Big Risk - Big Prize. Next Cancer Drug. Summit Therapeutics Analysis SMMT Stock | Martin Shkreli

Summary

In the video transcript, the speaker discusses the complexities of analyzing pharmaceutical stocks, particularly focusing on Summit Therapeutics. They mention the company's pivot from an ADR to an antibiotic and the surprising acquisition of 22 million shares, catapulting Summit to become one of the largest biotech companies. The discussion delves into the reliability of Chinese clinical trial data and the potential impact on Summit's stock valuation. The speaker also speculates on the company's future, considering the results of a phase three clinical trial and the possibility of partnerships, while expressing caution about making definitive investment decisions based on the current data.

Takeaways

• 🧐 The speaker believes that analyzing pharmaceutical stocks requires a multidisciplinary approach and is not easy for anyone to master.
• 📉 The company Summit Therapeutics is discussed, which pivoted from an antibiotic to a pharmaceutical company and experienced significant growth.
• 💡 The importance of not hyper-fixating on one stock is emphasized, as the market is vast and opportunities can be missed by focusing too narrowly.
• 📈 The stock of Summit Therapeutics surged due to a licensing deal, highlighting the potential for rapid growth in the pharmaceutical industry.
• 🔍 The speaker admits to missing out on covering Summit Therapeutics, underscoring the need for full-time dedication to stay updated on market movements.
• 🤔 There's skepticism about the reliability of Chinese clinical trial data, which is a point of discussion regarding Summit's drug performance.
• 📊 The speaker analyzes a clinical trial result, comparing the performance of Summit's drug to existing treatments, focusing on median progression-free survival (PFS).
• 💼 Mention of Bob Dugan, a trusted figure in biopharma, and his association with Summit Therapeutics, which adds credibility to the company.
• 🚀 The stock's valuation reached $12 billion, raising questions about its potential and the reliability of the clinical trial results supporting this value.
• 🤝 The potential for a big partnership is anticipated if the clinical trial results are legitimate, indicating future growth opportunities for Summit.

Q & A

What is the main topic of discussion in the transcript?

The main topic of discussion is the analysis of pharmaceutical stocks, specifically focusing on Summit Therapeutics, a company that pivoted to develop an antibiotic and later became a significant player in the biotech industry.

What is the significance of the 80% figure mentioned in the transcript?

The 80% figure refers to the ownership stake of Bob Dugan in Summit Therapeutics, which is a substantial portion, indicating his significant influence and investment in the company.

What is the importance of multidisciplinary knowledge in analyzing pharmaceutical stocks?

Multidisciplinary knowledge is crucial in analyzing pharmaceutical stocks because the field is complex and requires understanding from various disciplines to make informed decisions about a company's potential and its products.

Why did the speaker miss the pivot of Summit Therapeutics?

The speaker missed the pivot of Summit Therapeutics because they were not closely monitoring the market, highlighting the importance of being actively engaged in the market to catch significant changes in companies' strategies.

What is the potential issue with hyper-fixating on one stock, as mentioned in the transcript?

Hyper-fixating on one stock can cause investors to miss out on other potentially better investment opportunities in the market, as they become too focused on a single stock and overlook other stocks that may be performing better.

What is the significance of the 12 billion figure in the context of Summit Therapeutics?

The figure of 12 billion refers to the market capitalization of Summit Therapeutics, which is a significant amount, especially considering the company's relatively recent rise in the biotech industry.

What is the 'Forbes 30 under 30' list mentioned in the transcript?

The 'Forbes 30 under 30' list is an annual list by Forbes magazine that recognizes 30 young entrepreneurs, innovators, and leaders under the age of 30 in various fields, including business, technology, and healthcare.

What is the clinical trial 'Harmony 3' mentioned in the transcript?

Harmony 3 is a phase three clinical trial mentioned in the context of Summit Therapeutics' drug development. It involves 322 patients and aims to demonstrate a reduction in disease progression or death.

What does the acronym 'PD-1' stand for and why is it significant in the transcript?

