Summit shares soar after securing a $2 billion cancer therapy investment from AstraZeneca

Reuters, September 29 - In pre-market trading on Tuesday, Summit Therapeutics (SMMT.O) share price rose 23% after the pharmaceutical company announced that AstraZeneca (AZN.L) would invest $2 billion to jointly develop cancer treatment drugs.

The Anglo-Swedish joint venture announced the deal (link) on Monday evening, after which AstraZeneca's UK-listed shares rose 1.6%, hitting a two-month high.

Evercore ISI analyst Cory Kasimov said the investment is a significant endorsement of Summit from a global cancer treatment leader, not only providing much-needed capital injection but also retaining strategic options.

The two parties will begin testing AstraZeneca's experimental anti-cancer drug sonesitatug vedotin in combination with Summit’s ivonescimab for the treatment of certain gastrointestinal cancers to evaluate its efficacy.

Under the terms of the agreement, both parties will each retain the rights to research and commercialize the respective molecules involved.

Summit's ivonescimab works by simultaneously blocking two proteins: PD-1 (which helps cancer evade the immune system) and VEGF (which tumors use to grow blood vessels).

Barclays analyst James Gordon stated that the agreement gives AstraZeneca access to this promising new mechanism, known as “VEGF bispecific”, putting it on par with U.S. peers Bristol BMY.N and Merck MRK.N.

"Previously, we had anticipated that after AstraZeneca terminated the volrustomig (link) bispecific antibody project last month, its solid tumor R&D pipeline would appear somewhat thin, so the likelihood of entering a VEGF bispecific antibody partnership increased, and this deal helps fill that gap," Gordon added.

The two also intend to reach an agreement to conduct clinical trials combining ivonescimab with several of AstraZeneca’s anti-cancer drugs.

"The funding and clinical capabilities provided by AstraZeneca will enable Summit to grow larger, move faster, and capture a greater market share," said Cantor Fitzgerald analyst Eric Schmidt, adding that from AstraZeneca’s perspective, this deal is also of strategic significance.

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