Shares of Novogen Limited (ASX: NRT) surged 34.6% this afternoon after the junior Australian/US biotechnology company said one of its drugs could become an important therapy in treating brain cancer.
So What: In an update to the market, Novogen said that one of its lead candidate products, Trilexium (TRXE-009), could destroy brain cancer cells that are otherwise resistant to chemotherapy and cause tumours to reoccur.
Tests were conducted at the Feinstein Institute for Medical Research on a group of patients suffering from glioblastoma multiform (GBM), which is a common and aggressive type of brain cancer. As quoted by the company, "All patient derived cancer cells represented in the library responded to TRXE-009 at clinically relevant doses, suggesting a strong therapeutic potential."
While the shares rose as much as 80% earlier in the afternoon to be trading at 23.5 cents, they retreated slightly to be trading at 17.5 cents, up almost 35% for the day.
Now What: Investors need to be aware of the enormous risks associated with biotechnology stocks. While some, including Sirtex Medical Limited (ASX: SRX), have come to deliver shareholders with enormous returns, others have been catastrophic failures.
While Novogen's Trilexium product could prove to be successful, investors need to weigh up these risks and only invest what they are content with losing in case things go wrong. Rather than taking an unnecessarily high level of risk on Novogen Limited, there are plenty of other great stocks you can buy today.
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