Filing Shows Money Woes May Force NeuralStem to Halt Trials, Cease Operations or File for Bankruptcy
March 23, 2017
By Alex Keown, BioSpace.com Breaking News Staff
GERMANTOWN, Md. – Shares of Neuralstem Inc. are up more than 3 percent in premarket trading as the company announced its intention to seek additional capital in order to continue operations.
While the stock was up in premarket trading, the financial situation at Neuralstem appears to be dire. In Neuralstem’s filing with the U.S. Securities and Exchange Commission, the company said it has a long history of losses totaling approximately $193 million since it was founded in 2016. During its 20 years, the company has “generated no significant revenue from the sales of our proposed products.” In the three most recent years, the company said it has had losses of $21 million in 2016, $20 million in 2015 and $22 million in 2014. As of the end of 2016, Neuralstem said it had cash, cash equivalents and short-term investments of $20.2 million.
“No assurances can be given as to exactly when, if at all, we will be able to fully develop, commercialize, market, sell and/or derive any, let alone material, revenues from our proposed products,” the company said in its statement. “If additional financing is not available, we may not be able to fund our operations, develop or enhance our technologies, take advantage of business opportunities or respond to competitive market pressures. If we exhaust our cash reserves and are unable to secure adequate additional financing, we may be unable to meet operating obligations which could result in us initiating bankruptcy proceedings or delaying, or eliminating some or all of our research and product development programs.”
Neuralstem said it has allocated the majority of its resources to develop its stem cell and small molecule technologies.
In its filing, the company said it was hoping to generate capital through the sale of its common stock or obtaining debt financing.
“If we exhaust our cash reserves and are unable to secure adequate additional financing, we may be unable to meet operating obligations which could result in us initiating bankruptcy proceedings or delaying, or eliminating some or all of our research and product development programs,” the company said.
Last year, Neuralstem enrolled its first patient in a Phase II trial of NSI-189 for the treatment of major depressive disorder. NSI-189 is the lead compound in Neuralstem's neurogenic small molecule program. NSI-189 is believed to stimulate neurogenesis, synaptogenesis and increase hippocampal volume, all of which are believed to be effective in reversing depression, enhancing cognition, and promoting neuroregeneration, the company said. In a Phase I trial, NSI-189 was shown to be safe and demonstrated large treatment effects in two key depression outcome measures. The company said it anticipates data from the trial in the third quarter of 2017.
Additionally, preclinical data for NSI-189 suggests the therapy has the potential for broader application in nervous system diseases. Data obtained from studies using a rodent model of ischemic stroke demonstrate that NSI-189 can reverse stroke-induced motor and neurological deficits, and that this may involve upregulation of neurotrophic or neurogenic factors, the company said in its year-end statement.
Rich Daly, chairman and chief executive officer of Neuralstem, said in a statement that the company was committed to continue exploring NSI-189’s mechanism of action and potential therapeutic benefits.
The company is also focused on developing Neuralstem's first stem cell product candidate, NSI-566, a spinal cord-derived neural stem cell line, is under development for treatment of amyotrophic lateral sclerosis.
But while the company says it is committed to NSI-189 and NSI-566, money will certainly be a factor in its development. If the company cannot raise the funds it requires to operate, it may have to terminate programs or sell off the assets.