Neuralstem, Inc. (NASDAQ:CUR) is one of those biotechnology stocks that can be tough to hold. The company effected a reverse split back in January, bringing its post-split price to a little over six dollars a share. Subsequent to this point, however, and as is generally the case, price dipped into early February, bottoming out at just below three dollars a share at the start of the month. Since then, it’s been a roller coaster of a ride. The company peaked mid-March, once again hitting six dollars a share, before dipping to $2.90 a piece at the start of this month on essentially no news.
Across the last 24 hours, however, we have seen a resurgence in price and a recovery of a decent portion of the lost strength. At last count, Neuralstem closed at four dollars flat.
The question now is, what is next?
For us, the near to medium term value in this one is rooted in one event and one event only – the release of top line from an ongoing phase 2 of the company’s lead development asset. The data should hit press soon, with the company reporting alongside its financials (released yesterday) that it is ahead of schedule by a number of weeks, and when it does, sentiment surrounding its interpretation is going to dictate value throughout the remainder of 2017.
Here is what we are looking for from the release.
As a quick introduction, Neuralstem is attempting to develop CNS type treatments, with a lead asset called NSI-189. The drug is currently in the above-mentioned study, a phase 2, set up to investigate clinical impact in a target indication of major depressive disorder (MDD) across a range of safety and efficacy endpoints.
It’s part of a family of compounds called nootropics. Specifically, it’s what’s called a benzylphiperizine-aminiopyridine, and it’s designed to increase the size of the hippocampus – the region of the brain thought to be associated with depression. Basically, there’s a theory that a small hippocampus can result in certain neurological conditions, one of which is the depression in question. It’s also been linked with memory loss, disorientation, encephalitis, and hypoxia from diseases such as Alzheimer’s. The idea is that a nootropic like NSI-189 can reverse hippocampus atrophy, and in doing so, can counter (and potentially reverse) the characteristics of these sorts of conditions.
It’s really just a theory at the moment, but there’s quite a lot of preclinical, clinical and anecdotal evidence that’s it’s a valid one.
Which brings us to the catalyst.
As mentioned, it’s in a phase II study right now, and the study wasn’t initially slated to read out until the end of the year.
As part of its latest communication, however, company management has announced that the data should hit press four weeks ahead of target, bringing the release period to the third quarter of this year.
The primary endpoint is described as the durability of effect, which in turn is defined as the time until the start of a new antidepressant treatment, as compared to placebo. In other words, how long can a patient go with this drug before a new treatment is required, as compared to how long a patient that isn’t taking anything (placebo) can go before they need to start taking something real. It’s a pretty novel endpoint, but if it is hit, then it’s convincing evidence of efficacy.
So that’s what we’re looking for when the numbers hit press. A stat sig difference between the patients in the active group versus the patients in the control group. The larger the difference, of course, the better the performance, and the higher the reward on data day.
There’s a secondary asset under investigation in a spinal cord injury indication, and Neuralstem is adding this asset to its news stream with increased frequency of late. We’re not focusing too much on that right now, however.
The key, for us, is success in this phase 2. Get that in place and this rollercoaster of a stock should smooth out as part of a sustained upside revaluation.
One to watch.
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Disclosure: We have no position in CUR and have not been compensated for this article.