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What happened?

This morning, Anavex Life Sciences (NASDAQ:AVXL) announced an agreement with Biogen (NASDAQ:BIIB) concerning the latter's only clinical-stage candidate, Anavex 2-73. Biogen will conduct a laboratory study with 2-73 in cultures of cells that might play a role in multiple sclerosis, and if the results are positive it will test it in animal models. 

Does it matter? 

A disruption in the association between nervous system cell power stations and the site of protein synthesis is a common feature among neurodegenerative diseases such as multiple sclerosis and Alzheimer's. Anavex's candidate, 2-73, is thought to restore these associations by acting on sigma receptors, a process that has been well studied over the years without leading to any new drug approvals. 

To the uninitiated, Anavex's agreement with Biogen may sound like a huge development, but it isn't -- not yet. The odds of it leading to a big new drug development partnership between Anavex and Biogen are extremely long. That hasn't stopped the market from sending Anavex shares surging more than 40% this morning.

Considering Biogen's available resources, testing 2-73 in a laboratory setting is certainly worth the effort, but you should understand the vast majority of laboratory studies never result in human trials. The odds of Biogen advancing 2-73 to a stage that would lead to a big payment to Anavex are slim.  

There was no mention of any upfront cash offered by Biogen for the chance to test 2-73 in the lab, and certainly no mention of partnering with Anavex to advance its stalled Alzheimer's disease program into a costly phase 3 trial. Anavex Life Sciences has made more than a few bad moves recently. This minor deal isn't one of them, but it hardly warrants the big stock movement seen today.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.