Summit Therapeutics (NASDAQ:SMMT) will release its latest earnings on 6 August, while the company also has trial data released in September. This could be the catalyst for further upside.
Summit to release second-quarter earnings
Summit Therapeutics will release its second-quarter earnings and operational update on 6 August.
In its first-quarter earnings, Summit reported progress on its work with Ivonescimab (SMT112), a “potentially first-in-class antibody combining the effects of immunotherapy via a blockade of PD-1 with the anti-angiogenesis effects associated with blocking VEGF into a single molecule.”
At the annual J.P. Morgan Healthcare Conference in January 2024, the company noted the results of combining Ivonescimab with chemotherapy in cancer patients.
Summit noted a 1-year overall survival rate of 85.6%, while the 2-year overall survival rate was 64.8%.
Another study reported by the Journal of Clinical Oncology showed positive results. Investors can get more information on Ivonescimab from this video by Summit.
Analysts are bullish on upcoming trial data
Analysts at Citi are bullish on Summit Therapeutics going into the September 7-10 data for the Phase 3 HARMONi-2 trial results for Ivonescimab.
The data could “significantly de-risk the drug’s profile in non-small cell lung cancer (NSCLC) treatment,” analysts said. They added that similar PFS HR outcomes have been associated 100% rate of survival of first-line NSCLC immunotherapy trials.
In July, Summit also announced a strategic five-year collaboration with The University of Texas MD Anderson Cancer Center.
The purpose of the collaboration will be to accelerate the development of Ivonescimab, expanding trials into other cancers such as renal, skin, and breast cancer.
Financial update for Summit Therapeutics
Summit Therapeutics boosted its balance sheet in June with the announcement of a $200 million capital raise.
The company accepted an unsolicited offer from an institutional investor to purchase 22,222,222 shares of stock at $9.00 per share, for proceeds of $200 million. The company plans to use the money for the clinical development of Ivonescimab and working capital.
Within that announcement, Summit also said it had expanded its licensing territories in across the world.
The current licensed territories for Ivonescimab in its collaboration with Asian firm Akeso are Latin America, including Mexico, and all countries in Central America and South America, in addition to the Middle East and Africa. That expansion adds to the previous licenses for the United States, Canada, Japan, and Europe.
“Both parties are strengthening their bond with the intent to bring Ivonescimab to as many patients as possible around the world who can potentially benefit from this novel anti-cancer therapy,” Summit’s CEO said.
In its first-quarter earnings results, Summit Therapeutics announced cash and cash equivalents were $157.0 million on March 31, 2024.
Operating cash outflow for the three months ended March 31, 2024 and 2023 was $30.1 million and $13.1 million, respectively. R&D expenses according to GAAP were $30.9 million for the first quarter of 2024, compared to $9.9 million for the same period a year ago.
The recent $200 million inflow will show up in the coming earnings release, while management may give a positive update on Phase III trials ahead of the planned September release.
Risks to the investment thesis
As with many biotech investments, Summit Therapeutics’ upside relies heavily on the upcoming clinical trial data.
Price-to-book metrics on the company are currently 169x, according to Seeking Alpha data, which could see a heavy hit to the stock on negative results.
However, investors can use the positive results in the Phase I and II trials as a guide to how risky the potential investment is.
Conclusion
Summit Therapeutics is approaching an important Phase III trial that could see gains in the stock price. Phase I and II trials for a drug that can revolutionize chemotherapy treatment have been positive.
The company has also boosted its balance sheet with $200 million from an institutional investor to advance the treatment. The company has also boosted its upside potential with further licensing agreements, which now encompass the Americas and Europe. The company has been working closely in collaboration with Hong Kong-listed Akeso, which could mean an easy route to Asian licenses.
These recent developments in Summit look very positive and the upcoming earnings and operational update, may boost the share price ahead of the official September trial data.
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