Predicting Summit Therapeutics' Position in the Next 5 Years
Summit Therapeutics (SMMT dipping by 0.25%) has been making waves in the past couple of years, thanks to its promising pipeline candidate, ivonescimab, which could potentially be a cancer treatment. The company's shares have seen a surge of 340% since January 2023. Despite not having a single drug on the market, the biotech has a staggering market capitalization of $14 billion.
Spotting clinical-stage biotechs with market caps above $10 billion is rare. Will Summit Therapeutics meet the high expectations of investors? Let's delve into how things might unfold for the biotech over the next half-decade.
A brief glance at ivonescimab
Or rather, ivonescimab has already received approval in at least one nation: China. Akeso Biopharma, a Chinese company, was initially responsible for its development. Summit Therapeutics, however, sealed a deal with Akeso, granting them the right to commercialize ivonescimab in most nations, excluding China.
Before launching the drug, Summit Therapeutics needs to conduct trials that will be acceptable to authorities in every area. They are currently running phase 3 trials in the U.S. to push for ivonescimab's approval in the country. Summit's main focus is non-small cell lung cancer (NSCLC). In a late-stage study carried out in China, ivonescimab outperformed the market leader, Merck's Keytruda, in treating patients with first-line NSCLC with PD-L1 protein overexpression.
Summit Therapeutics' route to wealth
Summit Therapeutics' ivonescimab was awarded the "fast-track" designation by the U.S. Food and Drug Administration (FDA) for the treatment of metastatic non-squamous NSCLC. The fast-track program is designed to speed up the development of promising drugs that address critical unmet needs. Summit plans to reveal the main findings from its phase 3 study in metastatic NSCLC next year and also plans to initiate more late-stage trials.
In the following five years, the company might start numerous studies in the U.S. and reap a slew of positive results as ivonescimab targets many more indications. These results could lead to approvals and label extensions for the medicine, which is predicted to fetch well beyond $1 billion annually. Will we reach that mark by 2030?
I believe we will. Ivonescimab could secure its first approval within the next 2.5 years. Post-approval, ivonescimab's acceptance should pick up pace rather quickly. While there are challenges in relating results across borders, having data from other countries is significantly better than no data at all. Furthermore, within a couple of years, there will be more clinical-trial results from ivonescimab in both China and the U.S. The market is valuing Summit Therapeutics at unprecedented levels for a clinical-stage biotech company for a valid reason. Normally, drugmakers in this class have candidates with limited (if any) clinical data supporting their effectiveness.
Is Summit Therapeutics worth investing in?
Ivonescimab's positive phase 3 results and approval in China lessen some of the risks associated with investing in Summit Therapeutics. Consequently, the company has less room for growth as the market has already factored in some of that into the stock price. However, there's still a good deal of potential left. If ivonescimab consistently delivers positive results in clinical trials, especially those where it goes head-to-head against Keytruda (it is currently conducting such a study in the U.S.), the stock should see a boost.
Of course, there's always the risk of Summit running into clinical or regulatory obstacles, a common challenge for biotech stocks. Nevertheless, there's a strong possibility that Summit will be generating over $1 billion in annual sales by the end of the decade while still conducting numerous clinical trials for ivonescimab. The company should deliver solid returns over the next five years, making Summit Therapeutics an appealing stock to hold for the foreseeable future.
Investors may be curious about whether Summit Therapeutics can maintain its high valuation, given its lack of marketed drugs and reliance on ivonescimab. To increases its value, the company needs to successfully navigate international trial approvals and deliver positive results, particularly in head-to-head studies against renowned treatments like Merck's Keytruda. Smart investors might see this as an opportunity for substantial returns, as Summit Therapeutics continues investing money into the development of ivonescimab and explores potential new indications in the next five years.
