Reportedly, Biogen (NASDAQ:BIIB) and Japanese pharmaceutical company Eisai (OTCMKTS:ESALY) achieved positive test results for their Alzheimer’s disease treatment. As you might expect, BIIB stock exploded higher on this news.

However, these are early-stage results and prospective investors should read the fine print. Besides, if the good news has already been priced in, then buying now is tantamount to chasing, which generally isn’t a recommended strategy.

Just to provide the backstory, Biogen and Eisai are co-developing a drug called lecanemab. It’s meant to treat Alzheimer’s disease, and some folks seem to be forgetting that this currently is an unapproved, experimental drug.

Don’t misunderstand – progress in the battle against Alzheimer’s disease is certainly a good thing. Yet, if you truly believe in the principle of “buy low and sell high,” then you’ll want to set your emotions aside and consider some of the unanswered questions surrounding lecanemab.

BIIB Stock Goes High – Maybe Too High

It’s funny how today’s traders can have such short attention spans. On Sept. 26, BIIB stock was out of favor as it traded near its 52-week lows. That was the day when Biogen announced a $900 million legal settlement with a whistleblower.

It wasn’t a good look for Biogen – that’s for sure. According to the U.S. Department of Justice, the lawsuit accused Biogen of “paying doctors kickbacks to prescribe multiple sclerosis drugs.” Biogen didn’t have to admit wrongdoing, but it’s hard to deny that there was reputational damage.

The very next day, financial traders all but forgot about this legal settlement. That’s because Biogen and Eisai announced the results of a clinical trial for lecanemab on Sept. 27.

BIIB stock traders went absolutely bananas, pushing the shares up by around 40% in a single trading session. One has to wonder whether they actually read the report and considered all of the implications. Most likely, many of them only read the headline and then hit the “buy” button.

Everybody Loves BIIB Stock Now, and That’s a Red Flag

Now, it seems that practically everyone has forgotten about the lawsuit settlement and jumped on the Biogen bandwagon. Contrarian, value-focused investors should already understand that chasing a stock after a one-day 40% gain isn’t necessarily a wise move to make.

After all, the financial markets are highly efficient in the 2020s. Traders and their algorithms have baked all of the current and anticipated positive news into the proverbial pie.

Besides, informed investors should always look for the details in any press release. Specifically, Ronald Petersen, director of the Mayo Clinic Alzheimer’s Disease Research Center in Rochester, Minnesota, acknowledged that the effect indicated in the lecanemab study results was “positive” but not “huge.”

Furthermore, Kristian Steen Frederiksen, director of a clinical trial unit at the University of Copenhagen, cautioned that it’s still “very early days” in determining whether lecanemab’s effects are clinically meaningful.

Even if these early-stage results were enough to convince Wall Street for a day, they might not convince the U.S. Food and Drug Administration (FDA) or the Centers for Medicare and Medicaid Services. There are still regulatory hurdles to clear; it’s never a quick or easy process, and no outcomes are guaranteed.

What You Can Do Now

As Piper Sandler analyst Christopher Raymond put it, the clinical meaningfulness of the lecanemab results “is still TBD.” Yet, even though the ultimate outcome is to be determined, traders have priced in the best-case scenario for Biogen.

In other words, they may end up being disappointed if Biogen faces obstacles along the way in getting lecanemab and/or commercialized. So, don’t feel the need to be a chaser; BIIB stock is already quite high, and you can wait for the buyers to settle down before re-evaluating the trade’s potential.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.