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Why Biopharma’s Brain Bet Is Moving to Psychiatry

  • Fraol Galan
  • Jul 9
  • 5 min read

Updated: Jul 18

For much of the past decade, neurology remained a challenging frontier in biopharma strategy—scientifically urgent, but commercially constrained. Between Pfizer’s 2018 exit and Aduhelm’s 2021 backlash, capital shifted toward areas with more proven commercial models such as oncology, immunology, and even rare disease (1, 2). Large investments are now streaming back into CNS—not into amyloid or tau, but into psychiatry. Executive teams are prioritizing assets that deliver near-term revenue, leverage existing sales infrastructure, and align cleanly with payer narratives. In the first half of 2025 alone, the lion’s share of disclosed CNS deal value has targeted mood disorders, psychosis, or platform technologies that unlock them—signaling that the next decade of CNS returns will be earned, not speculated.


Large investments are now streaming back into CNS—not into amyloid or tau, but into psychiatry.

Deal Landscape: Capital Follows Psychiatric Certainty


If there were any lingering doubt that investors have re-priced CNS risk, the past 18 months have erased it. Three megadeals—J&J’s $14.6B acquisition of Intra-Cellular Therapies, AbbVie’s $8.7B buyout of Cerevel, and BMS’s $14B purchase of Karuna—collectively mobilized $37.3B in disclosed value (Table 1) (3–5). Each targeted a late-phase mood or psychosis asset. Each closed as a full acquisition. And together, they signal psychiatry’s new role as the gravitational center of CNS dealmaking.


Table 1. Top neurological deals featured between 2024-2025
Table 1. Top neurological deals featured between 2024-2025
*Milestone-weighted; $1.25 billion contingent on clinical and regulatory success.

Psychiatric programs often justify full up-front valuations because they integrate seamlessly into existing commercial models and can deliver pivotal data within 18–36 months. This is evident in recent examples such as KarXT, which has shown positive Phase III results in schizophrenia using FDA-accepted endpoints like PANSS and CGI-S, and targets the same prescriber base as antipsychotics like Abilify and Rexulti—allowing for frictionless field-force uptake (6). Intra-Cellular’s Caplyta, already approved for schizophrenia and bipolar depression, posted $482 million in early 2024 revenue and served as the cornerstone of J&J’s acquisition—offering immediate commercial lift and strategic fit (7).


Psychiatric programs often justify full up-front valuations because they integrate seamlessly into existing commercial models and can deliver pivotal data within 18–36 months.

By contrast, neurodegenerative assets remain encumbered by risk. BMS’s deal with BioArctic featured just $100 million upfront and $1.25 billion in milestones, reflecting the field’s reliance on unvalidated biomarkers, multi-year confirmatory trials, and uncertain payer reception (8).


The contrast is stark: while psychiatry now offers plug-and-play economics with line-of-sight to ROI, neurodegeneration still requires deferred bets on long-tail uncertainty.


Comparisons Across the Value Chain


Psychiatric assets now consistently outperform their neurodegenerative counterparts across both regulatory and commercial dimensions—making them more capital-efficient, launch-ready, and strategically compelling.


Psychiatry delivers superior clinical development economics. Phase I programs in mood and psychotic disorders have a 7.3% success rate from entry to approval, compared to 5.9% for neurological conditions (9). This advantage stems largely from the use of well-established, regulator-accepted endpoints. Trials in depression and bipolar disorder routinely employ MADRS, CGI-S, and relapse-prevention metrics, all recognized by the FDA as valid for full approval—enabling streamlined trial design and predictable timelines.


Neurodegenerative programs, by contrast, remain reliant on unvalidated surrogate biomarkers. The FDA has stated there are no fully qualified surrogate endpoints for Alzheimer’s disease (10,11). As a result, many programs must pursue accelerated approval pathways—triggering costly, time-consuming confirmatory trials that delay ROI and introduce commercial uncertainty.


This regulatory ambiguity carries downstream consequences. Conditional approvals place payers in a difficult position—making coverage decisions based on incomplete evidence. Aducanumab, priced at $56,000 per year, faced intense scrutiny for relying on surrogate endpoints without clear clinical benefit, prompting Medicare to restrict coverage (12). Broader trends reflect similar pressure: MS patients saw their average out-of-pocket costs rise from $750 to $2,378 between 2012 and 2021 (13).


In addition, psychiatry benefits from a far more scalable commercial model. In urban areas, 36–57% of psychiatric prescriptions come from primary care physicians; in rural areas, that figure rises to 47–65% (14). Overall, more than 60% of psychotropic medications are prescribed by non-psychiatrists/ psychologists—including GPs, nurse practitioners, and physician assistants (15). This allows commercial teams to scale rapidly through high-frequency prescriber networks. Neurodegenerative therapies, on the other hand, require specialist infrastructure—neurologists, MS centers, movement disorder clinics—and complex diagnostics, increasing both cost and time to peak penetration.


In sum, psychiatry outperforms across the entire go-to-market chain. From development timelines and regulatory clarity to payer alignment and commercial reach, the value chain increasingly favors psychiatric assets. As capital allocators revisit CNS strategy, psychiatry’s ascent is no longer a contrarian thesis—it’s a strategic reallocation of risk and return.


From development timelines and regulatory clarity to payer alignment and commercial reach, the value chain increasingly favors psychiatric assets.

