Summit Therapeutics Inc. (NASDAQ:SMMT) Q4 2023 Earnings Conference Call February 20, 2024 9:00 AM ET Company Participants Dave Gancarz - Chief Business and Strategy Officer Bob Duggan - Chairman of the Board and CEO Maky Zanganeh - CEO and President Ankur Dhingra - CFO Dr. Allen Yang - CMO Manmeet Soni - COO Conference Call Participants Brad Canino - Stifel Hartaj Singh - Oppenheimer Operator Good morning and welcome to Summit's Fourth Quarter and Year End 2023 Earnings Call. [Operator Instructions] Please ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________________ FORM 10-K _____________________________ (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 or ☐ 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 ...

Summit Therapeutics Inc. (NASDAQ:SMMT) Q3 2023 Results Conference Call November 7, 2023 9:00 AM ET Company Participants Dave Gancarz - Chief Business and Strategy Officer Bob Duggan - Chairman of the Board and Chief Executive Officer Dr. Maky Zanganeh - Chief Executive Officer and President Ankur Dhingra - Chief Financial Officer Dr. Allen Yang - Chief Medical Officer Manmeet Soni - Chief Operating Officer Conference Call Participants Brad Canino - Stifel Operator Good morning, and welcome to the Summit The ...

[Information Regarding Forward-Looking Statements](index=3&type=section&id=INFORMATION%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section cautions that forward-looking statements in the Form 10-Q involve substantial risks, and actual results may differ materially - The report contains forward-looking statements regarding strategy, future operations, financial position, revenues, costs, prospects, plans, and objectives[10](index=10&type=chunk) - Key forward-looking statements encompass the ability to develop successful product candidates like **ivonescimab**, raise additional funds, manage clinical trial timing, achieve market acceptance, and secure intellectual property[13](index=13&type=chunk) - Readers are cautioned against undue reliance on these statements, as actual results could materially differ due to factors outlined in the 'Risk Factors' section[11](index=11&type=chunk) [PART I - Financial Information](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, and cash flows, with detailed explanatory notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets and cash significantly decreased from December 2022 to September 2023, primarily due to short-term investments and Akeso payments, while total liabilities also saw a substantial reduction Condensed Consolidated Balance Sheet Summary | Metric | Sep 30, 2023 (in thousands) | Dec 31, 2022 (in thousands) | Change (in thousands) | % Change | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------- | :------- | | Cash and cash equivalents | $23,792 | $348,607 | $(324,815) | -93.18% | | Restricted cash | — | $300,000 | $(300,000) | -100.00% | | Short-term investments | $175,153 | — | $175,153 | N/A | | Total current assets | $204,951 | $656,712 | $(451,761) | -68.80% | | Total assets | $218,476 | $664,168 | $(445,692) | -67.11% | | Total current liabilities | $113,742 | $38,782 | $74,960 | 193.29% | | Total liabilities | $119,097 | $537,514 | $(418,417) | -77.84% | | Total stockholders' equity | $99,379 | $126,654 | $(27,275) | -21.54% | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Net loss significantly increased for the nine months ended September 30, 2023, driven by a substantial in-process research and development expense for the ivonescimab license agreement Condensed Consolidated Statements of Operations Summary | Metric (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Revenue | $— | $220 | $— | $705 | | R&D Expenses | $15,323 | $17,049 | $34,657 | $46,613 | | In-process R&D | $— | $— | $520,915 | $— | | G&A Expenses | $5,434 | $5,573 | $18,690 | $19,165 | | Total Operating Exp. | $20,757 | $22,622 | $574,262 | $65,778 | | Operating Loss | $(20,492) | $(16,940) | $(573,440) | $(51,790) | | Net Loss | $(21,268) | $(21,385) | $(578,361) | $(59,553) | | Basic & Diluted EPS | $(0.03) | $(0.10) | $(0.98) | $(0.37) | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) Stockholders' equity decreased from **$126.65 million** to **$99.38 million** due to a significant net loss, partially offset by a rights offering and common stock issuance for the Akeso upfront payment Condensed Consolidated Statements of Stockholders' Equity Summary | Metric (in thousands) | Dec 31, 2022 | Sep 30, 2023 | | :-------------------- | :----------- | :----------- | | Common Stock (shares) | 211,091,425 | 697,851,308 | | Common Stock (amount) | $2,110 | $6,978 | | Additional Paid-In Capital | $504,767 | $1,051,415 | | Accumulated Deficit | $(378,330) | $(956,691) | | Total Stockholders' Equity | $126,654 | $99,379 | - The **2023 Rights Offering** generated **$499.38 million** (net of costs) from the sale of **476,190,471** shares[21](index=21&type=chunk) - **10,000,000** shares of common stock were issued for **$45.90 million** as part of the **Akeso** upfront payment[21](index=21&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Significant cash outflows from investing activities, primarily for the Akeso upfront payment and short-term investments, were partially offset by cash provided by financing activities from a rights offering Condensed Consolidated Statements of Cash Flows Summary | Cash Flow Activity (in thousands) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------------------- | :-------------------------- | :-------------------------- | | Net cash used in operating activities | $(57,301) | $(46,773) | | Net cash used in investing activities | $(648,342) | $(634) | | Net cash provided by financing activities | $80,261 | $100,184 | | Decrease in cash and cash equivalents | $(624,815) | $50,180 | | Cash and cash equivalents at end of period | $23,792 | $121,971 | - Investing activities included **$475.02 million** cash payment to **Akeso** for upfront milestone payments and **$321.02 million** for short-term investments[23](index=23&type=chunk) - Financing activities included **$104.69 million** from the **2023 Rights Offering** and repayment of **$24.69 million** in related party promissory notes[23](index=23&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and disclosures for the unaudited condensed consolidated financial statements, covering business, accounting policies, liquidity, and significant transactions [Note 1. Nature of Business and Operations and Recent Events](index=9&type=section&id=1.%20Nature%20of%20Business%20and%20Operations%20and%20Recent%20Events) Summit Therapeutics Inc. strategically shifted its focus to oncology, centered on the in-licensed bispecific antibody **ivonescimab**, initiating Phase III trials and completing a major rights offering - The company's strategy has significantly shifted to oncology, focusing on the development of **ivonescimab** (**SMT112**) for non-small cell lung cancer (**NSCLC**)[28](index=28&type=chunk)[141](index=141&type=chunk) - Phase III clinical trials (**HARMONi** and **HARMONi-3**) for **ivonescimab** in **EGFR-mutated** and first-line metastatic squamous **NSCLC** have commenced[29](index=29&type=chunk)[33](index=33&type=chunk)[142](index=142&type=chunk)[151](index=151&type=chunk) - A **2023 Rights Offering** generated **$500 million** in gross proceeds from the sale of **476,190,471** shares of common stock[31](index=31&type=chunk)[145](index=145&type=chunk) - The company entered into a **Note Purchase Agreement** for **$520 million** in unsecured promissory notes with its **Co-CEOs**, with a significant portion repaid through the rights offering[32](index=32&type=chunk)[145](index=145&type=chunk) [Note 2. Basis of Presentation, Use of Estimates, and Risks and Uncertainties](index=10&type=section&id=2.