By Randy Osborne, Staff Writer

Neuralstem Inc.’s $19.65 million from a stock offering will help advance the lead compound NSI-566 in amyotrophic lateral sclerosis (ALS), which is “about halfway through” a Phase II trial, said CEO Richard Garr.

Rockville, Md.-based Neuralstem is selling about 6.7 million shares at $2.91 each in the offering. Each investor also gets a warrant to buy half the number of shares purchased. Warrants bear an exercise price of $3.64, and can be exercised for five years.

Shares (NASDAQ:CUR) closed Friday at $2.97, down 19 cents.

Expected to close next week, the offering’s proceeds will get Neuralstem through Phase II in the ALS effort with spinal cord derived stem cells, as well as the small-molecule program, where the company has “just completed a Phase Ib trial in major depressive disorder,” Garr told BioWorld Today. “We’re looking at the data now, and anticipate sometime in this quarter filing for a Phase II.”

Stem cell trials are neither much more expensive nor much cheaper than tests of other therapies. “That’s always in the eye of the beholder, isn’t it?” Garr noted. “Drug trials, especially for depression, are expensive. Everybody knows what the FDA expects and what the parameters are. It doesn’t cost us any more or any less than anybody else.”

Cell therapy as a whole is “fairly expensive,” he said. “In terms of the dollars per patient, it’s very expensive, but in terms of the numbers of patients, because it’s fairly small, the overall cost is manageable.” The Phase II trial in ALS got funding help from the National Institutes of Health and from the ALS Association, he said.

“We have to wait six months after the last surgery for the trial to end,” Garr said. “Sometime near the end of this calendar year, the Phase II [in ALS] should be over completely.”

Neuralstem’s approach represents the world’s first intraspinal injections of stem cells. “This is a targeted surgery at various segments of the spinal cord, and the cells actually go into the motor neuron pools in those segments and synaptically integrate,” Garr said. “There have been, in the past, people who have tried to put what you would think of as adult stem cells – all kinds of bone marrow and blood stem cells and things like that – into the spinal-fluid cavity,” though such experiments took place “mostly in Mexico and in Germany and other places,” as well as China, he said.

“Our approach is unique, actually rebuilding the circuitry,” Garr said. “These cells don’t fl oat up and down in the spinal fluid, and they don’t migrate to the spinal cord. They’re going in and creating new circuitry inside very specific segments of the spinal cord,” each of which is responsible for specific groups of muscles, he noted. In ALS patients, when the muscles that control breathing and swallowing give way, so do the patients, not long afterward.

Human Data Fueling Stock

Neuralstem also has been given clearance by the FDA to start a spinal cord injury trial in complete paralysis patients, using the same technology.

“Geron, of course, famously, had an approval from the FDA [for trials] with their oligodendrocyte progenitor [GRNOPC-1] cells to try to treat spinal cord injury,” Garr said. “I believe they may have actually transplanted two or three patients before they pulled the plug.”

Menlo Park, Calif.-based Geron last April disclosed in an SEC fi ling that the assets related to the program were taken over by Asterias Biotherapeutics Inc., a subsidiary of regenerative medicine specialist Biotime Inc., of Alameda, Calif. The deal involved transfers of common stock and warrants, along with patents, regulatory filings and investigational new drug applications filed with the FDA for Geron’s Phase I safety study with the cells. (See BioWorld Today, Jan. 26, 2009, Jan. 27, 2009, and April 5, 2013.)

“The mechanism of action by the cells, even though it’s the same cells, is a little different [in spinal cord injury, where] the idea is literally to build new circuitry to bridge the gap, to bring function back to paralyzed patients,” Garr said. “In ALS, even though patients lose their ability to walk, it’s not because there’s a break in the signal coming down the spinal cord from the brain. It’s because the muscles have atrophied and died. Our main goal here is to improve the quality of life and extension of life for these patients, is to keep them off breathing machines for as long as possible.”

Neuralstem’s shares have been on the climb for about a year. ”We don’t really talk about the stock that much,” Garr said, because market changes are too hard to explain, in most cases. “The clear answer is, there’s no substitute for human data,” and interim data have been showing up in presentations.

“A publication is coming out, we expect, on the Phase I trial [in ALS],” he said. “Some of the patients went public, and it was in Newsweek. It was pretty clear, just from a lay perspective, they were seeing a definite benefit to a number of patients, and long term, not just marginal but significant, quantitative actual improvement that no one has seen before, and that has lasted a very long time.”

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