This Unstoppable Biotech Stock Just Became an Even Better Buy

Last year, Summit Therapeutics (NASDAQ: SMMT) was one of the stars of the biotech industry. The company's shares soared following a significant clinical win. Summit's market capitalization of $15.3 billion is exceedingly rare among clinical-stage drugmakers, signaling the market's positive feelings toward this rising company.

Now, Summit has recently made a move that could pay even more significant dividends down the road and improve its prospects. Read on to find out more.

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Partnering up with a pharmaceutical giant

Summit Therapeutics' leading candidate, ivonescimab, is an investigational cancer treatment licensed from China-based Akeso Biopharma. Summit owns the rights to develop and market ivonescimab in North America, Latin America, Europe, Africa, Japan, the Middle East, and the Caribbean. Last year, Summit's shares caught fire after ivonescimab performed better than Keytruda, an oncology market leader, in a phase 3 clinical trial in patients with non-small cell lung cancer and a PD-L1 protein overexpression.

However, that study was conducted in China. If Summit Therapeutics wants to earn approval for ivonescimab in the U.S., it will have to run late-stage clinical trials in the country -- and it is currently doing so. But the company just unlocked even more potential opportunities. Last month, Summit announced it would collaborate with the pharmaceutical giant Pfizer to run clinical trials for ivonescimab in combination with some of the latter's oncology drug candidates across various potential indications.

Under the terms of the deal, Pfizer will be responsible for conducting these studies. Let's see what that could mean for Summit Therapeutics' prospects.

What Summit Therapeutics gets out of it

Combination therapies are all the rage in oncology, and in other therapeutic areas, for that matter. That's because pairing two or more drugs together that work in different ways can sometimes enhance efficacy far beyond what either one provides by itself. These potentially highly effective combinations aren't chosen at random, either. Researchers work hard to pick which two (or more) medicines could lead to improved efficacy.

Summit Therapeutics is likely already planning to target plenty of indications with ivonescimab, considering the list of clinical trials the therapy is undergoing in China. However, with Pfizer's help, it could go after even more potential approvals in the future if its crown jewel proves effective in one or more of the clinical trials it will undergo in combination with some of Pfizer's candidates. Here's an added perk: Pfizer will be responsible for running the clinical trials to test effective combo treatments featuring ivonescimab.

Keep in mind that this is still a clinical-stage company which generates no revenue and is consistently unprofitable. The partnership with Pfizer could allow Summit to identify more potentially lucrative indications for ivonescimab without spending significant funds on the expensive clinical trial process. While this partnership does not guarantee substantial clinical wins yet, it could open up a world of opportunities for Summit in the future.

Summit's pipeline in a drug

So, is Summit Therapeutics worth investing in today? My view is that it is because its leading candidate, ivonescimab, could prove to be a pipeline in a drug. Some of the most successful medicines in the industry, including Keytruda, fit this profile. Ivonescimab is already approved in China. It has produced data in several studies and, so far, there is no major red flag for the medicine that should cause significant skepticism (such as serious adverse events).

While it still needs to pass phase 3 studies in the U.S., ivonescimab looks destined to generate billions in sales across many different indications in the next decade. Summit Therapeutics may not yet generate any revenue, but that's why now is a good time to buy the stock. Investors should get in before ivonescimab-related success sends its share price even higher.

Should you invest $1,000 in Summit Therapeutics right now?

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Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Pfizer and Summit Therapeutics. The Motley Fool has a disclosure policy.