Shares of Alzamend Neuro (ALZN 3.36%), a biotechnology company in the pre-clinical stage, started Friday's trading 44% higher. Investors were thrilled with the positive results of a mouse toxicology study with an experimental new Alzheimer's disease treatment called AL002.
But the early gains have steadily faded away as investors realize today's announcement isn't terribly important. The stock was up just 6.5% as of 11:46 a.m. on Friday.
Alzheimer's disease (AD) affects more than 6 million Americans, and this number is on the rise. The only treatment approved to slow the progression of this fatal disease hasn't actually proved itself effective at improving patient outcomes, so demand for new drugs like AL002 is still sky-high.
Alzamend Neuro shares are rising today in response to a positive toxicology report from a mouse study with AL002. The report basically says they couldn't find any signs of brain damage caused by AL002 90 days after the mice received their last dose.
Bad mouse toxicology reports can derail programs before they begin, but they aren't worthy of a press release. Demand for AD drugs is so high that any positive news regarding experimental treatments can send related stocks through the roof.
AL002 isn't a drug itself. It's a patented method of withdrawing white blood cells that will mature to become dendritic cells and exposing them to amyloid-beta before reintroducing them into patients. It's supposed to make the immune system extra vigilant about cleaning up amyloid fragments before they can aggregate into plaques associated with AD.
Not finding evidence of neurological damage among mice after treating them with AL002 is a necessary step on the development path. But it tells us nothing about what effect, if any, it will have on AD patient outcomes.
If Alzamend eventually proves that AL002 can stop AD patients from worsening, the stock would provide enormous returns. Until we see some evidence that says this company's unusual approach actually works for people, it's probably best to watch this ultra-risky biotech stock from a safe distance.