%20Basis%20of%20Presentation%2C%20Use%20of%20Estimates%2C%20and%20Risks%20and%20Uncertainties) The unaudited condensed consolidated financial statements are prepared under **U.S. GAAP**, relying on management's estimates and judgments, while acknowledging potential adverse impacts from COVID-19 and supply chain issues - Financial statements are prepared under **U.S. GAAP**, and management's estimates are crucial for reported amounts[39](index=39&type=chunk)[44](index=44&type=chunk) - The company considers highly liquid investments with a maturity of **90** days or less as cash equivalents, including money market funds and U.S. treasury securities[40](index=40&type=chunk) - Potential adverse impacts from COVID-19 outbreaks and supply chain issues are noted as risks[45](index=45&type=chunk) [Note 3. Recently Issued or Adopted Accounting Pronouncements](index=11&type=section&id=3.%20Recently%20Issued%20or%20Adopted%20Accounting%20Pronouncements) The company adopted **ASU 2016-13** on January 1, 2023, which had no material impact on its financial statements, and other recent guidance is not expected to have a material effect - **ASU 2016-13** (**CECL model**) was adopted on January 1, 2023, with no material impact on financial statements[46](index=46&type=chunk) - **ASU No. 2021-04**, related to equity-classified written call options, had no modifications or exchanges during **2023** or **2022**[47](index=47&type=chunk)[49](index=49&type=chunk) [Note 4. Liquidity and Capital Resources](index=12&type=section&id=4.%20Liquidity%20and%20Capital%20Resources) Significant net losses and cash outflows resulted in a substantial accumulated deficit, raising doubt about the company's ability to continue as a going concern without raising additional capital Liquidity and Capital Resources Summary | Metric (in thousands) | 9 Months Ended Sep 30, 2023 | | :-------------------- | :-------------------------- | | Net loss | $(578,361) | | Cash flows used in operating activities | $(57,301) | | Accumulated deficit | $(956,691) | | Cash and cash equivalents | $23,792 | | Short-term investments | $175,153 | | R&D tax credit receivable | $1,559 | - The company has a **$100 million** promissory note payable to a related party maturing on September 6, 2024, and intends to raise additional capital to repay it[51](index=51&type=chunk) - These conditions raise substantial doubt about the company's ability to continue as a going concern for at least one year from the issuance date of the financial statements[51](index=51&type=chunk) [Note 5. Segment Reporting](index=12&type=section&id=5.%20Segment%20Reporting) The company operates as a single reportable operating segment focused on oncology product research and development, with long-lived assets distributed across the U.K. and the U.S - The company's chief operating decision makers view and manage the business as a single operating segment, primarily oncology product research activities[54](index=54&type=chunk) Long-Lived Assets by Geographic Region | Geographic Region | Sep 30, 2023 (in thousands) | Dec 31, 2022 (in thousands) | | :---------------- | :-------------------------- | :-------------------------- | | United Kingdom | $832 | $2,517 | | United States | $5,800 | $2,564 | | Total | $6,632 | $5,081 | [Note 6. Revenue](index=13&type=section&id=6.%20Revenue) The company recognized no revenue for the three and nine months ended September 30, 2023, as prior period revenue from the **Eurofarma** agreement concluded in 2022 Revenue Summary | Revenue Category | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :--------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Licensing agreements | $— | $220 | $— | $705 | - Revenue from the **Eurofarma** agreement was fully recognized by **2022**, and no additional milestone payments are expected[57](index=57&type=chunk)[159](index=159&type=chunk) [Note 7. Other Operating Income, net](index=14&type=section&id=7.%20Other%20Operating%20Income%2C%20net) Other operating income significantly decreased due to the conclusion of funding from **BARDA** and **CARB-X**, and a reduction in U.K. research and development tax credits Other Operating Income Summary | Income Category (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :----------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Funding income from BARDA | $— | $3,889 | $— | $7,774 | | Research and development tax credits | $265 | $1,224 | $768 | $3,730 | | Grant income from CARB-X | $— | $349 | $45 | $1,779 | | Total | $265 | $5,462 | $822 | $13,283 | - **BARDA** contract ended in **2022**, and **CARB-X** arrangement concluded in **2022**, leading to no further income from these sources[63](index=63&type=chunk)[68](index=68&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk) - R&D tax credits decreased due to reduced clinical and manufacturing activity for **ridinilazole** and changes in U.K. tax legislation[170](index=170&type=chunk) [Note 8. Akeso Collaboration and License Agreement](index=15&type=section&id=8.%20Akeso%20Collaboration%20and%20License%20Agreement) Summit in-licensed **ivonescimab** from **Akeso** in January 2023, involving a **$500 million** upfront payment expensed as in-process R&D, with potential future milestones up to **$4.5 billion** - Summit in-licensed **ivonescimab** (**SMT112**) from **Akeso**, a bispecific antibody combining PD-1 blockade and anti-VEGF effects for oncology, with rights in the US, Canada, Europe, and Japan[27](index=27&type=chunk)[30](index=30&type=chunk)[69](index=69&type=chunk)[70](index=70&type=chunk) - An upfront payment of **$500 million** was made to **Akeso**, consisting of **$274.9 million** cash, **10 million** shares of common stock (fair value **$45.9 million**), and a remaining **$200 million** cash payment[71](index=71&type=chunk)[72](index=72&type=chunk)[166](index=166&type=chunk) - The upfront payment was expensed as **$520.9 million** in-process research and development due to the asset being in clinical development[72](index=72&type=chunk)[166](index=166&type=chunk) - **Akeso** is eligible for up to **$4.5 billion** in regulatory and commercial milestones, plus low double-digit royalties on net sales[73](index=73&type=chunk) [Note 9. Other (Expense) Income, net](index=16&type=section&id=9.