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Summit Therapeutics Stock: Sell or Hold Before Q3 Earnings?
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Summit Therapeutics (SMMT - Free Report) is set to report third-quarter earnings on Oct. 30, before the opening bell. Since the company does not have any marketed drug in its portfolio, we do not expect it to record revenues. The Zacks Consensus Estimate for earnings is pegged at a loss of 7 cents per share.
Estimates for 2024 and 2025 loss per share have remained consistent at 27 and 29 cents, respectively, in the past 60 days. The company reported an earnings surprise of 16.67% in the last reported quarter.
Image Source: Zacks Investment Research
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Earnings Whispers on SMMT’s Upcoming Results
Our proven model does not predict an earnings beat for the stock this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not thecase here, as you will see below. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Without any approved/marketed product in its portfolio, the focus will likely be on updates related to ivonescimab, the only investigational drug in SMMT’s pipeline. The drug is being developed in collaboration with China-based Akeso, also the drug's original developer. Summit acquired an exclusive license from Akeso in 2022 to develop and market ivonescimab in the United States, Canada, Europe and Japan. The company expanded its licensing deal in June that now also covers Latin America, the Middle East and Africa.
Last month, Summit reported additional results from the HARMONi-2 study, which evaluated ivonescimab against Merck’s (MRK - Free Report) blockbuster oncology drug Keytruda in patients with locally advanced or metastatic NSCLC whose tumors have positive PD-L1 expression. Data from the study showed that the treatment with the drug cut the risk of disease progression or death by nearly half compared to Merck’s drug.
This data conforms with the initial results (reported by SMMT in May), wherein treatment with ivonescimab demonstrated a statistically significant and clinically meaningful improvement in the primary endpoint of progression-free survival.
Unlike Merck’s Keytruda, which targets the PD-1 protein, the Summit drug is a first-in-class bispecific antibody that targets two proteins, namely PD-1 and VEGF. Management believes that this dual mechanism differentiates ivonescimab from currently available therapies for solid tumors as there is a potentially higher expression of both PD-1 and VEGF in tumor tissue compared to the normal tissues in the body.
Based on HARMONi-2 results, Summit announced plans to sponsor a late-stage study called HARMONi-7 across several countries, expected to start in early 2025. This study will compare ivonescimab with Merck’s Keytruda in patients with metastatic NSCLC whose tumors have high PD-L1 expression. Based on details posted on a government website, data from this study can be expected in 2027.
Summit is currently conducting two late-stage studies, HARMONi and HARMONi-3, evaluating ivonescimab in separate settings for metastatic NSCLC indication. Earlier this month, management announced that the HARMONi study has completed enrolment. Data from the study is expected in mid-2025. The HARMONi-3 study is currently enrolling patients. Management is also exploring opportunities to expand the drug’s development across several oncology disease areas.
Investors would likely seek an update from management on the progress of the above two studies and its plans to start any other new study on the drug.
A single quarter’s results are not so important for long-term investors. Let us delve deeper to understand whether it would be a prudent move to buy, sell, or hold the stock at present.
SMMT’s Stock Price Performance & Valuation
Year to date, thestock has surged 667.4% against the industry’s 2.4% decline. The stock has also outperformed the sector and the S&P 500. Shares of the company are also currently trading above its 50-day and 200-day moving averages.
SMMT Stock Outperforms Industry, Sector & S&P 500
Image Source: Zacks Investment Research
The company is trading at a premium to the industry. Going by the price/book ratio, the stock currently trades at 74.39, trailing 12-month book value, higher than 1.33 for the industry.
Image Source: Zacks Investment Research
Our Investment Thesis on SMMT Stock
We are concerned about Summit’s dependence on just one product. Any development/regulatory setback could mar the stock’s growth prospects. Until now, all results reported by the company were from partner Akeso’s sponsored studies, which are being conducted mainly in China. The FDA is unlikely to accept results from such studies due to the absence of a diverse patient population. Summit is yet to report data from any of its sponsored studies. The data is not expected until next year.
Also, SMMT is not the only company developing a dual bispecific antibody for oncology indications. Some companies like BioNTech (BNTX - Free Report) and Instil Bio (TIL - Free Report) are also developing their respective PD-1/VEGF targeting antibody candidates, namely BNT327 and SYN-2510. While SMMT’s therapy is ahead in terms of clinical development, the BNTX and TIL candidates are not too far away. They are in early-stage or mid-stage development across multiple solid tumors. One of these candidates even carries an edge over ivonescimab. Instil Bio’s SYN-2510 has shown the potential to block both VEGF-A and VEGF-B compared to ivonescimab, which blocks only VEGF-A.
Short-Term Investors Should Sell SMMT Stock
At this point, we would advise investors to steer clear of this Zacks Rank #4 (Sell) company. Although ivonescimab is the first drug to demonstrate a clinically meaningful advantage over Keytruda in a late-stage NSCLC study, the company has its fair share of problems. It lacks a regular/stable stream of income. The stock is significantly overvalued when compared to the industry. We would recommend investors to wait and watch for a couple of pipeline updates from the company’s own sponsored studies before investing in it.
