As a stem cell company preparing to enter clinical trials in 2007, Neuralstem Inc. began trading last week on the Over-the-Counter Bulletin Board.

The Rockville, Md.-based company raised $5 million last March in a private placement, and then registered the shares to become a fully reporting public company.

"The idea of the deal was that the cash we raised, the $5 million, would get us into the clinic," said Richard Garr, Neuralstem's president and CEO. The placement included the issuance of warrants that the company could call to raise another $8.75 million. Neuralstem may call the warrants or conduct an additional financing in order to "make sure we can get through the first trial," Garr said.

The company chose to list on the OTC BB because it could raise money quickly, and it was ready to move forward with its neural stem cells of the human brain and spinal cord. Neuralstem already has completed the cGMP manufacturing and has stocked 400 clinical lab doses of its product and it has banked enough tissue to create another 1 million doses.

"We have just about completed preclinical animal work, and we didn't want to hold that up for the normal process" for going public, Garr told BioWorld Today.

The company's shares (OTC BB:NRLS) closed Thursday at $3, up 75 cents. The company has about 25.6 million shares outstanding, putting its market cap at $57.6 million.

There is a clear appetite among investors, Garr said, for stem cell research, and being a company ready to enter the clinic, Neuralstem is all the more enticing. The company is tackling some indications for which there are no cures, including spinal cord injury, Parkinson's disease and amyotrophic lateral sclerosis - or Lou Gehrig's disease.

"You have to ultimately access public markets to move the bigger indications forward," Garr said. He added that it doesn't matter which route a company takes to go public "if you have clear and compelling successes on the ground."

A paper recently published in Transplantation highlighted some of the company's research in which its neural stem cells were able to extend the life of rats with ALS. But Neuralstem intends to initially conduct human studies in ischemic spastic paraplegia - a form of paraplegia that can result from surgeries to repair aortic aneurysms.

"The idea here is to go into humans in a small manageable trial size, which means a smaller indication," Garr said, "so that we can demonstrate to the FDA that the cells are safe to humans and that they're efficacious."

Neuralstem intends to submit an investigational new drug application to the FDA for starting its first clinical trial in 2007. Garr said he expects the clinical development process to move more swiftly for neural stem cells than for traditional therapeutics because they are designed to address conditions that have no cures, but the FDA also could require numerous safety trials because the cells are a new, untested kind of therapy. In the case of paraplegics, "even if people get up and walk," Garr said, the agency likely would want solid data on long-term side effects.

Neuralstem's technology is not only able to produce commercial quantities of neural stem cells, but it can control the differentiation of the cells into mature neurons and glia. That is a key advantage the company has over other stem cell firms.

"These cells are much more physiologically relevant," Garr said. "If you think about other embryonic stem cells that people claim are out there, they're kind of blank cells."

The company does not need "cocktails of growth factors" to induce the fate of the cells, he added. "They actually already have the information in them to turn into what they're supposed to turn into."

Neuralstem intends to take its product through the clinic to regulatory filings on its own, without a partner. Small molecule drug companies often partner their products because they need the finances and credibility of a large pharmaceutical company in order to move forward with elaborate trials, Garr said. "Cell therapy is a little different. If it works, it's going to be very clear that it's working," he said.

The company also is establishing a presence in Europe, possibly the Czech republic where it has done some of its preclinical work. The European market is as large as the U.S. market, and Neuralstem plans to announce soon that it received notice that Europe will grant it one of its core patents. In the U.S., the company's first patent was issued in 1998, and another core patent received protection in 2000.

Neuralstem was founded by scientist Karl Johe, of the National Institute of Neurological Disease and Stroke, who discovered human neural stem cells. Aside from developing therapeutic products, the company also has created immortalized human neural stem cells for in vitro use in drug development.

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