PD-1 stands for Programmed cell death protein 1, which is a protein that functions as an immune checkpoint and plays a crucial role in the interaction between the body's immune system and cancer cells. In the transcript, it is significant because Summit Therapeutics' drug is a PD-1 inhibitor, which could potentially revolutionize cancer treatment.

What is the concern about the Chinese data mentioned in the transcript?

The concern about the Chinese data is the reliability of the clinical trial results, as sometimes data from Chinese studies may not be as robust or replicable as data from other regions, which could impact the validity of the drug's effectiveness.

What does the speaker mean by 'the old Buffett saying' in the context of making a bet on a stock?

The speaker is referring to Warren Buffett's investment philosophy, which emphasizes not making bets on investments unless there is a clear understanding and confidence in the investment. In the context of the transcript, the speaker is considering whether to invest in Summit Therapeutics' stock based on the available data and the company's potential.

Outlines

00:00

🧪 Analyzing Pharmaceutical Stocks and Summit Therapeutics

The speaker discusses the complexity of analyzing pharmaceutical stocks due to their multidisciplinary nature. They emphasize the importance of staying updated with the market and not fixating on a single stock. The focus then shifts to Summit Therapeutics, a company that pivoted from an antibiotic to a PD1 drug, which led to a significant increase in its stock value after licensing the drug for $13 billion. The speaker highlights the need for full-time investment effort to keep up with market changes and mentions the company's phase three Harmony 3 trial, which showed promising results with a 54% reduction in disease progression or death.

05:00

📈 Summit Therapeutics' Market Impact and Clinical Trial Analysis

The speaker continues the discussion on Summit Therapeutics, noting its rapid rise to become one of the largest biotech companies. They delve into the clinical trial results, comparing the performance of Summit's drug to Kud's drug, which is a top-selling cancer medication. The analysis includes a comparison of progression-free survival times and the potential for doctors to switch to Summit's drug if the benefits are significant. The speaker also touches on the challenges of relying on Chinese clinical trial data and the importance of considering various factors such as patient demographics and trial conditions when evaluating drug efficacy.

10:02

📊 Weighing the Evidence: Summit Therapeutics' Clinical Trial Outcomes

In this paragraph, the speaker grapples with the implications of Summit Therapeutics' clinical trial outcomes. They compare the results to other studies and discuss the significance of the trial's design, patient demographics, and baseline conditions. The speaker also considers the company's valuation and the potential impact of the drug's performance on the market. They express caution about making definitive conclusions based on the current data and the need for further clinical evidence to solidify the drug's position in the market.

Keywords

💡Pharmaceutical Stocks

Pharmaceutical stocks refer to shares in companies that research, develop, produce, and market drugs or medical devices. These stocks can be volatile due to factors like FDA approvals, patent expirations, and clinical trial results. In the script, the speaker discusses the complexity of analyzing pharmaceutical stocks due to their multidisciplinary nature, implying that understanding various fields is necessary for successful investment.

💡Summit Therapeutics

Summit Therapeutics is a biopharmaceutical company mentioned in the script. The speaker discusses the company's shift in focus and its potential in the market, highlighting the importance of staying updated on company developments for investors. It is used as an example of a company that pivoted and became significant in the biotech sector.

💡ADR (Anti-Drug Response)

An ADR, or Anti-Drug Response, typically refers to a patient's negative reaction to a drug. In the context of the script, it seems to refer to a past event or product related to Summit Therapeutics. The mention of ADR indicates the speaker's focus on the company's history and how it might affect current or future investments.

💡Pivoted

To pivot, in a business context, means to change direction or strategy. The script mentions that Summit Therapeutics pivoted, suggesting a strategic shift that could impact the company's valuation and stock performance. This is a key concept for investors who need to understand how company strategies can affect their investments.

💡Retail Investors

Retail investors are individual investors who invest on their own behalf, rather than through an institution. The script discusses how retail investors might hyper-fixate on one stock, which can be a mistake given the vast number of stocks available. This highlights the importance of diversification in investment strategies.

💡GameStop

GameStop is mentioned as an example of a stock that some retail investors might hyper-fixate on. The reference to GameStop in the script is used to illustrate the potential pitfalls of focusing too much on a single stock, especially one that has been subject to significant market volatility and attention.

