The biotech space is incredibly exciting, given that companies are investing heavily to treat and prevent diseases. In fact, according to scientists, we might be in the golden age of biotechnology, making companies such as Summit Therapeutics (SMMT) top investment options right now. Several biotech players, including Summit Therapeutics, have strong drug candidates in clinical-stage trials on the cusp of approval. 

Shares of Summit Therapeutics have soared over 1,120% in 2024, valuing the company at a market cap of $22.4 billion. Let’s see if it's too late to buy this breakout biotech stock right now. 

An Overview of Summit Therapeutics

Miami-based Summit Therapeutics (SMMT) discovers, develops, and commercializes medicines to treat infectious diseases in the U.S. and Latin America. It conducts clinical programs focused on CDI or Clostridioides difficile infection.

Summit's lead product candidate is ridinilazole, an orally administered small-molecule antibiotic in Phase III clinical trials for the treatment of CDI. 

Citi is Bullish on Summit Therapeutics Stock

Shares of Summit Therapeutics more than doubled last week after its drug candidate delivered solid clinical trial data. The company recently announced for its Harmoni-2 phase 3 trial, conducted in China in partnership with Akeso, where its lung cancer drug Ivonescimab showed a better progression-free survival period than Merck's (MRK) Keytruda - the current standard for lung cancer treatment. That suggests Summit could gain significant traction in a market valued at $50 billion. 

Citi (C) identified Summit Therapeutics as a top pick after the clinical trial data for Ivonescimab, which drove the stock higher by nearly 56% in a single trading session last Monday. The data showed that the drug reduced the risk of disease progression or death by 49% compared to Keytruda. 

Noting that Summit's candidate “unambiguously delivered" what Citi described as “unprecedented” results “against the gold-standard immunotherapy” in Keytruda, the brokerage firm raised its target price for SMMT stock to $19 from $13, stating it expects Ivonescimab to report peak risk-adjusted sales of $7.8 billion in the U.S. and Europe, above its earlier estimate of $5.3 billion. 

Citi also expects increased retail attention as investors will “seek to own a name that has paradigm and practice-changing potential globally for the treatment of lung cancer and possibly other solid tumors.”

Summit Therapeutics Raises $235 Million

As Summit Therapeutics is still a pre-revenue company, it needs to raise capital to support its research and development expenses. Last week, Summit Therapeutics announced it accepted offers to raise $235 million from biotech institutional and individual investors. 

Summit said that it intends to use the net proceeds to advance the clinical development of Ivonescimab, “including in non-small cell lung cancer and in settings outside of lung cancer by leveraging the data that will be presented at ESMO, which may include, but is not limited to, colorectal cancer, and triple-negative breast cancer, in addition to working capital needs and general corporate purposes.”

Is SMMT Stock a Good Buy Right Now?

Each of the three analysts covering SMMT stock has a “strong buy” recommendation. That said, the mean target price for Summit Therapeutics stock is $24.67, while the Street-high is $30 - both of which represent a discount to Friday's closing price of $31.93.

Ivonescimab may eventually become a blockbuster drug. However, it's difficult to estimate the impact of the lung cancer candidate on the company’s revenue and earnings, making SMMT stock a higher-risk investment right now. 

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On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.