Posted on: Monday, 23 October 2006, 21:01 CDT

Neuralstem's ALS Results Are Enough for Proof of Concept

By Karen Buckelew

Rockville-based Neuralstem Inc., close to becoming one of the nation's few publicly traded stem cell firms, has reported encouraging results in early studies of its potential treatment for amyotrophic lateral sclerosis, known as ALS or Lou Gehrig's disease.

Neuralstem and the Johns Hopkins University School of Medicine researchers announced last week that Neuralstem's proprietary stem cell technology - cells derived from human fetal spinal cord tissue - has shown promise in treating rats with ALS, a neurodegenerative disorder that involves loss of muscle control.

The findings are significant as "proof of concept" for the use of stem cells in treating spinal cord injury and neurodegenerative disease, according to Dr. Vassilis Koliatsos of the Hopkins medical school, lead investigator for the study.

Neuralstem is developing on the financial front as well as the scientific front, according to officials.

Its registration statement for a proposed $23.6 million public offering of about 16.3 million shares was approved Aug. 28 by the Securities and Exchange Commission.

CEO I. Richard Garr said he expected final details of its IPO to be ironed out within the coming weeks, at which point, the company, a tiny, four-employee outfit, which outsources much of its work, plans to begin trading on Nasdaq's Over the Counter Bulletin Board.

The IPO would be another boon to Maryland's stem cell industry, according to the state Department of Business and Economic Development, which is pushing to build a substantial presence in the field.

"Things are moving forward very quickly," said Garr of Neuralstem's recent developments.

The firm began in 1996 with what technology co-founder and Chief Scientific Officer Karl Y. Johe discovered at the National Institute of Neurological Disorders and Stroke of the National Institutes of Health.

The company now holds four patents, both for the technique it uses to harvest and propagate the stem cells and for the method it employs to turn them into neurons. Neuralstem has submitted applications on 12 more patents worldwide.

Koliatsos' study, published Oct. 15 in the journal Transplantation, showed for the first time the stem cells derived using the Neuralstem technique could have an effect on illness in animals.

Researchers led by Koliatsos, an associate professor of neuropathology, neurology, neuroscience and psychiatry at Hopkins, transplanted healthy stem cells into the spinal cords of rats infected with the rat equivalent of ALS.

The healthy stem cells not only thrived among the degenerating, diseased cells in the rats' spinal cords, but they grew to differentiate into motor neurons, the nerve cells that control muscle movement. Motor neurons degenerate in patients affected with ALS - about 30,000 Americans at any one time, according to the ALS Association.

The treatment also seemed to slow the degradation of the diseased cells, researchers found. Though all the rats eventually died of ALS, they did so more slowly than those without treatment.

The significance of these findings, Koliatsos said, is that they seem to debunk at least two theories researchers previously had believed.

"The spinal cord normally does not regenerate; it will not allow a foreign cell to differentiate into a neuron." Koliatsos explained. "And the second major concern is that here you're dealing with a degenerative environment. Such an environment would be toxic even for cells that are healthy."

However, the cells in the study seemed both to differentiate into neurons and thrive in the hostile environment - a triumph, the scientist said, for the science of stem cell research, still in its early stages.

"The field is in great need for establishing some proof of concept in a number of domains," Koliatsos said. "In this study I guess we begin to introduce the concept that this is a great, if not grandiose, potential target for the future."

"I think this is extremely encouraging on several fronts," Garr said of the study results.

The cells only were implanted in the subjects' lower spinal cord area; a true test of the technique, Koliatsos said, would be to implant them in the upper spinal cord as well, which controls respiratory function, obviously a key to survival.

Such a study currently is in its early stages, Koliatsos said.

The research was funded by a consortium including Neuralstem, the National Institutes of Health and the Robert Packard Center for ALS Research at Johns Hopkins, according to Hopkins.

The ALS community has looked to stem cells as a promising method of treatment for the devastating disease, said Lucie Bruijn, science director of the ALS Association.

"There is a patient community that is desperate out there," Bruijn said.

But the field of stem cell research still is in its very early stages, she added.

"I'm extremely cautious to over-represent the very exciting data that's being done in the lab," Bruijn said. "But every little thing leads us closer to understanding what these cells are doing."

Neuralstem's technology is undergoing similar study at the University of California, San Diego, for the treatment of ischemic spastic paraplegia.

That condition is a paralysis that can result from a localized obstruction of arterial blood flow to the spinal cord, sometimes a direct side effect of an aortic clamping procedure used during surgery.

The company actually is hoping to move its technology into clinical trials in paraplegia before testing begins in humans with ALS, Garr said.

Its recent developments in science likely will provide Neuralstem with a platform from which to enter the public market in the coming weeks, as the firm completes the process set in motion last March with its private sale of 1.8 million shares to Los Angeles-based Regal One Corp. Inc.

That sale was made with the understanding Regal One would assist Neuralstem in its initial public offering.

In March, Neuralstem announced it had sold $5 million worth of shares in a private placement, and would soon file for registration of its shares on the public market.

In the prospectus it filed with the SEC, the company reported at last count 25.8 million common shares outstanding, 11.1 million common shares reserved for issuance under outstanding options and about 100,000 shares reserved for the reimbursement of penalties it may have to pay regarding agreements made with investors in March's placement.

The company also reported in its filings it had raised about $34.9 million since its 1996 founding - including $500,000 from DBED's Enterprise Investment Fund - and had recorded losses of $35.4 million during that time period.

Neuralstem operates on an "outsource model," Garr said, employing only three or four workers full-time and filling in holes with outside consultants and manufacturers.

The state of Maryland is looking forward to the IPO, said DBED Deputy Secretary Christopher Foster. Neuralstem would be the second Maryland stem cell company to go public after Baltimore-based Osiris Therapeutics Inc. hit the market Aug. 9 with a $34.2 million offering.

"I think it makes us one of the hottest areas [for stem cell research] - two companies in 12 months going public," said Foster, citing the state's allocation this year of $15 million for stem cell research grants to academia and private companies.

The state will benefit financially from the transaction as well, with the ability to sell the 500,000 Neuralstem shares it received with its investment.

Garr said the company is "anxious" about the upcoming IPO, and then added, "Maybe excited is the right word."

"There are very high expectations. But we're confident we can meet them."

Source: The Daily Record (Baltimore)

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