Rethinking the Brain Business
A decade ago, neuroscientist Mike Merzenich and a team of colleagues conducted a bold experiment: Using computer exercises they showed that they could, in effect, rewire the brains of children with language-related learning disabilities like dyslexia.
He thought it was important work, but nothing prepared him for the public response. Less than 48 hours after an article about the effort appeared in Science magazine, phone lines at one of the institutions doing the research were flooded by tens of thousands of calls. So many people were clamoring for a copy of the software with the exercises the children used that the university had to shut down a switchboard.
"I went to the chancellor and said 'I have something valuable that I want to deliver to the world.?.?.?.?How do I do it?'?" the University of California at San Francisco scientist recalled in an interview.
Merzenich then created a company called Scientific Learning, which sells computer-exercise software to school districts and therapists around the world.
Now, Merzenich, a paunchy and rumpled 65-year-old whose mantra, associates say, has been "science to the people," is trying to build a bigger business. His second company, Posit Science, is in the vanguard of efforts to commercialize a revolution in brain science known as "brain plasticity."
Scientists once believed that the adult brain was largely unchangeable. But research by Merzenich and others has demonstrated the ability of the brain to adapt to new conditions in ways previously thought not possible.
The business based on the science has so far involved selling software programs that give the brain a workout-improving skills like memory and processing speed. For an aging baby-boom generation that seeks to keep physically fit, there is a ready market for such mental fitness programs, and Posit sells tens of thousands of them. (The Food and Drug Administration has not issued an opinion on mental-fitness programs.)
But Merzenich has loftier ambitions. He envisions his company as part of a new industry that will become a "mirror" of the drug industry. He wants to go far beyond simply sharpening memory and cognitive ability to tackle diseases as well. Instead of medications, he sees a business rooted in neuroscience that will use noninvasive computer exercises to rewire the brain, gradually training it back to mental health.
Through Posit Science, Merzenich hopes to develop programs that will tackle a wide array of problems previously treated with traditional medicine, ranging from traumatic brain injuries to neurological disorders like Parkinson's to acquired movement disorders to pathological aging-even schizophrenia.
"This is going to explode in acceptance," he says. "It's also going to explode in the number of ways it's used and it's going to be everywhere. We're going to broadly deal with problems in the brain. This is an effort to create a juggernaut. I'm determined."
If this is a revolution, Merzenich has plenty of followers in Silicon Valley. Some prominent technology venture capitalists have invested in Posit, which got its start four years ago.
"Mike's work has deep implications for the way we live our lives," says Steve Jurvetson, a managing director of Draper Fisher Jurvetson, and the biggest investor in Posit Science. "I'd call it a growth-stage, or pre-I.P.O. company. But we hope they'll be a multibillion-dollar global company. I think the company is approaching a threshold of awareness that could take it to the next level."
Begun in October 2003, Posit Science has raised $30 million in venture capital. But its chief executive, Jeff Zimman, says it is too early to say when and if Posit Science will go public.
Posit does not disclose its financial results. But executives say the company had its first two profitable quarters this year, and the market for its software is growing. Already its product is used in "brain fitness centers" in more than 150 retirement communities across North America. They sold their first consumer version last year, and are distributing them through Humana, the second-largest health insurer in the United States.
Earlier this week, the company announced its first deal with a long-term-care insurer, Penn Treaty, which will offer the brain fitness programs to its members at no cost.
The brain-fitness program is offered on Posit's website at $395 for one user and $495 for two. The program assesses the brain's level of functionality, then continues to calibrate tasks with improvement, pushing and challenging users with harder tasks as they move forward.
For Merzenich, the road to becoming an entrepreneur began when he was a young assistant professor at the University of California at San Francisco. He met a surgeon and helped him work on a device for the hearing impaired that shocked the acoustic nerve, mimicking the electrical patterns sent to the brain to represent sound.
Science at the time held that after a period of "plasticity" in childhood, the structure of the brain became fixed. Yet the cochlear implant suggested otherwise. The device produced electrical signals that were just a crude approximation of those produced by normal hearing. But after a few months, the brain seemed to adjust.
"The brain could take the information of these crude signals and turn it into a new form of representative speech," Merzenich says. "These devices worked too well- better than we had imagined."
In the years that followed, Merzenich became a leader in a field known as "neuroplasticity." Among other experiments, he mapped the somatosensory cortex of a monkey and showed that one could quadruple the amount of area in the brain that responded to signals from the monkey's finger just by training the monkey to use the finger repeatedly to accomplish a simple task. In the same way that muscles are built at a gym, parts of the brain are shaped up by regular exercise.
When a Rutgers psychologist, Paula Tallal, approached Merzenich and said she wanted his help applying neuroplasticity to children who had trouble processing information, he jumped at the chance. Merzenich created a training program that diagnosed a baseline of functionality, then gradually built up the areas of the brain associated with information processing. Tallal tested it out on children.
"By the end of the summer, we couldn't believe how different they were," Merzenich says. "One little kid was five and had the language skills of a two-and-a-half-year-old. A month later, his language was almost age appropriate. I knew at that point we had a valuable invention. I knew it would be commercialized."
After the clamor created by the Science article, Merzenich's chancellor at U.C.S.F. formed a committee to explore ways to bring the technology to market. Merzenich found himself facing Charles Schwab, the founder of the giant discount brokerage firm, and other business leaders on the committee, and soon realized some difficult challenges lay ahead.
"I had written a 12-page paper on how wonderful the science was and called it a business plan," Merzenich recalls. "Schwab started saying all these things I didn't understand. You don't know what kind of product you have, how to market it."
Merzenich was soon learning on the job. He took a sabbatical and served as president and chief executive of Scientific Learning for a year and a half, before returning to the university and staying on with Scientific Learning as a scientific adviser and member of the board.
Scientific Learning went public in 1999, near the height of the technology boom, at $16. The shares now trade at about $6.
Still, by most measures the company has been successful. But Merzenich chafed against the limitations imposed by having shareholders. As C.E.O., for example, he spent about $11 million evaluating how the neuroscience could help other populations. But the company decided it could no longer afford to focus on populations tangential to its core mission.
The unfinished research kept gnawing at Merzenich. So in 2002, Merzenich recruited Zimman, a lawyer with a venture capital background, to help him launch a new company. Merzenich's vision was for a broad company that would focus on many areas. Zimman suggested they begin with just one, and expand from there.
"Some scientists are motivated by fame, some by fame and money. Mike's pretty unusual in that what he really wants is to get the science out into the world," says Zimman, who became the chief executive.
They chose to focus on healthy aging, since the likelihood of success seemed the strongest.
"There's so many opportunities with this technology that we should constantly be moving ahead with other areas," Zimman says. "We've barely started with healthy aging and we're moving ahead with other clinical areas."
For now, Merzenich believes the emerging field of "brain health" is cluttered with bad science. He singled out Nintendo's brain games as an example of a product that has no science to back up its claims. But he doesn't expect that to last.
"This field is undisciplined now and full of trash," he says. "But it will mature and ultimately the snake oil will be cleaned up. It will grow like the fitness industry from almost nowhere. And it will become a part of everyday life."Visit Portfolio.com for the latest business news and opinion, executive profiles and careers. Portfolio.com© 2007 Condé Nast Inc. All rights reserved.