Neuralstem's technology enables the isolation and large-scale expansion of human neural stem cells from the developing human brain and spinal cord. In addition, the company has developed and patented a series of small molecule compounds -- low molecular weight organic compounds which can efficiently cross the blood/brain barrier -- they are wagering will stimulate the growth of new neurons in the hippocampus and provide a treatment for depression. If they're right, they and their shareholders win big. If they're wrong they'll be in the market for capital and they'll be there with less leverage than they have now.
The company has also developed a Spinal Cord Delivery Platform and Floating Cannula that has been demonstrated to deliver therapeutic agents to the spinal cord safely and effectively, a technology they have just licensed to Salt Lake City-based Q Therapeutics.
Nueralstem's recent venture into the capital markets was small, notable only for the low price of the offering. In mid-April Nueralstem (CUR) sold at $1.07 the day they announced the retirement of their CFO. In the following four months, which included announcements that additional patients had been dosed in their ALS clinical trial, that the first patient had been treated in their depression trial, the beginning of Zack's coverage of the firm with an 'Outperform' rating, and the receipt of a patent on the "Transplantation of Human Neural Cells for Treatment of
So why the small financing at the low price? We don't know what the company was thinking but we can make some observations: 1. They couldn't raise money at a higher price per share or they would have. 2. They more than likely put the deal together quickly for whatever reason. 3.The result suggests they are making a serious bet on their molecular solution for major depressive disorder. The first patients were dosed in Phase Ib of Neuralstem's ongoing trial to test the safety of NSI-189 in the treatment of major depressive disorder (MDD) on June 25th. First results should be in before the end of the calendar year. 4. It is possible their thinking has been impacted by the ongoing patent lawsuit with StemCells Inc. which has been in the courts since 2006 and could become an issue at any time (see the CUR and STEM 10Ks for detail on this).
Neuralstem has been granted patents on its four first-in-class chemical
entities that boost the generation of new neurons. NSI-189, the first of
these to be in a clinical trial, in major depressive disorder -- Major Depressive Disorder (MDD) --
significantly stimulates the generation of new neurons (neurogenesis) in
vitro and in animal models. While current antidepressant therapies seek to modulate brain
chemistry, NSI-189 has the potential to address directly the pathology
of the disease itself, potentially reversing the hippocampal atrophy
associated with depression.
A new hypothesis on major depressive disorder, implicates brain physiology rather than brain chemistry alone. Depressed patients have reduced hippocampal volume. While once it was believed that the adult brain did not generate neurons, scientists now know that new neurons develop in the hippocampus throughout life. Could the shrunken hippocampal volume observed in depressed patients be attributable to a reduction in normal new neuronal generation and/or atrophying hippocampal neural stem cells?
Neuralstem believes the answer is yes. There is also a broadening consensus in the research community that this is the case. In multiple animal model studies, Neuralstem's compounds have demonstrated clear evidence of increased hippocampal volume.
In addition to the depression study, Neuralstem has been conducting a Phase I trial for ALS with a good safety profile and the demonstration of at least anecdotal efficacy in one case. Neuralstem submitted a trial amendment to the FDA to increase both the number of patients treated as well as the dose in future cohorts. The amendment would also expand the trial to include certain efficacy endpoints. The trial was initially designed as a safety trial to treat 18 patients, and conclude six months after the final surgery. It may or may not now end before the end of 2012.
The balancing of capital requirements, research, clinical trials and eventually therapeutic production and distribution is a major challenge for small biotechs. Neuralstem's management seems to have pushed their chips to the center of the table. We wish them all the luck.
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