smmt-20230630

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________

FORM 10-Q

_________________


(Mark One)
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to _________

Commission File Number: 001-36866

_______________________________

Summit Therapeutics Inc.

(Exact name of registrant as specified in its charter)

_____________________


Delaware						37-1979717
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

2882 Sand Hill Road, Suite 106,

Menlo Park, CA

(Address of principal executive offices)

94025

(Zip Code)

650-460-8308

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address and former fiscal year, if changed since last report)

_________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	SMMT	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 2, 2023, there were 697,685,365 shares of common stock, par value $0.01 per share, outstanding.


		Page

PART I
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022	4
	Condensed Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2023 and 2022	5
	Condensed Consolidated Statements of Stockholders' Equity for the three and six months ended June 30, 2023 and 2022	6
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022	7
	Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	34
PART II
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3.	Defaults Upon Senior Securities	34
Item 4.	Mine Safety Disclosures	35
Item 5	Other Information	35
Item 6.	Exhibits	36
Signatures		36

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, or this Report, contains forward-looking statements that involve substantial risks and uncertainties. All statements contained in this Report, other than statements of historical fact, including statements regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and objectives of management, are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. The forward-looking statements in this Report include, among other things, statements about:

•the ability to develop a successful product candidate under the License Agreement (as defined below);

•our ability to raise sufficient additional funds to make payments under the License Agreement (as defined below);

•the timing of and the ability to start and effectively execute clinical development of ivonescimab;

•the timing and conduct of clinical trials for any product candidates;

•our ability to advance and conduct, through partners, research and development of SMT-738, the Company's preclinical product candidate for combating multidrug resistant infections, specifically carbapenem-resistant Enterobacteriaceae (“CRE”) infections;

•our plans with respect to possible future collaborations and partnering arrangements;

•the potential benefits of possible future acquisitions or investments in other businesses, products or technologies;

•our plans to pursue research and development of other future product candidates;

•the rate and degree of market acceptance and clinical utility of our product candidates;

•our estimates regarding the potential market opportunity for our product candidates;

•our sales, marketing and distribution capabilities and strategy;

•our ability to establish and maintain arrangements for manufacture of our product candidates;

•our intellectual property position;

•our estimates regarding expenses, future revenues, capital requirements and needs for additional financing;

•the impact of government laws and regulations;

•our competitive position;

•the need to raise additional capital to fund ongoing operations and capital needs; and

•the impact of the novel coronavirus pandemic (“COVID-19”) and the response to it.

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in this Report, particularly in the “Risk Factors” section in this Report, that we believe could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.

You should read this Report and the documents that we have filed as exhibits to this Report completely and with the understanding that our actual future results may be materially different from what we expect. We do not assume any obligation to update any forward-looking statements.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

Summit Therapeutics Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

(Unaudited)


	June 30, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	42,116	$	348,607
Restricted cash	—		300,000
Short-term investments	172,898		—
Accounts receivable	—		349

Prepaid expenses	6,093		1,504
Other current assets	1,787		486
Research and development tax credit receivable	4,607		5,766
Total current assets	227,501		656,712

Non-current assets:
Research and development tax credit receivable	513		—
Property and equipment, net	225		906
Right-of-use assets	6,996		4,175
Goodwill	1,883		1,798

Other assets	254		577
Total assets	$	237,372	$	664,168

Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	987	$	355
Accrued expenses	3,868		10,664
Accrued compensation	3,529		5,641
Lease liabilities	2,928		1,690

Other current liabilities	619		662
Promissory note payable to a related party	—		19,770
Total current liabilities	11,931		38,782

Non-current liabilities:
Lease liabilities, net of current portion	4,331		2,763
Other non-current liabilities	1,511		1,429
Promissory note payable to a related party	100,000		494,540
Total liabilities	117,773		537,514

Commitments and contingencies (Note 17)

Stockholders' equity:
Preferred stock, $0.01 par value, 20,000,000 shares authorized; none issued and outstanding at June 30, 2023 and December 31, 2022, respectively	—		—
Common stock, $0.01 par value: 1,000,000,000 shares authorized; 697,685,365 and 211,091,425 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively	6,976		2,110
Additional paid-in capital	1,050,483		504,767
Accumulated other comprehensive loss	(2,437)		(1,893)
Accumulated deficit	(935,423)		(378,330)
Total stockholders' equity	119,599		126,654
Total liabilities and stockholders' equity	$	237,372	$	664,168

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

Summit Therapeutics Inc.

