Neuralstem (AMEX: CUR) has gained considerable ground from its capital offering at $0.40 last month, but shares have nevertheless backed off considerably from their highs of $1.96. As of Friday’s close, Neuralstem was trading at $1.26, valuing the company at a market capitalization of $68 million. After announcing a special placement at $0.40, Neuralstem completed the final surgery in its 18-patient stem cell trial in Atlanta. The company’s shares then rallied on massive volume to a one-year high of $1.96.
Most of Neuralstem’s attention in the marketplace was due to Ted Harada, a victim of the terminal illness ALS, formerly known as Lou Gehrig’s disease. Harada was featured in a local Fox TV segment entitled Henry County man undergoes experimental ALS stem cell surgery. Harada agreed to undergo a cutting-edge surgery sponsored by Neuralstem in which he received stem cell injections directly into his spinal cord. After his first surgery, Harada experienced remarkable recovery from his symptoms, sparking rumors that Neuralstem might have found the cure for the terminal illness.
Additional fuel for the large rally in Neuralstem shares came from an official comment from the principal investigator of the trial, Dr. Eva Feldman. In an unusually confident statement given the early stage of the trial, Dr. Feldman said, “We have found the procedure to be extremely safe… In some patients, it appears that the disease is no longer progressing, but it is too early to know if the result from that small number of patients is meaningful.” Traders and investors were encouraged by this vote of confidence, despite the small cohort size and lack of statistically compelling data. Designed under the approval of the FDA, Neuralstem’s Phase 1b trial (in which Harada received his injections and experienced surprising recovery from ALS symptoms) was designed strictly to test safety, not efficacy. So far, the scientific community is only sure that the stem cell surgery is safe, not that it is efficacious for treating ALS. Nevertheless, the recovery of Harada and other members of the small cohort was encouraging to the investment community.
Message boards, twitter accounts, and other social media postings exploded to all-time highs as Neuralstem rallied from a low of $0.42 to a high of $1.96. Shares have subsequently retraced much of those gains to settle at $1.26, and volume has come down to 1.43 million shares traded per day versus a prior average of 2.07 million.
Outside of the United States, Neuralstem is pursuing the application of its surgery for the treatment of stroke through a combined Phase 1/2/3 trial in China. Neuralstem is also conducting additional trials in Mexico on an accelerated time schedule relative to its FDA process. Within the United States, the next major milestone for Neuralstem will be the compilation of its Phase 1 results and its application for a Phase 2 trial. The Phase 2 trial will allow the company to test a larger number of ALS patients with higher dosage levels.
Neuralstem recently announced a registered direct offering at $1.00 per share, raising $7 million in capital to finance further operations. Since the announcement of this dilutive financing, shares have consistently maintained price levels above $1.00 per share.
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