康方生物科技とのライセンス契約締結は、企業の戦略における重要な変更を表し、将来の運営はivonescimabの開発および他の将来の活動に重点を置く企業によって決定されています。企業のポートフォリオには、Clostridioides difficile感染症、別名C. difficile感染症、またはCDIとしても知られる患者の治療を目的とした製品候補であるridinilazoleも含まれています。 Clostridioides difficile感染症 C. difficile感染症 C. difficile感染症 また、SMt-738は、多剤耐性感染症、特に炭素ペネム耐性腸内桿菌（「CRE」）感染症に対抗する革新的なクラスの精密抗生物質の第一号です。ridinilazoleおよびSMt-738に関連する以前の開発活動はすべて中止されており、企業は両資産についてのパートナーシップ機会を検討する可能性があります。
The Company has operating leases for real estate. The Company does not have any finance leases.
In the first fiscal quarter of 2024, the Company recorded $4,216 of additional right-of-use assets related to a new lease for office space that commenced during the period for its Miami, Florida headquarters location ("Miami HQ"). Total future lease payments as of September 30, 2024, which include base rent and sales tax, are approximately $4,342 on an undiscounted basis. This lease commenced on February 1, 2024 and has a term of 64 months. As of September 30, 2024 the Company has $323 of restricted cash associated with an irrevocable letter of credit required by the landlord to enter into this lease. The carrying value of the right-of-use assets as of September 30, 2024 and December 31, 2023 was $7,976 and $5,859, respectively.
13. Research and Development Prepaid Expenses and Accrued Liabilities
Included within prepaid expenses and other current assets at September 30, 2024 and December 31, 2023 is $746 and $1,466, respectively, of prepayments relating to research and development expenditures. Included within accrued liabilities at September 30, 2024 and December 31, 2023 is $9,578 and $7,289, respectively, relating to research and development expenditures.
These amounts are determined based on the estimated costs to complete each study or activity related to the ongoing clinical trials for ivonescimab, the estimation of the current stage of completion and the invoices received, as well as predetermined milestones which are not reflective of the current stage of development for prepaid expenses. However, prepaid expenses decrease and accrued liabilities increase as the activities progress, and if actual costs incurred exceed the prepaid expenses, an accrual will be recorded for the liability. The key sensitivity is the estimated current stage of completion of each study or activity, which is based on information received from the supplier and the Company’s operational knowledge of the work completed under those contracts.
16
Summit Therapeutics Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
(in thousands, except share and per share data)
14. Promissory Note Payable to Related Parties
Current promissory note payable to a related party was $24,500 as of September 30, 2024 and non-current promissory note payable to a related party as of December 31, 2023 was $100,000.
December 2022 Promissory Note
On December 6, 2022, the Company entered into a Note Purchase Agreement (the "Note Purchase Agreement"), with Mr. Duggan and Dr. Zanganeh, pursuant to which the Company agreed to sell to each of Mr. Duggan and Dr. Zanganeh unsecured promissory notes in the aggregate amount of $520,000. Pursuant to the Note Purchase Agreement, the Company issued to Mr. Duggan and Dr. Zanganeh unsecured promissory notes in the amount of $400,000 (the "Duggan February Note") and $20,000 (the "Zanganeh Note"), respectively, which would mature and become due on February 15, 2023 and an unsecured promissory note to Mr. Duggan in the amount of $100,000 (the “Duggan September Note” and together with the Duggan February Note and the Zanganeh Note, the “December 2022 Notes”), which was originally due on September 15, 2023. The maturity dates of the December 2022 Notes could be extended one or more times at the Company’s election, but in no event to a date later than September 6, 2024. In addition, if the Company consummates a public offering, then upon the later to occur of (i) five business days after the Company receives the net cash proceeds therefrom or (ii) May 15, 2023, the Duggan February Note and the Zanganeh Note shall be prepaid by an amount equal to the lesser of (a) 100% of the amount of the net proceeds of such offering and (b) the outstanding principal amount on such Notes.
On January 19, 2023, the Company provided notice to extend the term of the Duggan February Note and Duggan September Note to a maturity date of September 6, 2024. Furthermore, on January 19, 2023, the Company and Mr. Duggan rectified the Duggan February Note and Duggan September Note in order to correctly reflect the parties’ intent that the Company may only prepay (i) the Duggan February Note following the completion of a public rights offering to be conducted by Summit in the approximate amount of $500,000, or a similar capital raise, in an amount equal to the lesser of (x) the net proceeds of the Rights Offering or such capital raise or (y) the full amount outstanding of the Duggan February Note, and (ii) Duggan September Note following the completion of a capital raising transaction subsequent to the 2023 Rights Offering in an amount equal to the lesser of (A) the net proceeds of such capital raise or (B) the full amount outstanding of the Duggan September Note. Following the issuance of the two new Promissory Notes (the “Duggan Promissory Notes”), the Duggan February Note and Duggan September Note were marked as “cancelled” on their face and replaced in their entirety by the Duggan Promissory Notes (together with the Zanganeh Note, the "Notes").
On February 15, 2023, the $20,000 Zanganeh Note matured and the Company repaid the outstanding principal balance. In connection with the closing of the 2023 Rights Offering, the $400,000 Duggan Promissory Note matured and became due, and the Company satisfied all principal and accrued interest thereunder 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.
The Notes accrued interest at an initial rate of 7.5%. All interest on the Notes was paid on the date of signing for the period through February 15, 2023. Such prepaid interest was paid in a number of shares of the Company’s common stock, par value $0.01 (“Common Stock”) equal to the dollar amount of such prepaid interest, divided by $0.7913 (the consolidated closing bid price immediately preceding the time the Company entered into the Note Purchase Agreement, plus $0.01), which was 9,720,291 shares. For all applicable periods following February 15, 2023, interest shall accrue on the outstanding principal balance of the Notes at the US prime interest rate, as reported in the Wall Street Journal, plus 50 basis points, as adjusted monthly, for three months immediately following February 15, 2023, and thereafter at the US prime rate plus 300 basis points, as adjusted monthly. Such accrued interest shall be paid in cash, quarterly in arrears, on each of March 31, June 30, September 30 and December 31.
Debt issuance costs associated with the Notes were $44 and were capitalized as part of the carrying value of the promissory notes payable to related parties.
On February 17, 2024, the Duggan February Note was amended and restated to extend the maturity date from September 6, 2024 to April 1, 2025. For all applicable periods commencing February 17, 2024, interest shall accrue on the outstanding principal balance at the greater of 12% or the US prime interest rate, as reported in the Wall Street Journal plus 350 basis points, as adjusted monthly, and compounded quarterly. Interest shall be paid upon maturity of the loan.
17
Summit Therapeutics Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
(in thousands, except share and per share data)
The debt discount is amortized to interest expense using an effective interest rate method. The effective interest rate of the Duggan February Note and Zanganeh Note was 8.9% and the effective interest rate of the Duggan September Note is 11.0%.
During the three and nine months ended September 30, 2024, the Company incurred interest expense of $2,455 and $8,677, respectively. During the three and nine months ended September 30, 2023, the Company incurred interest expense of $2,722 and $13,564, respectively. Interest expense incurred during the nine months ended September 30, 2023 included amortized imputed interest of $761. As of September 30, 2024, accrued interest was $7,294 and was recorded in accrued liabilities. As of December 31, 2023, accrued interest was $120 and was recorded in accrued liabilities.
On September 16, 2024, the Company used some of the proceeds raised from the September 2024 Private Placement (see Note 15 for further details) to repay $75,500 in principal on the Duggan September Note, thus reducing the outstanding current note payable balance to $24,500 as of September 30, 2024.
On October 1, 2024, the Company repaid the Duggan September Note in full, resulting in principal payments of $24,500 and accrued cash interest of $7,305.
15. Stockholders' Equity
Preferred Stock
As of September 30, 2024 and December 31, 2023, the Company had 20,000,000 shares of preferred stock, par value $0.01 authorized and no shares issued and outstanding.
