Shares of the clinical-stage biotech Summit Therapeutics (SMMT 2.96%) are moving northward yet again today. Specifically, the drugmaker's shares were up by a handsome 18.8%, on sky-high volume, as of 12:08 p.m. ET Monday afternoon.
As a result, Summit's stock price has gained a noteworthy 30% over the prior two trading days. The biotech's stock has been shooting higher in response to a recent insider buy by CEO Robert Duggan.
This insider buy couldn't have come at a better time. Summit's share price has been under heavy pressure this year for two key reasons. First, the ongoing bear market has taken a man-with-a-hammer stance toward all cash flow-negative biotech companies in 2022. Summit, for its part, has been no exception to this industry-wide trend.
Second, the U.S. Food and Drug Administration (FDA) informed the company back in July that another phase 3 trial would be required for its Clostridioides difficile infection drug candidate, ridinilazole. Investors were none too pleased with this development, as late-stage trials are both costly and time-consuming.
In short, Summit's shareholder base clearly needed a vote of confidence following these unfortunate events. Duggan's latest stock purchase seems to have delivered on that front.
Is Summit's stock still worth buying? It all depends on your investing horizon and comfort with risk. If ridinilazole becomes a commercial-stage product, Summit's stock ought to be worth a lot more than it is today.
Speaking to this point, ridinilazole, a narrow-spectrum antibiotic, has the potential to generate hundreds of millions in sales as a new treatment option for C. difficile infection. That's an enormous commercial opportunity for a company currently valued at approximately $249 million. That being said, the company is probably a few years away from possibly gaining market access for its lead product candidate.