💡PD-1/PD-L1

PD-1/PD-L1 refers to a protein pathway that inhibits certain immune responses, and drugs that target this pathway can be used in cancer immunotherapy. In the script, PD-1 is mentioned in relation to a drug that Summit Therapeutics might be developing or licensing, indicating the potential significance of this drug class for the company's future.

💡Phase Three Clinical Trial

A Phase Three Clinical Trial is a large-scale study that further evaluates the effectiveness of a drug or treatment and monitors side effects, conducted after preliminary testing suggests efficacy. The script mentions a Phase Three trial, 'Harmony 3', which is a critical trial for Summit Therapeutics' drug, indicating that the results could significantly impact the company's stock price.

💡Median PFS (Progression-Free Survival)

Median PFS, or Progression-Free Survival, is a metric used in clinical trials to measure how long patients live without their disease getting worse. The script discusses median PFS in the context of a clinical trial for Summit Therapeutics' drug, comparing it to another drug (Kuda), to assess the potential effectiveness of the new drug.

💡Bob Dugan

Bob Dugan is mentioned as a trusted figure in the biopharmaceutical industry. His association with Summit Therapeutics is used in the script to lend credibility to the company and its potential. His reputation might influence investor sentiment and the perceived value of the company's stock.

💡Market Cap

Market Cap, or Market Capitalization, is the total dollar market value of a company's outstanding shares. The script discusses Summit Therapeutics' market cap, which had reached 12 billion, as an indicator of the company's size and potential value. This is a key metric for investors assessing the scale of their investment.

Highlights

The complexity of analyzing pharmaceutical stocks requires a multidisciplinary approach.

Summit Therapeutics had a pivot from an ADR to an antibiotic.

Bob Dugan's involvement with Summit Therapeutics.

The importance of not hyper-fixating on a single stock in the market.

The need for full-time commitment to stay updated on the market's many stocks.

Summit Therapeutics' unexpected rise to become one of the largest biotech companies.

The licensing deal that catapulted Summit Therapeutics to a $13 billion valuation.

The challenge of getting on the Forbes 30 under 30 list and its evolution over time.

The licensing of a Chinese company's drug and its potential impact.

The phase three Harmony 3 trial's results and their significance.

The comparison of Summit Therapeutics' drug to Kud's drug in terms of median PFS.

The potential for a big partnership deal for Summit Therapeutics.

The difficulty in replicating Chinese clinical trial results in other markets.

The importance of the inclusion and exclusion criteria in clinical trials.

The potential market cap of Summit Therapeutics and its implications.

The speculation on whether the clinical trial results will hold up over time.

The potential for Summit Therapeutics' drug to be a breakthrough in cancer treatment.

The comparison of Summit Therapeutics' drug to other drugs in the market.

The strategic considerations for investors regarding Summit Therapeutics' stock.

The potential for Summit Therapeutics to become a high-value stock in the future.