Common Stock
As of September 30, 2024 and December 31, 2023, the Company had authorized 1,000,000,000 shares of common stock, par value $0.01 (the "Common Stock"). As of September 30, 2024 and December 31, 2023, the Company had 737,094,965 shares and 701,660,053 shares of Common Stock issued and outstanding, respectively.
June 2024 PIPE
On June 3, 2024, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with 667, L.P. and Baker Brothers Life Sciences, L.P., affiliates of Baker Bros. Advisors, L.P. (the “Investors”), for the sale by the Company in a private placement (the “June 2024 Private Placement”) of 22,222,222 shares (the “Shares”) of Common Stock, at purchase price of $9.00 per share, for an aggregate purchase price of approximately $200,000.
The closing of the June 2024 Private Placement was subject to the satisfaction of certain customary closing conditions, which were achieved on June 6, 2024. The Purchase Agreement contained customary representations, warranties and covenants by the Company, customary indemnification obligations of the Company, including for liabilities under the Securities Act of 1933, other obligations of the parties and termination provisions. The representations, warranties and covenants contained in the Purchase Agreement were made only for purposes of the Purchase Agreement and as of specific dates, were solely for the benefit of the parties to such agreements and were subject to limitations agreed upon by the contracting parties.
On June 3, 2024, in connection with the Purchase Agreement, the Company entered into a Registration Rights Agreement with the Investors (the “Registration Rights Agreement”). The Registration Rights Agreement provides, among other things, that the Company will as soon as reasonably practicable, file with the SEC a registration statement registering the resale of the Shares. The Company agreed to use its reasonable best efforts to have such registration statement declared effective as soon as practicable after the filing thereof. The Company filed the registration statement on August 6, 2024, which was automatically effective upon filing.
September 2024 PIPE (Private Investment in Public Equity)
On September 11, 2024, the Company entered into securities purchase agreements (the “September 2024 Purchase Agreements”) with multiple leading biotech institutional investors and individual accredited investors (the “September 2024 Investors”), for the sale by the Company in a private placement (the “September 2024 Private Placement”) of an aggregate of 10,352,418 shares (the “September 2024 Shares”) of the Company’s common stock, par value $0.01 per share of Common Stock, at purchase price of $22.70 per Share, which was the closing price of the Common Stock on September 11, 2024, for aggregate gross proceeds to the Company of approximately $235,000, with offering costs of $140.
All of the Company's Section 16 officers participated in the capital raise. A total of $79,000 was raised by the Company's Chief Executive Officer ("CEO"), Executive Chairman and majority stockholder, its CEO and the President and member of
18
Summit Therapeutics Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
(in thousands, except share and per share data)
the Company's Board of Directors (the "Board"), the Chief Operating Officer ("COO") and Chief Financial Officer ("CFO"), the Chief Accounting Officer ("CAO"), and a member of the Board of Directors, who invested via a controlled entity. The remaining $156,000 was raised with multiple leading biotech institutional investors. Refer to Note 17 Related Party Transactionsfor further details regarding related parties' participation.
The closing of the September 2024 Private Placement was September 13, 2024. The Purchase Agreements contain customary representations, warranties and covenants by the Company, customary indemnification obligations of the Company, including for liabilities under the Securities Act, as amended (the “Securities Act”), other obligations of the parties and termination provisions. The representations, warranties and covenants contained in the Purchase Agreements were made only for purposes of the Purchase Agreements and as of specific dates, were solely for the benefit of the parties to such agreements and were subject to limitations agreed upon by the contracting parties.
On September 11, 2024, in connection with the September 2024 Purchase Agreements, the Company entered into Registration Rights Agreements with the Investors (the “September 2024 Registration Rights Agreements”). The September 2024 Registration Rights Agreements provide, among other things, that the Company will as soon as reasonably practicable file with the SEC a registration statement registering the resale of the Shares. The Company filed the registration statement on September 19, 2024, which was automatically effective upon filing.
At-the-Market Offering (ATM Offering)
On May 13, 2024, the Company entered into an at-the-market sales agreement (the "ATM Agreement") pursuant to which the Company may, subject to the terms and conditions set forth in the agreement offer and sell, from time to time, through or to the agents, acting as agents or principal, shares of the Company's common stock, par value $0.01, having an aggregate offering price of up to $90,000.
During the three months ended and from the date of the ATM Agreement through September 30, 2024, the Company sold 1,807,093 shares of common stock under the ATM Agreement at a weighted-average price of $24.47 per share, for gross proceeds of $44,223. The remaining availability under the ATM Agreement as of September 30, 2024 is approximately $45,777.
The Company has received net proceeds of $43,033, which is net of sales commissions and other offering fees of approximately $1,190. The Company plans to use the net proceeds from this offering for working capital and general corporate purposes.
16. Stock-Based Compensation and Warrants
Stock-Based Compensation
The Company currently grants stock options to employees and directors under the 2020 Stock Incentive Plan (the "2020 Plan") and formerly, the Company granted stock options under the 2016 Long Term Incentive Plan (the "2016 Plan"). The 2020 Plan is administered by the Compensation Committee of the Board. The 2020 Plan is intended to attract and retain employees and directors and provide an incentive for these individuals to assist the Company to achieve long-range performance goals and to enable these individuals to participate in the long-term growth of the Company.
On May 3, 2024, the Board adopted the 2024 Inducement Pool (the “Inducement Pool”), which mirrors the terms of the 2020 Plan, with a total of 2,000,000 shares of common stock reserved for issuance under the Inducement Pool. The Inducement Pool provides for the grant of non-qualified stock options and was approved by the Compensation Committee of the Board without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Listing Rules.
The Inducement Pool is administered by the Compensation Committee of the Board. In accordance with Rule 5635(c)(4) of the Nasdaq Listing Rules, non-qualified stock options under the Inducement Pool may only be made to an employee who has not previously been an employee of the Company or member of the Board (or any parent or subsidiary of the Company), if he or she is granted such non-qualified stock options in connection with his or her commencement of employment with the Company or a subsidiary and such grant is an inducement material to his or her entering into employment with the Company or such subsidiary. As of September 30, 2024, there were 914,750 shares available for grant under the Inducement Pool.
19
Summit Therapeutics Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
(in thousands, except share and per share data)
The following table summarizes the Company's time-based stock option activity for the nine months ended September 30, 2024:
Number of Options
Weighted average exercise price
Outstanding at December 31, 2023
54,209,289
$
2.28
Granted
7,400,074
$
4.69
Forfeited
(1,552,537)
$
2.17
Exercised
(629,628)
$
2.29
Outstanding at September 30, 2024
59,427,198
59427198
2.58
Exercisable at September 30, 2024
7,115,267
4.88
The total intrinsic value of all outstanding time-based stock options and exercisable stock options at September 30, 2024 was $1,148,062 and $121,106, respectively. The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock.
The following table summarizes the Company's performance-based stock option activity for the nine months ended September 30, 2024:
Number of Options
Weighted average exercise price
Outstanding at December 31, 2023
46,654,220
$
1.62
Granted
2,825,000
$
4.14
Forfeited
(1,089,000)
$
1.34
Outstanding at September 30, 2024
48,390,220
$
1.77
Exercisable at September 30, 2024
9,151,844
$
1.63
The total intrinsic value of all outstanding performance-based and exercisable stock options at September 30, 2024 was $973,991 and $185,483, respectively.
During the three months ended September 30, 2024, the Company achieved certain market conditions, which resulted in 9,151,844 shares vesting and recognition of $8,409 of compensation expense for the quarter, inclusive of accelerated charges of $7,050 related to the accelerated vesting of these awards. Thus, as of September 30, 2024, total unrecognized compensation expense related to performance-based stock options that were deemed probable of vesting was nil.
The number of unvested performance-based stock options that were deemed not-probable of vesting and the related unrecognized stock-based compensation expense is 39,238,376 and $52,716, respectively.
