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What: XBiotech (NASDAQ:XBIT) fell 33% today, after presenting phase 3 clinical trial results for its colon-cancer drug Xilonix at the 18th European Society of Medical Oncology World Congress on Gastrointestinal Cancer on Saturday.

So what: On the surface, the headline sounds so promising: "Xilonix Demonstrated Significant Clinical Response." But -- as is often the case with biotechs -- the devil is in the details.

Rather than using the standard endpoints measured in cancer clinical trials -- overall response rate, progression-free survival, or the gold standard of overall survival -- XBiotech used an endpoint that it made up called "clinical response rate" (CRR), which it says was "developed in collaboration with the European Medicines Agency (EMA) Scientific Advice Working Group." For patients to be classified as responders, they have to maintain or improve their lean body mass, and maintain or improve in at least two of the three categories of pain, fatigue, and anorexia.

XBiotech said that 33% of patients taking Xilonix experienced a CRR, compared to 19% of patients on placebo. The difference was statistically significant, but the CRR is basically measuring how well a patient feels in a somewhat arbitrary manner. It's hard to know if the difference between a 33% CRR and a 19% CRR is clinically meaningful, and XBiotech didn't release any data on tumor shrinkage or survival.

Now what: Investors will know shortly what the EMA thinks of the CRR endpoint. XBiotech has already submitted the phase 3 data to European regulators and expects to hear back as early as the fourth quarter of this year.

XBiotech is also running another phase 3 trial measuring the more traditional overall survival rate as the endpoint. That study should give a definitive result about whether Xilonix helps colon-cancer patients, but it was started in 2013 and is still enrolling patients; the original completion date was April 2014, and is now listed as December of this year.

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