Ahh, the joys of biotech. One month a company is knocked down by clinical trial data, the next it's flying high, up 45% in one day.

Last month, investors gave Lexicon Pharmaceuticals (Nasdaq: LXRX) a haircut after an insanely high placebo effect washed out much of the effect of its rheumatoid arthritis drug LX2931.

Yesterday, the roller coaster was back on the upswing when the company released data on its diabetes drug LX4211. The good data overwhelmed the bad, as shares ended well above where they were before the LX2931 release.

The substantial increase is a little surprising since Lexicon had already released positive results on LX4211. In a previous trial, it  decreased hemoglobin A1c (HbA1c), a measure of blood glucose levels, and increased a protein called GLP-1 -- both excellent signs that a diabetes drug is working.

The trial data released yesterday compared a new tablet formulation with the previous liquid formulation. The tablet will be more convenient and sell better than a liquid formula, but it doesn't seem to be worthy of a 45% increase.

Brian Zambrowicz, Lexicon's chief scientific officer, told me in an interview that the trial was also used to confirm the mechanism of action of LX4211: increasing GLP-1 protein. Again, that's not exactly exploding-stock material.

Maybe investors latched onto the one new piece of data: an increase in the amount of PYY circulating in the bloodstream. PYY is a hormone that's been tested as an anti-obesity drug. Merck (NYSE: MRK) and Nastech Pharmaceutical tested it as a nasal spray, although it doesn't seem to have worked all that well in one phase 2 trial. Amylin Pharmaceuticals (Nasdaq: AMLN) is testing a compound that looks like PYY as an obesity treatment.

 If LX4211 could treat diabetics while helping patients lose weight, one of the risk factors for getting type 2 diabetes, it would make it a heck of a lot easier for Lexicon to compete with drugs already on the market such as Merck's Januvia and Onglyza from Bristol-Myers Squibb (NYSE: BMY) and AstraZeneca (NYSE: AZN).

But LX4211 is a long way from the market; the company plans to launch a phase 2b trial next quarter, and then it'll have to run multiple phase 3 trials. There's potential for a lot more dips and climbs between now and when LX4211 finally hits the market.

Grab your Pepto-Bismol. Eric Bleeker has more roller-coaster stocks for you.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool has a disclosure policy.