The total stock-based compensation expense included in the Company's condensed consolidated statements of operations and comprehensive loss was as follows:
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
Research and development
$
5,819
$
149
$
11,747
$
1,962
General and administrative
13,552
556
28,219
3,393
Total stock-based compensation expense
$
19,371
$
705
$
39,966
$
5,355
The following summarizes share-based compensation expense associated with each of the Company's stock-based compensation arrangements:
20
Summit Therapeutics Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
(in thousands, except share and per share data)
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
Time-based stock options
$
10,803
$
613
$
28,614
$
5,093
Performance-based stock options
8,409
51
11,031
144
Employee stock purchase plan
159
41
321
118
Total stock-based compensation expense
$
19,371
$
705
$
39,966
$
5,355
Warrants
The Company had outstanding and exercisable warrants of 4,945,669 and 5,015,642 with a weighted average exercise price of $1.58 and $1.57 as of September 30, 2024 and December 31, 2023, respectively. Warrants of 69,973 with a weighted average exercise price of $1.44 were exercised during the nine months ended September 30, 2024.
17. Related Party Transactions
Lease Agreements
July 25, 2022 First Amendment to Sublease Agreement with Maky Zanganeh and Associates, Inc.
On July 25, 2022 the Company entered into a first amendment, dated July 19, 2022, to its existing sublease agreement with Maky Zanganeh and Associates, Inc. ("MZA"), consisting of 4,500 square feet of office space at 2882 Sand Hill Road, Menlo Park, California. The existing sublease term, which was set to expire on September 30, 2022, was extended for a period of thirty-nine months from October 1, 2022 through December 31, 2025. The rent payable under the terms of the sublease is equivalent to the proportionate share of the net payable by MZA to the third-party landlord, based on the square footage of office space sublet by the Company, and no mark-up has been applied. The agreement was further amended to include additional space, as noted below under "August 2, 2024 Third Amendment to Sublease Agreement with Maky Zanganeh and Associates, Inc." During the three and nine months ended September 30, 2024, payments of $199 and $588, respectively, were made pursuant to the first and third amendments to the Sublease Agreement. During the three and nine months ended September 30, 2023, payments of $189 and $567, respectively, were made pursuant to the first amendment to the Sublease Agreement.
July 29, 2022 Second Amendment to Sublease Agreement with Maky Zanganeh and Associates, Inc.
On July 29, 2022, the Company entered into a second amendment, dated August 1, 2022, to its existing sublease agreement with MZA, described above. The second amendment was effective as of August 1, 2022 and expires on December 31, 2025. The second amendment includes an additional 1,277 square feet (the "Expansion Premises") of office space at 2882 Sand Hill Road, Menlo Park, California. The rent payable under the terms of the sublease is equivalent to the proportionate share of the net payable by MZA to the third-party landlord, based on the square footage of office space sublet by the Company, and no mark-up has been applied. During the three and nine months ended September 30, 2024, payments of $57 and $167, respectively, were made pursuant to the second amendment to the Sublease Agreement. During the three and nine months ended September 30, 2023, payments of $55 and $163, respectively, were made pursuant to the second amendment to the Sublease Agreement.
April 1, 2024 Miami Sublease Agreements
2024年4月1日、会社は two マイアミ本社のサブリース契約を oneworldアライアンスのメンバーと追加のグローバルパートナーとともに、お客様はalaskaair.comで30以上の航空会社と世界中の1,000以上の目的地で購入、獲得、または交換する選択肢が今まで以上にあります。 Genius 24C Inc.（以下、「Genius」という）と、会社のCEOであるRobert W. Dugganの提携会社であるDuggan Investments Research LLC（以下、「Investments Research」とする）と、会社のCEOであるRobert W. Dugganの提携先である「Geniusサブリース契約」と oneworldアライアンスのメンバーと追加のグローバルパートナーとともに、お客様はalaskaair.comで30以上の航空会社と世界中の1,000以上の目的地で購入、獲得、または交換する選択肢が今まで以上にあります。 「Investments Researchサブリース契約」を締結しました。Geniusサブリース契約に基づき、Geniusは 848 マイアミ本社のオフィススペースを」 六十二ヶ月 合計賃料支払いの契約条件は約$446。投資調査サブリース契約に基づき、投資調査はマイアミ本社のオフィススペースを会社からサブリースします 848 平方フィート 六十二ヶ月 合計賃料支払いの契約条件は約$446。2024年9月30日に終了した3か月および9か月間で、会社は$を認識しています57と $105.
会社のCEO兼Executive ChairmanのMr. Robert W. Dugganが購入しました 3,325,991 株を購入価格が$75,500CEO、President、および取締役の一員であるDr. Mahkam Zanganehが購入しました 44,052 株を購入価格が$1,000COO兼CFOのManmeet Soniが購入しました 44,052 株を購入価格が$1,000取締役のJeff Huberが、彼の管理下の実体であるCaspian Capital LLCを通じて購入しました 44,052
22
Summit Therapeutics Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
(in thousands, except share and per share data)
shares for an aggregate purchase price of $1,000, with their collective participation in the September 2024 Private Placement totaling 3,458,147 shares of Common Stock for an aggregate purchase price of $78,500.
The Company used some of the proceeds raised from the September 2024 Private Placement to repay $75,500 in principal on the Duggan September Note. See Note 14 for additional details regarding the promissory note payable to a related party.
18. Commitments and Contingencies
Lease Commitments
There were no material changes to the Company's lease commitments that were disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC, other than the new lease for the Miami, FL headquarter location as described in Note 12.
Debt Commitments
Refer to Note 14 for discussion on the promissory note payable to a related party.
Other Commitments
The Company enters into contracts in the normal course of business with various third parties for clinical trials, preclinical research studies and testing, manufacturing and other services and products for operating purposes. Most contracts provide for termination upon notice, and therefore are cancellable contracts. The majority of these commitments are due within one year. There have been no material changes to the Company's other contractual commitments that were disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Indemnifications
The Company's certificate of incorporation provides that it will indemnify the directors and officers to the fullest extent permitted by Delaware law. In addition, the Company has entered into indemnification agreements with all of the directors and executive officers. These indemnification agreements may require the Company, among other things, to indemnify each such director or executive officer for some expenses, including attorneys’ fees, judgments, fines, and settlement amounts incurred by him or her in any action or proceeding arising out of his or her service as one of the Company's directors or executive officers. The Company believes the fair value for these indemnification obligations is minimal. Accordingly, the Company has not recognized any liabilities relating to these obligations as of September 30, 2024 and December 31, 2023.
Legal Proceedings
The Company is not currently subject to any material legal proceedings.
23
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included herein and our audited consolidated financial statements and related notes for the year ended December 31, 2023 included in our Annual Report on Form 10-K, filed on February 20, 2024. Some of the information contained in this discussion and analysis or set forth elsewhere in this filing, including information with respect to our plans and strategy for our business, includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks and uncertainties. All statements other than statements relating to historical matters including statements to the effect that we “believe,” “expect,” “anticipate,” “plan,” “target,” “intend” and similar expressions should be considered forward-looking statements. As a result of many factors, including those factors set forth in the risks identified the “Risk Factors’’ section of our other filings with the Securities and Exchange Commission, or the SEC, our actual results could differ materially from the results, performance or achievements expressed in or implied by these forward-looking statements.
Company Overview
Summit Therapeutics Inc. (“we”, “Summit” or the “Company”) is a biopharmaceutical company focused on the discovery, development, and commercialization of patient-, physician-, caregiver- and societal-friendly medicinal therapies intended to improve quality of life, increase potential duration of life, and resolve serious unmet medical needs. The Company’s pipeline of product candidates is designed with the goal to become the patient-friendly, new-era standard-of-care medicines, in the therapeutic area of oncology.
