A 160% surge in one week, one good medicine is enough to change fate! What is Summit Therapeutics (SMMT.US)?

Climbing the hot search on US stocks! Wall Street turned out to be so crazy! In last week's US stock market, a stock named Summit Therapeutics (SMMT.US) surged unexpectedly, not only skyrocketing by 160% on its own, but also pulling up biotechnology companies like BioNTech and Instil Bio along the way. Starting from the beginning of the year, Summit Pharmaceuticals has risen from less than $3 to $31.93 at the closing of this week, with an astonishing increase of 1123.37%, and its market value has reached $23.1 billion. Whether it's the weekly or annual increase, it easily outperforms NVIDIA Corporation, and SMMT has become the hottest topic on Wall Street and a hot search for major financial media outlets in the US. What exactly is SMMT? A 1123% increase in one year, climbing to the top of US stock search In the past week, Summit has become a well-deserved star company, with its stock price soaring by 160%, and its market value has surpassed $23 billion. This leap in stock price is thanks to the announcement of the results of the HARMONi-2 study. On the evening of September 8th, at the 2024 World Lung Cancer Conference (WCLC), the results of AKESO's key pipeline product, the PD-1/VEGF bispecific antibody Ivonescimab in the HARMONi-2 study were announced. After the results were announced, SMMT's stock price surged by 55.99% overnight. Compared to Pembrolizumab (K drug), Ivonescimab can further reduce disease progression or death risk for 49% of patients (significant improvement in PFS benefit, HR 0.51), in previous combination therapies, no clinical trial had a PFS HR value lower than 0.6; Ivonescimab had a median PFS of the longest ever at 11.14 months, a 5.3-month increase from before. Previously, SMMT reported preliminary analysis data from the phase III HARMONi-2 study, which compared its investigational antibody Ivonescimab (SMT112) with Merck's blockbuster drug Keytruda (Pembrolizumab), also known in the industry as "K drug," in certain non-small cell lung cancer (NSCLC) patients. The study data showed that the drug reduced the risk of disease progression or death by nearly half compared to Keytruda. This data is consistent with the preliminary results reported by SMMT in May, where Ivonescimab treatment showed statistically and clinically significant improvement in the primary endpoint of PFS. Patients receiving SMMT treatment had a median PFS of 11.14 months, compared to 5.82 months for patients receiving the MRK drug. This difference indicates that Ivonescimab reduced the risk of disease progression or death by 49% compared to Keytruda. The overall response rate for patients treated with Ivonescimab was 50%, compared to 38.5% for those receiving Merck's drug. The disease control rate for patients receiving Ivonescimab was 89.9%, compared to 70.5% for those receiving Keytruda. SMMT and its Chinese partner AKESO recently announced positive data from their phase III HARMONi-2 study, using their PD-1/VEGF bispecific antibody Ivonescimab to treat locally advanced or metastatic non-small cell lung cancer patients with PD-L1-positive non-small cell lung cancer [NSCLC]. This is the first drug to directly compete with Merck (MRK)'s Keytruda for this patient population. In other words, Ivonescimab is the first drug in a phase III study to achieve clinically meaningful benefits over Keytruda and may benefit NSCLC patients. This bispecific antibody is becoming a very powerful drug that may ultimately capture a significant market share from Keytruda. Why are investors so optimistic? Another reason investors are watching is that this is only for PD-L1 positive tumor patients with advanced metastatic disease. There is now an opportunity to initiate another phase III trial using the drug to treat first-line PD-L1 high advanced NSCLC patients. Late-stage research of this kind is expected to begin in early 2025. The fact is, this particular clinical candidate has already succeeded in other subgroups of NSCLC patients in other combinations. Positive data show that Ivonescimab has clinical significance compared to Keytruda, plus the ability to expand the drug's use to other types of cancer patients, investors believe they can benefit from any potential gains here. Summit Therapeutics and its partner announced that they have achieved positive results in the phase III trial called HARMONi-2. This specific late-stage study compared monotherapy with Ivonescimab and monotherapy with Keytruda for NSCLC patients with PD-L1 positivity. Before discussing this specific plan and any other catalysts that may arise from it, it is important to understand what NSCLC is and what its potential market opportunities are. Lung cancer is a cancer characterized by malignant cells forming on the inner wall of the lungs. However, patients may have two types of lung cancer, classified as follows: Non-small cell lung cancer Small cell lung cancer It is worth noting that non-small cell lung cancer (NSCLC) is more common than small cell lung cancer (SCLC). In fact, NSCLC accounts for approximately 85% of all lung