What happened

Shares of Summit Therapeutics (SMMT -9.90%) were skyrocketing 371.8% higher this week as of the market close on Thursday, according to data provided by S&P Global Market Intelligence. This huge gain came after the company announced on Tuesday that it's licensing bispecific antibody ivonescimab from Chinese drugmaker Akeso.

Summit will pick up the rights to market ivonescimab in the U.S., Canada, Europe, and Japan. Akeso will retain the rights to market the therapy throughout the rest of the world, including China.

Summit will pay $500 million up front. Akeso could receive payments contingent on achieving regulatory and commercial milestones of up to $4.5 billion. The Chinese biopharmaceutical company will also be eligible for low-double-digit royalties on potential net sales of the drug.

So what

Investors knew that Summit was looking to make a big deal. The company stated in its third-quarter update in September that it hoped to expand its pipeline via business development transactions.

With the biotech stock more than quadrupling in value so far this week, the deal with Akeso was clearly well received. And it should be.

Ivonescimab appears to have significant potential. The experimental therapy has already received breakthrough therapy designations in China for three lung cancer indications. Akeso is currently evaluating ivonescimab in a late-stage clinical study as a second-line treatment for non-small cell lung cancer that's positive for an epidermal growth factor receptor (EGFR) mutation.

Now what

Summit plans to move quickly with its own development efforts for ivonescimab. The company expects to begin dosing patients by the second quarter of 2023.