AstraZeneca will put about $2 billion into Summit after the latter flagged in July that its cash pile was not enough to fund planned operations for a full year.
- AstraZeneca will buy newly issued convertible preferred stock valued at $18.36 per common share, nearly 19% above Monday’s close.
- After conversion, AZN would hold rights equal to about 12% of Summit’s outstanding common stock.
- The companies will test ivonescimab, Summit’s only experimental drug, with AstraZeneca’s Claudin 18.2 antibody-drug conjugate (ADC) sonesitatug vedotin.
Shares of Summit Therapeutics (SMMT) jumped in after-hours trading on Monday after AstraZeneca agreed to put $2 billion into the cancer-drug developer, sending the stock as much as 19% above its regular close.
AZN-SMMT Deal: A Premium Stake, Not A Buyout
AstraZeneca will buy newly issued convertible preferred stock valued at $18.36 per common share, nearly 19% above Monday’s close. After conversion, it would hold rights equal to about 12% of Summit’s outstanding common stock, or 10.6% fully diluted. The purchase is slated to close by week’s end.
The $2 billion does not give AstraZeneca the rights to Summit’s lead drug. It does give a pre-revenue, late-stage biotech a much larger cash buffer as it funds global late-stage clinical work and heads toward a possible first U.S. approval.
Combining SMMT, AZN Approaches To Cancer
The investment comes with combination studies, not a license. The companies will test ivonescimab, Summit’s only remaining experimental drug, with AstraZeneca’s Claudin 18.2 antibody-drug conjugate (ADC) sonesitatug vedotin. The first work will be in gastrointestinal cancers and is expected to start soon. AstraZeneca will sponsor those trials; the two sides will split costs and keep full rights to their own medicines, Summit said.
A non-binding memorandum also leaves room to pair ivonescimab with other AstraZeneca cancer drugs.
Ivonescimab is already approved in China, where it is sold by Summit’s partner Akeso. In the U.S., the Food and Drug Administration (FDA) is slated to decide on the company’s first application by Nov. 14 for the drug plus chemotherapy in certain non-small cell lung cancer patients. More late-stage studies are running in first-line lung cancer and other tumors.
Summit held $690.7 million in cash, cash equivalents, and short-term investments as of June 30, or the end of the second quarter. In July, the company said its cash pile was not enough to fund planned operations for a full year and flagged substantial doubt about going concern without more financing.
How Did SMMT Retail Traders React?
On Stocktwits, retail sentiment around SMMT stock rose from ‘bearish’ to ‘bullish’ over the past 24 hours, while message volume improved from ‘extremely low’ to ‘low’ levels.
A Stocktwits user opined that the investment alleviates concerns about capital flagged by the company in July.
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Another user expressed optimism for AstraZeneca eventually buying Summit, opining that “usually an investment this big is the first step in an acquisition.”
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SMMT stock has fallen 11% year-to-date.
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