Summit Therapeutics (SMMT 7.62%) has been one of the hottest stocks to own over the past 12 months, with its valuation soaring 300% during that stretch. But things have slowed of late and since the start of 2025, the stock’s returns have been flat. Investors are, after all, paying a hefty premium for a business which still isn’t generating any consistent revenue; its market capitalization remains north of $13 billion.
Hype and excitement around the potential for Summit’s cancer treatment candidate, ivonescimab, has fueled the stock’s rally. And while it might seem expensive and investors may be worried that it has peaked in value, there could be a catalyst on the horizon that may send the stock price even higher this year.
Why is there so much excitement around ivonescimab?
The big reason investors have been paying a premium for Summit’s stock is the potential for ivonescimab to be a massive game changer for the company. Last year, it outperformed Merck‘s top-selling cancer treatment, Keytruda, in a late-stage trial for non-small cell lung cancer. Even if ivonescimab were simply as good as Keytruda, that alone could make it a blockbuster and generate tens of billions of dollars in revenue for Summit. And if it’s better, then its potential would be far greater.
Although the drug hasn’t obtained approval yet, investors are effectively pricing that into Summit’s valuation. In the meantime, the business continues to burn through hundreds of millions of dollars in cash. Last year, it reported a net loss of more than $221 million. The company’s concerning financials do appear to be weighing on the healthcare stock of late, but I wouldn’t be surprised for it to start to rally again, perhaps as early as later this year.
Summit is collaborating with Pfizer on clinical trials
Pfizer (PFE -1.08%) is a big name in healthcare, and it’s partnering with Summit on clinical trials to investigate the potential use of ivonescimab alongside its antibody drug conjugates (ADCs) in treating solid tumors. The trials will start later this year; if the early results are promising, there could be a lot more excitement around Summit in the not-too-distant future.
Not only will this put ivonescimab into more trials, but Pfizer will also bear the responsibility of conducting them, including the costs associated with the trials. For Summit, keeping its costs down is crucial in case investors grow concerned about its high valuation.
Pfizer paid $43 billion for Seagen in 2023 for its ADCs — promising targeted cancer treatments which may be more effective than chemotherapy — and clearly sees a lot of potential in next-gen cancer treatments. If ivonescimab can play a key role, it may lead to even more opportunities for the drug down the road.
Is now a good time to buy Summit Therapeutics stock?
In the past month, Summit’s stock has declined by more than 10%, as the hype has cooled significantly around the business. But with a lot hinging on the success and potential of ivonescimab, more positive trial results could result in a much higher valuation for the stock this year. On the flip side, the risk is that if the trials don’t impress investors, that could raise doubts and lead to a massive sell-off given the company’s inflated valuation.
Summit doesn’t have an approved product in its portfolio yet, so don’t assume that ivonescimab obtaining approval and generating billions of dollars in the future is a done deal. This remains a risky investment. And while the stock may rally higher this year, there’s also the danger that it struggles under the weight of some sky-high expectations.
If you’re comfortable with the risk involved, this may be a stock worth putting a modest amount of money into. But it would also be a good idea to ensure your portfolio is diversified before you do so, to ensure that you aren’t placing all your hopes (and money) on the success of ivonescimab.
David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Merck, Pfizer, and Summit Therapeutics. The Motley Fool has a disclosure policy.
