Looking to climb out of bear market and FDA hurdles, Summit offers up $100M worth of stock
While the road has certainly been rocky for billionaire Bob Duggan’s biotech amidst a bear market and FDA troubles, Summit Therapeutics is still looking to forge ahead with a new stock offering.
Summit announced on Monday that it has kicked off a previously announced rights offering of up to $100 million of its common stock. According to the company, the subscription rights will expire if they are not exercised before Aug. 8.
Summit estimates the price per share at $1.08. The original announcement of the offering in June said that Duggan owns around 70% of Summit’s common stock before the rights offering, and COO Maky Zanganeh owns 6.5% of the common stock. Duggan, a long-time industry backer, touts having been the largest investor in his previous company, Pharmacyclics, which he sold to AbbVie for $21 billion in 2015, including the blood cancer drug Imbruvica.
Both Duggan and Zanganeh have indicated they intend to participate in the rights offering but have not indicated a minimum level of participation or made any formal binding commitments to any purchases.
The announcement has brought the biotech’s share price $SMMT up almost 1%, but more confidence will be needed in the long run as the company is looking at a 60% drop since early January as it sits just above the penny stock zone.
This is not the first time that Summit has offered up a substantial piece of the company to investors. In 2020, as the Covid-19 headwinds were hitting the biotech world, Duggan agreed to purchase up to another 15 million shares to raise $50 million and help Summit assist in finishing its pivotal Phase III trial of its lead antibiotic, ridinilazole, for C. difficile treatment, and launch it in the US.
Summit has been facing several headwinds this past year. When it announced its intent to combine two Phase III studies for ridinilazole into one trial that changed the primary endpoint, the FDA did not originally agree with the new endpoint and raised questions about its ongoing development. But Duggan did manage to stand his ground against the US regulator. Last week, Summit and the FDA held a meeting, with the new path likely involving at least one additional clinical trial.
Summit is not the only biotech going down the route of public companies attempting to raise cash after data drops. Last week, Pliant Therapeutics, on the back of early data for its TGF-β inhibitor in idiopathic pulmonary fibrosis, announced that it is looking to sell $150 million worth of its stock in a public offering, and an option for underwriters to purchase $22.5 million more.
Day One Biopharmaceuticals, after recently showing that a former Takeda drug worked well in treating kids with a certain form of brain cancer, also bumped up its public offering to $150 million as more investors came knocking.