Based on private stock trades, Elon Musk's Neuralink is worth $5 billion

According to privately executed stock trades described to Reuters by five sources with knowledge of the matter, Elon Musk's brain implant startup Neuralink, which was valued at close to $2 billion (roughly Rs. 16,500 crore) in a private fundraising round two years ago, is now worth around $5 billion (roughly Rs. 41,300 crore).

According to the sources, certain purchases by positive investors raised the valuation in recent months, ahead of Neuralink's May 25 news that US authorities had cleared a human trial on its brain device.

According to experts, obtaining commercial use permission for Neuralink might take several years. Kip Ludwig, former programme director for neural engineering at the National Institutes of Health (NIH), said he "optimistically" expected Neuralink's brain implant to take at least 10 years to commercialise. Other hurdles for the corporation include government investigations into its animal experimentation practises.

However, following the trial's acceptance, Neuralink shares were discreetly offered to investors in recent days at a $7 billion (approximately Rs. 57,900 crore) value, equivalent to $55 (about Rs. 4,500) per share, according to an email seen by Reuters. Reuters was unable to determine whether the vendor found purchasers for that price. The acceptance of the clinical study by the US Food and Drug Administration (FDA) was stated in the email as a reason for the agreement being "sweeter."

Executives from Neuralink and Musk did not reply to calls for comment.

Musk has stated that Neuralink's chip will allow healthy and impaired individuals to go into nearby facilities for quick surgical insertions of devices to cure obesity, autism, depression, and schizophrenia. He even envisions them employed for online browsing and telepathy. A Neuralink executive has stated more modest short-term goals, such as assisting paralysed people in communicating through computerised text without having to type.

Instead of Neuralink selling fresh shares to investors, the stock transactions at a valuation of over $5 billion (around Rs. 41,300 crore) were carried out by stockholders such as workers and the company's early backers. Secondary transactions are an imprecise measure of a company's worth since their volume is low and they lack the broader market consensus of a fundraising round or initial public offering (IPO).

In comparison to other firms, Neuralink's valuation increase in secondary transactions is striking. According to data source Caplight, around 85% of pre-IPO businesses are presently valued in secondary exchanges at a discount of 47% to their previous investment round.

According to data source Pitchbook, Neuralink raised $205 million (about Rs. 1,700 crore) in 2021 at a value of over $2 billion (roughly Rs. 16,500 crore).

Many of the recent stock transactions have gone to tiny investors, who are more concerned with acquiring a piece of a firm owned by Musk than with scrutinising its worth. According to the email obtained by Reuters, the highest amount requested for the Neuralink shares promoted for sale at a $7 billion (approximately Rs. 57,900 crore) valuation was only $500,000.

According to Sim Desai, CEO of Hiive, an online platform where the shares are exchanged, demand for Neuralink stock has been "tremendous." He estimated that purchasers are prepared to pay around $4.5 billion (approximately Rs. 37,200 crore).

Some biomedical professionals are sceptical. Arun Sridhar, a neuromodulation scientist and entrepreneur, termed Neuralink's price "bonkers" given how early the brain implant is in clinical development.

"A study to assess safety and tolerability is in no way valid to justify a $5 billion (roughly Rs. 41,300 crore) valuation," said Sridhar, who co-founded Galvani Bioelectronics, an implant developer financed by GSK Plc and Alphabet Inc's Verily Life Sciences. Galvani is not a rival of Neuralink since its implants are being developed to treat rheumatoid arthritis in an artery to the spleen rather than the brain.

Investigations

According to Reuters, the FDA first denied Neuralink's request for a human study last year, citing safety concerns. Even after obtaining clearance, the firm confronts a number of hurdles.

Neuralink has come under fire from politicians in the United States after Reuters revealed in May that its animal-research board may have broken conflict-of-interest rules. Employees of Neuralink who participated on that board, which regulates the care of the animals being tested, stood to gain from the implant's rapid development as well. According to secondary trading, the value of Neuralink shares held by some workers has increased by about 150 percent in just two years.

The US Department of Agriculture's law enforcement arm has been looking into Neuralink for alleged animal-welfare breaches. Staff at Neuralink told Reuters last year that Musk was pressuring them to expedite and botch surgery on monkeys, pigs, and sheep, resulting in much more animal fatalities than required.

Separately, the Department of Transportation is investigating whether Neuralink carried harmful infections on chips extracted from monkey brains without necessary containment precautions.

Musk and Neuralink have not replied to several requests for comment on the investigations or the Reuters story.