cancer cases. On the other hand, SCLC is said to account for about 15% of all lung cancer cases. Regardless of the type, lung cancer patients may experience the following symptoms: Chest pain Coughing up blood Cough Difficulty breathing Weight loss It is estimated that the global non-small cell lung cancer market will reach $36.9 billion by 2031. This is a very large market opportunity for Summit, but it is important to consider that it focuses on two specific patient groups with non-small cell lung cancer. One group of lung cancer patients is treated with Ivonescimab.Yagun is a patient with locally advanced and/or metastatic disease. It is said that about 70% of NSCLC patients have this type of disease at the time of diagnosis. Then, you also need to look at the proportion of patients who are PD-L1 positive. That is, the number of patients with tumor proportion scores [TPS]>1%. To assess this, it is important to note the proportion of patients with TPS<1%, which real-world studies show is about 48% of patients. Therefore, more than half of NSCLC patients will have TPS greater than 1%.BL-B02D1 Therefore, in order to understand whether monotherapy with ivonescimab can best treat Keytruda for treating locally advanced or metastatic NSCLC with TPS >1%, it allowed its partner Akeso to conduct the phase 3 HARMONi-2 study. This particular study recruited a total of 398 patients who were randomly assigned to receive intravenous ivonescimab or intravenous Keytruda over a period of 2 years. The primary endpoint of this post-study was progression-free survival [PFS]. Additionally, as part of this study, other secondary endpoints such as overall survival [OS], duration of response [DOR], and objective response rate [ORR] were also evaluated. Importantly, the primary endpoint of PFS for patients receiving this PD-1/VEGF bispecific antibody significantly exceeded the case of using Keytruda alone. The PFS for patients receiving monotherapy with ivonescimab was 11.4 months, compared to 5.82 months for patients receiving Keytruda as monotherapy. The significance of this data is that it was achieved in all NSCLC groups, regardless of whether they were high or low in PD-L1 expression, essentially across all etiologies. The issue is whether Summit's drug is clinically significant enough compared to Keytruda in terms of PFS alone, however, it was able to surpass Keytruda in the other two efficacy indicators. In other words, it achieved excellent percentages in ORR and disease control rate [DCR]. Although the positive data from the HARMONi-2 phase 3 study has led to an increase in stock price, I believe it is more important to consider the two expansion opportunities it now brings. The first expansion opportunity is the ability to extend the use of monotherapy ivonescimab to early-stage patients. What do I mean by this? Well, a milestone is expected to come early next year. Summit is expected to initiate the HARMONi-7 phase 3 trial in collaboration with partner AKESO, which will use ivonescimab to treat first-line PD-L1 high late-stage NSCLC patients. The second expansion opportunity for this clinical candidate drug is targeting cancers other than lung cancer. However, another milestone is the update of the clinical development plan for other cancers. For example, looking at its pipeline, it also uses this PD-1/VEGF bispecific antibody to target other types of cancer, such as: gynecologic tumors, liver cancer, triple-negative breast cancer, head and neck squamous cell carcinoma [HNSCC], and some others. Furthermore, ivonescimab showed benefits in all subgroups; at the same time, the safety of ivonescimab was very good. Although the results of overall survival (OS) have not been disclosed, there are many signs indicating that the future of ivonescimab is increasingly looking promising. Therefore, the market's enthusiasm for Summit continues to grow. After the data was released, Citigroup expressed appreciation for this data in a new report, recommending Summit Therapeutics as the top stock, and the new data also prompted a 56% increase in the drug developer's stock price last Monday. Citigroup analysts stated, "Summit's candidate drug 'decisively beat' Keytruda and exceeded 'nearly all clinical expectations' for the current 'gold standard immunotherapy' Keytruda, indicating it is a reliable emerging front-line drug. As a revenue pillar for Merck & Co., Inc., Keytruda has not only ushered in a new era of cancer immunotherapy but has also become the cornerstone of cancer treatment, gradually becoming one of the highest-selling drugs globally. In the first half of 2024, Keytruda's global sales reached $14.2 billion, and it is expected to exceed $30 billion for the whole year, accounting for 45% of Merck & Co., Inc.'s total revenue. Keytruda's success is due to its expanding indications, with approximately 40 indications currently approved. Therefore, Citigroup has raised its price target for the stock from $13 to $19, stating that due to the positive data and investor interest in the company, Summit is expected to continue to rise. The investment bank currently estimates that the peak sales in the US and