By Jason Napodano, CFA
Neuralstem, Inc. (NYSE MKT:
) has developed a technology that allows large-scale expansion of
human neural stem cells ("hNSC") from all areas of the developing
human brain and spinal cord. The company owns of has exclusive
license to 25 patients and 29 patent applications pending worldwide
in the field of regenerative medicine and cell therapy. Management
is currently focusing the company's efforts on replacing damaged,
malfunctioning, or dead neural cells with fully functional ones
that may be useful in treating many central nervous system diseases
and neurodegenerative disorders.
Neuralstem's lead development program is for Amyotrophic Lateral
Sclerosis ("ALS"), also known as
's disease, named after the famous New York Yankee first baseman
who was diagnosed with the disease in 1939, and passed in 1941 at
the age of only 37.
ALS is a rapidly progressive neurodegenerative disease
characterized by weakness, muscle atrophy and twitching,
spasticity, dysarthria (difficulty speaking), dysphagia (difficulty
swallowing), and respiratory compromise. The disease is almost
always fatal, typically due to respiratory compromise or pneumonia,
in two to four years. Initial symptoms of ALS include weakness
and/or stiffness followed by muscle atrophy in the arms and legs.
This is followed by slurred speech or difficulty swallowing, and
loss of tongue mobility. Approximately a third of ALS patients also
experience pseudobulbar affect (uncontrollable emotions). As the
disease progresses, worsening dysphagia and respiratory failure
leads to death. A small percentage of patients may also experience
cognitive affects such as frontotemporal dementia and anxiety.
The vast majority (~95%) of cases are idiopathic, although there is
a known hereditary factor that leads to familial ALS associated
with a defect on the 21st chromosome that accounts for
approximately 1.5% of all cases. There are also suspected
environmental causative factors, including exposure to a dietary
neurotoxin called BMAA and cyanobacteria, and use of pesticides.
However, in all cases, the defining factor of ALS is rapid and
progressive death of upper and lower motor neurons in the motor
cortex of the brain, brain stem, and spinal cord. Prior to their
destruction, motor neurons develop proteinaceous inclusions in
their cell bodies and axons. This may be partly due to defects in
Treatment for ALS is limited, and as of today only riluzole,
marketed by Sanofi-Aventis as Rilutek, has been found to improve
survival to a modest extent (several months). Riluzole
preferentially blocks TTX-sensitive sodium channels, which are
associated with damaged neurons. This reduces influx of calcium
ions and indirectly prevents stimulation of glutamate receptors.
Together with direct glutamate receptor blockade, the effect of the
neurotransmitter glutamate on motor neurons is greatly reduced.
Riluzole does not reverse the damage already done to motor neurons,
and people taking it must be monitored for liver damaged (about 10%
The remaining treatments for ALS are designed to relieve symptoms
and improve quality of life. This supportive care includes a
multidisciplinary approach that may include medications to reduce
fatigue, control spasticity, reduce excess saliva and phlegm, limit
sleep disturbances, reduce depression, and limit constipation. As
noted above, median survival is two to four years. In the U.S.,
approximately 30,000 persons are currently living with ALS.
Neuralstem's Approach For ALS
Neuralstem is seeking to treat the symptoms of ALS via
transplantation of its hNSCs directly into the gray matter of the
patient's spinal cord. In ALS, motor neurons die, leading to
paralysis. In preclinical animal work, Neuralstem cells both made
synaptic contact with the host motor neurons and expressed
neurotrophic growth factors, which are protective of cells.
Neuralstem's published preclinical data can be round here:
- J Comp Neurol. 2009 Jun
- PLoS Med. 2007 Feb;4(2):e39.
- Stem Cells. 2006 Aug;24(8):1976-85. Epub
2006 Apr 27.
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Neuralstem initiated the first FDA-approved stem cell trial for ALS
in January 2010, at
in Atlanta, GA. The trial is a phase 1, open-label, safety study
designed to evaluate the safety of the cells and surgical technique
in up to 18 patients. The goal of the program is to show that
Neuralstem's hNSC: 1) Graft permanently into the region where they
were transplanted, 2) Rebuild circuitry with the patient motor
neurons, and 3) Protect patient neurons from further degradation
from the disease.
The primary objective is to determine the safety of the treatment
(incidence of adverse events) over a 36 month timeframe. Secondary
endpoints will assess signs of efficacy through various qualitative
and quantitative rating scales, both patient and physician
The trial began with six mid-to-late stage (forced vital capacity
> 60%) ALS patients defined as non-ambulatory with permanent
paralysis. Three patients were treated with five unilateral cell
injections (Cohort A1) and three patients were treated with ten
bilateral (five on each side) injections (Cohort A2) into the
lumbar (L2-L4) spinal cord. The protocol called for 100,000 cells
per site injection.
Results after the first six patients showed no unexpected
complications as a result of the surgery that would prohibit
movement into the next cohort. As a result, Neuralstem moved into
dosing of the next six patients, which were a similar design to
Cohorts A1 and A2 only with ambulatory patients. Patients seven
through nine (Cohort B) received six cell injections in the lumbar
spine unilaterally. Patients ten through twelve received ten cell
injections bilaterally (Cohort C).
The FDA's data safety monitoring board ("DSMB") has been reviewing
the safety data during the trial. All patients tolerated the
treatment without any long-term complications related to either the
surgical procedure or the implantation of the stem cells. This was
clearly an encouraging sign, and a key hurdle cleared.
