Neuralstem, Inc. (NASDAQ:CUR) took a substantial hit early this week as the company released data from an investigation into its lead development asset. The data derived from a phase 2 study looking at a drug called NSI-189 in a target indication of major depressive disorder (MDD) across a range of safety and efficacy endpoints. The numbers missed expectations pretty much across the board and Neuralstem will open the session on Wednesday at a more than 60% discount to its Monday close (the numbers hit press after hours) and a 49% discount to yesterday’s end of session pricing.
When this sort of thing happens in the biotechnology space, it can be easy to write-off the company it happens to as being dead in the water. In this instance, however, there may be some inputs that are being widely ignored and that could contribute to a longer-term recovery for Neuralstem (at best) or a closing of the recent gap down (at worst).
Here is what we are thinking.
First, let’s quickly address the data.
As mentioned, the drug under investigation is called NSI-189 and the company was trying to prove that it could bring about a degree of clinical benefit in patients suffering from MDD. This is a severe form of depression that, right now, doesn’t really have many treatments at-market. Those treatments that are available bring with them some pretty severe side effects and – after a period of sustained use – often stop working.
The drug is what’s called a Nootropic and this category of drugs (which a number of companies are also investigating in the syndication) has been lauded over the past few years as potentially being a game changer in the space. Very few companies have had any late-stage success with drugs of this type, however, and the latest news adds Neuralstem to this list.
As per the results, the drug was unable to bring about any statistically significant improvement over placebo in the patient population as measured by a couple of industry-standard scales, one called MADRS and another called the Hamilton Depression Rating Scale.
At a glance, this looks like an outright failure. However, look at the numbers a little closer, and there exists some directional significance associated with both industry-standard scales.
Further, a secondary endpoint that compared the drug to placebo as measured by what’s called a patient-rated Symptoms of Depression Questionnaire (SDQ) achieved statistical significance (p=0.044).
In other words, while the trial technically failed, there does seem to be some real benefit brought about by NSI-189 in this indication. In another disease, this might not be that important. In a condition like depression, however, clinical benefit signals are amplified because the placebo effect is often more prominent in these sorts of trials than it is in a trial for, say, a cancer treatment.
There have been numerous occasions whereby a failed phase 2 in a neurological disorder has advanced into a pivotal trial based on some deeper endpoint hits, meaning it’s not unreasonable to suggest that this might not be the end of the line for NSI-189 in the MDD indication.
Of course, we are not putting all our eggs in one basket.
Even if this is the end of the line for the MDD target, the drug is still under investigation across a range of other diseases, including cognitive impairment and radiation-induced cognition, which are two disease categories for which there exists a whole host of legacy data supportive of this type of drug’s efficacy.
Outside of NSI-189, there is also a cell therapy asset called NSI-566 to consider. This one is under investigation as part of an ongoing phase 2 trial in patients with amyotrophic lateral sclerosis (ALS) and a phase 1 study in patients with spinal cord injury (SCI).
The bottom line here is that, while the latest news is a setback, this is a company with a deep pipeline and a relatively strong cash position (a little over $11 million at last count), coupled with debt of just $5 million.
With numerous catalysts set to hit press over the next 12 months and the risk of dilution relatively low given the just mentioned balance sheet metrics, we think it’s well worth a look at current prices.
We will be updating our subscribers as soon as we know more. For the latest updates on CUR, sign up below!
Image courtesy of Ryan Melaugh via Flickr
Disclosure: We have no position in CUR and have not been compensated for this article.