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Thoughts on Neuralstem's phase II ALS trial



March 14, 2015 – Comments (7) | RELATED TICKERS: CUR

Neuralstem stock was very volatile yesterday after the company reported results of their uncontrolled phase II trial of NSI-566 spinal cord stem cells. In the pre-market, the share price was up substantially as retail traders focused on the company's claim that 47% of ALS patients responded to treatment and exhibited a markedly diminished decline in function over the nine month duration of the trial, as measured by the ALSFRS-R. However, once regular trading opened it became clear that the gains weren't going to hold and in fact the share price declined substantially over the course of the day. The declines accelerated after Adam Feuerstein published an article critical of the data. As usual, I mistook a temporary plateau for a bottom and bought my initial 2000 share tranche at 2.95. The stock closed at 2.37.

Why the huge swing from a premarket high in the mid 4's to a close at 2.37? The answer is in the institutional ownership of 20%. That means 80% of the stock is owned by retail, and I can guarantee that a large chunk of those retail owners don't have a clue about ALS or what exactly Neuralstem is purporting to do about it. That's why there was a sharp spike when the PR first came out amplified by a large contingent of momentum traders, followed by a steep decline once retail got spooked by Feuerstein and other skeptics. That can be both a blessing and a curse for a better informed trader, because even if it gives him an advantage in the long term it subjects him to a lot of volatility in the near term. In this case my situation is particularly uncomfortable because I'm a huge skeptic of Neuralstem, along with all the other stem cell stocks, so I'm currently in the red on a position I don't believe in for the long term.

Feuerstein's article is interesting because he seems to take at face value Neuralstem's contention that their trial results can be explained by separate populations of "responders" and "non-responders". Feuerstein's criticism is based on the fact that Neuralstem cannot differentiate these subpopulations in advance and that the treatment actually seems to worsen ALS progression in non-responders. However, he may actually be playing along with Neuralstem's construct as a rhetorical device, because the company has provided no evidence that such a distinction is real.

So what do we actually know about this trial? We know that fifteen patients received NSI-566 cells in five dosage cohorts containing three patients each, but no placebo control. We know that the fifteen patients had an average pre-treatment ALSFRS-R score of 40/48, with 48 being a normal score. Of the seven patients who were deemed responders, the average ALSFRS-R score was 37 after nine months. Of the eight patients who were deemed non-responders, the average ALSFRS-R score was 14. When the responder group was compared to the non-responder group, the difference in ALSFRS-R score was statistically significant.

There is much more important information that was not included in Neuralstem’s PR than what was actually included. For example, we do not know Neuralstem’s justification for classifying the patients into two different populations based on response. We do not know the standard deviation of the pre-treatment average ALSFRS-R score or the post-treatment average ALSFRS-R scores for the two groups. If the post-treatment scores clearly showed two distinct groups with non-overlapping standard deviations that might support Neuralstem’s contention of discrete populations. However, if there was no such separation, it would imply that Neuralstem simply analyzed the seven patients who deteriorated less rapidly and compared them to the eight patients who deteriorated more rapidly. In a disease like ALS with variability in the rate of progression, such a division can always be made regardless of whether the treatment is effective or not. There will always be half the patients who do better than the other half, and comparing the two halves is meaningless. The company can claim that the patients who are doing better are “responders”, but there is no evidence to support such a claim.

We also do not know the pre-treatment average ALSFRS-R scores of the responder group and the non-responder group. In such a small trial, it is very possible that these baseline averages could have been substantially different and could account for the different degree of deterioration seen over nine months. For example, it is well-known that the rate of decline in ALS is fastest in the earliest and latest stages of the disease, and slowest in the middle. The “non-responders” could have started out with the lowest scores from the beginning. Once again, we end up with a result that is a tautology.

If we assume that responders and non-responders began with similar ALSFRS-R scores, then responders only lost three points over nine months instead of the roughly nine points that would have been expected. However, non-responders lost twenty-six points instead of the nine points that would have been expected. Therefore, non-responders would actually be negative responders. If these data extrapolate to larger groups, then less than half of ALS patients treated with NSI-566 would experience a moderate benefit, while a majority would experience a severe worsening of their expected rate of decline. I believe this realization is what caused the most harm to Neuralstem’s share price once people had a chance to really look at the data.

Neuralstem also does not provide any information regarding the performance of the five different dosage cohorts. It can therefore not be determined if there was any dose-response correlation.