Results from the first twelve patients were presented at the
American Neurological Association annual meeting in September 2011
). Data has since been e-published in Stem Cells, in March 2012 (
). Clinical assessments ranging from 6 to18 months after
transplantation demonstrated no evidence of acceleration of disease
progression due to the intervention. Results even show that one
patient demonstrated improvement in his clinical status, though we
note these data must be interpreted with caution since this trial
was neither designed nor powered to measure treatment efficacy to
The trial has now expanded enrollment to the next six patients,
which includes three patients that received five unilateral
injections in the cervical cord (Cohort D), followed by three
repeat patients (patients 10-12 from Cohort C) that will receive
unilateral injections in the cervical cord (Cohort E). Injections
into the cervical cord (upper back) may help patients maintain, or
even improve, breathing function. As noted above, the majority of
ALS patients pass away due to respiratory complications. It will be
interesting to see how the re-dosed patients in Cohort E perform.
Patient #13 was dosed in November 2011. In March 2012, Neuralstem
noted that the 14th patient - the first woman enrolled in the study
- was treated at the trials single center at Emory University. The
15th patient completed in April 2012.
This morning, Neuralstem
that the 16th patient, the first to receive cell injections into
the lumbar and cervical spine, was treated at Emory University
Hospital in Atlanta, GA. This patient has now received a total of
15 injections, with 10 in the lumbar spine and 5 in the cervical
spine. We expect dosing in patients 17 and 18 in the next two
The dosing for these re-treated patients remains at approximately
100,000 cells per injection - about 1/3rd of the number of cells
per injection that management would eventually like to achieve.
Besides safety, the goal of the trial is to identify the
maximum-tolerated-dose (MTD), which is believed to be between
300,000 and 400,000 cells per injection.
We are expecting to see data in 2013, perhaps at the ANA meeting in
October 2013 for all 18 patients. Management is currently in
discussion with the FDA on expanding enrollment of the phase 1
trial, currently taking place at Emory University in Atlanta, GA to
a second site at the University of Michigan in Ann Arbor, MI, and
expanding enrollment up to 27 patients.
If allowed, the FDA would consider this a phase 1 / 2 trial,
allowing Neuralstem to proceed in 2014 directly into phase 3.
Patients 19 through 27 would receive higher doses of cells per
injection - either 200,000 or 300,000. The ultimate goal is to dose
patients at 20 sites (10 in the lumbar spine and 10 in the cervical
spine) with 200-300,000 cells per injection. We view this potential
acceleration as a clear positive for Neuralstem, as it would shave
two years and several million dollars off of development.
The company is also looking to conduct a small feasibility trial in
Mexico later this year or in 2013 to add to the safety database.
This will be followed by a larger pivotal study (n~100 patients) in
Mexico perhaps in 2013 or 2014. We think opening enrollment to a
second site in the U.S. and some international sites will greatly
help accelerate clinical timelines and reduce cost for Neuralstem,
while increasing investor awareness to the program.
As of now, management is planning to conduct the pivotal program on
its own, mostly likely seeking funding through grants with the ALS
Association and U.S. National Institutes of Health. However,
management is also in discussion with potential pharmaceutical
partners on the pivotal program. ALS is a highly attractive area
for Big Pharma. Depending on the strength of the phase 1 / 2 data,
Neuralstem may be able to strike a commercialization partnership in
2014 to help defer the costs of the planned pivotal trial. We
expect that any deal with a larger pharmaceutical company would
include a substantial upfront payment that Neuralstem would then
use to fund expansion of the development platform into new
indications, such as spinal cord injury (IND filed) or stroke.
In February 2011, the U.S. FDA granted Neuralstem an
Orphan Drug designation
for its human spinal cord stem cells (HSSC) for the treatment of
ALS. As noted above, there are approximately 30,000 patients in the
U.S. living with ALS. We estimate that approximately half of these
patients are characterized with an FVC > 60% and may be eligible
for treatment with Neuralstem's hNSCs. Given the Orphan Drug
designation, the limited patient population, and the lack of any
meaningful treatment options, we think Neuralstem or its
commercialization partner could price this therapy at upwards of
$100,000. Therefore, the peak market opportunity for Neuralstem is
That being said, drug development in ALS has been a graveyard for
pharmaceutical companies. One would assume, based on numerous past
clinical failures, that Neuralstem's chances in ALS are slim. Small
molecules including gabapentin, topiramate, celecoxib, tamoxifen,
indinavir, minocycline, and xaliproden, many of which are approved
for other indications and have posted annual sales over a billion
dollars, have all failed human clinical programs for ALS. Even
Vitamin E and Creatine have been tested, to little avail, in ALS.
Failed mechanisms of action included calcium channel blockers,
glutamate regulators, neuroprotectants, immunosuppressants, GABA
receptors, anti-inflammatory agents, and antioxidants.
However, there is one thing in common we see in all of the above
failures. They are one molecule targeting one mechanism of action
or one pathway. ALS is a high complex and largely uncharacterized
disease. Neuralstem's approach uses human spinal stem cells that,
once injected, can provide multiple mechanisms of action on
multiple pathways to affect the disease. Plus, Neuralstem's
approach is highly targeted, with the cells injected directly into
the lumbar or cervical spine. Following grafting, the hypothesis is
that the cells rebuild circuitry with the patient motor neurons and
protect existing neurons from further degradation. It's clearly a
unique approach, and one we believe has a better chance of success
than many of the previous failed theories enacted over the past
That is why we rate Neuralstem a 'Buy'.