Summit Therapeutics' Upcoming Duchenne Muscular Dystrophy Data 'A Strong Catalyst,' Janney Says In Bullish Initiation

SUMMIT THERAPEU/S ADR (NASDAQ: SMMT) is conducting clinical trials for Duchenne muscular dystrophy, or DMD, and clostridium difficile infection, or CDI.

The Analyst

Janney analyst Yun Zhong initiated coverage of Summit Therapeutics with a Buy rating and $27 fair value estimate.

The Thesis

The reduction in developmental myosin revealed by Summit Therapeutics with interim data from the PhaseOut DMD trial, as well as magnetic resonance spectroscopy data, strongly backs the efficacy of ezutromid, Zhong said in a Wednesday note.

DMD is the most common form of muscular dystrophy, which results from the lack of dystrophin, a protein responsible for maintaining healthy muscle function.

The PhaseOut trial is an open-label, multicenter trial with 40 patients in the U.S. and U.K. ages 5-10 years. 

"We do not believe investors fully appreciate the encouraging efficacy signal demonstrated by the 24-week data from the PhaseOut DMD study, and that the upcoming 48-week data in 3Q18 should be a strong catalyst for Summit shares," Zhong said. 

Janney expects FDA approval of ezutromid in 2021 following the completion of a placebo-controlled study.

Since all DMD patients are eligible for treatment, Zhong forecast significant commercial potential.

Ridinilazole for CDI adds more potential to Summit's pipeline, the analyst said. The company received a $62-million Biomedical Advanced Research and Development Authority award that "highlights both the significant unmet medical need and the program's strong prospect." 

The Price Action

Summit Therapeutics shares were down marginally at $13.74 at the close Friday.

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Cross-section of a Duchenne muscular dystrophy patient's muscle by the Centers for Disease Control and Prevention via Wikimedia.