Shares of Summit Therapeutics (SMMT 3.92%) rocketed as high as 75.2% Monday, before settling into a 57.5% gain as of 1:27 PM EDT.
The biotech firm released the results of a Phase III study on Sunday at the 2024 World Conference on Lung Cancer in San Diego. The data showed its lung cancer treatment Ivonescimab outperformed Pembrolizumab, also known as Keytruda, the current standard of care from Merck (MRK 1.11%).
Aa an early-stage biotech, a potential blockbuster drug would be a huge deal to Summit. Meanwhile, Merck's shares were down marginally in Monday's trading, with Merck being a large-cap, more diversified company.
NASDAQ: SMMT
Key Data Points
Clinically significant efficacy vs. Keytruda
The Phase III trial named Harmoni-2 was held in China, in conjunction with Summit's partner Akeso. In the trial, Ivonescimab and Keytruda were administered as a monotherapy to patients with locally advanced or metastatic non-small cell lung cancer (NSCLC) whose tumors have positive PD-L1 expression. PDL-1 is a protein that prevents a body's immune system T-cells from attacking cancer cells.
In the trial, Summit's Ivonescimab achieved a median progression-free survival time of 11.14 months vs. 5.82 months for Pembrolizumab. Encouragingly, the outperformance was seen across all subgroups, including patients with low and high expressions of PDL-1, and squamous and non-squamous originations of the disease.
While there were some adverse effects in some patients that were on balance slightly higher than Pembrolizumab, the adverse side effect statistics were relatively low and in an "acceptable and manageable" range for Ivonescimab.
Summit's stock had spiked back in late May after results of an earlier trial Harmoni-A were released, which was also conducted by Summit's partner Akeso. In that trial, patients were given Ivonescimab in combination with chemotherapy, after disease progression following EGFR-TKI treatment. This was a setting in which PD-1 monoclonal antibodies had been unsuccessful in the past.
After releasing data in May showing Ivonescimab caused a reduction in disease progression in that trial, the positive Harmoni-2 trial data is only proving out Ivonescimab more and more as a potential Keytruda replacement for lung cancer treatment.
Citi makes Summit a "top pick"
The data was clearly better than analysts had anticipated, even though Summit had already made positive announcements on Ivonescimab's efficacy earlier in the year. On Monday, Citigroup analysts raised the firm's price target on Summit from $13 to $19 in light of the trial while making the stock a top pick at the firm. Not to be outdone, Stifel analyst Brad Canino raised his price target from $14 to $25, adding, "We think the 0.51 PFS HR versus Keytruda will begin to convince more investors the answer to those questions [on efficacy] is yes, and when the 2023 PD-[L]1 TAM is ~$50bn and still growing the upside potential for SMMT is significant."
With a $50 billion and growing addressable market and a market cap that was under $10 billion entering the day -- it's now over $15 billion -- no wonder Summit is making a huge move on Monday.