The Company’s current lead development candidate is ivonescimab, a novel, potential first-in-class bispecific antibody intending to combine the effects of immunotherapy via a blockade of PD-1 with the anti-angiogenesis effects of an anti-VEGF compound into a single molecule. On December 5, 2022, the Company entered into a Collaboration and License Agreement (the “License Agreement”) with Akeso, Inc. and its affiliates (“Akeso”) pursuant to which the Company has in-licensed ivonescimab. Through the License Agreement, the Company obtained the rights to develop and commercialize ivonescimab in the United States, Canada, Europe, and Japan. The License Agreement and transaction closed in January 2023 following customary waiting periods. On June 3, 2024, the Company entered into an amendment to the License Agreement with Akeso to expand its territories covered under the License Agreement to also include the Latin America, Middle East and Africa regions (collectively, and as expanded, the "Licensed Territory"). The Company’s operations are focused on the development of ivonescimab and other future activities, as the Company determines.
The Company has begun its development for ivonescimab in non-small cell lung cancer (“NSCLC”), specifically launching Phase III clinical trials in the following proposed indications:
a) 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”); and
b) ivonescimab combined with chemotherapy in first-line metastatic squamous NSCLC patients (“HARMONi-3”)
In addition, the Company announced its intention to initiate a Phase III clinical study in the following proposed indication in early 2025:
c) ivonescimab monotherapy in first-line metastatic NSCLC patients with high PD-L1 expression (“HARMONi-7”).
•The sample size for this study is currently planned to have an estimated 780 patients with two primary endpoints, progression-free survival (PFS) and overall survival (OS)
On October 3, 2024, the Company announced that it had completed enrollment in its HARMONi clinical trial and expects to disclose topline results from HARMONi in mid-2025, depending upon maturation of the data per the protocol.
The Company recently announced that it has the intention to amend the protocol for its HARMONi-3 study to include both squamous and non-squamous patients without actionable genomic alterations, adjust the primary endpoint for HARMONi-3 to include PFS in addition to OS, and adjust the sample size to include an estimated 1,080 patients.
24
The entry into the License Agreement with Akeso represented a significant change in the Company’s strategy and its future operations will be focused on the development of ivonescimab and other future activities as the Company determines. Our portfolio also includes ridinilazole, a product candidate for treating patients suffering from Clostridioides difficile infection, also known as C. difficile infection, or CDI, and SMT-738, the first of a novel class of precision antibiotics for combating multidrug resistant infections, specifically carbapenem-resistant Enterobacteriaceae (“CRE”) infections. All prior development activities related to ridinilazole and SMT-738 have been terminated; we may explore partnership opportunities for both assets.
Akeso Collaboration and License Agreement
Pursuant to the License Agreement with Akeso, the Company received the rights to develop and commercialize ivonescimab in the United States, Canada, Europe, and Japan. Akeso will retain development and commercialization rights for the rest of the world excluding such licensed territories. In exchange for these rights, Summit made an upfront payment during the first quarter of 2023 comprised of $474.9 million cash and the issuance of 10 million shares of the Company's common stock in lieu of $25.1 million cash pursuant to a share transfer agreement. Furthermore, on June 3, 2024, the Company entered into an amendment to the License Agreement with Akeso to expand its territories covered under the License Agreement to also include the Latin America, Middle East and Africa regions (collectively, and as expanded, the "Licensed Territory"), for which Summit paid an upfront payment of $15.0 million cash in the third quarter of 2024. In addition, the Company will potentially owe Akeso (a) milestone payments tied to achievement of regulatory approval of ivonescimab with various regulatory authorities in the Licensed Territory (b) milestone payments tied to achievement of annual revenue from ivonescimab in the Licensed Territory and (c) royalty payments equal to low-double-digit percentage of annual revenues from ivonescimab in the Licensed Territory.
Pursuant to the terms of the License Agreement, Summit will have final decision-making authority with respect to clinical development strategy and execution in the Licensed Territory. For co-joined studies in which both Summit and Akeso participate, mutual agreement is required for material decisions; Summit retains the exclusive decision making with respect to participating in, and continuing its participation in, co-joined studies. In connection with the License Agreement, the Company has also agreed to enter into a Supply Agreement with Akeso (the "Supply Agreement"). Pursuant to the Supply Agreement, Summit agreed to purchase a certain portion of drug substance for clinical and commercial supply. Pursuant to the terms of the License Agreement, Summit will have final decision-making authority with respect to commercial strategy, pricing and reimbursement and other commercialization matters in the Licensed Territory.
Summit has not assumed any liabilities (including contingent liabilities), nor acquired any physical assets or trade names, or hired or acquired any employees from Akeso in connection with the License Agreement.
Ivonescimab
Ivonescimab is a novel potential first-in-class PD-1 / VEGF bispecific antibody, believed to be the most advanced in clinical development in the Licensed Territory; there are no known PD-1 / VEGF bispecific antibodies approved in our Licensed Territory. Engineered with Akeso’s unique Tetrabody technology, ivonescimab, as a single molecule, blocks programmed cell death protein 1 (“PD-1”) from binding to PD-L1 and PD-L2, and blocks vascular endothelial growth factor (“VEGF”) from binding to VEGF receptors. Ivonescimab is designed to potentially allow cooperative binding of the intended targets, such that the binding of PD-1 increases the binding affinity of VEGF and the binding of VEGF increases the affinity towards PD-1. In view of the co-expression of VEGF and PD-1 in the tumor micro-environment (“TME”), ivonescimab may block these two pathways more effectively and enhance the antitumor activity, as compared to combination therapy through what is believed to be a differentiated cooperative binding mechanism.
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This could differentiate ivonescimab as there is potentially higher expression (presence) of both PD-1 and VEGF in tumor tissue and the TME as compared to normal tissue in the body. As shown in Akeso’s in-vitro studies, ivonescimab’s tetravalent structure (four binding sites) enables higher avidity (accumulated strength of multiple binding interactions) in the tumor microenvironment with over 18-fold increased binding affinity to PD-1 in the presence of VEGF in vitro, and over 4 times increased binding affinity to VEGF in the presence of PD-1 in vitro. This tetravalent structure, the intentional novel design of the molecule, and bringing these two targets into a single bispecific antibody with cooperative binding qualities have the potential to direct ivonescimab to the tumor tissue versus healthy tissue. The intent of this design, together with a half-life of six to seven days, is to improve upon previously established efficacy thresholds, in addition to side effects and safety profiles associated with these targets.
In addition to the Phase III clinical trials sponsored by the Company, ivonescimab is also being developed in China and Australia by Akeso in multiple solid tumors and has been dosed in more than 1,800 patients globally.
HARMONi-A
Based on data published by Akeso at the 2024 Annual Meeting of the American Society of Clinical Oncology (ASCO 2024) and in a recent publication in the Journal of the American Medical Association (JAMA) in the HARMONi-A study, in a single-region (China), randomized, double-blinded Phase III study in patients with NSCLC who have progressed following an EGFR-TKI, ivonescimab achieved its primary endpoint of PFS when combined with doublet chemotherapy (pemetrexed and carboplatin). Patients experienced a 54% reduction in disease progression or death as compared to placebo plus doublet-chemotherapy (HR: 0.46, 95% CI: 0.34 - 0.62; p<0.001). In a pre-specified subgroup analysis of patients who received a previous third-generation TKI, a hazard ratio of 0.48 was observed. A median Overall Survival (mOS) in this study of 17.1 months was observed, reflecting a 20% reduction in death as compared to placebo plus chemotherapy in the study (HR: 0.80, 95% CI: 0.59 - 1.08). The Phase III study was considered to have demonstrated a tolerable safety profile and a low discontinuation rate for adverse events.