The View from the Crow’s Nest


Three clear patterns now define where capital is flowing and why. First, psychiatry leads in late-phase bolt-ons that generate near-term returns. Assets like KarXT and Caplyta offer fast readouts, validated endpoints, and seamless fit with existing sales infrastructure—making them ideal for plugging revenue gaps with minimal lift. Second, psychiatry benefits from built-in commercial efficiency. While neurodegenerative therapies require specialists and diagnostic complexity, psychiatric drugs scale through generalists—primary care physicians, NPs, and PAs—accelerating uptake and lowering cost of sales. Third, neurodegeneration remains relevant but is treated as a long-horizon, high-risk play. Milestone-weighted deals like BMS–BioArctic reflect a cautious stance: capital will engage, but only after Phase II proof reduces biological and regulatory uncertainty.


In short, psychiatry is no longer a speculative pursuit—it is emerging as CNS’s most capital-efficient, infrastructure-compatible adjacency. The firms that win won’t just chase scientific novelty; they’ll prioritize strategic fit, regulatory clarity, and go-to-market leverage.

 

If you are interested in learning more, get in touch at strategy@spinnakerLS.com. 

Spinnaker offers true partnership and comprehensive guidance to help leaders navigate the complexities of the Life Sciences industry and chart a path to success. From early-stage market assessment through commercial execution and ongoing lifecycle management, we deliver tailored solutions to ensure optimized practicable results.

Sources:

  1. Biopharma Dive. Pfizer ends neuroscience, Alzheimer’s research and cuts 300 jobs. Biopharma Dive; January 7, 2018. https://www.biopharmadive.com/news/pfizer-ends-neuroscience-alzheimers-research-cuts-300-jobs/514210/

  2. Biopharma Dive. Aduhelm approval triggers FDA, Biogen investigation—Congress weighs reforms. Biopharma Dive; June 2021. https://www.biopharmadive.com/news/aduhelm-approval-fda-biogen-congress-investigation/639479/

  3. Johnson & Johnson. Johnson & Johnson Closes Landmark Intra‑Cellular Therapies Acquisition to Solidify Neuroscience Leadership. Johnson & Johnson Media Center; April 2, 2025. https://www.jnj.com/media-center/press-releases/johnson-johnson-closes-landmark-intra-cellular-therapies-acquisition-to-solidify-neuroscience-leadership

  4. AbbVie Inc. AbbVie Completes Acquisition of Cerevel Therapeutics. AbbVie News Center; August 1, 2024. https://news.abbvie.com/2024-08-01-AbbVie-Completes-Acquisition-of-Cerevel-Therapeutics

  5. Bristol Myers Squibb. Bristol Myers Squibb Completes Acquisition of Karuna Therapeutics, Strengthening Neuroscience Portfolio. Bristol Myers Squibb News; March 18, 2024. https://news.bms.com/news/details/2024/Bristol-Myers-Squibb-Completes-Acquisition-of-Karuna-Therapeutics-Strengthening-Neuroscience-Portfolio/default.aspx

  6. Kramer J, Brannan SK, Sauder C, Kaul I. Safety and efficacy of KarXT in patients with schizophrenia in the randomized, double-blind, placebo-controlled EMERGENT trials. Int J Neuropsychopharmacol. 2025;28(Suppl 1):i162. doi:10.1093/ijnp/pyae059.279. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC11814830/

  7. Synapse. J&J’s $14.6 Billion Acquisition of Intra-Cellular Therapies: Caplyta as a Game-Changer. Patsnap; May 2025. https://synapse.patsnap.com/blog/j-and-j-146-billion-acquisition-of-intra-cellular-therapies-caplyta-as-a-game-changer

  8. BioArctic AB. BioArctic Announces Global License Agreement with Bristol Myers Squibb for BioArctic’s Pyroglutamate Amyloid‑β Antibody Program. BioArctic AB; October 2024. https://www.bioarctic.com/en/bioarctic-announces-global-license-agreement-with-bristol-myers-squibb-for-bioarctics-pyroglutamate-amyloid-beta-antibody-program/

  9. Thomas D, Chancellor D, Micklus A, et al. Clinical Development Success Rates and Contributing Factors 2011–2020. Biotechnology Innovation Organization; February 2021. https://go.bio.org/rs/490-EHZ-999/images/ClinicalDevelopmentSuccessRates2011_2020.pdf

  10. Cummings J, Lee G, Nahed P, et al. Alzheimer’s disease drug development pipeline: 2022. Alzheimer’s & Dementia: Translational Research & Clinical Interventions. 2022;8(1):e12295. doi:10.1002/trc2.12295. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9066743/

  11. U.S. Food and Drug Administration. Early Alzheimer’s Disease: Developing Drugs for Treatment. Guidance for Industry. 2024. https://www.fda.gov/media/110903/download

  12. Brockmann R, Nixon J, Love BL, Yunusa I. Impacts of FDA approval and Medicare restriction on antiamyloid therapies for Alzheimer’s disease: patient outcomes, healthcare costs, and drug development. Lancet Reg Health Am. 2023;20:100467. doi:10.1016/j.lana.2023.100467. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9996432/

  13. Ohio State University Wexner Medical Center. Out‑of‑pocket costs continue to rise for neurologic medications. Columbus, OH; October 31, 2024. https://wexnermedical.osu.edu/mediaroom/pressreleaselisting/out-of-pocket-costs-continue-to-rise-for-neurologic-medications

  14. Muench U, Jura M, Thomas CP, Perloff J, Spetz J. Rural‑urban prescribing patterns by primary care and behavioral health providers in older adults with serious mental illness. BMC Health Serv Res. 2022;22:1440. https://doi.org/10.1186/s12913-022-08813-6

  15. Hughes PM, Annis IE, McGrath RE, Thomas KC. Psychotropic Medication Prescribing Across Medical Providers, 2016–2019. Psychiatr Serv. 2024 May 1;75(5):477–480. doi:10.1176/appi.ps.20230156. https://pubmed.ncbi.nlm.nih.gov/38018151/

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