Curis (Nasdaq: CRIS) investors seem to have shrugged off the multiple unknowns and embraced the potential for the company's skin cancer drug, GDC-0449, which now goes by the name vismodegib.

At one point today, shares were trading up nearly 24% on news that vismodegib had succeeded in a clinical trial. There are a few caveats, though:

  • This was a phase 2 trial.
  • Everyone in the study got vismodegib, so there's nothing to compare the response to.
  • There wasn't any data in the press release.
  • For the trial to be a success, a certain percent of patients had to see their tumors shrink, but that number wasn't specified in the announcement. If it was, we would have at least known the minimum level that vismodegib had achieved.

Those caveats aside, there are reasons to be hopeful. Vismodegib was tested in patients with advanced basal cell carcinoma, a type of skin cancer without any alternative treatments. This is a different type of skin cancer than Bristol-Myers Squibb's (NYSE: BMY) Yervoy would treat if it gains Food and Drug Administration approval this week.

Unlike survival times, using tumor shrinkage as the primary endpoint makes the uncontrolled nature of the trial a little less worrisome. Tumors don't generally spontaneously shrink. If 50% of patients saw their tumors shrink, we can assume that didn't happen by chance alone.

While the threshold for the primary endpoint wasn't announced, Curis' partner, Roche, presumably set it high enough to ensure that the FDA would approve.

Of the concerns above, the first one might be the biggest. The FDA is willing to approve drugs based solely on phase 2 data, but the accelerated approval process requires that drugs be used for diseases where there are no other treatment options. Advanced basal cell carcinoma would seem to fit the description, but that's what we thought about Roche and ImmunoGen's (Nasdaq: IMGN) trastuzumab-DM1 before the FDA refused to accept Roche's marketing application for an accelerated approval for the drug.

Curis investors should keep an eye on Seattle Genetics (Nasdaq: SGEN), which should hear shortly about whether its application for accelerated approval for brentuximab vedotin was accepted. An accepted application doesn't ensure the drug will be approved, but at least investors will know the FDA isn't being overly cautious.

At a market cap of just $250 million, Curis might be worth taking a risk on; just realize that you're investing a little blind until Roche releases the full data set.

Interested in keeping track of Curis as it tries to gain approval of vismodegib? Click here to add it to My Watchlist, which will help you keep track of all our Foolish analysis on Curis.

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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.