Shares of Alterity Therapeutics (NASDAQ:ATHE) — which specializes in neurodegenerative diseases and neurological disorders — are skyrocketing today. Undergirding sentiment on Monday is groundbreaking research regarding Parkinson’s disease (PD) in primates. Subsequently, ATHE stock is enjoying tremendous upside, although broader challenges remain for this otherwise extremely speculative enterprise.

According to a press release, Alterity announced promising new data on the effect of its lead drug candidate ATH434. Specifically, the biotechnology firm presented data which focused on a PD primate model during the Future of Parkinson’s Diseases Conference 2023 that took place recently in Austin, Texas. This data revealed that the “ATH434 treatment improved motor performance and general function in monkeys with experimentally induced Parkinson’s disease. The favorable impact on Parkinson’s symptoms was associated with lower iron levels in the area of pathology.”

Significantly, the treatment also increased levels of synaptophysin, “a protein marker that reflects functional connections between neurons.” Alterity CEO David Stamler said the following about the significance of the study:

“These new data are exciting because we have shown for the first time that ATH434 can reduce Parkinson’s symptoms in a higher order animal – the monkey.”

ATHE Stock Rises on Potential But Faces Significant Challenges

Providing hope for PD patients, Stamler emphasized the tangible impact that was witnessed in the clinical research. “Importantly, the improvements in motor skills and general functioning that parallel human parkinsonism were associated with reductions in iron in affected brain regions, validating the approach we are using in our ongoing clinical trials,” said the CEO.

Naturally, ATHE stock is soaring on the strong positive implications here. Nevertheless, investors need to be careful about reacting too aggressively to the news. For one thing, while ATH434 inhibits the “aggregation of pathological proteins implicated in neurodegeneration,” there is “no consensus” on the actual mechanisms that trigger aggregation, neuronal cell loss and degeneration.

Even more pressing, efforts to address neurodegenerative diseases — while progressing at a rapid pace — are still encountering tremendous obstacles. One research paper published on the National Library of Medicine’s website notes that attempts to generate a “neuroprotective therapy” for PD have “failed in humans” despite promising preclinical animal study results.

In fairness, what distinguishes Alterity from others — and what has led to the lift in ATHE stock — is its higher order animal study. However, that doesn’t take away from the decades of research that ultimately have not yielded a viable therapeutic yet.

Finally, though, ATHE stock benefits from an underlying stable balance sheet — and particularly a strong cash position relative to debt. Still, the company only carries a market capitalization of around $15 million, presenting a huge risk by itself.

Why It Matters

Within the last three months, no analyst covers ATHE stock on TipRanks. However, in early June of this year, Ladenburg Thalmann & Co. reiterated a “buy” rating on shares with a $10 price target. Should ATHE hit this mark, it would represent over 100% upside.

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On the date of publication, Josh Enomoto did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.