Condensed Consolidated Statements of Comprehensive Loss

(in thousands, except share and per share data)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenue	$	—	$	235	$	—	$	485
Operating expenses:
Research and development	9,451		9,008		19,334		29,564
In-process research and development	—		—		520,915		—
General and administrative	6,316		6,933		13,256		13,592

Total operating expenses	15,767		15,941		553,505		43,156
Other operating (expense) income, net	(27)		3,014		557		7,821
Operating loss	(15,794)		(12,692)		(552,948)		(34,850)
Other income (expense), net	1,077		(4,079)		(4,145)		(3,318)


Net loss	$	(14,717)	$	(16,771)	$	(557,093)	$	(38,168)

Net loss per share:
Basic and diluted	$	(0.02)	$	(0.12)	$	(1.03)	$	(0.27)
Weighted-average shares used to compute net loss per share:
Basic and diluted	697,685,365		140,114,997		538,807,328		140,077,890

Comprehensive loss:
Net loss	$	(14,717)	$	(16,771)	$	(557,093)	$	(38,168)

Other comprehensive (loss) income:
Foreign currency translation adjustments	(76)		789		(128)		(971)
Reclassification of cumulative currency translation gain to other (expense) income, net	—		—		(419)		—
Net changes related to short-term investments	(965)		—		3		—
Comprehensive loss	$	(15,758)	$	(15,982)	$	(557,637)	$	(39,139)

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

Summit Therapeutics Inc.

Condensed Consolidated Statements of Stockholders' Equity

(in thousands, except share data)

(Unaudited)


	Three Months Ended June 30, 2023
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount
Balance at March 31, 2023	697,685,365	$	6,976	$	1,048,608	$	(1,396)	$	(920,706)	$	133,482



Stock-based compensation	—	—		1,875		—		—		1,875

Net changes related to short-term investments	—	—		—		(965)		—		(965)

Foreign currency translation adjustment	—	—		—		(76)		—		(76)
Net loss	—	—		—		—		(14,717)		(14,717)
Balance at June 30, 2023	697,685,365	$	6,976	$	1,050,483	$	(2,437)	$	(935,423)	$	119,599

	Six Months Ended June 30, 2023
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount
Balance at December 31, 2022	211,091,425	$	2,110	$	504,767	$	(1,893)	$	(378,330)	$	126,654
Rights offering of common stock, net of offering costs of $619	476,190,471	4,762		494,619		—		—		499,381
Issuance of common stock under stock purchase plans and exercise of stock options	403,469	4		647		—		—		651
Issuance of common stock in lieu of cash for Akeso upfront payment	10,000,000	100		45,800		—		—		45,900
Stock-based compensation	—	—		4,650		—		—		4,650

Net changes related to short-term investments	—	—		—		3		—		3
Reclassification of cumulative translation gain (Note 8)	—	—		—		(419)		—		(419)
Foreign currency translation adjustment	—	—		—		(128)		—		(128)
Net loss	—	—		—		—		(557,093)		(557,093)
Balance at June 30, 2023	697,685,365	$	6,976	$	1,050,483	$	(2,437)	$	(935,423)	$	119,599


	Three Months Ended June 30, 2022
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount
Balance at March 31. 2022	98,122,356	$	981	$	388,328	$	(3,957)	$	(320,945)	$	64,407


Stock-based compensation	—	—		2,496		—		—		2,496
Imputed interest on promissory note payable to a related party				396						396
Foreign currency translation adjustment	—	—		—		789		—		789
Net loss	—	—		—		—		(16,771)		(16,771)
Balance at June 30, 2022	98,122,356	$	981	$	391,220	$	(3,168)	$	(337,716)	$	51,317

	Six Months Ended June 30, 2022
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders' Equity
	Shares	Amount
Balance at December 31, 2021	98,039,540	$	980	$	384,049	$	(2,197)	$	(299,548)	$	83,284

Issuance of common stock under stock purchase plans and exercise of stock options	82,816	1		186		—		—		187
Stock-based compensation	—	—		6,492		—		—		6,492
Imputed interest on promissory note payable to a related party	—	—		493		—		—		493
Foreign currency translation adjustment	—	—		—		(971)		—		(971)
Net loss	—	—		—		—		(38,168)		(38,168)
Balance at June 30, 2022	98,122,356	$	981	$	391,220	$	(3,168)	$	(337,716)	$	51,317

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

Summit Therapeutics Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)


