In This Article:
Key Points
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Ivonescimab is a promising cancer drug that has sent its shares soaring in the past year.
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The drug isn't approved yet, but it's involved in dozens of trials and has shown promise.
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The stock's high price tag could be a problem for investors looking for a big return.
Summit Therapeutics (NASDAQ: SMMT) has more than just a potential blockbuster cancer drug in its portfolio. Ivonescimab could be one of the best drugs to ever hit the market. This has investors excited that Summit may be one of the next big healthcare companies in the world. After all, sometimes all it takes is one huge drug to change a company's long-term prospects.
There's been no shortage of optimism around Summit of late, and if ivonescimab does come to market and proves to be a game changer for the business, that could transform its operations. Could this be an investment that possibly doubles your money within the next five years?
Why Summit Therapeutics may soar in value
The bullish case for Summit Therapeutics, and the reason the stock has been soaring in the past year, is that it's potentially sitting on a drug that could generate tens of billions in revenue. Ivonescimab performed better than one of the best cancer drugs in the world, Keytruda (which Merck owns), in a trial involving non-small cell lung cancer. It could mean a new standard of care for patients.
While ivonescimab hasn't obtained approval from regulators yet, Summit and its China-based collaboration partner, Akeso, are studying the drug in over a dozen trials. Investors are more than just a little optimistic that there will be at least some approvals forthcoming for the drug, which could not only justify Summit's $21 billion market cap but may push its valuation even higher. But that high price tag could pose a problem for investors looking to earn a significant return on the stock.
Can it reach more than $40 billion in valuation?
For Summit to double in value, its already-high market capitalization would need to soar to more than $40 billion. It's already trading at a significant value for a business that doesn't generate any consistent revenue and doesn't have an approved drug in its portfolio.
While there is hope that it may soon have at least one approval, investors shouldn't assume it's a slam dunk. There are serious question marks about ivonescimab. Most of the trials involving the drug take place in China, where there may not be a diverse enough group of participants to convince the U.S. Food and Drug Administration of how safe and effective it is.