HARMONi-2
After announcing positive qualitative results for the HARMONi-2 trial, also referred to as AK112-303, a randomized, single-region (China) Phase III study sponsored by Akeso, on May 30, 2024, the Company announced, on September 8, 2024, quantitative data from the primary analysis of the Phase III HARMONi-2 trial featuring ivonescimab that was presented as
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part of the Presidential Symposium at the International Association for the Study of Lung Cancer’s (IASLC) 2024 World Conference on Lung Cancer (WCLC 2024). The HARMONi-2 presentation evaluated monotherapy ivonescimab compared to monotherapy pembrolizumab in patients with locally advanced or metastatic NSCLC whose tumors have positive PD-L1 expression. HARMONi-2 is a single region, multi-center, double-blinded Phase III study conducted in China sponsored by Akeso, with data generated and analyzed by Akeso.
In the HARMONi-2 primary analysis, ivonescimab monotherapy demonstrated a statistically significant improvement in the trial’s primary endpoint, PFS by Independent Radiologic Review Committee (IRRC), when compared to monotherapy pembrolizumab, achieving a hazard ratio of 0.51 (95% CI: 0.38, 0.69; p<0.0001). A clinically meaningful benefit was demonstrated across clinical subgroups, including patients with tumors with high PD-L1 expression. Overall survival data was not yet mature at the time of the data cutoff and will be evaluated in the future.
Ivonescimab demonstrated an acceptable and manageable safety profile, which was consistent with previous studies. There were three patients (1.5%) who discontinued ivonescimab due to treatment-related adverse events (TRAEs) compared to six patients (3.0%) who discontinued pembrolizumab due to TRAEs. There was one patient in the ivonescimab arm and two patients in the pembrolizumab arm who died as a result of TRAEs in this Phase III study.
Additional Phase II Data Sets
In addition to the HARMONi-2 data announced, on September 8, 2024 at the WCLC 2024, Akeso also announced the results from AK112-205, a single-region (China), multi-center, open-label Phase II study, sponsored by Akeso, of patients with Stage II or III resectable NSCLC, with data generated and analyzed by Akeso. Further, the Company announced that data for ivonescimab was presented as a part of the 2024 European Society for Medical Oncology Annual Meeting (ESMO 2024) featuring updated ivonescimab data in advanced triple-negative breast cancer (TNBC), recurrent / metastatic head and neck squamous cell carcinoma (HNSCC), and metastatic microsatellite-stable (MSS) colorectal cancer (CRC). Each trial from which the data was generated was a Phase II study conducted in China sponsored by Akeso, with data generated and analyzed by Akeso.
Based on data published by Akeso at the 2024 European Lung Cancer Conference, in the AK112-201 (Cohort 1), a Phase II study conducted in China, for first-line advanced NSCLC patients with squamous histology, (n=63), ivonescimab, combined with carboplatin and paclitaxel, demonstrated a median PFS of 11.1 months. For first-line advanced non-squamous NSCLC patients (n=72), ivonescimab, combined with carboplatin and pemetrexed, demonstrated a median PFS of 13.3 months. Median overall survival was not reached for either subgroup of patients after a median follow-up period of 22.1 months. This Phase II study was considered to have demonstrated a tolerable safety profile and a low discontinuation rate for adverse events.
Product Pipeline
Summit Sponsored Ivonescimab Trials: Ivonescimab is currently being investigated in global Phase III clinical trials. Phase I and II trials were completed by our partner Akeso. This pipeline reflects clinical trials that have been or are planned to be initiated by Summit in its Licensed Territory.
HARMONi study is a Phase III, multi-regional, potentially registration-enabling clinical trial that we joined with Akeso, and for which we started initiating and activating sites in North America and Europe during 2023. The first patient in our Licensed Territory was enrolled in the second quarter of 2023. We completed enrollment in October 2024. The two primary endpoints for this study are PFS and OS, and the study compares ivonescimab plus platinum-based doublet chemotherapy versus placebo plus platinum-based doublet chemotherapy. We expect to disclose top-line results from HARMONi in mid-2025, depending upon maturation of the data per the protocol.
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The U.S. Food and Drug Administration (FDA) has granted Fast Track designation for the proposed use of ivonescimab in combination with platinum-based chemotherapy for the treatment of adult patients with locally advanced or metastatic NSCLC with EGFR mutation, who have experienced disease progression following EGFR-TKI therapy.
HARMONi-3 study is a Phase III, multi-regional, potentially registration-enabling clinical trial for which we initiated activating sites in North America and China during the fourth quarter of 2023. The primary endpoint for this study is overall survival (OS), and the study compares ivonescimab plus platinum-based doublet chemotherapy versus pembrolizumab plus platinum-based doublet chemotherapy. The Company continues to enroll patients in its HARMONi-3 clinical trial. The Company recently announced that it has the intention to amend the protocol for the HARMONi-3 study to include both squamous and non-squamous patients without actionable genomic alterations, adjust the primary endpoint for HARMONi-3 to include progression-free survival (PFS) in addition to overall survival (OS), and adjust the sample size to include an estimated 1,080 patients.
Based on the results of HARMONi-2, the Company announced its intention to initiate HARMONi-7 in early 2025. HARMONi-7 is currently planned as a multi-regional Phase III clinical trial that will compare ivonescimab monotherapy to pembrolizumab monotherapy in patients with metastatic NSCLC whose tumors have high PD-L1 expression. The sample size for this study is currently planned to have an estimated 780 patients with two primary endpoints, PFS and OS.
Summit plans to conduct its current clinical trials, as well as design and conduct additional clinical trial activities for ivonescimab within its Licensed Territory, to support and submit relevant regulatory filings. We intend to explore further clinical development of ivonescimab in solid tumor settings outside of metastatic non-small cell lung cancer, our current area of focus in its Phase III clinical trials.
In the fourth quarter of 2023, we began collaborating with multiple institutions globally and opened our investigator-initiated study program across several disease areas. In July 2024, we entered into a collaboration agreement with The University of Texas M.D. Anderson Cancer Center (MD Anderson) with the intent to further accelerate the development of ivonescimab through pre-clinical and clinical studies. Under the terms of the agreement, we have committed to MD Anderson $15.0 million in milestone payments as compensation for services to be provided for the studies, over the five-year term of the collaboration agreement. Actual costs incurred under this collaboration are expensed to research and development as MD Anderson renders the services under the agreement. As of September 30, 2024, we have not provided any funding to MD Anderson and no research and development costs have been incurred.
In addition, our partners at Akeso are sponsoring multiple, ongoing Phase II and III clinical trials in NSCLC and other cancers outside of our Licensed Territory. We plan to review the data generated from these clinical trials as a part of our consideration for advancing our clinical development pipeline for ivonescimab in our Licensed Territory.
Recent Developments
Private Placement
On September 11, 2024, we entered into the Purchase Agreements with multiple leading biotech institutional and individual accredited investors (collectively, the “Investors”), for the sale by us in a private placement (the “September 2024 Private Placement”) of an aggregate of 10,352,418 shares (the “Shares”) of our common stock, at purchase price of $22.70 per Share, which was the closing price of the common stock on September 11, 2024, for aggregate gross proceeds to us of approximately $235.0 million (the “September 2024 Private Placement”). The closing of the September 2024 Private Placement occurred on September 13, 2024. The proceeds of the September 2024 Private Placement are expected to be used to advance, in part, the clinical development of ivonescimab, including in solid tumor settings outside of metastatic non-small cell lung cancer by leveraging the data that was presented at ESMO 2024, in addition to working capital needs and general corporate purposes, including, without limitation, the repayment of principal during the third quarter of 2024 in the amount of approximately $75.5 million of the $100.0 million promissory note issued by the Company to Robert W. Duggan, due April 1, 2025. The promissory note, including accrued interest, was subsequently repaid in full on October 1, 2024.
Our Chief Executive Officer, Executive Chairman and majority stockholder, Robert W. Duggan, Chief Executive Officer, President and member of the Board of Directors (the “Board”), Dr. Mahkam Zanganeh, Chief Operating Officer, Chief Financial Officer and member of the Board, Manmeet Soni, Chief Accounting Officer, Bhaskar Anand, and member of the Board, Jeff Huber, through his controlled entity Caspian Capital LLC, each participated as Investors in the Private Placement, purchasing an aggregate of 3,480,173 shares of common stock.