	Six Months Ended June 30,
	2023		2022
Cash flows used in operating activities:
Net loss	$	(557,093)	$	(38,168)
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash interest expense	6,234		941
Amortization of discount on short-term investments	(2,901)		—
Unrealized foreign exchange loss (gain)	(864)		2,366
Reclassification of currency translation gain	(419)		—
Impairment of fixed assets	474		—
Amortization of operating right-of-use assets	710		558
Depreciation	136		168
Amortization of intangible assets	—		480
Gain on disposal of assets	(122)		—
Stock-based compensation	4,650		6,492
In-process research and development expense	520,915		—
Change in operating assets and liabilities:
Accounts receivable	356		1,160
Prepaid expenses	(4,565)		1,231
Other current and long-term assets	(923)		(1,410)
Research and development tax credit receivable	897		(2,426)
Deferred revenue and other income	—		(4,132)
Accounts payable	605		(721)
Accrued liabilities	(7,528)		(1,078)
Accrued compensation	(2,135)		(3,085)
Operating lease liabilities	(831)		(594)
Net cash used in operating activities	(42,404)		(38,218)

Cash flows used in investing activities:
Purchases of property and equipment	(73)		(654)
Proceeds from sale of property. plant and equipment	226		—
Purchase of short-term investments	(208,165)		—
Maturities and sales of short-term investments	38,171		—
Payments to Akeso for upfront milestone payments and associated direct transaction costs	(475,015)		—
Net cash used in investing activities	(644,856)		(654)

Cash flows provided by financing activities:
Proceeds from the issuance of common stock for rights offering	104,686		—
Transaction costs related to the issuance of common stock for rights offering	(619)		—
Proceeds from related party promissory notes	—		25,000

Repayment of related party promissory notes	(24,686)		—

Proceeds received related to employee stock awards	651		187
Net cash provided by financing activities	80,032		25,187
Effect of exchange rate changes on cash	737		(771)
(Decrease) increase in cash and cash equivalents	(606,491)		(14,456)
Cash at beginning of the period	648,607		71,791
Cash and cash equivalents at end of the period	$	42,116	$	57,335




Supplemental Disclosure of Cash Flow Information:
Cash paid for interest on related party promissory notes	$	4,794	$	—
Cash paid for income taxes	$	52	$	—
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Consideration for the issuance of common stock for rights offering used to satisfy a portion of a related party promissory note (Note 14)	$	395,314	$	—
Issuance of common stock pursuant to the Akeso License Agreement (Note 8)	$	45,900	$	—

Lease assets obtained in exchange for operating lease liabilities	$	4,245	$	—

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

Summit Therapeutics Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

(in thousands, except share and per share data)

1. Nature of Business and Operations and Recent Events

Nature of Business and Operations

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 recently in-licensed from Akeso, Inc. ("Akeso") its breakthrough bispecific antibody, ivonescimab. Ivonescimab, known as AK112 in China and Australia, and also as SMT112 in the United States, Canada, Europe, and Japan, is a novel, potential first-in-class bispecific antibody intending to combine the benefits of immunotherapy via a blockade of PD-1 with the anti-angiogenesis benefits of an anti-VEGF into a single molecule. Ivonescimab was engineered to bring two well-established oncology targeted mechanisms together. Through the License Agreement (as defined below), Summit obtained the rights to develop and commercialize SMT112 in the United States, Canada, Europe, and Japan (the "Licensed Territory").

The entry into the License Agreement represents a significant change in the Company’s strategy. All business activities related to anti-infectives are being reviewed for partnership opportunities for potential further development. The Company's future operations will be focused on the development of ivonescimab and other future activities, as the Company determines.

The Company has announced plans to initiate Phase III clinical studies for ivonescimab in non-small cell lung cancer ("NSCLC"), specifically in the following 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”)

Recent Events

On December 5, 2022, we entered into a Collaboration and License Agreement (the “License Agreement”) with Akeso, Inc. and its affiliates (“Akeso”) pursuant to which we are in-licensing breakthrough bispecific antibody, ivonescimab. Ivonescimab, is a novel, potential first-in-class bispecific antibody intending to combine the benefits of immunotherapy via a blockade of PD-1 with the anti-angiogenesis benefits of an anti-VEGF into a single molecule. Through the License Agreement, we obtained the rights to develop and commercialize Ivonescimab in the United States, Canada, Europe, and Japan (the “Licensed Territory”). The License Agreement and transaction closed in January 2023 following customary waiting periods. See Note 8 for further information.

On December 6, 2022, the Company announced a rights offering for its existing shareholders to participate in the purchase of additional shares of its common stock (the "2023 Rights Offering"). The 2023 Rights Offering commenced on February 7, 2023 and the associated subscription rights expired on March 1, 2023. Aggregate gross proceeds from the Rights Offering were $500,000 from the sale of 476,190,471 shares of the Company's common stock at a price of $1.05 per share, net of issuance costs of $619.

On January 19, 2023, the Company filed Amendment No. 2 to the Restated

SEC Form 10-Q filed by Summit Therapeutics Inc.