HYDRA-5: Funding and Incubation of NewBrain

Submitted by: HydraCore Team Members: HydraCore

1. Problem

HydraDAO aims to fund and launch its first incubated company with a focus on progressive brain replacement.

2. Solution

NewBrain is developing a method to replace a part of the brain, the hippocampus, that is required for forming new memories and that degenerates in AD and during normal aging. The approach involves engineering human precursor brain tissue ex vivo from iPSC-derived cells and their normal extracellular environment. This will require transcriptomic and proteomic analyses of developing brain tissue, development of natural biogels and iPSC-differentiation protocols, and precursor tissue assembly. The first focus is on generating hippocampal precursor tissue to treat Alzheimer's, a major market with no effective treatments. The work builds on previous research, including the work of Fred Gage and Jean Hebert, e.g.:

https://doi.org/10.1007/bf00247897 https://doi.org/10.3390/bioengineering10020263

We’ve had several conversations with US funding agencies, and they are interested in our work. We intend to secure non-dilutive funding to go from early innovative R&D to clinical readiness.

Funding from HydraDAO will enable us to gather preliminary data (see below: Preliminary Work) to secure additional support from these US funding agencies and later venture capital and other investors interested in curative therapies for neurodegenerative diseases.

2.1 Background and Rationale

The grafting of a single cell type, interneuron precursors, into the hippocampal region is being used clinically to safely and effectively treat intractable temporal lobe epilepsy (Neurona Therapeutics, CA). Although generally encouraging for cell-based brain treatments, this single cell type approach does not amount to the tissue-level repair or replacement required to address neurodegenerative conditions, including aging. And although hippocampal cell and tissue grafting was explored decades ago, modern cell tracing tools were not available at that time to meaningfully assess graft integration^1,2^, and despite much interest, no meaningful work has been done since to advance hippocampal tissue replacement^3^. Nevertheless, progress in neocortical grafts has clearly provided proof-of-concept for neuronal integration in the adult, and based on these, it is reasonable to assume a similar potential exists for hippocampal tissue-level repair.

2.2 Proposed work

Under the auspices of an approved IACUC (Institutional Animal Care and Use Committee), grafts of mouse fetal hippocampal tissue into lesioned adult mouse hippocampus will be performed to establish the ability of grafts to neuronally and vascularly integrate with the host. These experiments, once initiated, are not expected to take more than 3 months to yield important preliminary data (neuronal projection patterns and vascular anastomosis) to support further funding efforts. Graft analyses will continue beyond 3 months to obtain higher resolution information on graft integration and aspects of functionality (e.g., synapse formation and blood circulation).

During the first 3 months, existing human single-cell sequencing datasets^4-6^ will be mined to identify the cellular and extracellular components of the early fetal human hippocampus in preparation for generating graftable precursor tissue. The precursor cell types and select top extracellular components will also be validated in mouse or NHP fetal tissue by immunohistofluorescence staining.

The activities described above would be the Preliminary Work. The company would then aggressively pursue grants and contracts, as well as institutional funding.

With proof of preliminary work complete and additional funding obtained, the next technical steps would be:

• Confirm precursor cell types and key extracellular components in mouse and NHP fetal hippocampus based on human data.
• Optimize iPSC differentiation protocols for hippocampal precursor cell types in conjunction with developing a platform for tissue generation that includes the extracellular and cellular components.
• Test human precursor tissue in pre-clinical models (first rodent, then NHP) for neuronal and vascular integration, culminating in a demonstration of functionality in a hippocampal-based cognitive task.
• In parallel, establish a GMP iPSC bank with sufficient aliquots to make it through first phases of clinical trials, as well as establish a GMP procedure for precursor tissue generation.
• Complete pre-IND discussions with regulatory bodies to be considered ready for clinical trials.

2.3 Alzheimer’s market

The global Alzheimer's therapeutics market size is estimated to grow from USD 7.8 billion in 2025 to surpass around USD 30.8 billion by 2033, registering a CAGR of 18.8% between 2025 and 2033. The growth is driven by an aging population and increasing prevalence. A handful of medications (e.g., Donepezil, Rivastigmine, Galantamine, Memantine) can help manage symptoms, and newer therapies such as Lecanemab and Aducanumab aim to slow disease progression, but no cure exists yet.

2.4 Leadership Team

Interim CEO: Dima Syrotkin, serial founder, 1 prior exit. CSO: I-Li Tan, PhD, protégé of Jennifer Doudna.

