"Alex, I'll take Biotech Shocking Surprises for $400."

"This company is the first in 40 years to develop a drug which improves upon the standard of care for elderly patients with high-risk acute myeloid leukemia."

"Oof, Alex, this is a tough one. Okay, here goes... Who is Celator Pharmaceuticals (CPXX) ?"

"That's correct! Congratulations, you're our new Biotech Jeopardy Champion!"

That's pretty much how Monday night went for Celator, except, few people, if anyone, outside of Celator would have gotten the right answer. The company is tiny, almost unknown and its leukemia drug, Vyxeos, wasn't expected to demonstrate a significant survival benefit in a phase III study.

But Vyxeos did just that, and as a result, Celator's stock price nearly quintupled in value.

Based on the positive study results, Celator expects to seek regulatory approval for Vyxeos in the U.S. and Europe later this year.

Vyxeos is an optimized reformulation of the cytarabine/daunorubicin chemotherapy cocktail (known colloquially as 7+3 after its dosing regimen) used for decades as the standard of care in elderly patients with acute myeloid leukemia, or AML, a cancer of the bone marrow which primarily affects older people.

Based on early clinical work, Celator believed Vyxeos was superior to the old cytarabine/daunorubicin, or 7+3, combination, so the company designed a straightforward phase III study to prove it. More than 300 elderly patients with secondary (high risk) AML were randomized equally to treatment with Vyxeos or the 7+3 regimen. The primary endpoint of the study was overall survival.

Celator was proven right. Treatment with Vyxeos reduced the risk of death by 31% compared to 7+3. The survival benefit favoring Vyxeos -- 3.6 months at the median -- was statistically significant, achieving the primary endpoint of the study.

There were no substantial differences in the rate of adverse events between the two arms of the study, Celator said. Within 60 days of beginning treatment, 14% of Vyxeos patients died compared to 21% of 7+3 patients.

"The overall survival advantage seen with CPX-351 [Vyxeos] compared to 7+3, along with a superior response rate and no increase in serious toxicity indicates that we'll likely have a new standard of care for treating older patients with secondary AML," said Dr. Jeffrey E. Lancet, a blood cancer specialist at the Moffitt Cancer Center and the principal investigator for the study, in a statement.

Celator believes it can achieve U.S. and European Vyxeos sales in the range of $200 million to $270 million based on the subset of AML patients enrolled in the phase III study. If use of Vyxeos is expanded into other AML patient populations, peak sales could reach $690 million to $780 million, the company estimates.

To hit those targets, Celator will need to convince insurance companies that a reformulation of two generic drugs justifies a higher, branded price. The significant survival benefit favoring Vyxeos, if it holds up, helps the company's argument.

Heading into Monday night's Vyxeos study announcement, Celator's market cap was under $60 million. (This also means Celator managed to become just the second biotech company to escape the Feuerstein-Ratain Rule.)

After dropping the Vyxeos news, Celator shares jumped 368% to $7.86 per share. At that price, the company's market cap increased to approximately $275 million.

Celator plans to sell Vyxeos in the U.S. and find a marketing partner to handle sales outside the country. The company had $24 million in cash at the end of the September 2015 quarter, enough to last into the second half of this year, according to the company's SEC filings. Celator will need more money to market Vyxeos, if the drug is approved, but whether that cash comes via dilutive stock sales or through proceeds from a marketing partnership remains to be seen.

Celator could also be an acquisition target. Japanese drug companies, in particular, have shown interest in the past in acquiring smaller blood-cancer drug companies. In 2014, Daiichi Sankyo bought Ambit BioSciences. In 2013, Otsuka acquired Astex Pharmaceuticals. The largest such deal goes back to 2008 when Takeda purchased Millennium Pharmaceuticals.

Celator developed Vyxeos with financial assistance from the Leukemia & Lymphoma Society. If Vyxeos is FDA approved, it would mark the first time LLS's direct investment in a biotech company resulted in bringing a new drug to the market. As part of its deal with Celator, LLS is entitled to royalties on sales of Vyxeos.

"From the start, LLS recognized the potential of CPX-351 [Vyxeos], so we are very gratified with the results of this clinical trial, and we are hopeful that this positive news brings us a step closer to delivering better outcomes for patients with high-risk (secondary) AML," said LLS CEO Louis DeGennaro, in a statement.

Celator plans to present more detailed data from the Vyxeos AML study at the American Society of Clinical Oncology annual meeting in June.

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.