One day before the July Fourth holiday, the stock of clinical-stage bio Summit Therapeutics (SMMT -7. 70%) exploded a powerful fireworks display.
S of the cancer-focused company leaped by 8%, on a media report that a well-known peer was interested in a licensing deal. That rise bettered the S&P 500's (^GSPC -0.
8% increase by several orders of magnitude.
15 billion new reasons to consider the stock The media outlet in question was Bloomberg, which that morning published an article asserting that AstraZeneca is in talks with Summit a partnership between the two companies.
Image source: Getty Images. According to unnamed "people familiar with the matter," the piece stated that such a partnership would center on the investigational lung cancer treatment ivonescimab.
The drug, which Summit licenses from Chinese peer Akeso, has recently attracted much attention from the healthcare community and investors a.
This was due to its impressive performance in a late-stage clinical trial. Bloomberg's sources said that the terms of a potential deal were still being hashed out.
They might include an up-front payment of several billion dollars, and several milestone payments over time (this kind of structure is common in pharmaceutical industry licensing/partnership arrangements).
All told, a deal between the two companies could pay out as much as $15 billion. Both Summit and AstraZeneca declined on the Bloomberg article.
Fingers crossed When a drug development gram attracts $15 billion worth of interest from a major industry player with deep pockets, it's almost indisputably a win.
If the Bloomberg report is accurate and a deal is indeed in the works (and is ultimately agreed upon), it would open a great, powerful, and quick road to success for Summit.
It's little wonder investors were so happy the possibility. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Summit Therapeutics.
The Motley Fool recommends AstraZeneca Plc. The Motley Fool has a disclosure policy.