Shares of biotech drug firm OSI Pharmaceuticals (OSIP) soared 16 percent higher on Tuesday after a late stage trial found that its cancer pill, Tarceva, when combined with Genentech’s Avastin, extended the time patients with advanced lung cancer lived without the disease getting worse.

The study, dubbed “Atlas,” combined the two drugs and involved 1,157 patients.

The patients were initially treated with Avastin plus chemotherapy and were given Tarceva during the maintenance phase. Genentech, who conducted the trial, stopped it early after significant results were found.

Many analysts affirmed their views on OSI after news of the study was released. One Morgan Stanley analyst said the findings are “likely to lead to volume acceleration for Tarceva.”

He figures the positive results from the trial could add about $200 million to OSI’s revenue each year for the next several years. Lazard Capital Markets believes the study data and label expansion could double the potential eligible treatment population for Tarceva.

Others were more skeptical. Cowen and Co. has just a “neutral” rating on OSI because its analyst, Eric Schmidt, doubts whether there will be a large number of physicians using the combination of the two drugs as a maintenance treatment for lung cancer.

He also believes there is the threat of competition from Eli Lilly’s Alimta.

OSI is looking to gain approval for other drugs. It is in late stage testing for another cancer drug, Erlotinib, and early stage testing for several others.

The company is also working on drugs in early stage testing in areas of unmet medical needs such as diabetes and obesity. These, however, are several years away from being approved, if at all.

While the findings of the Atlas study are indeed encouraging, in this market one must think skeptically. If Mr. Schmidt is right, these shares could go back to where they came from or lower.

Currently, Tarceva is OSI’s only marketed drug. The additional revenue it brings in as a result of the study is welcome, of course, and will go a long way towards funding research and development for other compounds.

OSIP trades for six times sales and 11 times book value. There is little room for error.

This article was written by Jamie Dlugosch, contributor to InvestorPlace.com. For more actionable insight like this, go to: www.InvestorPlace.com.