The company's shares rose 95 percent to a year-high of $1.95 in afternoon trading on the American Stock Exchange. They later pared some gains to trade at $1.40.

Results from an independent study, which used Neuralstem's cells, were published on the website of scientific journal CELL. (r.reuters.com/qeq62t)

The company said the tested rodents regained movement in all their lower extremity joints as the stem cells helped connect the broken points of the spinal cord.

"The fact that these cells induce regeneration of axons (nerve fibers) and partial recovery of motor function makes them relevant for testing for the treatment of human spinal cord injury," the company's chief scientific officer, Karl Johe, said in a statement.

The company said it has applied with U.S. health regulators for approval to test these cells in its own spinal cord injury study.

The company recently completed an 18-patient study to test the same cells, codenamed NSI-566, to treat Lou Gehrig's disease, or ALS, a condition where nerve cells of the brain and spinal cord die, hampering the body's ability to control muscle movement.

Other companies that are developing treatments for ALS include Biogen Idec Inc, Cytokinetics Inc and BrainStorm Cell Therapeutics.

(Reporting by Adithya Venkatesan and Zeba Siddiqui in Bangalore; Editing by Don Sebastian)

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