Clinical trials to get a drug approved for new uses usually don't have the gusto that trials for the original New Drug Application have, but Pharmion (NASDAQ:PHRM) results released last week have blown the stock price through the roof. The stock has bounded 75% in the past week.

Vidaza has been approved in the U.S. for the treatment of all types of myelodysplastic syndromes (MDS) since 2004, but this was the first trial to prove that the drug not only improves patients' lives but also extends them. MDS patients have bone marrow that does not produce enough blood cells, with Carl Sagan and Eleanor Roosevelt being two well-known patients, according to the Aplastic Anemia & MDS International Foundation.

The latest phase 3 trial demonstrated that Pharmion's drug extended the median survival of high-risk MDS patients from 15 months with conventional treatments to 24.4 months with Vidaza.

Vidaza works by restarting genes that have been turned off in MDS patients. The turning-off process is seen in many cancers, so Vidaza could be used to treat them, too, but I wouldn't bet on that just yet. However, Pharmion is testing it for the treatment of acute myeloid leukemia as well as solid tumors. Those trials are still in phase 2, so it will be a while before we know whether Pharmion can expand into those markets.

Vidaza is the only drug to have shown a survival advantage in MDS patients. That pretty much guarantees that any higher-risk patients that were taking Vidaza's biggest competitor, MGI Pharma's (NASDAQ:MOGN) Dacogen, will be switching relatively soon. Unfortunately, the market isn't that big -- only 40,000-50,000 people in the United States and 75,000-85,000 people in Europe now have MDS.

Pharmion intends to seek FDA permission to expand the labeling indications for the drug, and to file a Marketing Authorization Application in the European Union for Vidaza for the treatment of higher-risk MDS by the end of the year. The latter is clearly more important, as it will open up an entirely new territory for the company.

While the results of the clinical trial seem good enough for the drug to receive marketing approval, I'm not sure if the 75% increase in stock price since the announcement is justified. Vidaza sales were almost two-thirds of total sales for the company last quarter, but I'm not convinced that the new trial will increase sales as much as investors have factored in. While it does suggest that Vidaza is quite effective and might work on other populations, turning genes back on as a treatment for cancer is a relatively new field. I think investors would be wise to wait for those results before including potential sales to cancer patients in the value of the company.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool has a disclosure policy.