Shares of Oncolytics Biotech (ONCY) surged 36% after the company had announced that the FDA has granted Orphan Drug designation for its drug Reolysin for pancreatic cancer. Oncolytics is a biotechnology company that focuses on using an environmental virus  to combat against cancers and other diseases. The company's drug is a type of reovirus -- Respiratory Enteric Orphan Virus -- that infects and destroys only cancerous cells in the patient's body. For instance the mechanism of action for Reolysin is that it targets tumors that activate a pathway known as "Ras". This is necessary because about 70% of pancreatic cancer patients exhibit this Ras pathway mutation, therefore a drug like Reolysin may be able to treat these patients.

Orphan Drug status is given to companies that treat a rare disease with a huge unmet medical need. In addition these biotech companies that achieve Orphan Drug status also get reduced tax benefits as well as longer market exclusivity after the product is approved by the FDA.

Pancreatic cancer is hardly ever detected early and spreads at an alarming rate. Pancreatic cancer is the leading cause in cancer death and has limited treatment options at the moment. The pancreas is very important for the body because it is responsible for secreting enzymes that aid in digestion of foods in addition to releasing hormones that help keep sugar levels in the body at a stabilized level.

Oncolytics had also already received Orphan Drug Status for Reolysin for ovarian cancer as well just about a week ago. The Ovarian Cancer product candidate is still in the early to mid-stage part of the trials. One trial is in a phase 1/2 trial using Reolysin alone against Ovarian Cancer and the other trial is in a phase 2 clinical trial testing Reolysin in combination with paclitaxel -- current chemotherapeutic drug -- against paclitaxel alone. The company has a long way to go to prove the efficacy of these compounds in later stage clinical trials, but for the time being this gives investors a few catalysts and incentive to buy a speculative position.