What happened

Shares of Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI), a biopharmaceutical company primarily focused on cancer and blood-based disorders, are rising in response to some surprising early stage data for a potential new lung cancer drug. Although there isn't much data to chew on, data that suggests poziotinib could become king of an important drug class has lifted the stock 18.6% as of 12:37 a.m. EDT Wednesday.

So what 

Drugs that dial back epidermal growth factor receptor (EGFR) activity such as Erbitux and Tarceva are blockbuster drugs and more recent launches that focus on specific mutations that increase EGFR activity are following in their footsteps. Tagrisso targets a specific mutation, called T790, that makes tumors resistant to Erbitux and Tarceva. It's a limited population, but the drug is already on pace to reach the $1 billion in annual sales threshold this year, its second full year post-approval. Investors are pushing up Spectrum shares because it looks like the company has a fancy new drug candidate that inhibits EGFR activity caused by a family of genetic aberrations that often occur along exon 20 of the EGFR gene.

Cash money raining down on a person looking at her phone and making a triumphant gesture.

Image source: Getty Images.

Poziotinib was much better than Tagrisso and other recent EGFR inhibitors at limiting activity related to mutations that occur along exon 20, in a test tube setting. The company has already given the drug to eight patients with advanced stage exon 20 mutation-positive lung cancer, and two have been examined for disease activity after eight weeks of treatment. Both exhibited a "dramatic response" to the therapy. Poziotinib also shrank tumors for a third patient that isn't in the trial after just three weeks of therapy.

Now what

It is extremely unusual to see a company tack about $170 million onto its market cap in response to pre-clinical data. That said, poziotinib's ability to quickly shrink tumors for three out of three patients with advanced stage lung cancer certainly suggests the company is onto something big.

The data released on Wednesday was current as of June 21, 2017, the submission deadline for the scientific conference where Spectrum will present the results in greater detail. If poziotinib can continue its tumor response streak past three patients, the stock could jump higher still.

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.