What's an early submission of a cancer drug to the European Union worth? Apparently a 60% jump in the value of Endocyte (Nasdaq: ECYT).

Ridiculous? On the surface, yes. But considering the value of Endocyte after the negative reaction investors had when the company announced survival data for its cancer drug EC145 in December, perhaps an overreaction in the other direction is warranted.

Shares of the biotech popped after it disclosed plans to submit a marketing application in Europe using its phase 2b trial. The early submission for a conditional approval, expected in the third quarter, requires positive data from Endocyte's phase 3 Proceed trial to gain full approval.

EC145 is built on Endocyte's small molecule drug conjugate platform, which is similar to Seattle Genetics' (Nasdaq: SGEN) and ImmunoGen's (Nasdaq: IMGN) antibody drug conjugate systems. Instead of an antibody to target the toxic payload to the tumor, Endocyte uses -- you guessed it -- a small molecule. Endocyte claims its small molecule targeting system has some advantages over antibodies, but only time will tell which one works better. Seattle Genetics and ImmunoGen are certainly ahead of Endocyte in the clinic and in signing up partners to use their technology.

EC145 targets the folate receptor, so it can theoretically be used in any tumors that express the protein; Endocyte is developing a companion diagnostic too. The EU application is for ovarian cancer patients that have failed platinum-based chemotherapy because that's the patient population that the phase 2b trial was tested in. The drug also seems to work in lung cancer patients.

Endocyte isn't going to make that much money selling EC145 as a second-line treatment in Europe, where prices are extremely constrained. An early approval just isn't worth that much.

But the decision to apply for the accelerated approval came after discussions with European officials, somewhat validating the data in the phase 2b trial.

And keep in mind that Endocyte is only a $200 million company after the recent jump -- not exactly expensive for a biotech with a promising cancer drug. By comparison, Exelixis (Nasdaq: EXEL), which is going after a small market but has potential for bigger things, is valued at $800 million.

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