Neuralstem: 1000% Returns?
Neuralstem (CUR), embodies the concept of high-risk, high-return. Currently, trading for $0.28 a share, the stock is so cheap it runs the risk of being de-listed. A mere two-cent increase in the price gives a mouthwatering return of almost 8%.
CUR is a stock capable of delivering returns in excess of 1000%, if things go well, but it is just as likely to hit zero if they don't. Neuralstem is a compelling biotech stock because unlike most pre-clinical healthcare stocks; it's flagship depression treatment NSI-189 is available to the general public - on Ebay (EBAY). That is right; potential investors have the ability to actually buy NSI-189 on Ebay and have the pre-clinical drug shipped to their homes for testing.
In this article, we will explore the financial situation of Neuralstem as well as look at the unique insights the widespread availability of NSI-189 provides.
Neuralstem is a two asset biotech company with a market cap of around $30 million.
The company ran into serious trouble when the NSI-566 Phase 3 results came back disappointing.
NSI-189 is in Phase 2 and has passed safety tests. The reviews from people who have bought the drug online are remarkable. The treatment has earned a cult following, with almost no serious side effects being reported.
Here is a quote from a Reddit user who experimented with the drug:
"Day 1: Veil of depression disappears immediately after taking a dose of NSI-189 Phosphate (not sure exactly what dose my scoop is but I'm guessing 40-50 mg). I feel optimistic, happy, and with no anxiety whatsoever......
I hope I don't build tolerance, and this continues without side effects, it seems like a miracle cure so far."
Neuralstem has $13.29 million in assets, but the firm loses around $20.9 million dollars every year and has around $4.21 million in long-term debt. Thankfully, its cash position is stable, with 11.13 million in cash and liquid assets.
This stock is compelling, not only because of the evidence for its drugs efficacy, but also the potential for acquisition and the intrinsic value of the drug itself.
The global depression market is currently worth 14 billion dollars - poised to increase to 20 billion by the time NSI-189 will be ready to hit the market in 2020.
Let us pretend NSI-189 reaches only 5% of the depression market - this would be valued at $1 billion.
Phase 2 drugs only make it to market 15% of the time. Assuming the drug is a decade from reaching its apex sales number, using a discount rate of 20%, a 5x price to sales multiple, and accounting for the risk, I arrive at $125 million in value for this drug alone. Translating to around $1.25 for each share of CUR.
If we assume the chance of approval is 100% instead of 15%, the value of this stock is over 1000% higher than the current price.
Posted in ...Market Commentary