Why Summit Therapeutics is up more than 60% today

Actions of Summit Therapeutics (SMMT 57.51%) rose 75.2% on Monday before settling with a 57.5% gain as of 1:27 PM EDT.

The biotech company released the results of a Phase III trial at the 2024 World Conference on Lung Cancer in San Diego on Sunday. The data showed that his lung cancer treatment Ivonescimab outperformed Pembrolizumab, also known as Keytruda, the current standard of care from Merck (MRK -2.27%).

In early-stage biotech, a potential blockbuster drug would be a huge deal for Summit. Meanwhile, Merck shares were marginally lower in trading on Monday, with Merck being a more diversified large-cap company.

Clinically significant efficacy vs. Keytruda

The phase III study called Harmoni-2 took place in China with partner Summit Akeso. In the study, Ivonescimab and Keytruda were given as monotherapy in patients with locally advanced or metastatic non-small cell lung cancer (NSCLC) whose tumors had positive expression of PD-L1. PDL-1 is a protein that prevents T cells of the body’s immune system from attacking cancer cells.

In the study, Summit’s Ivonescimab achieved a median progression-free survival time of 11.14 months versus 5.82 months for Pembrolizumab. Encouragingly, performance was seen in all subgroups, including patients with low and high PDL-1 expressions and squamous and non-squamous disease origins.

Although there were some adverse effects in some patients that were generally slightly higher than Pembrolizumab, adverse side effect statistics were relatively low and in an “acceptable and manageable” range for Ivonescimab.

Summit shares rose again in late May after the results of an earlier Harmoni-A trial, which was also led by Summit partner Akeso, were released. In that study, patients were given Ivonescimab in combination with chemotherapy after disease progression after EGFR-TKI treatment. This has been a setting in which PD-1 monoclonal antibodies have not been successful in the past.

After publishing data in May showing that Ivonescimab caused a reduction in disease progression in that study, the positive data from the Harmoni-2 study further strengthens Ivonescimab as a potential replacement for Keytruda for the treatment of lung cancer.

Citi Makes Summit a ‘Top Pick’

The data were clearly better than analysts had anticipated, even though Summit had already made positive announcements about Ivonescimab’s effectiveness earlier in the year. On monday, City Group Analysts raised the company’s price target at Summit from $13 to $19 in light of the test, making the stock a top pick at the firm. Not to be inferior, Stifel analyst Brad Canino raised his price target from $14 to $25, adding: “We think the 0.51 PFS HR versus Keytruda will start to convince more investors that the answer to these questions (regarding efficacy) is yes, and when the 2023 PD-(L) 1 TAM is around $50 billion and the increase in growth potential for SMMT is significant.”

With an addressable market of $50 billion and a growing addressable market and a market cap that was under $10 billion going into today — it’s now over $15 billion — it’s not no wonder the Summit makes a huge move on Monday.