Welll.....
Talk to your neighbor.. let her know what's going on, as nicely as possible...
If she doesn't seem to care, or anything of the sort.. then my advice is to take him in yourself.
Frankly, it is my opinion if a person can not properly care for their cat because they just do not give a darn, then they do not deserve to have the cat! (so i totally agree with K&L).

If I had a neighbor that was treating their cat this way, I have to say not even my husband would disagree about taking it in and keeping it! After all, if they treat the cat bad and leave it out in horrid weather, they really won't notice or rather CARE the cat is gone. I'd do the same thing if it was a dog! If they are being neglected, and you can do something, do it.

But again, try talking to her, find out if it's her cat, and if she knows that it's being treated this way (if it's hers I don't see how she doesn't)..and if it doesn't improve, then bring kitty into your home, bath him, comb him, and LOVE HIM!