Finally, I have some quibbles regarding some inconsistencies between the design of the trial on and the information in the press release. The timeframe of the trial on was two years, and there is no mention of a primary endpoint at nine months. In the company’s PR, they do not state whether they plan to continue to follow the subjects for the two year period. It is possible that Neuralstem modified the protocol or addressed the discrepancy at some prior timepoint, but they did not change the protocol posted on In addition, the PR refers to the ALSFRS score rather than the ALSFRS-R score, although the protocol on describes stabilization of ALSFRS as a secondary objective. The ALSFRS-R score replaced the ALSFRS score in general usage years ago but Neuralstem’s use of the old terminology creates uncertainty and confusion. It’s sloppy.

I don’t think this trial can be interpreted as a positive or a negative based on the limited data provided by the company. However, the fact that Neuralstem chose not to provide what was obviously essential data to interpret the results can’t be seen as a good sign. Regardless of any additional data, it seems clear that a randomized, blinded, placebo-controlled study will be necessary to answer the question of whether cervical injections of NSI-566 can slow the functional decline of ALS patients. It is unfortunate that Neuralstem chose to not even include a small cohort of placebo patients along with their five different dosage cohorts of active treatment.

I believe that ultimately NSI-566 injections will prove to be ineffective for ALS. I think Neuralstem has little confidence in their own platform, which is why they’re wasting years on inconclusive and ineffective trials that only highlight the need for larger and better trials. The stock will of course surge again but the question as always is how far it will drop before that happens and how long it will take before a new crop of optimists is ready to begin building the share price back upward. Unfortunately, it seems for now that I underestimated the strength of the tide going out so unless I decide to bail on my position I could end up holding these shares for a while.

7 Comments – Post Your Own

#1) On March 14, 2015 at 10:14 AM, portefeuille (98.93) wrote:

For those interested in how #zzporte is doing.

#zzporte gains/losses. @zzlangerhans $TKMR $ALCLS $ISIS $ENTA $FLML $BMRN $BLUE $GNFT $VRTX $ALKS $KBIO. cash ≈ $509k.




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#2) On March 14, 2015 at 10:24 AM, byrod (< 20) wrote:

You sound like an Adam what to be.  I think you should sell.  I'll buy.

As with the first trial, Phase I, more data will be presented for Phase II as it is gathered over time.  Why wound't it be given that they certainly are following the previous trial.   I frequently wonder why you or Adam do not ask the company first for clarification to your questions before bashing the eye's and tees you or anyone can mine from verbal or written information.  My answer is, then you might run out of matterial.

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#3) On March 14, 2015 at 11:05 AM, zzlangerhans (99.58) wrote:

Thanks for the unintentional laughs and for illustrating my point about retail. Please keep buying.

Actually, I already thought it might be interesting to get Neuralstem's take on these issues. If IR responds, there will be a follow up next week.

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#4) On March 14, 2015 at 11:06 AM, zzlangerhans (99.58) wrote:

I forgot to mention this poster in my post

It's a good reference for the ALSFRS-R score and the contention that the natural history of ALS decline is one point per month.

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#5) On March 14, 2015 at 12:28 PM, zzlangerhans (99.58) wrote:

Portefeuille came up with a great analogy for the Neuralstem data which I modified a little and will present here.

Let's say you wanted to test the hypothesis that kissing rubber duckies makes them swim faster. You take 15 rubber duckies to a bridge, give them all a wet sloppy kiss, and toss them into the river. The fifteen ducks eventually reach the next bridge downstream. You label the first seven rubber duckies "affectionate" and the last eight duckies "dispassionate". You then analyze the data and conclude that the affectionate ducks swam significantly faster than the dispassionate ducks. Ergo, there is a large subset of rubber duckies whose swimming performance can be enhanced by kissing.

Hopefully, this analogy clarifies the need to have a control group of fifteen duckies that do not get kissed before being thrown into the riverbefore arriving at any conclusions about kissing rubber duckies.

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#6) On March 14, 2015 at 7:00 PM, iBioInvests (< 20) wrote:

That's too simple an analogy, one would assume any rubber duckie could float to the end of the river.

Here is a more reasonable analogy. Let's say I kiss 15 100 lbs rocks and dump them in a river; somehow, 7 float to the end of the river.

You argument is I need to dump 15 more rocks in the river, without kissing them to make sure 100 lb rocks didn't suddenly start floating.

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#7) On March 14, 2015 at 7:26 PM, zzlangerhans (99.58) wrote:

Correct. Meanwhile, you can be the first to get on the raft made out of rocks.

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