Is Summit Therapeutics a Buy, Sell, or Hold Now?

Key Points

• Shares of Summit Therapeutics recently fell in response to differences measured between Asian and Western patients who received its experimental cancer treatment.

• Ivonescimab didn't provide a statistically significant overall survival benefit, but it was close.

• Despite a big stock price drop, expectations for future ivonescimab sales are high.

• 10 stocks we like better than Summit Therapeutics ›

A rocky road for Summit Therapeutics got a lot rougher over the weekend. The company presented somewhat disappointing data for the experimental cancer drug it's developing.

When the market opened on Monday, Sep. 8, shares of the pre-commercial biotech stock had fallen 17% from the previous session's closing price. While ivonescimab's path forward isn't as clear as investors had hoped it would be, it's still a long way from hopeless.

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Let's take a closer look at the results Summit presented to see if now's a good time to buy, sell, or hold this volatile biotech stock.

Why a 33% tumor progression risk reduction is a problem for Summit Therapeutics

Summit Therapeutics' market cap spiked above $25 billion earlier this year because investors were hoping the outstanding results reported among Chinese patients could be repeated among Western patients.

In May, it looked like ivonescimab was just as effective in a global population as it was among Chinese patients. Interim results from the global Harmoni study showed that patients randomized to receive ivonescimab plus chemotherapy were 48% less likely to experience tumor growth than patients who just had chemotherapy.

Summit Therapeutics' stock is tanking now because a new analysis taken in September shows a huge difference between Asian patients and patients enrolled in the EU and North America. Among 165 Western patients enrolled, the progression-free survival benefit measured suggested a 33% risk reduction. There was a much stronger, 45% tumor-growth risk reduction among Asian patients.

Experts wanted to see a gap between Western and Asian patients that was no more than a few percentage points wide. A 12% gap is so wide that analysts now have to question the reproducibility of all the successful cancer trials from China recently.

In addition to a geographically distinct progression-free survival benefit, investors are concerned about the lack of an overall survival benefit observed so far. At a median follow-up time of 29.7 months, it looked like adding ivonescimab to standard chemo reduced patients' risk of death by 21% compared to chemo on its own. Unfortunately, the benefit measured wasn't strong enough to be considered statistically significant.

Next steps for Summit Therapeutics

Harmoni data from Asian and Western patients combined didn't show an overall survival benefit, but it was close. The overall survival benefit measured from Western patients in the global Harmoni trial appears a little stronger, which could be enough to achieve statistical significance among this subgroup.

Side effects among patients randomized to receive ivonescimab weren't much higher than the placebo group. Just 7.3% of patients on chemo plus ivonescimab discontinued treatment due to side effects compared to 5% of participants who only received chemo.

Summit licensed rights to sell ivonescimab in territories outside of China from Akeso. Summit has a decent chance to earn approval in the territories where it has a license to sell the drug, if Western regulators ignore the 12% progression-free survival difference observed between Western and Asian patients.

A 33% progression-free survival benefit observed among Western patients, in light of relatively mild side effects, seems like enough to push a new cancer treatment candidate across the finish line. Strong sales, on the other hand, aren't as easy to predict.

Time to buy, sell, or hold?

Without a clear, overall survival benefit or consistency across geographies, it's hard to imagine future sales of ivonescimab exceeding $1 billion annually in the territories where Summit is licensed to sell it.

In addition to lackluster data that could limit ivonescimab revenue, Summit Therapeutics has agreed to send Akeso a low, double-digit percentage of net sales (not profits) it generates.

Despite falling more than 24% to $19.50 per share on the morning of Sep. 8, Summit Therapeutics still boasts a huge market cap above $14 billion. That seems excessive for a company with a cancer candidate that hasn't shown a strong overall survival benefit. If we consider the royalty that Summit has agreed to pay Akeso, it's an extremely high valuation. It's probably best to watch this stock from a safe distance until after regulators and oncologists react to disappointing inconsistencies between Asian and Western patients.

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Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Summit Therapeutics. The Motley Fool has a disclosure policy.