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Summit Therapeutics Stock: Sell or Hold Before Q3 Earnings?
Summit Therapeutics (SMMT - Free Report) is set to report third-quarter earnings on Oct. 30, before the opening bell. Since the company does not have any marketed drug in its portfolio, we do not expect it to record revenues. The Zacks Consensus Estimate for earnings is pegged at a loss of 7 cents per share.
Estimates for 2024 and 2025 loss per share have remained consistent at 27 and 29 cents, respectively, in the past 60 days. The company reported an earnings surprise of 16.67% in the last reported quarter.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
Earnings Whispers on SMMT’s Upcoming Results
Our proven model does not predict an earnings beat for the stock this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not thecase here, as you will see below. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Summit has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors Shaping SMMT’s Upcoming Results
Without any approved/marketed product in its portfolio, the focus will likely be on updates related to ivonescimab, the only investigational drug in SMMT’s pipeline. The drug is being developed in collaboration with China-based Akeso, also the drug's original developer. Summit acquired an exclusive license from Akeso in 2022 to develop and market ivonescimab in the United States, Canada, Europe and Japan. The company expanded its licensing deal in June that now also covers Latin America, the Middle East and Africa.
Last month, Summit reported additional results from the HARMONi-2 study, which evaluated ivonescimab against Merck’s (MRK - Free Report) blockbuster oncology drug Keytruda in patients with locally advanced or metastatic NSCLC whose tumors have positive PD-L1 expression. Data from the study showed that the treatment with the drug cut the risk of disease progression or death by nearly half compared to Merck’s drug.
This data conforms with the initial results (reported by SMMT in May), wherein treatment with ivonescimab demonstrated a statistically significant and clinically meaningful improvement in the primary endpoint of progression-free survival.
Unlike Merck’s Keytruda, which targets the PD-1 protein, the Summit drug is a first-in-class bispecific antibody that targets two proteins, namely PD-1 and VEGF. Management believes that this dual mechanism differentiates ivonescimab from currently available therapies for solid tumors as there is a potentially higher expression of both PD-1 and VEGF in tumor tissue compared to the normal tissues in the body.
Based on HARMONi-2 results, Summit announced plans to sponsor a late-stage study called HARMONi-7 across several countries, expected to start in early 2025. This study will compare ivonescimab with Merck’s Keytruda in patients with metastatic NSCLC whose tumors have high PD-L1 expression. Based on details posted on a government website, data from this study can be expected in 2027.
Summit is currently conducting two late-stage studies, HARMONi and HARMONi-3, evaluating ivonescimab in separate settings for metastatic NSCLC indication. Earlier this month, management announced that the HARMONi study has completed enrolment. Data from the study is expected in mid-2025. The HARMONi-3 study is currently enrolling patients. Management is also exploring opportunities to expand the drug’s development across several oncology disease areas.
Investors would likely seek an update from management on the progress of the above two studies and its plans to start any other new study on the drug.
A single quarter’s results are not so important for long-term investors. Let us delve deeper to understand whether it would be a prudent move to buy, sell, or hold the stock at present.
SMMT’s Stock Price Performance & Valuation
Year to date, thestock has surged 667.4% against the industry’s 2.4% decline. The stock has also outperformed the sector and the S&P 500. Shares of the company are also currently trading above its 50-day and 200-day moving averages.
SMMT Stock Outperforms Industry, Sector & S&P 500
The company is trading at a premium to the industry. Going by the price/book ratio, the stock currently trades at 74.39, trailing 12-month book value, higher than 1.33 for the industry.
Our Investment Thesis on SMMT Stock
We are concerned about Summit’s dependence on just one product. Any development/regulatory setback could mar the stock’s growth prospects. Until now, all results reported by the company were from partner Akeso’s sponsored studies, which are being conducted mainly in China. The FDA is unlikely to accept results from such studies due to the absence of a diverse patient population. Summit is yet to report data from any of its sponsored studies. The data is not expected until next year.
Also, SMMT is not the only company developing a dual bispecific antibody for oncology indications. Some companies like BioNTech (BNTX - Free Report) and Instil Bio (TIL - Free Report) are also developing their respective PD-1/VEGF targeting antibody candidates, namely BNT327 and SYN-2510. While SMMT’s therapy is ahead in terms of clinical development, the BNTX and TIL candidates are not too far away. They are in early-stage or mid-stage development across multiple solid tumors. One of these candidates even carries an edge over ivonescimab. Instil Bio’s SYN-2510 has shown the potential to block both VEGF-A and VEGF-B compared to ivonescimab, which blocks only VEGF-A.
Short-Term Investors Should Sell SMMT Stock
At this point, we would advise investors to steer clear of this Zacks Rank #4 (Sell) company. Although ivonescimab is the first drug to demonstrate a clinically meaningful advantage over Keytruda in a late-stage NSCLC study, the company has its fair share of problems. It lacks a regular/stable stream of income. The stock is significantly overvalued when compared to the industry. We would recommend investors to wait and watch for a couple of pipeline updates from the company’s own sponsored studies before investing in it.