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Neuralstem Inc. Reports Operating Results (10-Q)

November 16, 2009 | About:
10qk

10qk

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Neuralstem Inc. (CUR) filed Quarterly Report for the period ended 2009-09-30.

NEURALSTEM's patent-protected technology enables, for the first time, the ability to produce neural stem cells of the human brain and spinal cord in commercial quantities, and the ability to control the differentiation of these cells into mature, physiologically relevant human neurons and glia. The Company expects that its first Investigational New Drug application will be for the treatment of Ischemic Paraplegia, a form of paraplegia that sometimes results from the surgery to repair aortic aneurysms and for which there is no effective treatment. Neuralstem Inc. has a market cap of $58.74 million; its shares were traded at around $1.7 with and P/S ratio of 191.95.

Highlight of Business Operations:

For the third quarter of 2009, the Company reported a net loss of $5,096,983, or $0.15 per share, compared to a net loss of $3,177,957, or $0.10 per share, for the comparable 2008 period. The increase was caused by a non cash charge related to a change in the way we account for certain warrants offset in part by reductions in most other expense categories. Net loss attributable to common stockholders for the first nine months of 2009 was $7,380,751 or $0.22 per share, compared to $8,410,081, or $0.26 per share for the comparable period in 2008. The decrease in net loss from year to year was due to a year to date gain in our warrant accounting, partially offset by increases in non cash stock-based compensation expense, R&D , and legal fees.

General and administrative expenses totaled $1,191,480 for the three months ended September 30, 2009 compared to $1,400,795 for the same period of 2008. The decrease of $209,315 or 15% for the three months ended September 30, 2009 compared to the comparable period in 2008 was primarily attributable to reductions in stock option expenses of $126,087 as several early option grants were fully vested and expensed. The remaining expense decrease was spread over a wide range of categories and reflects management s ongoing efforts to manage cash consumption.

On January 1, 2009 we reclassified the fair value of common stock purchase warrants, which have exercise price reset and anti-liquidation features, from equity to liability status as if these warrants were treated as a derivative liability since their date of issue. We established a long-term warrant liability of $6.6 million to recognize the fair value of such warrants. In the three months ended March 30, 2009, the fair value of these common stock purchase warrants decreased because of a decrease in the stock price, resulting in a gain for the quarter. In the three months ended June 30, 2009, the fair value of these common stock purchase warrants increased to $3.2 million because of an increase in the stock price. We recognized a $0.5 million non-cash expense from the change in fair value of these warrants for the three months ended June 30, 2009. In the three months ended September 30, 2009 the fair value of the common stock purchase warrants increased again, due to an increase in the stock price. We recognized a $2.6 million expense for the three months ended September 30, 2009.

General and administrative expenses totaled $3,898,666 for the nine months ended September 30, 2009 compared to $3,802,673 for the same period of 2008. The increase of $95,993 or 3% for the nine months ended September 30, 2009 compared to the same period in 2008 was primarily attributable to increased litigation expenses of $115,029 and increased non-cash stock-based compensation expense of $38,737 offset by expense decreases spread over a wide range of categories and reflects management s ongoing efforts to manage cash consumption.

On January 1, 2009 we reclassified the fair value of common stock purchase warrants, which have exercise price reset and anti-liquidation features, from equity to liability classification as if these warrants were treated as a derivative liability since their date of issue. We established a long-term warrant liability of $6.6 million to recognize the fair value of such warrants. In the first quarter ended March 30, 2009, the fair value of these common stock purchase warrants decreased because of a decrease in the stock price, resulting in a gain for the quarter. In the three months ended June 30, 2009, the fair value of these common stock purchase warrants increased to $3.2 million because of an increase in the stock price. We recognized a $473,799 non-cash expense from the change in fair value of these warrants for the three months ended June 30, 2009. In the three months ended September 30, 2009, the fair value of these common stock purchase warrants increased to $5.6 million due to an increase in the stock price. We recognized a $2.6 million non-cash expense (or loss) from the change in fair value of these warrants for the three months ended September 30, 2009. The net gain for the nine month period ended September 30, 2009 is $761,178.

Total cash and cash equivalents was $2,240,715 and $5,249,805 for the nine months ended September 30, 2009 and 2008, respectively. The decrease in our cash and cash equivalents of $3,009,090 or 57% for the nine months ended September 30, 2009 compared to the same period in 2008 was primarily attributed to placement of our common equity of $2,711,211 in the first nine months of 2008 versus $1,219,510 in the first nine months of 2009.

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