Transcripts

he owns

80% no way this guy is up 12 B's on this

thing I think anyone can learn how to

analyze pharmaceutical stocks it's

not it is so multidisciplinary that no

one discipline will actually help you so

that's one thing to keep in mind so all

to talk today is this company

summit summit Therapeutics which kind of

had an ADR and then didn't this is Bob

duin's thing and then they they had an

antibiotic and I guess at some point

they pivoted I missed that so I missed

this whole Spiel that's one of the

problems with uh if you're not so front

and center in the market and I think

this is what a lot of retail investors

get wrong when they hyper fixate on one

stock like a GameStop or a Sava or

whatever there still there's so many

stocks in the market so while you're

waiting and like thinking about your

same old stock there's often times like

a a better stock that's out there and

you're just kind of so focused on this

one stock because you don't know any

better and you know I try to cover as

many stocks as I can but even I can't do

it that's why funds have many people on

a team and um Summit is one of these

stocks that kind of I just missed and

that's why you need to do this

full-time if you're going to be investor

you really have to try to do it

full-time so it's still a Lon company I

think let me see I don't think shorting

Boeing is a great great idea um yeah so

when did they in license this thing and

why isn't airo up a bunch wow somebody

bought 22 million shares this thing so

this is one of the biggest biotech

companies

Now isn't that crazy it just all of a

sudden became one of the largest

stocks and it's a pd1 VF by specific 13

billion from one license there's so many

companies that spent decades building up

their business and some it's

already at 13 billion from one license

crazy huh it's almost like bdnl is a

really important function at these

companies well anyway yeah the 30 under

30 list um I don't know what to say um

it was only 30 people way back when and

I recommended V to the list after

because I think he's a couple years

younger than me and I was just turning

30 and he was like 28 or 29 or something

V made list the next year but the next

year was 30 under 30 in

each you can't exactly pay for a spot

but it's gotten so bad they need they

need people so bad that they you can

almost kind of use PR a PR person to get

name to it so hey well the guy at Forbes

Nathan VY who wrote the for Blood and

Money book which I still haven't read V

asked me who who belongs on the Forbes

30 under 30 and I just mentioned cuz he

was

my largest stockholder at the time or

one of them the story was even more

impressive than maybe I realized oh this

is a kizo not airo I thought it was a

KIRO oops this is this is a Chinese

company they they are publicly traded

bit of an ARB here well maybe not a huge

ARB but okay so they got the license a

while back so there's no

excuse yeah

so it's up a lot on Chinese data the

question is is the Chinese data

reliable sometimes it

isn't it's hard to say it depends

exactly on the results exactly you know

just a bunch of details but so they're

doing a phase three Harmony 3 I'll show

you the key to like analyzing all right

322 let's analyze this trial a little

bit 322 patients 54% reduction in

disease progression or death I don't

think that's the result that we care

about right we care about the new result

49% versus pemro in first line pdl1

positive median PFS of 11 months versus

6 months so basically we have to check

if this is the right number right for

for K truda because if this number is a

little bit too high and this number is a

little bit too low then you can kind of

make some conclusions from that but if

the Kuda number is very good or is

comports with what has already been

reported then you can assume the trial

was run relatively well to some extent

here's a study that we can maybe glance

at so do you guys see chat do you see

what I see here I don't know I might

short this for an intraday for an

intraday trade so basically the idea I

mean I still think this they'll get like

a big partnership and all this stuff

looks fairly balanced just a little bit

of imbalance with the metastases but not

enough to sway the trial I don't think

yeah I don't know if you if you see it's

really hard to tell

if I mean there's clear separation I I

would concede that but this static can

still mature a little bit more I I guess

one perspective to keep here is kud is

such a big seller that even if one oh

all the benefit driven by okay well 3B

is small group here it's almost all four

healthier did better but that's a small

group too I guess one way to look at it

is look even if uh the benefit Narrows

which I suspect it will are even going

to get people switching over will

doctors switch over because after all

better is better right any amount better

is better yeah I got to say I mean it

could be cheap could be a cheap stock

I'm waffling on this

one

because I still want to look at the data

but it does seem like in a controlled

study they beat Kuda and Kuda is selling

20 billion in Revenue almost all profit

you know they're going to do a uh big

secondary tonight but that's almost to

be

expected Bob Dugen is such a trusted guy

in biofarma yeah I mean the only there's

a couple pieces of diligence here I

don't think it changes the landscape for

ioa because this is first line and

they're really treating lastline

patients but I guess if you look at that

5.8 number if it was really

7.4 in other words here your curves are

so close at that point that one or two

patience gets you back to sort of what

you'd

expect this is a tough

one on one hand you have Bob Dugen the

pharmacyclics Maestro no the market cap

of this is 12 billion this is survival

so these are the red line is people on

krudo which is MC's bestselling cancer

drug one of the best selling drugs in

the world the blue line is people on

this new drug from SS smmt Summit oh you

be

quiet he's a little baby it does look

better than Merc yeah yeah definitely

looks better than Merc oh I really don't

want to say something negative and then

have

it come back to haunt me it certainly

looks better than Sava I mean it could

be a real

breakthrough this was a bigger study

Chinese patients are also a little bit

different than us patients

[Music]