2.5 Governance

NewBrain needs to be and stay mission-aligned above all.

HydraDAO aims to ensure a strong board with the right to replace the leadership team at will. The board cannot be replaced by shareholders regardless of majorities; board members can be replaced by a board vote with a 75% majority (initially 5 out of 7).

The board will consist of 7 people that are handpicked for mission alignment:

• 3x HydraDAO representatives
• 3x additional board members
• 1x Dima Syrotkin
• One position to CEO once joined

HydraDAO’s 3 board seats (out of 7) during the early stages allow it to influence leadership decisions and safeguard its investment. The 75% board vote threshold protects against misalignment.

Even post-buyout, HydraDAO retains a board observer position in perpetuity, allowing long-term strategic visibility.

HydraDAO intends for the mission-aligned leadership team to retain a high amount of equity in the company to incentivize long-term motivation.

2.6 Investment

HydraDAO will invest in NewBrain via a USD 500k Convertible Loan Agreement (CLA), capped at a USD 2.5M valuation. The CLA converts automatically either upon the receipt of non-dilutive funding or at the end of a fixed term, providing HydraDAO with equity in the company.

When the CLA converts (triggered by non-dilutive funding or the fixed term), HydraDAO receives equity based on the USD 2.5M cap, offering significant upside if NewBrain’s valuation grows in subsequent VC rounds.

At the VC stage, HydraDAO can be bought out, offering a clean exit. The buyout terms would ideally reflect an increased company valuation, generating a multiple on HydraDAO’s initial USD 500k investment.

HydraDAO gets its investment back either through conversion and later buyout at a higher valuation or by maintaining long-term equity with governance rights, which provides upside potential through future exit events.

2.7 Use of Funds

500,000 USDC to achieve the Preliminary Work that would enable the team to pursue grants and institutional funding.

References:

1. Shetty AK, Turner DA. Development of fetal hippocampal grafts in intact and lesioned hippocampus. Prog Neurobiol. 1996 Dec;50(5-6):597-653. doi: 10.1016/s0301-0082(96)00048-2. PMID: 9015829.
2. Buzsàki G, Czopf J, Kondàkor I, Björklund A, Gage FH. Cellular activity of intracerebrally transplanted fetal hippocampus during behavior. Neuroscience. 1987 Sep;22(3):871-83. doi: 10.1016/0306-4522(87)92966-6. PMID: 3683854.
3. Agavriloaei LM, Iliescu BF, Pintilie RM, Turliuc DM. Therapeutic Potential of Experimental Stereotactic Hippocampal Cell Transplant in the Management of Alzheimer's Disease. J Clin Med. 2025 Jan 29;14(3):891. doi: 10.3390/jcm14030891. PMID: 39941562; PMCID: PMC11818268.
4. Braun E, Danan-Gotthold M, Borm LE, Lee KW, Vinsland E, Lönnerberg P, Hu L, Li X, He X, Andrusivová Ž, Lundeberg J, Barker RA, Arenas E, Sundström E, Linnarsson S. Comprehensive cell atlas of the first-trimester developing human brain. Science. 2023 Oct 13;382(6667):eadf1226. doi: 10.1126/science.adf1226. Epub 2023 Oct 13. PMID: 37824650.
5. Eze UC, Bhaduri A, Haeussler M, Nowakowski TJ, Kriegstein AR. Single-cell atlas of early human brain development highlights heterogeneity of human neuroepithelial cells and early radial glia. Nat Neurosci. 2021 Apr;24(4):584-594. doi: 10.1038/s41593-020-00794-1. Epub 2021 Mar 15. PMID: 33723434; PMCID: PMC8012207.
6. Zeng B, Liu Z, Lu Y, Zhong S, Qin S, Huang L, Zeng Y, Li Z, Dong H, Shi Y, Yang J, Dai Y, Ma Q, Sun L, Bian L, Han D, Chen Y, Qiu X, Wang W, Marín O, Wu Q, Wang Y, Wang X. The single-cell and spatial transcriptional landscape of human gastrulation and early brain development. Cell Stem Cell. 2023 Jun 1;30(6):851-866.e7. doi: 10.1016/j.stem.2023.04.016. Epub 2023 May 15. PMID: 37192616; PMCID: PMC10241223.

3. Requested Budget

The project requests 500,000 USDC for execution.

4. Timeline

This proposal should be executed immediately upon a positive community vote. HydraCore will disperse the money gradually so as to swap the least amount of ETH as possible while ETH is underperforming.