After hours on Tuesday, Texas based development stage biotech XBiotech Inc (NASDAQ:XBIT) hit markets with the news that it was set to report data from its ongoing oncology trial at the European Society of Medical Oncology’s World Congress on Gastrointestinal Cancer. Not only that, but that the data would be positive, and relate specifically to preliminary survival in its colorectal cancer indication – an indication that is notoriously hard to treat. The data has the potential to inject some immediate upside momentum into the company’s market capitalization if it points towards a positive resolution of the pivotal trial in question. With this said, here is a look at how the drug works, and what to look out for when the company presents its data.

So, the drug in question is called Xilonix. It’s a monoclonal antibody that is part of a proprietary family of drugs that XBiotech refers to as True Human. The differentiation here is that normal antibody therapies (referred to as fully human, generally) undergo some sort of ex vivo alteration. This alteration opens them up to potential rejection by the human immune system when introduced to a patient, and as such, they require a concurrent administration of drugs that counter any potential rejection. XBiotech’s True Human antibodies don’t undergo any ex vivo alteration, and as such, don’t pose any threat of host immune system attack.

Specifically, how do they work? Xilonix is an antagonist of a protein called interleukin 1a (IL-1a).  Readers familiar with the development environment in oncology will likely already be familiar with interleukins. They are the proteins that play a role in cell growth and reproduction, and in this instance specifically, they mediate tumor growth. Through their antagonization (which just means opposition of), Xilonix aims to inhibit growth of both the tumor itself and the vascular system that enables its expansion – i.e., the blood vessels that surround the tumor.

So what did the latest announcement reveal about the upcoming data release, and what are we looking out for when we get a little bit more detail? As mentioned, we know that the data is positive from a mean overall survival perspective. It’s phase 3 data, relating to a trial with a primary endpoint of clinical response rate after eight weeks of therapy in patients with symptoms known to inversely correlate with overall survival. We don’t know to what degree the drug had an impact on survival (only that it was positive, as reported) so it’s difficult to speculate as to what chances Xilonix has come NDA submission. When the data hits, however, we will be looking for an endpoint meet of improvement in mean overall survival over the placebo arm of trial. In colorectal cancer, overall survival is high – if caught early stage. As the stages progress, however, the chances of survival at five years rapidly decline. The five-year survival at five years for advanced colorectal cancer (stage IV) is just 10%. Xilonix is targeting this subsector (i.e., the advanced patients), and so likely shouldn’t have to induce too high a level of overall survival in order to demonstrate a statistically significant improvement over current standard of care, or placebo.

With this said, chances are efficacy and tolerability will be equally important for the FDA when it comes to making a decision. Data from early-stage trials have not pointed towards any severe adverse events, and so long as XBiotech can replicate these tolerability data in this pivotal, there should be no problem going forward. If anything crops up unexpectedly, however, it could harm the drug’s chances of an agency nod come PDUFA.

So what are the near term milestones? Well, this one is moving pretty fast. The drug has accelerated approval for marketing authorization in Europe by the European Medicines Agency (EMA), and so long as the upcoming data demonstrates an improvement over current standard of care, it could get approval before the close of this year. It goes without saying, therefore, that this is the major near term upside catalyst if all runs smoothly. Of course, the data presentation will also likely inject some upside momentum into XBiotech’s market capitalization – July 2 being the date to watch.