Europe, adjusted for risks, will be around $7.8 billion, higher than the previous estimate of $5.3 billion." What is the relationship between SMMT and AKESO? So, what is the relationship between this drug and SMMT, AKESO? As early as 2022, there was an announcement: On December 6, 2022, AKESO entered into a collaboration and licensing agreement with Summit Therapeutics Inc. (NASDAQ stock code: SMMT), under which AKESO will grant Summit the exclusive license rights to develop and commercialize its breakthrough bispecific antibody ivonescimab (PD-1/VEGF, AK112) in the United States, Canada, Europe, and Japan. AKESO will retain the rights to develop and commercialize ivonescimab outside the areas licensed to Summit. In addition, AKESO will have equity in the co-branded product in the licensed territories. As an exchange condition for these rights, AKESO will receive an upfront payment of $500 million and a total deal amount of up to $5 billion, including milestone payments for product development, registration, and commercialization. The company will also receive a low double-digit percentage of net sales of ivonescimab as a royalty fee for licensing the product. Along with the execution of the licensing agreement, AKESO's Chairman, Executive Director, CEO, and President Dr. Xia Yu will be appointed as a member of the Summit board. This ivonescimab monoclonal antibody from AKESO, with a highest price of $5 billion, grants the commercialization rights in the US, Canada, Europe, and Japan markets to SMMT. There have been previous cases where Bioteching Inc. granted BL-B02D1 to BMS (Bristol-Myers Squibb Company) for a maximum of $8.4 billion, receiving an upfront payment of $800 million. Similarly, a promising innovative anti-cancer drug, this company's BL-B02D1 clinical trial progress is smooth in the first quarter of this year, and it received a substantial upfront payment, leading to a significant increase in the company's stock price.Net profit of 5 billion (the first milestone payment is included in the net profit).From these cases, it can be seen that promising innovative drugs, especially anti-cancer drugs, are very profitable, especially foreign pharmaceutical companies are willing to pay a high price to buy commercialization rights, but the premise is that there is real potential and progress, not just for fundraising stories. It is because of this announcement of the transfer that Summit's stock price has risen from $0.785 to the current $31.93 after acquiring Ivonescimab, which is a 40-fold increase, with a market value of $23.13 billion. It is worth noting that the owner Robert W. Duggan holds a 78.2% stake, with a market value of $18.01 billion, which means that Ivonescimab-related interests have brought Duggan more than $15 billion in investment returns, equivalent to over $100 billion in Chinese yuan. Founder Duggan, a legendary figure in the biopharmaceutical industry How could an American agent's market value surpass our leading innovative drug? This has left many investors puzzled. Who exactly is the founder of SMMT Duggan? Duggan started his journey of investing in stocks during college and has founded companies in household sewing tools, chain biscuit companies, computer networking companies, etc. It may be because Duggan's son suffered from tumors and passed away, that Robert entered the healthcare field in the 1990s, investing in the Siasun Robot & Automation company, Computer Motion, and serving as CEO. In 2003, he sold the company for $150 million and his personal assets reached $65 million. He later invested in the innovative drug development company, Pharmacyclis. Initially, the core drug under development at Pharmacyclis was the radiosensitizer Modafinil gadolinium (Xcytrin), which was first introduced by founder Richard Miller. In 2006, for $6.6 million, three investigational drugs including the BTK inhibitor Ibrutinib were introduced from Celera. At that time, Ibrutinib was primarily exploring self-immunity. Although it discovered Ibrutinib and recognized its potential value in treating hematological malignancies, early development issues with animal models led to slow progress and burning through too much money. Additionally, Modafinil gadolinium's FDA application for market approval i was rejected, leading to the founder's departure and Pharmacyclis stock price hitting its low in 2008, with a market value of just a few million dollars. As an excellent investor, Duggan bought more as the stock price dropped, with a stake close to 30%. He eventually took over as CEO of Pharmacyclics, accepting the advice of an expert committee to suspend the development of Xcytrin and focus on the more promising Ibrutinib. In 2011, he successfully negotiated with Johnson & Johnson for a partnership on Ibrutinib, receiving a $150 million upfront payment, while retaining the rights in the US market, laying the foundation for AbbVie's $21 billion acquisition of Pharmacyclics in 2015. Following the acquisition, Ibrutinib's revenue increased year after year, reaching its peak in 2021 and totaling $33.142 billion by the first half of 2024. Duggan invested approximately $50 million in