What happened

Shares of biotech BioVie (BIVI -7.95%) rose 15.3% in December, according to data provided by S&P Global Market Intelligence. The stock closed November at $6.74 a share. It climbed to as high as $14.38 on Dec. 16, before closing the month at $7.77.

That roller-coaster climb came after the company announced, and then explained, some results from a couple of phase 2 trials for its lead therapy, NE3107. The stock is up more than 20% over the past year.

So what

The clinical-stage biotech's stock jumped after the company announced on Dec. 5 that its candidate therapy NE3107 had shown positive results in studies on both Parkinson's disease and Alzheimer's disease. In one of the phase 2 trials, 88.9% of Parkinson's disease patients 70 or older who were treated with NE3107 in combination with levodopa (the current standard of care for Parkinson's) showed improvements of greater than 30% on their UPDRS Part 3 score -- a key measurement of motor function -- compared to just 63.6% of patients treated with levodopa alone. 

In the Alzheimer's trial, 18 of 22 patients dosed with NE3107 as a monotherapy showed improved cognition after three months compared to a baseline.

There haven't been many recent major advances in Parkinson's or Alzheimer's treatments, so the news was greeted with enthusiasm by investors. It's important to note the two trials' small sizes (45 Parkinson's patients and 22 Alzheimer's patients) mainly showed that the drug, taken orally, was safe. Phase 3 clinical trials will be conducted to determine how effective it is. The drug is different than some Alzheimer's therapies that have made news recently in that it treats inflammation rather than attempting to reduce amyloid plaques in the brain.

Now what

The news was timely for BioVie as it is struggling financially. The clinical-stage biotech isn't making revenue yet and has $21.2 million in cash on its books. In the third quarter, it lost $10.4 million, or $0.38 per share, compared to a loss of $5.5 million ($0.23 per share) in the same period a year ago. At that pace, the company will soon need additional funding, and the positive clinical trial results will make that easier to procure.

BioVie, like any clinical-stage biotech, presents a risk for investors, but it has a huge potential upside because the market for its therapy is large. According to the Parkinson's Foundation, there are nearly 1 million people in the U.S. with Parkinson's, and that number is expected to grow to 1.2 million by 2030. The Alzheimer's Association's data shows that there are more than 6 million people in the U.S. with Alzheimer's, and roughly 1 in 3 seniors die with that disease or a dementia-related disease.