Summit Therapeutics: What’s This Ivonescimab Rollercoaster

Summit Therapeutics (NASDAQ: SMMT) saw its stock plummet 30% on Friday, May 30th, trading at $18. This sharp drop comes despite the stock having doubled in the past year, fueled by positive news about its lung cancer drug, ivonescimab. The recent nosedive was triggered by a mixed bag of trial results. On the bright side, ivonescimab, when combined with chemotherapy, slashed the risk of disease progression or death by 48%. Plus, the company found no big differences between Asian and Western patient populations, which is a huge deal for future studies. However, the trial didn’t hit the “statistically significant” mark for overall survival – and that’s exactly what the FDA wants for approval. This understandably sent investors into a tizzy. But if you think about it, these results aren’t as bad as the market made them out to be. In fact, we think this actually brings Summit closer to FDA approval for ivonescimab, with a reduced risk of disease progression and its efficacy outside of Asia. Separately, see – Buy, Sell, or Hold HIMS Stock?

Image by u_9p7tw4noz0 from Pixabay

It’s important to remember that Summit doesn’t have any commercial products yet, and ivonescimab could be a huge money-maker. For biotech companies without products on the market, their value is all about their pipeline potential. The company has been burning through cash, with net operating losses of $226 million last year and $610 million the year before.

Despite Friday’s drop, we think Summit is still worth a look. Of course, there are risks to consider. Any bad news about its drug pipeline would hit the stock hard – Friday’s stock reaction really showed how sensitive it is to setbacks. The stock also has a history of performing poorly during market downturns, like its whopping 94% drop during the 2022 inflation shock compared to the S&P 500’s 25% decline, or its 78% fall during the 2020 Covid-19 correction versus the S&P 500’s 34% drop.

Given the recent results of ivonescimab, Summit Therapeutics could be a compelling turnaround opportunity for investors willing to weigh the risks. But, with plenty of other strong investment options out there right now, you should really think hard about whether SMMT is the right pick. See, there always remains a meaningful risk when investing in a single, or just a handful, of stocks. Consider Trefis High Quality (HQ) Portfolio which, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last four-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

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