%20Other%20(Expense)%20Income%2C%20net) Other (expense) income, net, for the nine months ended September 30, 2023, was a net expense of **$4.92 million**, primarily due to interest expense on related party promissory notes, partially offset by interest income Other (Expense) Income Summary | Metric (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Foreign currency gains (losses) | $(475) | $(3,799) | $344 | $(6,281) | | Interest expense on promissory notes | $(2,722) | $(692) | $(13,564) | $(1,497) | | Interest income | $2,485 | $— | $8,028 | $— | | Total | $(776) | $(4,445) | $(4,921) | $(7,763) | - Interest expense increased significantly due to the **$520 million** promissory notes issued to **Co-CEOs** in December **2022**[76](index=76&type=chunk)[176](index=176&type=chunk) - Interest income increased due to investments in money market funds and U.S. treasury securities[76](index=76&type=chunk)[176](index=176&type=chunk) [Note 10. Loss per Share](index=16&type=section&id=10.%20Loss%20per%20Share) Basic and diluted net loss per share for the nine months ended September 30, 2023, was **$(0.98)**, reflecting a higher net loss, with potentially dilutive securities excluded as anti-dilutive Loss per Share Summary | Metric | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :----- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net loss per share (Basic & Diluted) | $(0.03) | $(0.10) | $(0.98) | $(0.37) | | Weighted-average shares (Basic & Diluted) | 697,739,477 | 208,909,351 | 592,366,880 | 161,846,345 | - Potentially dilutive securities, including stock options and warrants, were excluded from diluted EPS calculation due to the company being in a net loss position[77](index=77&type=chunk)[79](index=79&type=chunk) [Note 11. Fair Value Measurements and Investments](index=17&type=section&id=11.%20Fair%20Value%20Measurements%20and%20Investments) The company's financial assets measured at fair value primarily consist of money market funds and U.S. Government treasury bills, with short-term investments totaling **$175.15 million** as of September 30, 2023 Fair Value Measurements and Investments Summary | Asset Category (in thousands) | Level 1 | Level 2 | Level 3 | Total | | :---------------------------- | :------ | :------ | :------ | :---- | | Money market funds | $4,711 | $— | $— | $4,711 | | U.S. Government treasury bills | $— | $175,153 | $— | $175,153 | | Total financial assets | $4,711 | $175,153 | $— | $179,864 | - All short-term investments, primarily U.S. Government treasury bills, are due within one year[88](index=88&type=chunk) [Note 12. Goodwill and Intangible Assets](index=19&type=section&id=12.%20Goodwill%20and%20Intangible%20Assets) Goodwill remained stable at **$1.81 million**, while intangible assets, including the **Discuva** platform and **Utrophin** program, are fully amortized or impaired, resulting in a net carrying amount of zero Goodwill Summary | Metric (in thousands) | Sep 30, 2023 | Dec 31, 2022 | | :-------------------- | :----------- | :----------- | | Goodwill | $1,814 | $1,798 | Intangible Assets Summary | Intangible Asset (in thousands) | Gross Carrying Amount | Accumulated Amortization and Impairment | Net | | :------------------------------ | :-------------------- | :-------------------------------------- | :-- | | Discuva platform acquired | $13,019 | $(13,019) | $— | | Utrophin program acquired | $— | $— | $— | | Other licenses | $134 | $(134) | $— | | Total | $13,977 | $(13,977) | $— | - The **Utrophin** program intangible assets were fully impaired and removed from accounting records due to the dissolution of **Muox Limited**[92](index=92&type=chunk) [Note 13. Leases](index=19&type=section&id=13.%20Leases) The company holds operating leases for office space, with a new lease in Menlo Park, California, and the termination of a U.K. lease due to strategic reprioritization towards **ivonescimab** - A new operating lease for office space in Menlo Park, California, commenced, adding **$4.25 million** in right-of-use assets[94](index=94&type=chunk) - The Cambridge, U.K. laboratory and office space lease was terminated, disposing of **$788 thousand** in right-of-use assets, as the company reprioritized investments to **ivonescimab**[94](index=94&type=chunk) Lease Cost Summary | Lease Cost (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Fixed lease costs | $678 | $444 | $1,535 | $1,033 | | Variable lease costs | $2 | $53 | $71 | $91 | | Total lease cost | $680 | $497 | $1,606 | $1,124 | [Note 14. Promissory Notes Payable to Related Parties](index=20&type=section&id=14.%20Promissory%20Notes%20Payable%20to%20Related%20Parties) The company issued **$520 million** in unsecured promissory notes to its **Co-CEOs** in December 2022, with **$420 million** repaid by September 2023, leaving a **$100 million** note outstanding - The company issued **$520 million** in unsecured promissory notes to **Co-CEOs Mr. Duggan** and **Dr. Zanganeh** in December **2022**[98](index=98&type=chunk)[119](index=119&type=chunk) - The **$20 million Zanganeh Note** and **$400 million Duggan Promissory Note** were repaid in February **2023**, largely through the **2023 Rights Offering**[100](index=100&type=chunk)[121](index=121&type=chunk) - A **$100 million Duggan September Note** remains outstanding, maturing on September 6, 2024[103](index=103&type=chunk)[105](index=105&type=chunk) - Interest expense on these notes for the nine months ended September 30, 2023, was **$13.56 million**[103](index=103&type=chunk) [Note 15. Stock-Based Compensation and Warrants](index=22&type=section&id=15.%20Stock-Based%20Compensation%20and%20Warrants) The company's **2020 Stock Incentive Plan** had **20.55 million** options outstanding, with stockholders approving an increase of **70 million** shares, and total stock-based compensation expense was **$5.36 million** Stock Option Activity Summary | Stock Option Activity | 9 Months Ended Sep 30, 2023 | | :-------------------- | :-------------------------- | | Outstanding at Dec 31, 2022 | 19,476,359 | | Granted | 3,921,450 | | Forfeited | (2,672,305) | | Exercised | (177,237) | | Outstanding at Sep 30, 2023 | 20,548,267 | | Weighted average exercise price | $3.24 | - Stockholders approved an increase of **70,000,000** shares for the **2020 Stock Incentive Plan**[108](index=108&type=chunk) Stock-Based Compensation Expense Summary | Stock-Based Compensation (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Research and development | $149 | $1,162 | $1,962 | $3,300 | | General and administrative | $556 | $1,636 | $3,393 | $5,990 | | Total | $705 | $2,798 | $5,355 | $9,290 | [Note 16. Related Party Transactions](index=23&type=section&id=16.%20Related%20Party%20Transactions) The company engaged in various related party transactions, including sublease agreements, the issuance and repayment of **$520 million** in promissory notes to **Co-CEOs**, and the **Akeso License Agreement** - Sublease agreements for office space with **Maky Zanganeh and Associates, Inc.** (**MZA**), an entity related to **Co-CEO Dr. Zanganeh**, resulted in payments of **$730 thousand** for the nine months ended September 30, 2023[113](index=113&type=chunk)[114](index=114&type=chunk) - The **$520 million Note Purchase Agreement** with **Co-CEOs Mr. Duggan** and **Dr. Zanganeh** was a significant related party financing event, with **$420 million** repaid by February **2023**[119](index=119&type=chunk)[121](index=121&type=chunk) - The **Akeso License Agreement** led to **Dr. Yu (Michelle) Xia**, **Akeso's** founder, being appointed to **Summit's** Board of Directors[124](index=124&type=chunk) - In the **2023 Rights Offering**, **Mr. Duggan's $395.31 million** subscription price was satisfied by extinguishing a portion of his outstanding promissory note[125](index=125&type=chunk) [Note 17. Commitments and Contingencies](index=25&type=section&id=17.