AstraZeneca is getting a closer look at one of the most closely watched drugs in oncology research, announcing Monday a substantial equity investment in the medicine’s developer, Summit Therapeutics, as well as a broad alliance to accelerate its progress.
Per deal terms, AstraZeneca will invest $2 billion in Summit by acquiring about 109,000 shares of convertible preferred stock. AstraZeneca will own about 12% of Summit afterwards, or around 10.6% on a fully-diluted basis.
Alongside that investment, AstraZeneca announced a deal to test Summit’s drug, ivonescimab, alongside possibly multiple cancer medicines in the British drugmaker’s portfolio. Initially, the two companies will evaluate a pairing of ivonescimab and a targeted AstraZeneca cancer medicine called “Sone-Ve” in gastrointestinal tumors. But they also intend to broaden the partnership and combine ivonescimab with more AstraZeneca oncology prospects, including other so-called antibody drug conjugates like Sone-Ve.
AstraZeneca and Summit will jointly cover development costs and keep ownership rights to their respective medicines, according to Monday’s statement. Summit holds rights in the U.S., Canada, Europe and Japan to ivonescimab through a $500 million deal with the drug’s China-based inventor, Akeso, in 2022.
The deal gives AstraZeneca access to the most advanced clinical-stage candidate of more than a dozen medicines designed to block the proteins PD-1 and VEGF. These drugs are seen as a promising way to build upon widely used cancer immunotherapies like Merck & Co.’s Keytruda, which generate tens of billions of dollars in yearly sales.
This optimism stems from a lung cancer study that showed ivonescimab cut the risk of disease progression or death in half compared to Keytruda. The results marked the first time an experimental drug outperformed Keytruda head to head in a Phase 3 study of lung cancer patients — a finding so striking it galvanized several deals from major drugmakers such as Pfizer, Merck, AbbVie and Bristol Myers Squibb.
Yet ivonescimab’s potential has since become the source of intense debate among Wall Street investors and analysts. It’s unclear whether the results observed in studies conducted solely in China will translate to success in global trials — among them an all-important test of ivonescimab against the Keytruda-chemotherapy combination used to treat many lung cancers.
Also unknown is how broadly beneficial ivonescimab and other drugs like it will be against other tumor types. Several drugmakers working on PD-1/VEGF drugs are testing alternative approaches in search of superior next-generation cancer drug regimens.
Investing in Summit but not acquiring ivonescimab rights, then, gives AstraZeneca a “route” to combining its drugs with PD-1/VEGF blockers without taking on significant risk, wrote Michael Leuchten, an analyst with the investment firm Jefferies. Leuchten noted that the deal also ensures AstraZeneca a “seat at the table” should the approach become “globally validated” in ongoing trials.
AstraZeneca has multiple antibody-drug conjugates, or ADCs, it could combine with ivonescimab — a strategy other drugmakers are evaluating. It’s also working on a few other double-barreled drugs aimed at different cancer targets. Monday’s deal could be a sign that AstraZeneca “likely believes their ... approaches are superior to PD-1/VEGF, while leaving the door open for a potential [deal] expansion” with Summit in the future, wrote RBC Capital Markets analyst Trung Huynh.
For Summit, meanwhile, AstraZeneca’s investment is an “important validating vote of confidence” in PD-1/VEGF inhibitors, Leerink Partners analyst Daina Graybosch added in a separate note. But the move is “more tepid than an outright acquisition” and “may be more of a hedge investment for Sone-Ve,” she added.
Summit shares climbed about 17% in early Tuesday trading.
