Since February began, the share price of biotech startup Curis (Nasdaq: CRIS) has increased by nearly 10% -- three times as fast as the average S&P 500 stock. What's behind the run-up?

In a word: earnings. Tomorrow, Curis reports its fiscal 2010 earnings. But more important than the financial results, I suspect, will be the color behind the news. Management promises to update investors on the "hedgehog pathway inhibitor program" it's collaborating on with Genentech, and on its CUDC-101, CUDC-907, and Debio 0932 cancer treatments as well. The fate of the stock hinges on this news, but will investors like what they hear?

Bull thesis
On one hand, the "hedgehog" news is almost certain to be good. Earlier this week, Curis released results from a double-blind trial, in which 41 test subjects were treated with the Genentech/Curis drug GDC-0449 in hopes of preventing their developing basal-cell carcinoma, or BCC. Other treatments for the cancer exist, including surgical excision, laser removal, and topical creams such as Allergan's (NYSE: AGN) Tazorac, but Curis has few real competitors in this effort (although Merck (NYSE: MRK), and Infinity Pharmaceuticals (Nasdaq: INFI) are said to be doing similar work). In addition, Curis' drug sounds especially promising. In the trial, subjects treated with GDC-0449 reported developing BCC at a rate just 4% that of subjects receiving a placebo.

Impressive results, and if this drug comes to market … well, BCC is the most common cancer out there, so there's a huge potential demand.

Bear thesis
Bears, of course, will emphasize that penultimate word: "potential" -- as in a market Curis hasn't yet tapped and hasn't begun profiting from. In fact, although nominally an earnings report, tomorrow's news is unlikely to 
involve any actual earnings at all. To the contrary, most analysts predict that we'll see at least $0.06 worth of losses for Q4 and that Curis will keep losing money next year, too.

Foolish takeaway
The good news is that at last report, Curis dialed its cash burn way back, to just $1.1 million a year. With strong financial support from Genentech and $44 million tucked away in its bank accounts already, it seems likely Curis has plenty of cash to tide it over till GDC-0449 comes to market -- however long that takes.

Between now and then, though, investors should gird themselves for an extended game of press-release bingo -- and wide swings in the stock price -- as investors bet for and against Curis' prospects. With biotech start-ups, that goes with the territory.

Which way do you think Curis is heading? Head over to Motley Fool CAPS now, and tell us all about it.

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.