Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI) shareholders are having a great week this week, with the company picking up some real strength on the back of some news related to one of its lead investigative assets. At the close of play on Tuesday, Spectrum shares traded for $20.76, a 42% premium to their price at the start of play on the same day and preannouncement.

So, what happened and why is it such a big deal?

Well, the announcement was rooted in a drug called poziotinib, which Spectrum is trying to get approved in a target indication of the treatment of non-small cell lung cancer. The trial that was set up to provide the data that supports this effort, and the one that has just read out and induced the positive market response, was a phase 2 study based in the US. The recent data derived from the first 11 patients to have reported out of this study.

As is pretty standard with these sorts of oncology indication type trials, the endpoints (the efficacy endpoints, that is) were rooted in objective response rates and progression-free survival. As per the latest announcement, in the first 11 patients, the confirmed objective response rate came in at 64% and the median progression-free survival (PFS) has not been reached after a median follow-up of 6.5 months.

Both of these outcomes are positive for different reasons.

The objective response rate of 64% is strong, especially given the difficulty normally associated with treating this cancer under the current standard of care treatment regimens. The fact that the median PFS has not been reached after a follow-up of 6.5 months means that, in these patients at least, the drug looks to extend PFS beyond that generally associated with standard treatment, implying success as the child matures to completion.

For those not familiar with this treatment, poziotinib is what’s called an oral pan-HER inhibitor that irreversibly blocks signaling through the Epidermal Growth Factor Receptor (EGFR) family of tyrosine kinase receptors.

Through the blocking of this signaling, the uncontrolled proliferation of cells normally associated with cancer (and the proliferation that is at the root of the difficulty generally associated with treating cancer) is slowed or halted and it’s on this mechanism of action (MOA) that this drug (and in turn, program) rests.

And it’s not just non-small cell lung cancer that this kind of treatment could be effective for. Spectrum is also analyzing its effect across a range of other cancer types, including breast cancer, and this amplifies the impact from a sentiment perspective of any positive data resulting from each individual indication.

To put this another way, and efficacy signal in a trial set up to investigate the asset in the non-small cell lung cancer, such as that we have seen this week and as is outlined above, is a strong indicator that we will get a similar efficacy signal in other target populations. This, in turn, means that a single efficacy signal will have a larger positive impact on the company’s market capitalization than might otherwise be the case if this was the only cancer type for which Spectrum was targeting treatment.

So, what comes next?

Well, it’s important to recognize that this is just an initial data and, while it looks strong, there is still some ways to go before the company can register this trial as a success. At the time of the announcement, Spectrum reported that it intends to put out full data from the study at an upcoming medical conference and, more likely than not, this conference will prove to be the annual meeting of the American Society of Clinical Oncology (ASCO), which takes place on June 1 to June 5 in Chicago, Illinois this year.

As such, markets are now looking towards this event as the next major catalyst associated with this program.

If the full data supports that which we have seen reported as outlined above, there is a good chance we will see this company pickup further strength heading into the third quarter of this year.

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