Expert Financial Analysis and Reporting

Key Investment Summary

The lead investigator will give an important update on the ALS phase I trial on Friday, May 17 that will have meaningful efficacy data on eight patients and safety data on fourteen. I believe that the paper will be positive based on highly encouraging results already reported for five patients. I also think that the action of the FDA, which has seen these results, in approving a phase II trial is another indicator that results will be encouraging. There will be some investor caution because there is data on only eight patients, but my judgment is that there will be a positive move in the stock following the release of this paper. I continue to be a buyer.

Background on ALS Phase I Trial

Neuralstem (CUR) has discovered and developed regionally specific neural stem cells that can be surgically implanted in the spine where they engraft in the grey matter; this product is called NSI-566. They then create synapses and release proteins that stimulate growth and functioning of surrounding neurons that have been damaged by disease or injury, thereby improving signaling to peripheral muscles. The initial phase I trial of these stem cells was in amyotrophic lateral sclerosis or ALS, a progressive and always fatal neurological disease that affects motor neurons in the spinal column. These motor neurons project their axons from the spine to control voluntary and involuntary muscle contractions throughout the body. ALS results in loss of control over bodily functions involving muscles. It usually does not affect cognition or the sensations of sight, touch, smell and taste so that mentally alert patients are trapped in a dysfunctional body.

Neuralstem has completed its first trial in humans, a 15 patient phase I trial in amyotrophic lateral sclerosis or ALS. Results of this trial have indicated that the surgical procedure used to implant the cells and the cells themselves are safe, which is the critical first step. Importantly, there have been encouraging signals of efficacy in this dreadful disease which is invariably fatal and for which there is only one approved drug; Rilutek extends life by three months or so in some younger patients, but has no effect on quality of life. Most ALS patients die within three to five years of diagnosis and during that time they suffer a horrible deterioration in quality of life. There is a desperate need for effective therapy.

Lead Investigator to Provide Update on Trial

Eva Feldman, MD, PhD is the lead investigator on Neuralstem's phase I trial. She will be presenting updated data on the trial in a presentation on May 17 ^th at the Romanian Neurological Society Congress in Bucharest, Romania. The paper is called "Recent Therapeutic Advances in Stem Cell Therapy" This will be the first update on efficacy for quite some time and could be a significant catalyst for the stock.

She will provide updates on all patients who have been treated thus far in the phase I trial. The report will be on 15 patients, three of whom received the surgery twice; Ted Harada is one of these three. The Company will probably put out a press release with a quick summary and a more detailed 8-K sometime after the speech. I am not sure if this will be on Friday May 17 or Monday May 20.

Measuring Results in ALS

One of the primary ways of measuring results for ALS clinical trials is a validated scale called the Amyotrophic Lateral Sclerosis Functional Rating Scale-Revised or ALSFRS-r. It measures the change in functionality of 12 different bodily functions: speech; salivation; swallowing; hand writing; cutting food and handling utensils; dressing and hygiene; turning in bed and adjusting bed clothes; walking; climbing stairs; shortness of breath upon exertion; shortness of breath when lying still; and respiratory insufficiency. Each item is ranked by a physician on a scale of from 4 (normal) to 0 (severely disabled) and is equally weighted in the scale. A normal person would score about 48.

ALS patients tend to decline linearly and lose about 0.9 points per month on the ALSFRS-r scale. I have been told by investigators that patients with ALS
show an inexorable steady decline as measured by ALSFRS-r. They say that stability for a month or two is very rare. If NSI-566 can show stability for several months, it would be clinically meaningful.

What We Already Know About the Phase I Trial

The phase I trial was done in three parts. The initial part treated six severely ill patients who were non-ambulatory. These were very advanced patients and there was little hope for efficacy. All received injections in the lower region of the spine or lumbar region. The goal was to show that the cells and surgeries in these first six patients treated were safe. Safety was established, but there was no signal of efficacy.

This was followed by a second part which treated six less advanced patients who were ambulatory. Injections were given in the lumbar region. One of these patients died of a heart attack which the investigator concluded was not due to the neural stem cell treatment. This left five patients for evaluation. One of these patients, Ted Harada, had an unprecedented improvement, which investigators say they haven't seen before. Mr. Harada is an active blogger who has chronicled his experience and has become a symbol of hope for the ALS community. The other four evaluable patients all had stable ALSFRS-r scores, which I took as a very strong signal of efficacy.

The third part of the trial involved six new surgeries. Three of these were done in patients who had already had surgeries, one of whom was Ted Harada. Three surgeries were done in new patients. In this phase of the trial, injections were done in both the lumbar and the cervical region of the spine. The cervical region is the site of neurons that control breathing and most ALS patients die from respiratory issues. It is hoped that these second six surgeries will provide more evidence of benefit on breathing.

These results so far in this trial that showed stability of the disease as measured by the ALSFRS-r scale in four ambulatory patients and a very impressive improvement for Mr. Harada. Six non-ambulatory patients with more advanced disease showed no improvement. Using ALSFRS-r as a measure, I will be extremely interested to see the duration of effect in these five ambulatory patients, three of whom received second surgeries and one of these was Ted Harada. There were three new patients who received surgeries for the first time.

What to Look for In Dr. Feldman's Presentation

I think that the primary focus will be on the duration of response in the five patients who showed benefit from the second part of the phase I trial; three of these went on to receive a second surgery. There will also be data on three new patients. Altogether, there will be meaningful data on eight patients. There will be a focus on the ALSFRS-r trend in these patients as well as some measures of breathing and muscle strength.