On Friday, Citi maintained a Buy rating on Summit Therapeutics plc (NASDAQ:SMMT) and significantly increased the price target to $13.00, up from the previous $7.00. This adjustment follows promising interim analysis results from a clinical trial involving Summit Therapeutics' drug, ivonescimab.
The trial, named HARMONi-2, is currently taking place exclusively in China and has shown that ivonescimab offers a statistically significant and clinically meaningful progression-free survival (PFS) benefit over pembrolizumab for patients with PD-L1≥1% NSCLC. This finding is considered potentially groundbreaking for the treatment of non-small cell lung cancer (NSCLC) in this subset of patients.
While the full extent of the PFS benefit, overall survival (OS) benefit, and safety profile are yet to be disclosed, the success of the HARMONi-2 trial is believed to significantly reduce the risk associated with the ongoing HARMONi-3 trial. The latter is investigating ivonescimab as a first-line treatment for squamous NSCLC.
Citi's analysis of late-stage PD-L1≥1% NSCLC trials suggests that no other drug has shown single-agent superiority over pembrolizumab, which underscores the potential of ivonescimab in the NSCLC treatment landscape. The firm anticipates that this milestone could lead to the drug's use in multiple indications where pembrolizumab is currently the standard-of-care.
The revised price target reflects an increased probability of success (PoS) for the HARMONi-3 trial to 75%, a 10% increase from previous estimates, and a projected market share for ivonescimab in squamous NSCLC to 35%. The new target price represents a 72% estimated return on after-market pricing.
InvestingPro Insights
Following Citi's optimistic outlook on Summit Therapeutics (NASDAQ:SMMT) and their revised price target, current InvestingPro data provides a broader financial perspective on the company. Summit Therapeutics' market cap stands at $7.67 billion, reflecting significant investor interest. The stock's Price/Book ratio, as of the last twelve months leading into Q1 2024, is at a high 173.39, indicating a premium valuation by the market relative to the company's book value. Furthermore, the stock has experienced a remarkable 1-year price total return of 569.94%, showcasing a strong performance trend.
In the context of the article, two InvestingPro Tips are particularly relevant. First, Summit Therapeutics' stock price has been trading near its 52-week high, currently at 97.07% of this threshold, which aligns with Citi's increased price target following the promising trial results. Additionally, the stock has been marked by high price volatility, which investors should consider when evaluating the potential risks and rewards associated with the company's shares.
For those seeking more in-depth analysis, there are additional InvestingPro Tips available that delve into various aspects of Summit Therapeutics' financial health and market performance. Subscribers can access these insights and leverage the comprehensive tools offered by InvestingPro for a more informed investment decision. Use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and explore beyond the 16 additional tips listed on the platform for Summit Therapeutics.
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