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On September 11, 2024, in connection with the Purchase Agreements, we entered into Registration Rights Agreements with the Investors (the “Registration Rights Agreements”). The Registration Rights Agreements provide, among other things, that we will as soon as reasonably practicable file with the Securities and Exchange Commission (the “SEC”) a registration statement registering the resale of the Shares. The Company filed the registration statement on September 19, 2024, which was automatically effective upon filing.
At-the-Market Offering
On May 13, 2024, the Company entered into an at-the-market sales agreement (the "ATM Agreement") pursuant to which the Company may, subject to the terms and conditions set forth in the agreement offer and sell, from time to time, through or to the agents, acting as agents or principal, shares of the Company's common stock, par value $0.01, having an aggregate offering price of up to $90.0 million.
During the three months ended and from the date of the ATM Agreement through September 30, 2024, the Company sold 1,807,093 shares of common stock under the ATM Agreement at a weighted-average price of $24.47 per share, for gross proceeds of $44.2 million. The remaining availability under the ATM Agreement as of September 30, 2024 is approximately $45.8 million.
The Company has received net proceeds of $43.0 million, which is net of sales commissions and other fees of approximately $1.2 million. The Company plans to use the net proceeds from this offering for working capital and general corporate purposes.
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Results of Operations
Amounts reported in millions within this Quarterly Report are computed based on the amounts in thousands, and therefore, the sum of components may not equal the total amount reported in millions due to rounding.
The following table sets forth our results of operations for the three and nine month periods ended September 30, 2024 and 2023:
Three Months Ended September 30,
Nine Months Ended September 30,
(in millions)
2024
2023
2024
2023
Operating expenses:
Research and development
$
37.7
$
15.3
$
99.4
$
34.7
Acquired in-process research and development
—
—
15.0
520.9
General and administrative
20.4
5.4
46.1
18.7
Total operating expenses
58.1
20.7
160.5
574.3
Other operating (expense) income, net
(0.3)
0.3
0.1
0.8
Operating loss
(58.4)
(20.4)
(160.4)
(573.5)
Other income (expense), net
2.1
(0.8)
0.3
(4.9)
Net loss
$
(56.3)
$
(21.2)
$
(160.1)
$
(578.4)
Operating Expenses
Research and Development and Acquired In-Process Research and Development Expenses
The table below summarizes our research and development expenses by category for the three and nine month periods ended September 30, 2024 and 2023, respectively.
Three Months Ended September 30,
Nine Months Ended September 30,
(in millions)
2024
2023
2024
2023
Oncology
$
23.0
$
10.5
$
64.8
$
19.3
Acquired in-process research and development
—
—
15.0
520.9
Anti-infectives
0.2
(0.1)
0.2
(1.3)
Compensation related costs, excluding stock-based compensation
8.7
4.8
22.6
14.7
Stock-based compensation
5.8
0.1
11.8
2.0
Total
$
37.7
$
15.3
$
114.4
$
555.6
Research and development expenses (excluding acquired in progress research and development noted below) increased by $22.4 million and $64.7 million during the three and nine month periods ended September 30, 2024, respectively, compared to the same periods in the prior year. This increase was primarily due to our continued investment in oncology expenses for ivonescimab, known as SMT112 in our Licensed Territory, resulting in an increase of $12.5 million and $45.5 million for the three and nine months periods ended September 30, 2024, respectively, and an increase in compensation and stock-based compensation related expenses of $9.6 million and $17.7 million in the three and nine months period ended September 30, 2024, respectively, to support the clinical development of ivonescimab as we continue to hire additional clinical resources in the oncology field, coupled with acceleration charges related to the achievement of certain market conditions on performance stock option awards, as described in Note 16 of our condensed consolidated financial statements included in this report. We expect oncology-related research and development costs to continue to increase as we progress with the development of ivonescimab.
In June 2024, we entered into a second amendment (the "Second Amendment") to the License Agreement with Akeso to expand our licensed territories to include Latin America, Middle East and Africa regions. Considered an extension of the
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original License Agreement, we agreed to make an upfront payment to Akeso in the amount of $15.0 million for these expanded territories which we paid in the third quarter of 2024. This was recorded in our condensed consolidated statement of operations and comprehensive loss as Acquired in process research and development expenses for the nine months ended September 30, 2024.
Our investment in ivonescimab totaled $520.9 million for the nine months ended September 30, 2023 and primarily relates to our upfront milestone payments pursuant to the License Agreement with Akeso. The License Agreement closed in January 2023, and both Akeso and Summit entered into the Common Stock Issuance Agreement (“Issuance Agreement”). Pursuant to the License Agreement and Issuance Agreement, Akeso elected to receive 10 million shares of our common stock in lieu of $25.1 million cash and was paid $274.9 million in cash as the initial upfront payment. The remaining $200.0 million upfront payment was paid on March 6, 2023. In-process research and development expense comprised of the $474.9 million paid in cash, the fair value of the 10 million shares of common stock on the date of closing the transaction of $45.9 million, and $0.1 million of direct transactions costs incurred.
General and Administrative Expenses
The table below summarizes our general and administrative expenses by category for the three and nine month periods ended September 30, 2024 and 2023, respectively.
Three Months Ended September 30,
Nine Months Ended September 30,
(in millions)
2024
2023
2024
2023
Compensation related costs, excluding stock-based compensation
$
4.1
$
2.3
$
10.1
$
7.3
Stock-based compensation
13.6
0.6
28.2
3.4
Legal fees and professional services
(0.1)
1.3
3.0
4.9
Other general and administrative expenses
2.8
1.2
4.8
3.1
Total
$
20.4
$
5.4
$
46.1
$
18.7
General and administrative expenses increased by $15.0 million and $27.4 million for the three and nine months ended September 30, 2024, respectively, compared to the same period in the prior year, primarily due to an increase of $13.0 million and $24.8 million, respectively in stock-based compensation primarily due to acceleration charges related to the achievement of certain market conditions on performance stock option awards, as described in Note 16 of our condensed consolidated financial statements included in this report. Additionally, compensation-related costs, excluding stock-based compensation increased by $1.8 million and $2.8 million, for the three and nine months ended September 30, 2024,respectively, as the Company is focused on building its executive management team to continue supporting the growth of the Company. We expect our general and administrative costs to increase as we continue to support our development efforts in ivonescimab.
Other Operating (Expense) Income, net
The table below summarizes our other operating (expense) income, net for the three and nine month periods ended September 30, 2024 and 2023, respectively.
Three Months Ended September 30,
Nine Months Ended September 30,
(in millions)
2024
2023
2024
2023
Research and development tax credits
$
(0.3)
$
0.3
$
0.1
$
0.8
$
(0.3)
$
0.3
$
0.1
$
0.8
U.K. research and development tax credits decreased by $0.6 million and $0.7 million for the three and nine months ended September 30, 2024, compared to the same period in the prior year as management updated its estimates for qualifying expenditures relating to ivonescimab, which resulted in a decrease in tax credits claimed.
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Other Income (Expense), net
The table below summarizes our other income (expense), net by category for the three and nine month periods ended September 30, 2024 and 2023, respectively.
Three Months Ended September 30,
Nine Months Ended September 30,
(in millions)
2024
2023
2024
2023
Foreign currency gains/(losses)
$
0.2
$
(0.5)
$
0.2
$
0.3
Interest expense on promissory notes payable to related parties
(2.5)
(2.7)
(8.6)
(13.6)
Investment income
4.3
2.5
8.7
8.0
Reclassification of cumulative currency translation gain
—
—
—
0.4
Other expense, net
—
(0.1)
—
(0.1)
$
2.1
$
(0.8)
$
0.3
$
(4.9)
For the three and nine months ended September 30, 2024, other expense, net primarily consisted of loan interest expense incurred related to the $100 million promissory note as described in Note 14 to our condensed consolidated financial statements included in this report, for which $24.5 million was outstanding as of September 30, 2024. These amounts for both periods presented are partially offset by investment income related to our money market funds and short-term investments in U.S. treasury securities. Investment income increased $1.9 million and $0.8 million for the three and nine months ended September 30, 2024, respectively, compared to the same period in the prior year, due to an overall increase in our money market funds and short-term investments balances.
