Neuralstem Inc. (NYSEMKT:CUR)

zzlangerhans (99.79) Submitted: 9/14/2012 2:41:26 AM : Start Price: $1.53 CUR Score: +15.57

Welcome to the scuzzy underbelly of biopharma, where microcap companies collude with stock manipulators under the benevolent gaze of stock blog "editors".

Neuralstem is one of the weaker sisters in the publicly traded brigade of stem cell outfits. They have recently completed dosing in a trial of "human spinal cord stem cells" injected into the lumbar and cervical spines of patients with ALS. Recruitment of eighteen patients took years and ultimately they were forced to bring three patients who had previously undergone lumbar cord injections to have cervical cord injections. Of course they have some justification for altering the protocol mid-trial but I'm fairly confident they had run out of ALS patients willing to be guinea pigs. Given that ALS is a poorly understood disease of motor neurons in the cerebral cortex as well as the spinal cord, it doesn't seem exactly intuitive that injections of spinal cord stem cells (whatever those are) into the spinal cord will solve the problem.

Neuralstem is also in the midst of a phase Ib trial of neurogenesis stimulator NSI-189 in major depression. Likewise, there's rather little evidence that generating new neurons is likely to ameliorate or cure major depression, another very poorly understood disease.

Up until now, 2012 hasn't been a very good year for Neuralstem. Multiple dilutive financings were barely keeping up with expenditures and a plummeting share price reflected the street's growing impatience. Yet another dilutive financing in mid-August brought the share price as low as 0.45. Clearly, extreme measures were indicated and I believe Neuralstem employed a strategy I've decided to call Dig! Set! Spike!

DIG! As the share price dives, something has to dive in and put the stock back in play. Enter Seeking Alpha, everyone's favorite go-to site for stock pumpery. Articles on August 27 and September 4 by "Troy Bayer", an individual with no medical/biological background whose previous focus seems to have been mining stocks. "Troy" touts the miraculous improvement of a patient from the ALS trial as reported in the lay media. Next up is "John Ford" on September 11, citing the same lay media reports of a patient's self-reported improvement. By the end of trading on September 12, the share price was back up to 1, having more than doubled form recent lows.

Are Seeking Alpha readers really that credulous or is it a game of chicken designed to see who can jump off the merry-go-round safely and who gets stuck holding the bag? I suspect the latter. While both these Seeking Alpha writers claim no business association with Neuralstem in their disclosures, I can't help but recall how that same John Ford furiously pumped the pathetic disinfectant developer Oculus on Seeking Alpha in September 2011 and disclosed no business relationship with the company http://seekingalpha.com/article/295026-oculus-shares-should-triple-from-here . However, just a few short months later Ford delivered a new ridiculous pump of Oculus and this time disclosed that he was being paid for his efforts http://seekingalpha.com/article/355091-10-billion-market-opportunity-for-oculus . So Ford either failed to disclose that he was getting paid for his original article as mandated by SEC rules, or he was using the Seeking Alpha forum to audition for an Oculus PR job much like Richard Cavalli openly did so for Ampio. Presumably, we can assume it's one or the other for Neuralstem as well. Very sleazy.

I'll also note that while Neuralstem doesn't issue its own press releases touting miraculous ALS cures, they link to such stories in the lay press and also to the Seeking Alpha pumps on their website. John Ford's article made it onto their website within 24 hours with a giddy thumbs up from a Neuralstem reviewer http://www.neuralstem.com/neuralstem-in-the-news .

SET! Around mid-day today, September 14, the company released a PR touting publication of a study demonstrating positive findings after transplantation of spinal cord stem cells in a rat model of spinal cord injury. Yawn. Aside from the multitude of miraculous rodent studies in general that never translated into approved human therapies, I've seen papers specifically addressing spinal cord injury models similar to this going back at least to the 1990's. Here's a good example http://ntp.neuroscience.wisc.edu/neuro670/reqreading/transplanted.pdf . Lots of things that work in rats just don't end up working in humans. I've seen this same ratty tactic trotted out to induce share price spikes in Prana, Stemcells, and too many other lame ass biopharmas to mention. Nevertheless, the share price rocketed as high as 1.9 today, giving smart players and insiders and Seeking Alpha contributors a great opportunity to hand off the bag to the gullible. By the end of trading, the share price was down to 1.38.

SPIKE! In the after hours, Neuralstem announced a 7M dilutive financing, revealed in the late after hours to be at a share price of 1. Ouch! Who wins? Neuralstem - they got 7M with half the dilution they would have had to endure at the share price a month ago; anyone Neuralstem paid to promote their stock; early adopters who knew or sensed the Dig and the Set coming and handed off their shares before the Spike. Who lost? You know who you are.