[Applause]

is

so basically the idea is like okay your

drug did 11 months and you're saying

it's better because the other drug did

six months but something's wrong with

this because typically people who get

that drug don't live for six months or

have PFS for six months they usually

get

um no this is a better long way better

long sava's not a long yeah exactly it's

it's it's going to be a while before we

see more clinical trial results and this

that is a little sus cuz you you can

give I mean I guess the reason you don't

want to give a vaston is it's toxic I do

analyze we're we're trying to get our

head through head around this um result

the China thing doesn't help a lot of

Chinese studies don't exactly replicate

but a lot do too this is really tricky

Summit is the one of the largest biotech

companies in the world now they have one

drug uh I van esab and we're just trying

to see if this result is legit or not I

don't I think it's I don't think we're

going to get the answer today but I do

think you have a a very unusually low

performance for the control group The

thing about controlled studies is you

kind of have to believe them like H I

don't know like it was such a big big

benefit it's really hard to say that

this is like something that shouldn't be

trusted or like something that you know

should be avoided you think about the

valuation

12 billion well now it's even

higher 15 billion just not small cells

like 15 billion in Revenue

potential H this is tricky because I

guess if you think about it that way if

it's 5050 that this holds up relatively

High discount rate there's not that much

upside it might double and then of

course if you're 50/50s right you double

again the problem with looking at the

other studies is that this

trial rep says supposed to represent the

randomized sample so looking at another

study like keynote o24 was done by the

keynote o24 investigators which is a

different sample right those are maybe

like tertiary hospitals academic centers

this one might have been rural Chinese

hospitals very big difference and K24

was open label I mean typically you do

get rapid progression early on that's

not uncommon uh I don't think maybe

you'll look at kot2 for within three

months to already be down to 70% unusual

yeah the the inclusion and exclusion is

important the Baseline is even more

important okay so they had some pdl1

here's PDL pdl1 low and PDL one

high and if you look at that median PFS

sort of the same little little faster

here a little slower here but either way

it's a

win I don't know it looks like a

w if I had to sort of put everything

against each

other all the puts and takes i' sort of

narrowly edge out on the W the problem

is it's like really hard to the old

Buffett saying you know do I have to

make a

bet don't have to make a you don't ever

have to make a

bet but you do have clear separation you

have Bob duck

presumably isn't isn't a fraudster rich

enough he doesn't need to do this twice

guy's just becoming a legend right now

and this it's funny this used to be a 3

to six month PFS and

Os now you're you know like 6mon OS now

you're talking about 22 28 maybe even 30

months here on on overall survival more

time to say goodbye I suppose uh and

maybe some patients even get cured um

but this data will mature more and as it

matures I expect these Lions will get a

little closer but they're probably not

going to get so close to overlap or come

close to that he's

80% no way he's

up this guy is up 12 B's on this thing

you heard that chat 12 billion man I'm a

hater jealous hater right now and if he

gets to 70 billion I mean

he'll you know I don't know what to say

and how the Baker Brothers get in on

this and maybe long 50 basis points I

think that's going to be my

final final verdict

here man this is tricky I the other

problem is I don't think momentum is

going to work in this market this MOA

sucks the rationale is you

have the other arm of pd1

anchoring the cell and the other arm of

vef anchoring the vasculature but

I'm not sure I buy that at

all at higher maybe they just got the

dose right because at higher doses

you're going to get the V Adverse Events

I think it's going to be better I think

it's going to be better than Kuda which

is like basically going to get you a I

don't know $100 stock at least something

like

that but it's going to take time like

they have to show that result

again and before that's that's assuming

the result happens they'll get too well

then you have other indications possibly

what I guess what they could do to a

27's point

is do a melanoma study or do a single

arm

study and see if you can't get

replicatable like or gets better I guess

you still have to get better than Kuda

yeah these studies take a while like

especially the adant studies stage three

studies stage three lung cancer not

phase three clinical

trial uh yeah this is so tricky see I

wouldn't I just wouldn't Advocate like

if you really want a speculative crazy

high flyer stock this might be a decent

decent long but I'm not sure that's the

is definitely a wild animal this thing

is going to be interesting for years to

come years to come