What happened

Shares of Loxo Oncology (NASDAQ:LOXO) rose over 23% today after the company released an abstract to be presented at the 2018 ASCO Annual Meeting next month that contained promising data from an ongoing phase 1 study.

The pipeline's second-leading drug candidate, LOXO-292, demonstrated a robust ability to shrink tumors in patients with cancers that harbor a genetic mutation in the RET gene. Since the mutation is a primary factor in the ability of those cancers to survive and grow, it was always a great drug target on paper. It looks like that in the clinic, too.

A person sitting on the floor using their laptop as cash money falls around them.

Image source: Getty Images.

The promising data are just the latest piece of positive news for the development stage company, which has enjoyed a 260% rise in its share price and 313% increase in its market cap in the last year alone. Wall Street is clearly excited about the potential for genetically defined cancer therapeutics -- only one part of the personalized medicine movement sweeping through the biopharmaceutical sector.

As of 12:39 p.m. EDT, the stock had settled to a 17.4% gain.

So what

The phase 1 study from which the data came is evaluating LOXO-292 as a treatment against three types of RET-mutated cancers: non-small cell lung cancer (NSCLC), papillary thyroid cancer (PTC), and medullary thyroid cancer (MTC).

The drug candidate reported an overall response rate of 52% across the patients evaluated at the cutoff date in January (that's not the cutoff date for the entire trial, just for this interim data analysis). However, LOXO-292 demonstrated an overall response rate of 69% for patients with NSCLC and PTC. Only two of 14 patients with MTC showed even a partial response, which sapped the study-wide response rate.

Now what

The fact that Wall Street is brushing off the limited response in MTC is somewhat surprising. That's because RET-mutations are present in an estimated 60% of MTC cases, but only 2% of NSCLC cases and 10% to 20% of PTC cases. While that could limit the ultimate patient population that would benefit from a drug such as LOXO-292, it's still early enough in the drug's development that analysts aren't nitpicking the early stage data.

All in all, the latest data release is just the most recent reminder that Loxo Oncology's development remains on track.

Maxx Chatsko 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.