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.

Market Opportunity

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 Neuralstems 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 $1.5 billion.

That being said, drug development in ALS has been a graveyard for pharmaceutical companies. One would assume, based on numerous past clinical failures, that Neuralstems 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. Neuralstems approach uses human spinal stem cells that, once injected, can provide multiple mechanisms of action on multiple pathways to affect the disease. Plus, Neuralstems 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. Its 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 decade.

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CUR - Neuralstem Pioneering Efforts In ALS