Pharmacyclics and made a profit of $3.5 billion. At the time of the deal with AKESO, Summit's market value was only $158 million, with cash on hand of just $120 million. As the company's major shareholder and CEO, Duggan provided $500 million in cash to solve the prepayment issue, while further ensuring his absolute controlling stake in Summit, with a 78.2% shareholding. In March 2023, AKESO received the full $500 million prepayment (including $25.1 million in Summit company shares), allowing Ivonescimab to progress smoothly to the global Phase 3 clinical trials. Prior to this, AKESO had just obtained $500 million in funding from the Guangzhou High-tech Zone Group to advance the commercialization of its first PD-1/CTLA-4 dual antibody Kantani and to promote entry into major indications. How to value Summit? The excitement on Wall Street is that this result signifies a huge commercial opportunity. In addition to lung cancer, K drug approvals cover a dozen other types of cancers. According to statistics, global sales of K drugs in 2023 reached $25.11 billion, surpassing Simegluza to claim the title of "global drug king." The success of Ivonescimab not only indicates the huge potential of this drug, but also opens up the market's imagination for PD-1/VEGF bispecific antibodies - how much is a company worth with a new drug that generates billions in annual revenue? Summit management revealed that they are currently conducting over 20 clinical trials with their Chinese partners. On Thursday, Summit Pharmaceuticals announced the completion of a new $235 million financing - selling 10.3 million shares to "leading biotechnology institutions and individual qualified investors" at a price of $22.70 per share. Management and board members purchased 3.48 million shares. This news has driven another round of price increases. Summit Therapeutics and its partner AKESO are undoubtedly on the right track in developing Ivonescimab for the treatment of lung cancer patients. What I mentioned in this article is only related to the development of the drug for two NSCLC subgroups, which are first-line locally advanced or metastatic NSCLC patients with PD-L1 positivity, followed by first-line advanced NSCLC patients with high PD-L1 tumors. Since obtaining the Ivonescimab license, it has been able to initiate two additional late-stage studies. A Phase 3 trial named HARMONi is using the drug with chemotherapy from United Therapeuti.Patients with EGFR mutation, locally advanced or metastatic non-squamous NSCLC, treated with third-generation tyrosine kinase inhibitors [TKI], experienced disease progression. Another ongoing phase 3 study called HARMONi-3 is currently being conducted.This special post-trial experiment uses ivonescimab combined with chemotherapy to treat first-line metastatic squamous non-small cell lung cancer. Based on the achievements Summit and its partners have achieved so far, especially showing that monotherapy with ivonescimab can beat Keytruda in the treatment of locally advanced or metastatic NSCLC patients with positive tumor PD-L1 expression, then it can definitely ultimately capture this billion-dollar indication for non-small cell lung cancer. Investment risks Investors should be aware of some risks before investing in Summit Therapeutics. The first risk to consider is the positive data just obtained from the Phase 3 HARMONi-2 study, which used ivonescimab to treat first-line locally advanced or metastatic NSCLC patients with positive PD-L1. This is because, even though the company's drug has been shown to reduce the risk of disease progression or death by 49% compared to Keytruda, it still needs to be submitted for regulatory review. There is no guarantee that this drug will ultimately be approved as a single therapy for this specific subset of lung cancer patients. The second-risk will be the first expansion opportunity for ivonescimab, targeting first-line PD-L1-high late-stage NSCLC patients. Although using this bispecific antibody can achieve various efficacy measures when assessing multiple factors for this type of cancer, there is no guarantee that trials targeting only PD-L1 high patients will achieve similar successful cases. The third risk is the potential second expansion opportunity for ivonescimab. This is because the company will announce its plans to use this clinical candidate against other types of cancer in early 2025, which is a milestone. There is no guarantee that ivonescimab will succeed, nor that the main endpoint of another study targeting a completely different indication will be reached. The fourth risk is regulatory. This is because most trials are conducted in China. Therefore, in order to ultimately expand the range of ivonescimab for the treatment of NSCLC and other cancer patients, it may need to be conducted and completed in the United States for late-stage research. Although the use of this PD-1/VEGF bispecific antibody has obtained clinically significant data in China, this does not mean that positive results will also be achieved in the United States. This article was reprinted from the public account "US Stocks IPO", GMTEight editor: Chen Wenfang.