It wasn't an overnight three-bagger, but any day when shares of a stock are up more than 25% can be considered a good day. Shares of molecular-diagnostics developer Third Wave Technologies (Nasdaq: TWTI) received that kind of boost Wednesday, after the company reported phase 3 results for its human papillomavirus (HPV) test on Tuesday.

According to the World Health Organization, HPV is considered one of the most common sexually transmitted diseases, and it's estimated that up to 75% of Americans will have contracted the virus at some point in their lives. Unfortunately, the virus is relatively difficult to detect (especially in men), and after a woman's pap smear shows she might be infected with HPV, a very painful biopsy is often performed.

Essentially, Third Wave is developing its HPV test as an interim solution to help reduce the need for so many women to undergo this painful HPV-related biopsy. One of Third Wave's primary competitors, QIAGEN (Nasdaq: QGEN), already has an HPV test on the market.

Third Wave's press release was light on details about the clinical trial except to say that the HPV test "achieved all primary clinical endpoints" in the study. In patients who had an abnormal pap test, Third Wave's HPV test correctly diagnosed that the patient was HPV-free in more than 99% of healthy patients.

Even with vaccines like Merck's (NYSE: MRK) Gardasil and GlaxoSmithKline's (NYSE: GSK) Cervarix on the market to help prevent some forms of HPV, Third Wave estimates the market potential for HPV tests to be around $1 billion worldwide per year. The company believes that the U.S. sales opportunity for HPV tests could be $400 million to $500 million. Third Wave does have the aforementioned competition for this slice of the testing market, but with a market capitalization of only $400 million, it's easy to see why investors got excited about Third Wave's shares.

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Fool contributor Brian Lawler does not own shares of any company mentioned in this article. GlaxoSmithKline is an Income Investor pick. The Fool has an A+ disclosure policy.