Liquidity and Capital Resources
Sources of Liquidity
To date, we have financed our operations primarily through issuances of our common stock, including our most recent private placement issued in September 2024 for gross proceeds of $235.0 million and the raise of $44.2 million gross proceeds from our ATM Agreement, issuance of debt, receipt of payments to us under license, collaboration, and commercialization arrangements, for example, our license and commercialization agreement with Eurofarma Laboratórios SA, or Eurofarma, development funding and other assistance from government entities, philanthropic, non-government and not-for-profit organizations for our product candidates. In particular, we have received funding from BARDA, CARB-X, Innovate UK, Wellcome Trust and a number of not-for-profit organizations.
We have devoted substantially all of our efforts to research and development, including clinical trials. We have not completed the development of any drugs. We expect to continue to incur significant expenses and increasing operating losses for at least the next few years. The net losses we incur may fluctuate significantly from quarter to quarter and year to year, due to the nature and timing of our research and development activities. We expect that our research and development and general and administrative expenses will continue to be significant in connection with our ongoing research and development efforts. In addition, if we obtain marketing approval for any of our product candidates in the United States or other jurisdictions where we retain commercial rights, and if we choose to retain those rights, we would expect to incur significant sales, marketing, distribution and outsourced manufacturing expenses, as well as ongoing research and development expenses. In addition, our expenses will increase if and as we:
•invest in clinical development of ivonescimab in our Licensed Territory;
•conduct research and continue development of additional product candidates;
•maintain and augment our intellectual property portfolio and opportunistically acquire complimentary intellectual property;
•seek further regulatory advancement for ivonescimab;
•invest in our manufacturing capabilities for ivonescimab and any other products for which we may obtain regulatory approval;
•seek marketing approvals for any product candidates that successfully complete clinical development;
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•ultimately establish a sales, marketing and distribution infrastructure in jurisdictions where we have retained commercialization rights and scale up external manufacturing capabilities to commercialize any product candidates for which we receive marketing approval;
•perform our obligations under our collaboration agreements;
•pursue business development opportunities, including investing in other businesses, products and technologies;
•experience any delays or encounter any issues with any of the above, including but not limited to failed studies, complex results, safety issues or other regulatory challenges
•hire additional clinical, regulatory, scientific and administrative personnel;
•expand our physical presence;
•add operational, financial and management information systems and personnel, including personnel to support our product development and planned future commercialization efforts; and
•borrow capital to fund our resources and have to pay interest expenses on such borrowings.
During the three and nine months ended September 30, 2024, we incurred a net loss of $56.3 million and $160.1 million, respectively, and cash flows used in operating activities for the nine months ended September 30, 2024 was $93.4 million. As of September 30, 2024, we had an accumulated deficit of $1,153.4 million, cash and cash equivalents of $93.8 million, and short-term investments in U.S. treasury securities of $393.1 million. We expect to continue to generate operating losses for the foreseeable future.
We have evaluated whether our cash, cash equivalents and short-term investments provide sufficient cash to fund our operating cash needs for the next 12 months from the date of issuance of these quarterly financials. We believe that our cash, cash equivalents, and short-term investments as of September 30, 2024 will fund our operating cash needs for at least the next 12 months from the date of issuance of these quarterly financials.
From time to time, we may raise additional equity or debt capital through both registered offerings off of a shelf registration, including “at-the-market” offerings, and private offerings of securities. On February 20, 2024, we filed a shelf registration statement on Form S-3 with the SEC, which the SEC declared effective on February 27, 2024. Through our shelf registration statement we may, from time to time, sell up to an aggregate of $450 million of our common stock, preferred stock, debt securities, depositary shares, warrants, subscription rights, purchase contracts, or units. Of the $450 million of liquidity available to us under this shelf registration statement, on May 13, 2024, we had established an at-the-market offering program with J.P. Morgan Securities LLC, as sales agent, in the amount of up to $90 million, of which $45.8 million remains available for sale as of September 30, 2024. If we require or elect to seek additional capital through debt or equity financing in the future, we may not be able to raise capital on terms acceptable to us or at all. To the extent we raise additional capital through the sale of equity or convertible debt securities, the issuance of such securities will result in dilution to our stockholders. If we are required and unable to raise additional capital when desired, our business, operating results and financial condition may be adversely affected. As of the date of this report, additional capital has not been secured.
In addition to the payments already made to Akeso under the License Agreement and Second Amendment, there are additional potential milestone payments of $4.56 billion, as Akeso will be eligible to receive regulatory milestones of up to $1.05 billion and commercial milestones of up to $3.51 billion. In addition, Akeso will be eligible to receive low double-digit royalties on net sales. Until we can generate substantial revenue and achieve profitability, we will need to raise additional capital to fund ongoing operations and capital needs, including the payment of the milestone payments referenced above.
We have based the foregoing estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect. This estimate assumes, among other things, that we do not obtain any additional funding through grants and clinical trial support or through new collaboration arrangements. Our future capital requirements will depend on many factors, including:
•the costs, timing and outcome of clinical trials required for clinical development of ivonescimab;
•the number and development requirements of other future product candidates that we pursue;
•the costs, timing and outcome of regulatory review of ivonescimab and/or our other product candidates we develop;
•the costs and timing of commercialization activities, including product sales, marketing, distribution and manufacturing, for any of our product candidates that receive marketing approval;
•the extent to which we become liable formilestone payments under the License Agreement and Second Amendment for ivonescimab;
•subject to receipt of marketing approval, revenue received from commercial sales of any product candidates;
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•the costs and timing of preparing, filing and prosecuting patent applications, maintaining and protecting our intellectual property rights and defending against any intellectual property-related claims;
•our ability to establish and maintain collaborations, licensing or other arrangements and the financial terms of such arrangements;
•the extent to which we acquire or invest in other businesses, products and technologies;
•the rate of the expansion of or the extent to which we change our physical presence.
Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of some, or all, of the following: equity and debt offerings, collaborations, strategic alliances, grants and clinical trial support from government entities, philanthropic, non-government and not-for-profit organizations, and marketing, distribution or licensing arrangements.
We will need to seek additional funding in the future to fund operations. Additional capital, when needed, may not be available to us on acceptable terms, or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our existing stockholders may be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our existing stockholders. Additional debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends or other distributions. If we raise additional funds through collaborations, strategic alliances or marketing, distribution, or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us.
If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves, which could materially adversely affect our business prospects or our ability to continue operations.
Cash Flows
The following table summarizes the results of our cash flows for the nine months ended September 30, 2024 and 2023:
Nine Months Ended September 30,
(in millions)
2024
2023
Net cash used in operating activities
$
(93.4)
$
(57.3)
Net cash used in investing activities
$
(288.8)
$
(648.3)
Net cash provided by financing activities
$
404.8
$
80.3
Operating Activities
Net cash used in operating activities for the nine months ended September 30, 2024 was $93.4 million and was due to a net loss of $160.1 million, which included non-cash charges of $35.5 million, an adjustment of $15.0 million cash payments to investing activities, related to acquired-in process research and development for the upfront payment to Akeso for the Second Amendment signed in June 2024 and paid in the third quarter of 2024, and a net change in working capital of $16.2 million. The non-cash charges primarily consisted of $40.0 million of stock-based compensation, offset by $4.9 million relating to the amortization of the discount of short-term investments in U.S. Treasury securities. The net change in working capital was primarily due to an increase of $9.9 million in accrued liabilities, which mostly represents the interest on the current promissory notes payable, an increase of $2.5 million in accrued compensation relating to an increase in accrued bonuses, a decrease of $2.1 million in current and other long-term assets, a decrease of $0.7 million in research and development tax receivable to reflect a true-up in estimates, an increase of $0.5 million in accounts payable, and a decrease of $0.6 million in prepaid expenses.