%20Commitments%20and%20Contingencies) The company has lease commitments, **$6.36 million** in non-cancellable purchase commitments for clinical trials, and unestimable contingent payment obligations for milestones and royalties under various agreements - New lease for office space in Menlo Park, California, with total payments of **$4.7 million** over **36** months[129](index=129&type=chunk)[198](index=198&type=chunk) - Termination of Cambridge, U.K. laboratory and office space lease due to strategic reprioritization[129](index=129&type=chunk)[198](index=198&type=chunk) - Approximately **$6.36 million** in non-cancellable purchase commitments associated with clinical trials as of September 30, 2023[132](index=132&type=chunk)[200](index=200&type=chunk) - Contingent payment obligations for royalties or milestone payments under agreements with **Akeso**, **Wellcome Trust**, **University College London**, and others are currently unestimable[133](index=133&type=chunk)[199](index=199&type=chunk) [Note 18. Subsequent Events](index=26&type=section&id=18.%20Subsequent%20Events) On October 16, 2023, **Mr. Manmeet Soni** was appointed Chief Operating Officer and purchased **2,976,190** shares of common stock for **$5 million** via a private placement - **Mr. Manmeet Soni** was appointed Chief Operating Officer on October 16, 2023[38](index=38&type=chunk)[136](index=136&type=chunk)[153](index=153&type=chunk) - **Mr. Soni** purchased **2,976,190** shares of common stock for **$5 million** in a private placement, effective October 13, 2023[38](index=38&type=chunk)[136](index=136&type=chunk)[153](index=153&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, emphasizing the strategic shift to oncology with **ivonescimab**, the financial impact of the **Akeso** license, and the ongoing need for additional capital due to significant operating losses and debt obligations [Company Overview](index=27&type=section&id=Company%20Overview) Summit Therapeutics Inc. is a biopharmaceutical company that strategically shifted its focus to oncology, with **ivonescimab** as its primary product candidate in-licensed from **Akeso**, Inc - The company is a biopharmaceutical firm focused on oncology, aiming to develop patient-friendly, new-era standard-of-care medicines[139](index=139&type=chunk) - **Ivonescimab** (**SMT112**), a potential first-in-class bispecific antibody, is the key product candidate, in-licensed from **Akeso** for development and commercialization in the US, Canada, Europe, and Japan[140](index=140&type=chunk) - The company's strategy has significantly changed, with future operations focused on **ivonescimab** development, and anti-infective activities being reviewed for partnership opportunities[141](index=141&type=chunk) [Recent Events](index=27&type=section&id=Recent%20Events) Recent events include the in-licensing of **ivonescimab** and initiation of its Phase III clinical trials, a **$500 million** rights offering, and **$520 million** in related party promissory notes, with most repaid - The Collaboration and License Agreement for **ivonescimab** with **Akeso**, Inc. closed in January **2023**[143](index=143&type=chunk) - Phase III clinical studies for **ivonescimab** in **NSCLC** (**HARMONi** and **HARMONi-3**) were initiated, with the first US patient enrolled in **HARMONi** in May **2023**[149](index=149&type=chunk) - A **$500 million 2023 Rights Offering** was completed, and **$520 million** in promissory notes were issued to **Co-CEOs**, with **$420 million** repaid by February **2023**[145](index=145&type=chunk)[147](index=147&type=chunk) - The **2020 Stock Incentive Plan** was amended to increase authorized shares by **70 million**, and **Mr. Manmeet Soni** was appointed COO, purchasing **$5 million** in common stock[152](index=152&type=chunk)[153](index=153&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) The company reported a net loss of **$578.4 million** for the nine months ended September 30, 2023, primarily due to a **$520.9 million** in-process R&D expense for **ivonescimab** Consolidated Statements of Operations Summary | Metric (in millions) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Revenue | $— | $0.2 | $— | $0.7 | | Operating Loss | $(20.4) | $(16.9) | $(573.5) | $(51.8) | | Net Loss | $(21.2) | $(21.3) | $(578.4) | $(59.6) | [Revenue](index=30&type=section&id=Revenue) Revenue for the three and nine months ended September 30, 2023, was zero, attributed to the full recognition of milestones from the **Eurofarma** license agreement in 2022 Revenue Summary | Metric (in millions) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Revenue | $— | $0.2 | $— | $0.7 | - The decrease in revenue is due to the **Eurofarma** license and commercialization agreement milestones being fully recognized by **2022**, with no additional milestones expected[159](index=159&type=chunk) [Operating Expenses](index=30&type=section&id=Operating%20Expenses) Total operating expenses significantly increased to **$574.3 million** for the nine months ended September 30, 2023, primarily driven by a **$520.9 million** in-process R&D expense for **ivonescimab** Operating Expenses Summary | Metric (in millions) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Research and development | $15.3 | $17.0 | $34.7 | $46.6 | | In-process research and development | $— | $— | $520.9 | $— | | General and administrative | $5.4 | $5.6 | $18.7 | $19.2 | | Total operating expenses | $20.7 | $22.6 | $574.3 | $65.8 | [Research and Development Expenses](index=30&type=section&id=Research%20and%20Development%20Expenses) Research and development expenses decreased by **$11.9 million** due to concluding anti-infectives programs, partially offset by investment in oncology (**ivonescimab**) and compensation-related costs Research and Development Expenses by Category | R&D Category (in millions) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Oncology | $9.4 | $— | $16.7 | $— | | Anti-infectives | $(0.1) | $11.9 | $(1.8) | $28.2 | | Compensation related costs | $4.8 | $3.0 | $14.7 | $12.1 | | Stock-based compensation | $0.1 | $1.2 | $2.0 | $3.3 | | Other R&D costs | $1.1 | $0.9 | $3.1 | $3.0 | | Total | $15.3 | $17.0 | $34.7 | $46.6 | - The company is investing resources in the clinical development of **ivonescimab**, including Phase III **HARMONi** and **HARMONi-3** studies for **NSCLC**[162](index=162&type=chunk)[163](index=163&type=chunk) - Anti-infectives programs for **ridinilazole** and **SMT-738** concluded development activities, resulting in a **$30.0 million** decrease in expenses[164](index=164&type=chunk) [In-process research and development](index=31&type=section&id=In-process%20research%20and%20development) In-process research and development expense totaled **$520.9 million** for the nine months ended September 30, 2023, representing upfront milestone payments for the **ivonescimab** license agreement with **Akeso** In-process Research and Development Expenses Summary | IPR&D Category (in millions) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :--------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Upfront