This Stock Crushes Nvidia’s Performance This Year: Is It Too Late To Buy?

Few companies have attracted more attention this year than Nvidia. The chipmaker is on a roll thanks to the rapid growth of artificial intelligence, and its revenue, earnings and stock price continue to grow incredibly fast. Nvidia shares are up 137% this year.

Some companies fared even better, including one many investors have never heard of: Summit Therapeutics (SMMT 5.31%). The biotech’s performance this year makes Nvidia look mediocre: Summit shares are up nearly 900% year to date.

What exactly drives this performance? Is Summit Therapeutics stock still attractive? Let’s find out.

SMMT data by YCharts.

Summit faces a giant

The summit focuses on the development of cancer drugs. As is usually the case when a drugmaker grows so quickly, it owes its recent course to excellent clinical progress related to its lead candidate, ivonescimab.

Originally developed by a China-based company called Akeso, Summit struck a deal with the former to license the drug in select countries, including the US, in exchange for an upfront payment, potential development milestones, and sales and royalties. Ivonescimab is already approved in China for a certain type of lung cancer.

It recently approved a phase 3 clinical trial in the country in treating another variant of non-small cell lung cancer (NSCLC). Ivonescimab was put against MerckKeytruda, the standard of care in NSCLC and last year’s best-selling drug in the world, in this phase 3 study.

In the study, ivonescimab led to a median progression-free survival of 11.14 months, compared with Keytruda’s 5.82 months. It also reduced the risk of disease progression or death by 49% compared to Keytruda and published a similar safety profile.

According to Summit, ivonescimab is the first drug to show better clinical results than Keytruda in a phase 3 trial in NSCLC.

The potential of ivonescimab

Although Keytruda has gained dozens of indications worldwide, NSCLC is undoubtedly one of the biggest drivers of growth. According to the World Health Organization, lung cancer was the second most common cancer in the world in 2020. However, it was the leading cause of cancer death.

About 85% of lung cancer cases are NSCLC. In 2017, about 40% of Keytruda’s sales came from the various indications it won in treating NSCLC, although that is likely to have changed as the drug’s indications have expanded.

But using that as a benchmark, and given that Keytruda generated $25 billion in sales last year, about $7-10 billion could have come from NSCLC indications. Ivonescimab, if approved in the US, Canada, Japan and other countries where Summit holds the licensing rights, could capture much of that revenue and funnel it back into Summit’s finances.

The drug is also being investigated in other indications, including colorectal cancer, the second leading cause of cancer death in the world.

Is Summit a buy?

There’s no doubt that Summit has a winner in ivonescimab, a drug that could become a “pipeline within a drug” just like Keytruda. The problem for investors is that the market has already priced some of ivonescimab’s success into the stock. Despite not having a single drug on the market, the company is worth $17 billion. The stock could fall off a cliff at these levels if something goes wrong with its top contender.

The good news is that funding probably won’t be a problem. Summit ended the second quarter with $325.8 million in cash and cash equivalents, which the company said could help carry its operations through the fourth quarter of 2025. Since then, it has raised even more money, capitalizing on the recent success of ivonescimab.

Summit Therapeutics looks a little risky, but ivonescimab’s potential makes it worthwhile for biotech investors who can stomach the risk. If the company can continue to post ivonescimab-related earnings, the stock could be very profitable over the long term.