Source: Revance Therapeutics

What: After reporting interim phase 2 clinical trial results suggesting that its drug may outperform Allergan's (NYSE:AGN) Botox Cosmetic, shares in Revance Therapeutics (NASDAQ:RVNC) shot higher by more than 31% earlier today.

So what: The clinical stage company is evaluating RT002 against placebo and Allergan's multibillion dollar blockbuster, and the mid stage data could suggest that RT002 does better than Botox Cosmetic at eliminating frown lines.

Specifically, the trial results show that 100% of patients who were treated with RT002 responded to the drug with at least a one point improvement on a key measurement scale at week four. That finding compares favorably to the 95% response rate for patients taking Botox Cosmetic.

Additionally, RT002 was found to be statistically better than Botox Cosmetic for duration of effect, and at week 16, far more patients taking RT002 had no or mild wrinkles according to the measurement scale than patients who received Botox Cosmetic.

Now what: There weren't any significant safety risks associated with RT002 at the interim look, so eyes now shift to final mid stage data that is expected in the first half of next year. If the final data remains robust, then a larger late stage trial could begin by the end of 2016.

Clearly, Botox's success implies that there's a big market opportunity associated with RT002, but before investors get too excited, they should remember that there's no guarantee that Revance Therapeutics phase 3 results will back up phase 2 data or if they do, that the FDA will approve it.

Investors should also know that Revance Therapeutics, while well capitalized at $149.5 million in cash exiting Q2, is spending $16.7 million per quarter on operating expenses, meaning that, absent an approved product on the market, losses will continue to mount.

Nevertheless, Revance Therapeutics believes there are multiple indications that RT002 could target within a market that it values at $3 billion annually. In August, management indicated it expects to deliver phase 3 data on another drug, RT001, for use in crow's feet in the first half of 2016.

Given the potential market opportunity for RT002 and the upcoming data on RT001, this is an intriguing company to keep an eye on -- especially for investors who can handle the risk of a clinical trial failure.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.