On May 11, 2023 Summit Therapeutics Inc. (NASDAQ: SMMT) ("Summit," "we," or the "Company") reported its financial results and provided an update on operational progress for the first quarter ended March 31, 2023 (Press release, Summit Therapeutics, MAY 11, 2023, View Source [SID1234631615]).
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Operational & Corporate Updates
Our Collaboration and License Agreement with Akeso Inc. (Akeso) for ivonescimab:
On December 5, 2022, Summit and Akeso entered into a Collaboration and License Agreement for ivonescimab, Akeso’s innovative, potentially first-in-class bispecific antibody combining the effects of immunotherapy via a blockade of PD-1 with the anti-angiogenesis effects associated with blocking VEGF into a single molecule.
The Collaboration and License Agreement with Akeso closed on January 17, 2023 after going effective following customary waiting periods.
Summit received the rights to develop and commercialize ivonescimab (SMT112) in the United States, Canada, Europe, and Japan. Akeso retained development and commercialization rights for the rest of the world, including China.
In exchange for these rights, Summit committed to an upfront payment of $500 million, which was paid in two installments.
The first installment worth $300 million was paid in January in conjunction with the closing of the transaction. Of the $300 million paid to Akeso by Summit, Akeso opted, in accordance with the Collaboration and License Agreement, to receive 10 million shares in lieu of a cash payment of $25.1 million; the remaining $274.9 million was paid by Summit to Akeso in cash.
The second installment of $200 million was paid on March 6, 2023 in cash.
Going forward, Akeso will be eligible to receive regulatory and commercial milestones of up to $4.5 billion. In addition, Akeso will receive low double-digit royalties on net sales in the Summit territories.
Summit is actively engaged in development activities for SMT112, including holding multiple meetings with the US Food & Drug Administration (FDA) regarding its planned Phase III clinical program and incorporated this feedback accordingly. Summit will start its clinical development in non-small cell lung cancer (NSCLC) in the following indications:
Ivonescimab combined with chemotherapy in patients with epidermal growth factor receptor (EGFR)-mutated, locally advanced or metastatic non-squamous NSCLC who have progressed after treatment with a third-generation EGFR tyrosine kinase inhibitor (TKI) ("HARMONi" trial)
Ivonescimab combined with chemotherapy in first-line metastatic squamous NSCLC patients ("HARMONi-3" trial)
In May 2023, the first patient was treated in the Phase III HARMONi clinical trial.
Summit intends to dose patients in the HARMONi-3 trial during the second half of 2023.
Akeso has a rich and diversified antibody drug pipeline with over 30 internally discovered drug candidates in various stages of development, including six bispecific antibodies. Akeso has taken part in over 80 clinical trials for 17 drug candidates, including 14 pivotal trials. Akeso has two drugs approved for oncology indications in China: a PD-1 inhibitor, and novel PD-1 / CTLA-4 bispecific antibody. Akeso has over 2,400 employees.
In January 2023, upon the closing of the Collaboration and License Agreement, Yu (Michelle) Xia, Ph.D., Co-Founder, Chairwoman, and CEO of Akeso, was appointed to our Board of Directors. Dr. Xia has over 27 years of experience in the pharmaceutical industry and academic research. Prior to founding Akeso, Dr. Xia held senior leadership roles at Crown Bioscience Inc., where she played a decisive role in constructing Crown Bioscience’s platform, building its team and forging its joint venture with Pfizer (the Pfizer-Crown Asian Cancer Research Centre). Dr. Xia also served as a senior scientist and group leader at PDL BioPharma, Inc. (later acquired by AbbVie Inc.), a senior process development scientist at Bayer Corporation, and held scientific and managerial roles at Axys Pharmaceuticals, Inc. (later acquired by Celera Genomics, Inc.). In addition, Dr. Xia has also received numerous awards and recognitions for her contributions to both the pharmaceutical industry and commercial enterprises. Most recently, Dr. Xia was selected into Forbes’ Powerful Women in Technology in 2020 and in 2023 was named by Forbes China as a Top 100 Women in Business in China.
Financial Highlights
Aggregate cash, cash-equivalents, short-term investments, and receivables on March 31, 2023 totaled $246.9 million as compared to $654.7 million on December 31, 2022.
Our cash, cash-equivalents and short-term investments on March 31, 2023 was $241.9 million as compared to $648.6 million on December 31, 2022. Accounts receivable and research and development tax credits receivable on March 31, 2023 were $5.0 million as compared to $6.1 million on December 31, 2022.
Our short-term investments consist of highly-liquid U.S. treasury securities.
Our notes payable balance at March 31, 2023 was $100.0 million, which is due in September 2024.
Based on our current cash and investments position, we believe that we have sufficient capital resources to fund our operating costs and working capital needs, including our planned clinical trials for ivonescimab, going into the second half of 2024.
Net loss for the three months ended March 31, 2023 and 2022 was $542.4 million and $21.4 million, respectively.
The net loss for the three months ended March 31, 2023 includes one-time in-process research and development expenses associated with the in-licensing of ivonescimab from Akeso of $520.9 million.
Operating cash outflow for the three month ended March 31, 2023 and 2022 was $13.1 million and $19.0 million, respectively.
On December 6, 2022, the Company entered into a Note Purchase Agreement with the Company’s Chairman and CEO, Robert W. Duggan, and the Company’s Co-Chief Executive Officer, President, and a member of the Company’s Board of Directors, Dr. Maky Zanganeh, in the aggregate amount of $520.0 million. Interest due and payable through February 15, 2023 was prepaid in shares of the Company’s common stock.
On February 15, 2023, Dr. Zanganeh’s $20.0 million note became due and the Company repaid the outstanding principal balance.
On December 6, 2022, the Company announced a Rights Offering for its existing shareholders to participate in the purchase of additional shares of its common stock. The Rights Offering commenced on February 7, 2023, and the associated subscription rights expired on March 1, 2023. Through the fully subscribed Rights Offering, the Company raised $500.0 million in gross proceeds through the issuance and sale of 476.2 million shares of its common stock at a price per share of $1.05. Issuance costs associated with the Rights Offering were $0.6 million, resulting in net proceeds of approximately $499.4 million.
In connection with the closing of the rights offering, a $400.0 million note payable with Mr. Duggan matured and became due, and the Company satisfied all principal and accrued interest of $401.3 million using a combination of a portion of the cash proceeds from the 2023 Rights Offering and the extinguishment of a portion of the amount due equal to the subscription price for shares subscribed by Mr. Duggan in the 2023 Rights Offering.
First Quarter 2023 Earnings Call
Summit will host an earnings call this morning, Thursday, May 11, 2023, at 9:00am ET. A live webcast and instructions for joining the call are accessible through Summit’s website www.smmttx.com. An archived edition of the webcast will be available on our website after the call.