenging, said Paolo Di Giorgio, CEO and managing director of Rome-based Angelini Ventures and Julia Moore, managing partner at San Francisco-based Breakout Ventures.
Unlike therapeutics backed by decades of clinical research, “you’re investing in a future that doesn’t yet exist,” noted Moore. Company founders must have a vision where the tech can unlock opportunity in a relatively new field, she added.
Despite the uncertainties in the neuro field, “I think it’s the single best area to spend time in,” Bhutani concluded.
