Canaccord Boosts Price Target on Summit Therapeutics PLC (ADR) (SMMT) Following Collaboration Agreement with Sarepta Therapeutics Inc (SRPT)

Yesterday, Summit Therapeutics PLC (ADR) (NASDAQ:SMMT) announced a collaboration and license agreement, which will grant Sarepta Therapeutics Inc (NASDAQ:SRPT) European Union commercialization rights to Summit’s oral utrophin modulators pipeline to treat patients suffering from Duchenne muscular dystrophy (DMD).

The biotech firm will retain U.S. rights while receiving an upfront payment of $40 million, with eligibility for $522 million development, regulatory and sales milestones coupled with EU sales bringing in tiered royalties. This will significantly offset both research and development expenses with a cost split of 44-55.

On back of the deal, Canaccord analyst Arlinda Lee reiterates a Buy rating on shares of SMMT, while raising the price target from $14 to $28, which represents a 94% increase from where the stock is currently trading.

“Coming on the heels of FDA’s approval of SRPT’s exon-skipping Exondys-51, the first drug approved for DMD in the US, this deal provides SMMT with immediate and milestone cash for ezutromid clinical development, and allows access to SRPT’s expertise in DMD drug development, regulatory affairs, and marketing. We view the deal as favorable for SMMT,” Lee believes.

Regarding ridinilazole, SMMT’s pipeline oral drug to treat Clostridium difficile infection (CDI), the leading cause of infections healthcare-associated diarrhea, the analyst anticipates top-line Phase 2 fidaxomicin comparison data by the end of the second half of the year, as well as a prospective partnership announcement.

Moreover, the analyst expects interim Phase 2 PK and safety data also by the end of the second half of the year for ezutromid, a pipeline oral drug designed to modulate utrophin, a protein similar in structure and functionality to that of dystrophin, a protein that DMD patients lack and is essential for the healthy function of all muscles. Additionally, Lee looks to a 24-week muscle biopsy data readout by the second or third quarter of 2017 as well as full Phase 1 data for new ezutromid formulation data by fourth-quarter.

As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, analyst Arlinda Lee is ranked #4,007 out of 4,193 analysts. Lee has a 40% success rate and faces a loss of 9.6% in her annual returns. However, when recommending SMMT, Lee gains 11.7% in average profits on the stock.

TipRanks analytics exhibit SMMT as a Strong Buy. Based on 4 analysts polled in the last 3 months, 100% rate a Buy on SMMT. The 12-month price target stands at $24.50, marking a nearly 71% upside from where the shares last closed.screen-shot-10-05-16-at-05-53-pm

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