Summit Therapeutics retains Buy stock rating on clinical trial

On Tuesday, Summit Therapeutics plc (NASDAQ:SMMT) shares, currently trading at $19.03, maintained its Buy rating and $44.00 price target from H.C. Wainwright, following a recent engagement with the company's management. The stock has shown remarkable momentum, delivering a 427% return over the past year.

According to InvestingPro analysis, the company's stock typically moves counter to the market with a beta of -0.87. During the J.P. Morgan Healthcare Conference held in San Francisco, CA, discussions focused on the anticipated mid-2025 outcomes for the Phase 3 HARMONi trial of ivonescimab (PD1 x VEGF) in the treatment of EGFR mutant non-small cell lung cancer (EGFRmut NSCLC) after EGFR tyrosine kinase inhibitor (TKI) therapy.

Summit Therapeutics, with a market capitalization of $14.03 billion, is in the process of integrating data from the China-based HARMONi-A study into the multi-regional HARMONi study. While the company maintains strong liquidity with a current ratio of 8.31, InvestingPro data shows it operates at a significant EBITDA loss of -$181.49 million.

Investors have expressed concern about whether ivonescimab can surpass the overall survival (OS) hazard ratio (HR) benchmark set by the MARIPOSA-2 trial of RYBREVANT (amivantimab) combined with chemotherapy, which reported a 0.73 median OS HR at 18.1 months. However, with two-thirds of the HARMONi data coming from the HARMONi-A study, which showed a 0.8 median OS HR at 17.6 months, there is a growing anticipation for the trial's readout.

Summit's management highlighted the comprehensive profile advantages of ivonescimab, pointing out that the OS HR does not fully capture its potential. They noted that the RYBREVANT plus chemotherapy combination has significant toxicity, suggesting that ivonescimab could offer a meaningful safety benefit, provided its efficacy is comparable to the existing benchmark.

The company's co-CEO and Chairman, Bob Duggan, emphasized the significance of safety from three perspectives: the patient's desire for a good quality of life, the physician's role in managing patient complaints and concerns, and the payer's interest in avoiding the costs of additional symptom management therapies—collectively referred to as "Trauma2" by Duggan.

The reiteration of the Buy rating and $44 price target by H.C. Wainwright reflects the firm's continued confidence in Summit Therapeutics' stock and its prospective treatment, ivonescimab, as it moves closer to the pivotal mid-2025 trial readout.

Trading at a Price/Book ratio of 32.05, the stock appears overvalued according to InvestingPro Fair Value metrics. Investors seeking deeper insights can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers, which includes detailed analysis of Summit's financial health, valuation metrics, and growth prospects.

In other recent news, Summit Therapeutics has been the focus of several analysts, with Truist Securities and Jefferies initiating coverage with Buy ratings and price targets of $35 and $31 respectively, based on the potential of the company's lead drug candidate, ivonescimab. JMP Securities also expressed confidence in Summit, maintaining Market Outperform rating.

Summit Therapeutics' promising Q3 2024 results highlighted a robust cash position of $487 million and an additional $235 million raised to support clinical development. The company is currently conducting several pivotal trials for ivonescimab, a drug with potential not only in lung cancer but in a larger market as well.

Recent developments include the FDA granting a fast track designation for ivonescimab for EGFR-mutated NSCLC, and the expansion of Summit's HARMONi-3 trial to include patients with non-squamous metastatic NSCLC. Furthermore, the company completed enrollment for the global HARMONi trial and expects to release top-line data by mid-2025.

Analysts from various firms have shown confidence in the company's progress, with ivonescimab demonstrating a 49% reduction in disease progression risk in NSCLC patients with high PD-L1 expression. These developments highlight the company's focus on advancing its Phase 3 trials and exploring additional indications for ivonescimab.

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