Here's why Novogen Limited skyrocketed today

Novogen Limited (ASX:NRT) shares jumped by more than 23% during the day. Is the stock a buy?

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Novogen Limited (ASX: NRT) shares surged by as much as 23% today, hitting a high of 37.5 cents after the Australian biotech released an update on its latest experimental cancer drug-candidate, TRXE-009.

So What: In the market-sensitive announcement, Novogen said that pre-clinical data on the drug had confirmed its potential to become an important new therapy against a currently incurable paediatric brain cancer, called diffuse intrinsic pontine glioma (DIPG). As it stands, sufferers have a median survival of less than one year (whereby surgery is not an option and radiation provides only temporary relief), a statistic which has not improved over the last 50 years.

The latest study conducted by Novogen indicated that TRXE-009 kills DIPG cells at 'therapeutically relevant' concentrations, without affecting normal brain astrocytes, a cell of the central nervous system, unless a much higher concentration of the drug was given.

Now What: Investors need to remember that these are only preliminary results and, although the company is excited by its prospects, there is still a long way to go before it knows whether the drug is a complete success.

Of course, if it is a success, Novogen could deliver outstanding returns, much the same as other biotechs such as Sirtex Medical Limited (ASX: SRX) or CSL Limited (ASX: CSL) have done. But there is also a huge element of risk in investing in such stocks, meaning that Novogen is not one to consider for the more risk-averse investor.

Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned. You can follow Ryan on Twitter @ASXvalueinvest. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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