milestone payments | $— | $— | $520.8 | $— | | Direct transaction costs | $— | $— | $0.1 | $— | | Total | $— | $— | $520.9 | $— | - The **$520.9 million** expense includes **$474.9 million** in cash and **$45.9 million** fair value of **10 million** common shares issued to **Akeso**[166](index=166&type=chunk) [General and Administrative Expenses](index=32&type=section&id=General%20and%20Administrative%20Expenses) General and administrative expenses slightly decreased by **$0.5 million** due to lower stock-based compensation, partially offset by increases in compensation-related costs and legal/professional services General and Administrative Expenses by Category | G&A Category (in millions) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Compensation related costs | $2.3 | $2.1 | $7.3 | $6.3 | | Stock-based compensation | $0.6 | $1.6 | $3.4 | $6.0 | | Legal fees and professional services | $1.3 | $1.0 | $4.9 | $3.9 | | Other G&A expenses | $1.2 | $0.9 | $3.1 | $3.0 | | Total | $5.4 | $5.6 | $18.7 | $19.2 | - Stock-based compensation decreased due to awards becoming fully amortized, lower fair values, and forfeitures[168](index=168&type=chunk) - Compensation-related expenses and legal/professional services increased to support company growth and corporate projects[168](index=168&type=chunk) [Other Operating Income](index=32&type=section&id=Other%20Operating%20Income) Other operating income significantly decreased to **$0.8 million** due to the conclusion of funding from **BARDA** and **CARB-X**, and reduced U.K. research and development tax credits Other Operating Income by Category | Income Category (in millions) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :---------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Research and development tax credits | $0.3 | $1.2 | $0.8 | $3.7 | | Funding income from BARDA | $— | $3.9 | $— | $7.8 | | Grant income from CARB-X | $— | $0.4 | $— | $1.8 | | Total | $0.3 | $5.5 | $0.8 | $13.3 | - **BARDA** and **CARB-X** contracts ended in **2022**, and no further income is expected from these arrangements[171](index=171&type=chunk)[172](index=172&type=chunk) - U.K. R&D tax credits decreased due to reduced clinical and manufacturing activity for **ridinilazole** and changes in U.K. tax legislation[170](index=170&type=chunk) [Other (Expense) Income, net](index=33&type=section&id=Other%20(Expense)%20Income%2C%20net) Other (expense) income, net, was a net expense of **$4.9 million**, an improvement driven by favorable foreign currency gains and increased interest income, partially offset by higher interest expense on related party notes Other (Expense) Income, Net Summary | Metric (in millions) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Foreign currency (losses) gains | $(0.5) | $(3.8) | $0.3 | $(6.3) |\ | Interest expense on promissory notes | $(2.7) | $(0.6) | $(13.6) | $(1.5) |\ | Interest income | $2.5 | $— | $8.0 | $— |\ | Total | $(0.8) | $(4.4) | $(4.9) | $(7.8) | - Interest expense increased by **$12.1 million** due to the **$520 million** promissory notes issued to **Co-CEOs** in December **2022**[176](index=176&type=chunk) - Interest income increased by **$8.0 million** from investments in money market funds and U.S. government securities[176](index=176&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) The company faces significant liquidity concerns with an accumulated deficit of **$956.7 million** and insufficient cash to fund operations, raising substantial doubt about its ability to continue as a going concern [Sources of Liquidity](index=33&type=section&id=Sources%20of%20Liquidity) Historically, funding came from stock issuances, license agreements, government funding, and related party promissory notes, with recent financing including a **$100 million** rights offering and **$520 million** in related party notes - Primary funding sources include common stock issuances, license/collaboration agreements, government/philanthropic funding, and related party promissory notes[177](index=177&type=chunk) - The **2022 Rights Offering** generated **$99.9 million** in net proceeds[178](index=178&type=chunk) - In December **2022**, **$520 million** in unsecured promissory notes were issued to **Co-CEOs**, with **$420 million** repaid by February **2023**, leaving a **$100 million** note outstanding[179](index=179&type=chunk)[180](index=180&type=chunk) [Cash Flows](index=36&type=section&id=Cash%20Flows) Net cash used in operating activities was **$57.3 million**, and investing activities used **$648.3 million** (Akeso payment, short-term investments), while financing activities provided **$80.3 million** (rights offering) Cash Flow Activities Summary | Cash Flow Activity (in millions) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :------------------------------- | :-------------------------- | :-------------------------- | | Net cash used in operating activities | $(57.3) | $(46.8) | | Net cash used in investing activities | $(648.3) | $(0.6) | | Net cash provided by financing activities | $80.3 | $100.2 | - Investing activities included **$475.0 million** cash payment to **Akeso** and **$321.0 million** for short-term investments[192](index=192&type=chunk) - Financing activities included **$104.1 million** net proceeds from the **2023 Rights Offering** and repayment of **$24.7 million** in related party promissory notes[194](index=194&type=chunk) [Critical Accounting Policies and Significant Judgments and Estimates](index=37&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) The financial statements rely on management's estimates and judgments for revenue, R&D, intangible assets, stock-based compensation, and income taxes, with no material changes since the **2022 Form 10-K** - Management evaluates estimates and judgments related to revenue recognition, R&D expenses, stock-based compensation, intangible assets, goodwill, and income taxes[196](index=196&type=chunk) - No material changes to critical accounting policies and estimates were disclosed since the **2022 Form 10-K**[197](index=197&type=chunk) [Contractual obligations and commitments](index=37&type=section&id=Contractual%20obligations%20and%20commitments) The company has lease commitments, **$6.4 million** in non-cancellable purchase commitments for clinical trials, and unestimable contingent payment obligations for milestones and royalties under various agreements - Lease commitments include a new **36**-month lease for office space in Menlo Park, California, with total payments of **$4.7 million**, and the termination of a U.K. lease[198](index=198&type=chunk) - Approximately **$6.4 million** in non-cancellable purchase commitments are associated with clinical trials as of September 30, 2023[200](index=200&type=chunk) - Contingent payment obligations for royalties or milestone payments under agreements with **Akeso**, **Wellcome Trust**, and others are currently unestimable[199](index=199&type=chunk) [Off-Balance Sheet Arrangements](index=37&type=section&id=Off-Balance%20Sheet%20Arrangements) The company did not have any off-balance sheet arrangements during the periods presented or currently - The company has no off-balance sheet arrangements[201](index=201&type=chunk) [Recently Issued Accounting Pronouncements](index=38&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) For a discussion of recently issued accounting pronouncements, refer to **Note 3** of the condensed consolidated financial statements - Refer to **Note 3** for details on recently issued or adopted accounting pronouncements[202](index=202&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a 'smaller reporting company,' Summit Therapeutics Inc. is not required to provide quantitative and qualitative disclosures about market risk - The company is exempt from providing market risk disclosures as it qualifies as a 'smaller reporting company'[203](index=203&type=chunk) [Item 4. Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective at a reasonable level of assurance as of September 30, 2023, with no material changes in internal control over financial reporting - Disclosure controls and procedures were evaluated and deemed effective at a reasonable level of assurance as of September 30, 2023[204](index=204&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended September 30, 2023[205](index=205&type=chunk) [PART II - Other Information](index=38&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any material legal proceedings - The company is not currently subject to any material legal proceedings[135](index=135&type=chunk)[207](index=207&type=chunk) [Item 1A. Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) The company highlights significant investment risks, including substantial doubt about its ability to continue as a going concern due to insufficient working capital and uncertainty in raising additional funds - There is substantial doubt about the company's ability to continue as a going concern due to insufficient working capital to fund planned operations for the next twelve months and uncertainty in raising additional capital[209](index=209&type=chunk)[210](index=210&type=chunk) - Inadequate funding or disruptions to government agencies (FDA, SEC) could hinder product development, regulatory reviews, and access to capital, negatively impacting the business[211](index=211&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=39&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds to report - No unregistered sales of equity securities or use of proceeds to report[212](index=212&type=chunk) [Item 3. Defaults Upon Senior Securities](index=39&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities to report - No defaults upon senior securities to report[213](index=213&type=chunk) [Item 4. Mine Safety Disclosures](index=39&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) There were no mine safety disclosures to report - No mine safety disclosures to report[215](index=215&type=chunk) [Item 5. Other Information](index=39&type=section&id=Item%205.%20Other%20Information) There was no other information to report - No other information to report[216](index=216&type=chunk) [Item 6. Exhibits](index=40&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed or furnished with the Form 10-Q, including employment agreements, certifications, and **XBRL** taxonomy documents - Exhibits include employment agreements, certifications (**Sarbanes-Oxley Act**), and **XBRL** taxonomy documents[218](index=218&type=chunk) [Signatures](index=40&type=section&id=Signatures) The report is duly signed on behalf of Summit Therapeutics Inc. by **Ankur Dhingra**, Chief Financial Officer, on November 7, 2023 - The report was signed by **Ankur Dhingra**, Chief Financial Officer, on November 7, 2023[220](index=220&type=chunk)

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 or ☐ 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 ...

Summit Therapeutics, Inc. (NASDAQ:SMMT) Q2 2023 Earnings Conference Call August 9, 2023 9:00 AM ET Company Participants Dave Gancarz - SVP, Stakeholder Relations, Business Development & Corporate Strategy Robert Duggan - CEO & Executive Chairman Mahkam Zanganeh - CEO, President & Director Ankur Dhingra - CFO Allen Yang - Former Head, Clinical Development & Acting Chief Medical Officer Conference Call Participants Operator Good morning, everyone, and welcome to the Summit Therapeutics Second Quarter 2023 Ear ...

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) Presents the unaudited condensed consolidated financial statements and management's analysis for the reporting period [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited condensed consolidated financial statements, detailing a significant net loss increase and strategic shift to oncology [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Details the company's financial position, including assets, liabilities, and equity at specific reporting dates Condensed Consolidated Balance Sheets (in thousands) | Metric | March 31, 2023 | December 31, 2022 | | :-------------------------- | :------------- | :---------------- | | Cash and cash equivalents | $70,969 | $348,607 | | Restricted cash | — | $300,000 | | Short-term investments | $170,963 | — | | Total current assets | $248,027 | $656,712 | | Total assets | $254,897 | $664,168 | | Total current liabilities | $17,443 | $38,782 | | Promissory note payable to a related party (non-current) | $100,000 | $494,540 | | Total liabilities | $121,415 | $537,514 | | Total stockholders' equity | $133,482 | $126,654 | [Condensed Consolidated Statements of Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) Reports the company's financial performance, including net loss and other comprehensive income (loss) for the period Condensed Consolidated Statements of Comprehensive Loss (in thousands) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Revenue | $— | $250 | | Research and development | $9,883 | $20,556 | | In-process research and development | $520,915 | $— | | General and administrative | $6,940 | $6,659 | | Total operating expenses | $537,738 | $27,215 | | Other operating income | $584 | $4,807 | | Operating loss | $(537,154) | $(22,158) | | Other (expense) income, net | $(5,222) | $761 | | Net loss | $(542,376) | $(21,397) | | Net loss per share (Basic and diluted) | $(1.43) | $(0.15) | | Weighted-average shares (Basic and diluted) | 378,163,980 | 140,040,370 | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Outlines changes in the company's equity accounts, reflecting stock transactions and net loss Condensed Consolidated Statements of Stockholders' Equity (in thousands) | Metric | Balance at Dec 31, 2022 | Rights offering of common stock | Issuance of common stock for Akeso upfront payment | Net loss | Balance at Mar 31, 2023 | | :-------------------------- | :---------------------- | :------------------------------ | :----------------------------------------- | :--------- | :---------------------- | | Common Stock (Shares) | 211,091,425 | 476,190,471 | 10,000,000 | — | 697,685,365 | | Common Stock (Amount) | $2,110 | $4,762 | $100 | — | $6,976 | | Additional Paid-In Capital | $504,767 | $494,619 | $45,800 | — | $1,048,608 | | Accumulated Deficit | $(378,330) | — | — | $(542,376) | $(920,706) | | Total Stockholders' Equity | $126,654 | $499,381 | $45,900 | $(542,376) | $133,482 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Summarizes cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(13,131) | $(19,001) | | Net cash used in investing activities | $(645,063) | $(361) | | Net cash provided by financing activities | $80,112 | $25,187 | | (Decrease) increase in cash and cash equivalents | $(577,638) | $5,659 | | Cash and cash equivalents at end of the period | $70,969 | $77,450 | - 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: **$395,314 thousand** (Q1 2023)[24](index=24&type=chunk) - Issuance of common stock pursuant to the Akeso License Agreement: **$45,900 thousand** (Q1 2023)[24](index=24&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations and additional information supporting the condensed consolidated financial statements [Note 1. Nature of Business and Operations and Recent Events](index=9&type=section&id=1.