What happened

Shares of SpringWorks Therapeutics (NASDAQ:SWTX), a clinical-stage biopharmaceutical company, rose 68.7% in December, according to data from S&P Global Market Intelligence. It was a quiet month for specific news about a gamma-secretase inhibitor GlaxoSmithKline (NYSE:GSK) is developing in partnership with SpringWorks, but encouraging early results from a similar program provided the lift for SpringWorks stock. 

So what 

GlaxoSmithKline is developing belantamab mafodotin, a protein that delivers single-serving chemotherapy packages directly to tumor cells when it finds B-cell maturation antigen (BCMA) on their surface. In June, Glaxo agreed to fund early clinical-stage development of nirogacestat from SpringWorks because it could be an effective way to boost its belantamab mafodotin's efficacy.

A man in a suit touches two illuminated points on an upward-trending line suggesting a rising stock chart.

Image source: Getty Images.

Nirogacestat inhibits gamma-secretase from removing BCMA from cancerous cells, which should help belantamab mafodotin take out more cancerous targets when used in combination. We haven't seen results from the Glaxo-sponsored proof-of-concept study, but in December investigators from the National Cancer Institute presented encouraging data from a clinical trial with a different gamma-secretase inhibitor combined with another BCMA-targeting therapy.

Now what

It's good to see some human proof-of-concept results that support adding gamma-secretase inhibitors to BCMA-directed therapies in general, but it looks as if the stock market already expects a great deal of success from the SpringWorks Therapeutics pipeline specifically. At the moment, SpringWorks has a $1.5 billion market cap being supported by just two cancer drug candidates that haven't produced their own human proof-of-concept results yet.

SpringWorks licensed rights to nirogacestat and an experimental MEK inhibitor called mirdametinib from Pfizer (NYSE:PFE) in 2017. If SpringWorks' out-licensed pipeline does deliver sales, investors need to remember that Pfizer is entitled to a royalty percentage that tops out in the low 20s. With a great deal of success already baked into SpringWorks market valuation, it's probably best to watch this show from a safe distance.

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