Humanigen (NASDAQ:HGEN) recently announced impressive results from a late-stage study of its COVID-19 antibody therapy lenzilumab. The biotech stock skyrocketed on the news but subsequently gave up some of its gains. In this Motley Fool Live video recorded on March 31, Motley Fool contributors Keith Speights and Brian Orelli talk about whether or not Humanigen stock could soar even higher going forward.

Keith Speights: Let's move on to another COVID-19 story. Earlier this week, Humanigen, the ticker there is HGEN. The company announced what appeared to be really great news from a late-stage study of its COVID-19 antibody therapy. The company said that lenzilumab, which was the antibody therapy, improved the relative likelihood of survival without need for invasive mechanical ventilation by 54% and that was the primary endpoint of the study.

This stock skyrocketed on the news initially more than doubled and intraday trading before giving up a lot of those gains, but still up a lot. Do you think Humanigen stock can soar even higher or do you think it's likely that the stock might retreat some from here after this what seems to be really good news?

Brian Orelli: Unlike the other antibody therapies that attack the virus directly, lenzilumab targets GM-CSF, which is granulocyte-macrophage colony-stimulating factor, and basically that molecule stimulates the immune system by getting an antibody to it your dampening the immune system and that's because in sicker COVID-19 patients, a lot of them are dying not from the virus directly, but from the new system overreacting to the virus and then attacking the patient's own cells or tissues.

So that's what this drug is doing is been dampening the immune system and then allowing the immune system to catch up and get rid of the virus. Their 54% improvement sounds impressive but when we're talking about going from 22.1% for placebo down to 15.6% for the drug. For every 100 people on the drug, you're saving about 6.5% from going on a ventilator. While the 54% sounds very impressive, when you look at it in relative terms, is not quite as impressive.

The other issue here is that the company used modified intent-to-treat population. The FDA typically would like to see just intent-to-treat. That would be, I was planning on treating these patients so I'm going to include them in the numbers. So they removed everybody who they were planning on treating but didn't actually get the drug.

These aren't normal times, so maybe the FDA is a little more lenient and presumably, it may depend on why the people didn't get on the drug. We have, for instance, the patients didn't go on the drug because they actually went on a ventilator and what the clinical trial was measuring was the ability to keep them off of the ventilator then that makes sense. You want to start with everybody off the ventilator at the beginning of the trial. If they went out on the ventilator when they were planning on going on trial and when they would've gotten their first dose of the drug that's reasonable.

The FDA is going to have the final say on this. But the agency has given the benefit of the doubt for a couple of Emergency Use Authorizations and has even removed them after the fact. This drug is being tested in other studies. So the FDA is going to have the ability to see that data eventually and then make a decision on it could give the EUA now, and then rescind the EUA once they get that data or use that data to give it a full approval.

I think the fact that they have another study is probably to their advantage to get the Emergency Use Authorization. Because I think the FDA will be more likely to feel like we're going to get some more data. So let's give it to the few people who might need it now and hopefully, it's helping them and if it's not, we'll figure that out later.

Speights: For investors looking to check out this stock, you might notice that Humanigen is down nearly 15% today and that this does not appear to be related to the news from their study, by the way. The company announced that they're going to conduct a stock offering. They're going to sell 5 million shares to raise a little over $92 million in gross proceeds. This is par for the course, right Brian? When a biotech has good news, take advantage of it.

Orelli: Absolutely. Raise when you can, not when you have to. Don't wait until you're out of money, raise money anytime your stock goes up. And it's annoying because they're diluting you and you're getting the stocks are going to down but you should be happy because now they're not raising money when your stock is down already and then you're diluting even more.

Speights: Right. In terms of what happens next, usually, these sell-offs as a result of stock offerings are temporary in nature and if the underlying prospects for the company are still bright, the stock is going to bounce back. But I think a lot of this just depends on some of these other studies that Humanigen has underway.

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.