%20Nature%20of%20Business%20and%20Operations%20and%20Recent%20Events) Describes the company's strategic shift to oncology, recent corporate actions, and clinical development updates - Company's strategy significantly changed to focus on oncology, specifically the development of ivonescimab[29](index=29&type=chunk) - All prior development and marketing activities for ridinilazole (anti-infective) are being terminated, with anti-infectives business activities under review for partnership opportunities[27](index=27&type=chunk)[29](index=29&type=chunk) - In-licensed ivonescimab, a bispecific antibody combining PD-1 blockade with anti-VEGF benefits, from Akeso, Inc. for development and commercialization in the US, Canada, Europe, and Japan[28](index=28&type=chunk) 2023 Rights Offering Details | Metric | Value | | :-------------------- | :---------- | | Gross Proceeds | $500,000 | | Shares Sold | 476,190,471 | | Price Per Share | $1.05 | | Issuance Costs | $619 | - Authorized common stock increased from 350,000,000 to **1,000,000,000 shares** on January 19, 2023[31](index=31&type=chunk) - Repaid **$20,000 thousand** Zanganeh Note and satisfied **$400,000 thousand** Duggan Promissory Note in February 2023[32](index=32&type=chunk) - Announced plans to initiate Phase III clinical studies for ivonescimab in non-small cell lung cancer (NSCLC) in May 2023 (HARMONi and HARMONi-3)[34](index=34&type=chunk) - First US-based patient enrolled in Phase III HARMONi study in May 2023[36](index=36&type=chunk) [Note 2. Basis of Presentation and Use of Estimates](index=10&type=section&id=2.%20Basis%20of%20Presentation%20and%20Use%20of%20Estimates) Explains the accounting principles, estimates, and assumptions used in preparing the financial statements - Unaudited condensed consolidated financial statements prepared in accordance with U.S. GAAP and SEC rules, with interim data including all necessary normal recurring adjustments[37](index=37&type=chunk) - Marketable securities are classified as available-for-sale, recorded at fair value, with unrealized gains and losses in other comprehensive income (loss)[39](index=39&type=chunk) - Estimates for expected credit losses are made when fair value is below amortized cost[40](index=40&type=chunk) - Management makes estimates and assumptions for revenue recognition, accrued R&D expenses, stock-based compensation, intangible assets, goodwill, other long-lived assets, and income taxes[41](index=41&type=chunk)[43](index=43&type=chunk) [Note 3. Recently Issued or Adopted Accounting Pronouncements](index=11&type=section&id=3.%20Recently%20Issued%20or%20Adopted%20Accounting%20Pronouncements) Discusses the impact of new accounting standards on the company's financial reporting - ASU 2021-04 clarifies issuer's accounting for modifications or exchanges of freestanding equity-classified written call options, effective for annual periods beginning after December 15, 2021, with no material impact on the Company's financial statements for 2023 or 2022[44](index=44&type=chunk) - Other recent authoritative guidance is not expected to have a material impact on the Company's consolidated financial statements[45](index=45&type=chunk) [Note 4. Liquidity and Capital Resources](index=11&type=section&id=4.%20Liquidity%20and%20Capital%20Resources) Assesses the company's ability to meet its financial obligations and fund future operations Key Financial Metrics (in thousands) | Metric | As of March 31, 2023 | | :------------------------------------ | :------------------- | | Net loss (three months ended) | $(542,376) | | Cash flows used in operating activities (three months ended) | $(13,131) | | Accumulated deficit | $(920,706) | | Cash and cash equivalents | $70,969 | | Short-term investments (U.S. treasury securities) | $170,963 | | Current and long-term U.K. R&D tax credits receivable | $5,035 | - Existing cash, cash equivalents, and U.K. R&D tax credits are expected to fund operating costs and working capital for ivonescimab clinical trials for at least twelve months from the issuance date of the financial statements[47](index=47&type=chunk) - The Company expects to continue generating operating losses and will need to raise additional capital to fund ongoing operations and capital needs, including potential milestone payments[48](index=48&type=chunk) - Evaluating options such as equity and debt offerings, collaborations, strategic alliances, grants, and licensing arrangements, with no assurance that additional financing will be available on acceptable terms, which could lead to delays or termination of R&D programs[48](index=48&type=chunk) [Note 5. Segment Reporting](index=11&type=section&id=5.%20Segment%20Reporting) Identifies the company's operating segments and provides geographical information on long-lived assets - The Company operates as a single reportable operating segment, covering research and development activities, primarily oncology (ivonescimab) and anti-infectives programs[52](index=52&type=chunk) Long-Lived Assets by Geography (in thousands) | Geography | March 31, 2023 | December 31, 2022 | | :---------------- | :------------- | :---------------- | | United Kingdom | $1,983 | $2,517 | | United States | $2,358 | $2,564 | | **Total** | **$4,341** | **$5,081** | [Note 6. Revenue](index=13&type=section&id=6.%20Revenue) Details the sources and recognition of the company's revenue, including changes from prior periods Revenue by Category (in thousands) | Category | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--------------- | :-------------------------------- | :-------------------------------- | | Licensing agreements | $— | $250 | Revenue by Geography (in thousands) | Geography | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :---------- | :-------------------------------- | :-------------------------------- | | Latin America | $— | $250 | Deferred Revenue and Other Income (in thousands) | Metric | March 31, 2023 | March 31, 2022 | | :---------------------------------------------------------------- | :------------- | :------------- | | Ending deferred revenue and other income | $— | $5,097 | - No revenue recognized in Q1 2023[54](index=54&type=chunk) - Q1 2022 revenue related to the Eurofarma license and commercialization agreement for ridinilazole[54](index=54&type=chunk) - Cumulative income from Eurofarma since inception was **$4.7 million** as of December 31, 2022, fully recognized by 2022 due to the decision to seek partners or divest ridinilazole[60](index=60&type=chunk) [Note 7. Other Operating Income](index=15&type=section&id=7.