Summit Therapeutics stock holds $44 target despite drop

On Monday, H.C. Wainwright reaffirmed a Buy rating and a $44.00 price target for Summit Therapeutics plc (NASDAQ:SMMT) shares, well above the current trading price of $23.46. According to InvestingPro data, analysts maintain a strong buy consensus with targets ranging from $30.07 to $44.19. The endorsement comes in the wake of Summit’s partner Akeso’s announcement on Friday that ivonescimab (PD-1 x VEGF) received approval for use in PD-L1-positive front-line non-small cell lung cancer (NSCLC) in China. This approval is based on the Phase 3 (HARMONi-2) study results.

Akeso also released interim analysis data from the HARMONI-2 study, indicating a 22% reduced risk of death compared to Merck (NSE:PROR)’s KEYTRUDA (pembrolizumab), with a hazard ratio (HR) of 0.777 after observing 157 patient deaths. Despite this, SMMT shares fell 36% in contrast to the flat performance of the XBI biotech index, as investors were seemingly unimpressed by the absence of statistical significance in the overall survival (OS) hazard ratio. Notably, InvestingPro analysis shows the stock has demonstrated remarkable resilience with a 507.9% return over the past year, and its beta of -0.46 indicates it often moves counter to market trends.

The interim analysis was not intended for statistical significance, and a more conclusive analysis is slated to occur after 232 and 280 deaths have been recorded in the trial. H.C. Wainwright analysts perceive the approval in China as a positive indicator for ivonescimab’s potential in the U.S. market, suggesting that the National Medical (TASE:BLWV) Products Administration (NMPA)’s decision might bode well for future FDA assessment.

The HARMONi-2 study’s OS HR of 0.777 is seen as a significant outcome for ivonescimab, although H.C. Wainwright acknowledges the need for statistical significance to bolster the probability of approval in Western markets. The firm remains steadfast in its Buy rating and 12-month price target for Summit Therapeutics, undeterred by the market’s reaction to the interim data maturity of 39%.

In other recent news, Summit Therapeutics has been in the spotlight following several key developments. The company announced that its partner, Akeso, received approval from the National Medical Products Administration in China for ivonescimab as a monotherapy for PD-L1 positive advanced non-small cell lung cancer (NSCLC). This approval is based on the HARMONi-2 Phase III study, which showed a potential 22% reduction in the risk of death compared to pembrolizumab, with a hazard ratio of 0.777. Despite this, Summit’s stock experienced a significant decline of 37% after an interim analysis did not fully reassure investors, highlighting concerns over the preliminary nature of the data. Analysts at Citizens JMP maintained a Market Outperform rating with a $40 price target, while H.C. Wainwright reaffirmed a Buy rating with a $44 price target, citing promising results from recent trials. Cantor Fitzgerald also reiterated an Overweight rating, emphasizing ivonescimab’s potential to become a new standard of care in NSCLC. Summit is actively enrolling patients in the global HARMONi-7 trial, which aims to evaluate ivonescimab against pembrolizumab with registration intent for the United States and other regions. The company continues to focus on developing ivonescimab, with multiple Phase III trials underway and several updates anticipated in the coming years.

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