Net cash used in operating activities for the nine months ended September 30, 2023 was $57.3 million and resulted from a net loss of $578.4 million, which included an adjustment of $475.0 million cash payments to investing activities for the purchase of in-process research and development from Akeso under the terms of the License Agreement and the associated direct transaction costs, non-cash charges of $55.1 million and a net decrease in working capital of $9.1 million. The non-cash charges primarily comprised of $45.9 million issuance of shares in lieu of cash for Akeso upfront payment, $5.9 million of non-cash interest expense, $5.4 million of non-cash charges related to stock-based compensation, partially offset by $1.7 million for amortization of discount on short-term investments. The net decrease in working capital was primarily due to a
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decrease of $9.9 million in accrued liabilities and accrued compensation, an increase of $3.6 million in prepaid expenses and an increase of $3.4 million in other current and long-term assets, partially offset by a decrease of $4.3 million in the research and development tax credit receivable and an increase of $2.9 million in accounts payable.
Investing Activities
Net cash provided by investing activities for the nine months ended September 30, 2024 was $288.8 million and was primarily due to $256.9 million received from the maturity, redemption and sale of short-term investments in U.S. Treasury securities, offset by $530.5 million related to the purchase of short-term investments and $15.0 million cash payment to Akeso for the Second Amendment signed in June 2024.
Net cash used in investing activities for the nine months ended September 30, 2023 primarily comprised of $475.0 million cash payments made to Akeso for the upfront payment pursuant to the License Agreement, $321.0 million for the purchase of short-term investments in U.S. treasury securities, partially offset by $147.6 million received from the maturity and redemption of short-term investments in U.S. treasury securities.
Financing Activities
Net cash provided by financing activities was $404.8 million for the nine months ended September 30, 2024, and primarily consisted of net proceeds of $435.0 million from various private placements, $43.0 million net proceeds from our current ATM Agreement, proceeds received of $2.2 million related to employee stock awards, partially offset by $75.5 million early principal repayment on the $100.0 million promissory notes payable with a related party.
Net cash provided by financing activities was $80.3 million for the nine months ended September 30, 2023, and was due to net proceeds received of $104.1 million (net of paid issuance costs) related to the issuance of common stock from the 2023 Rights Offering and net of the extinguishment of $395.3 million of principal and accrued interest due and payable by us under the $400 million Duggan Promissory Note in satisfaction of the subscription price for the shares subscribed by Mr. Duggan in the 2023 Rights Offering, proceeds received of $0.9 million related to employee stock awards, offset by the repayment of $24.7 million related to promissory notes from related parties.
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Critical Accounting Policies and Significant Judgments and Estimates
Our management’s discussion and analysis of our financial condition and results of operations are based on our condensed consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, and expenses and the disclosure of contingent liabilities in our financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue recognition, research and development costs, intangible assets, stock-based compensation and income taxes. We base our estimates on historical experience, known trends and events, and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Our significant accounting policies are described in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, and in Critical Accounting Policies and Significant Judgments and Estimates in our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission on February 20, 2024 (our "Annual Report"). There have been no material changes to our critical accounting policies and estimates that were disclosed in our Annual Report.
Contractual Obligations and Commitments
Lease Commitments
We lease office space in Menlo Park, California, Miami, Florida, United States and in Oxfordshire, United Kingdom. In addition to our lease commitments as of December 31, 2023, which were disclosed in our Annual Report, we entered into a new lease agreement for our Miami, Florida headquarters in the first fiscal quarter of 2024. Total future lease payments as of September 30, 2024, which include base rent and sales tax are approximately $4.3 million on an undiscounted basis. This lease commenced on February 1, 2024 and has a term of 64 months. As of September 30, 2024, we have $0.3 million of restricted cash associated with an irrevocable letter of credit required by the landlord to enter into this lease.
Debt Commitments
Refer to Note 14 to our condensed consolidated financial statements included in this report for a discussion of the promissory note payable to a related party.
Other Commitments
We enter into contracts in the normal course of business with various third parties for clinical trials, preclinical research studies and testing, manufacturing and other services and products for operating purposes. Most contracts provide for termination upon notice, and therefore are cancellable contracts. The majority of these commitments are due within one year. There have been no material changes to the Company's other contractual commitments that were disclosed in our Annual Report.
We have certain commitments under our agreements with Akeso, Wellcome Trust, the University College London and certain employees, former employees and former directors of Discuva, pursuant to which we will be required to pay royalties or make milestone payments. The License Agreement with Akeso also contains certain manufacturing and purchase commitments. As of September 30, 2024, we are unable to estimate the amount, timing or likelihood of achieving the milestones, making future product sales or assessing estimated forecasts for manufacturing and supplied materials which these contingent payment obligations relate to.
Indemnifications
Our certificate of incorporation provides that it will indemnify the directors and officers to the fullest extent permitted by Delaware law. In addition, we have entered into indemnification agreements with all of the directors and executive officers. These indemnification agreements may require us, among other things, to indemnify each such director or executive officer for some expenses, including attorneys’ fees, judgments, fines, and settlement amounts incurred by him or her in any action or proceeding arising out of his or her service as one of our directors or executive officers. We believe the fair value for these
36
indemnification obligations is minimal. Accordingly, we have not recognized any liabilities relating to these obligations as of September 30, 2024 and December 31, 2023.
Off-Balance Sheet Arrangements
Other than the contractual obligations and commitments described above, we did not have during the periods presented, and we do not currently have, any off‑balance sheet arrangements, as defined in the rules and regulations of the Securities and Exchange Commission.
Recently Issued Accounting Pronouncements
For a discussion of recently issued accounting pronouncements, refer to Note 3, Summary of Significant Accounting Policies and Recently Issued or Adopted Accounting Pronouncements, to our condensed consolidated financial statements included in this report.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).
Item 4. Controls and Procedures.
We have carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) under the supervision and the participation of the Company’s management, which is responsible for the management of the internal controls, and which includes our Chief Executive Officers and our Chief Financial Officer. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon our evaluation of our disclosure controls and procedures as of September 30, 2024, our Chief Executive Officers and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at a reasonable level of assurance.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended September 30, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. We are not currently party to any material legal proceedings.
Item 1A. Risk Factors.
An investment in our common stock or other securities involves a number of risks. In addition to other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider each of the risks described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (our "Annual Report") filed with the Securities and Exchange Commission on February 20, 2024, which Annual Report includes a detailed discussion of the Company’s risk factors. If any of the risks described therein or other uncertainties currently unknown to us, or that we currently deem to be immaterial, develop into actual events, our business, financial condition, or results of operations could be negatively affected, the market price of our common stock or other securities could decline, and you may lose all or part of your investment.
There have been no material changes to the risk factors disclosed in Item 1A of our Annual Report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
There were no unregistered sales of equity securities sold during the period covered by this Quarterly Report on Form 10-Q that were not previously included in a Current Report on Form 8-K filed by the Company.
Securities Purchase Agreement, dated September 11, 2024, by and among Summit Therapeutics Inc. and the Investors named therein (incorporated by reference to Exhibit 10.1 of Form 8-K filed by the Company on September 12, 2024, File No. 001-36866)
10.2†
Registration Rights Agreement, dated September 11, 2024, by and among Summit Therapeutics Inc. and the Investors named therein (incorporated by reference to Exhibit 10.2 of Form 8-K filed by the Company on September 12, 2024, File No. 001-36866)
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
*
Filed herewith.
**
Furnished herewith.
†
Certain of the exhibits and schedules to this exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The Company agrees to furnish supplementally a copy of all omitted exhibits and schedules to the SEC upon its request.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: October 30, 2024
SUMMIT THERAPEUTICS INC.
By:
/s/ Manmeet Soni
Name:
Manmeet Soni
Title
Chief Operating Officer and Chief Financial Officer
