In preparing the October issue of NeuroPerspective, we noted that September was another solid month for the neuroscience stock sector, with a number of companies showing dramatic valuation gains. In fact, the index was up over 11% in just the past month, and the closing NIR Index value is the highest ever recorded: 377.22, blowing by the previous high, 354.16, achieved back in March 2000.
The NIR Index is an admittedly crude benchmark, an unweighted basket of fourteen publicly traded CNS companies, but even so, this high water mark is worth noting. To put it in perspective: That previous high of 354.16 back in 2000 came less than two years after the all-time low point of 81.02, a nadir reached in September 1998. Those were indeed heady, even bipolar times, where money was indiscriminately thrown at academics turned entrepeneurs based on promises that almost always vaporized. That 2000 high point soon vanished in the rear view mirror, and if one parses out five months at the beginning of 2006 where the index barely and briefly rose above 200, it remained in a range 0f 103 to 195 until July 2012–more than a decade. Now, in the past three years, the NIR Index has risen 366%.
Someone is making money in CNS, but the slope of this transformation, after a seeming eternity of moldering in the Horse Latitudes, begs the question of whether this is another bubble, one that could burst as suddenly as did the bubble of 2000, where the index fell by almost 50% over the next twelve months. We do not think so: The cynicism of these times about the prospects for neuroscience is a far cry from the euphoric naiveté of that era. There will be corrections of course, partly in response to geopolitical tremors and governmental microcephaly. But these gains are based on advances far more substantive than the vague promises that fueled the rise thirteen years ago.