%20Other%20Operating%20Income) Explains the components and changes in other operating income, such as tax credits and grant funding Other Operating Income by Category (in thousands) | Category | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Funding income from BARDA | $— | $2,634 | | Research and development tax credits | $542 | $1,696 | | Grant income from CARB-X | $34 | $477 | | Other income | $8 | $— | | **Total** | **$584** | **$4,807** | - BARDA funding contract concluded in December 2022, resulting in no income in Q1 2023 (vs. **$2,634 thousand** in Q1 2022)[63](index=63&type=chunk) - CARB-X grant income decreased due to the arrangement concluding in 2022 and the strategic shift away from anti-infectives[68](index=68&type=chunk) - Research and development tax credits decreased due to reduced clinical and manufacturing activity for ridinilazole and changes in U.K. tax legislation[65](index=65&type=chunk) - R&D tax credit receivable (current): **$4,500 thousand** (March 31, 2023) vs. **$5,766 thousand** (Dec 31, 2022)[67](index=67&type=chunk) [Note 8. Akeso Collaboration and License Agreement](index=16&type=section&id=8.%20Akeso%20Collaboration%20and%20License%20Agreement) Describes the terms and financial impact of the ivonescimab in-licensing agreement - Entered into a Collaboration and License Agreement with Akeso, Inc. on December 5, 2022, for in-licensing ivonescimab (SMT112)[69](index=69&type=chunk) - Agreement closed in January 2023, granting Summit rights to develop and commercialize SMT112 in the US, Canada, Europe, and Japan[70](index=70&type=chunk) - Upfront payment of **$500,000 thousand** to Akeso, paid as **$274,900 thousand** in cash initially, **$200,000 thousand** in cash on March 6, 2023, and 10 million shares of common stock in lieu of **$25,100 thousand** cash (fair value **$45,900 thousand**)[71](index=71&type=chunk) - Total in-process research and development expense for Q1 2023 was **$520,915 thousand**, including direct transaction costs[73](index=73&type=chunk) - Potential milestone payments up to **$4,500,000 thousand** (**$1,050,000 thousand** regulatory, **$3,450,000 thousand** commercial) and low double-digit royalties on net sales[74](index=74&type=chunk) [Note 9. Other (Expense) Income, net](index=17&type=section&id=9.%20Other%20(Expense)%20Income,%20net) Presents the breakdown of non-operating income and expenses, including interest and investment income Other (Expense) Income, net (in thousands) | Category | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Foreign currency gains (losses) | $508 | $930 | | Interest expense on promissory notes payable to related parties | $(8,327) | $(152) | | Investment income | $1,761 | $— | | Reclassification of cumulative currency translation gain | $419 | $— | | Other income (expense) | $417 | $(17) | | **Total** | **$(5,222)** | **$761** | - Shift from net income to net expense primarily due to a significant increase in interest expense on related party promissory notes (**$8,327 thousand** in Q1 2023 vs. **$152 thousand** in Q1 2022)[75](index=75&type=chunk) - Partially offset by new investment income (**$1,761 thousand** in Q1 2023) and reclassification of cumulative currency translation gain (**$419 thousand**) from dissolved dormant entities[75](index=75&type=chunk)[76](index=76&type=chunk) [Note 10. Loss per Share](index=17&type=section&id=10.%20Loss%20per%20Share) Provides the calculation of basic and diluted net loss per share and related share data Loss per Share Data | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net loss (in thousands) | $(542,376) | $(21,397) | | Basic weighted average shares outstanding | 378,163,980 | 140,040,370 | | Diluted weighted average shares outstanding | 378,163,980 | 140,040,370 | | Basic net loss per share | $(1.43) | $(0.15) | | Diluted net loss per share | $(1.43) | $(0.15) | - Potentially dilutive securities (options and warrants) were excluded from diluted EPS calculation as their effect would have been anti-dilutive due to the Company's loss position[76](index=76&type=chunk) - Total anti-dilutive securities: **26,207,731** (March 31, 2023) vs. **19,097,646** (March 31, 2022)[79](index=79&type=chunk) [Note 11. Fair Value Measurements and Investments](index=18&type=section&id=11.%20Fair%20Value%20Measurements%20and%20Investments) Details the fair value hierarchy and classification of financial assets and investments - Financial assets are measured at fair value using a three-level hierarchy (Level 1: quoted prices in active markets; Level 2: observable inputs other than Level 1 prices; Level 3: unobservable inputs)[81](index=81&type=chunk)[82](index=82&type=chunk)[83](index=83&type=chunk) Fair Value Measurements as of March 31, 2023 (in thousands) | Asset Category | Level 1 | Level 2 | Level 3 | Total | | :-------------------------- | :------ | :-------- | :------ | :------ | | Cash equivalents: Money market funds | $21,090 | $— | $— | $21,090 | | Short-term investments: U.S. Government treasury bills | $— | $170,963 | $— | $170,963 | | **Total financial assets** | **$21,090** | **$170,963** | **$—** | **$192,053** | Investments by Contractual Maturity as of March 31, 2023 (in thousands) | Maturity | Amortized Cost | Fair Value | | :--------------- | :------------- | :--------- | | Due within one year | $169,995 | $170,963 | | **Total** | **$169,995** | **$170,963** | [Note 12. Goodwill and Intangible Assets](index=20&type=section&id=12.%20Goodwill%20and%20Intangible%20Assets) Reports the carrying amounts and changes in goodwill and other intangible assets Goodwill (in thousands) | Metric | March 31, 2023 | December 31, 2022 | | :------- | :------------- | :---------------- | | Goodwill | $1,839 | $1,798 | - Goodwill changes are due to foreign currency movements only; no cumulative goodwill impairments recognized[91](index=91&type=chunk) Intangible Assets (in thousands) | Asset Category | Gross Carrying Amount (Mar 31, 2023) | Accumulated Amortization and Impairment (Mar 31, 2023) | Net (Mar 31, 2023) | | :-------------------------- | :----------------------------------- | :--------------------------------------------------- | :----------------- | | Utrophin program acquired | $4,487 | $(4,487) | $— | | Discuva platform acquired | $13,196 | $(13,196) | $— | | Option over non-financial asset | $835 | $(835) | $— | | Other patents and licenses | $136 | $(136) | $— | | **Total** | **$18,654** | **$(18,654)** | **$—** | - Amortization expense for Q1 2023 was **$0**, compared to **$248 thousand** in Q1 2022[92](index=92&type=chunk) [Note 13. Leases](index=20&type=section&id=13.%20Leases) Outlines the company's lease commitments, costs, and related financial information - The Company has operating leases for real estate, with no new right-of-use assets recorded in Q1 2023 or Q1 2022[93](index=93&type=chunk) - Carrying value of right-of-use assets: **$3,928 thousand** (March 31, 2023) vs. **$4,175 thousand** (Dec 31, 2022)[93](index=93&type=chunk) Lease Costs (in thousands) | Lease Cost Category | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------ | :-------------------------------- | :-------------------------------- | | Fixed lease costs | $346 | $212 | | Variable lease costs | $43 | $10 | | **Total lease cost** | **$389** | **$222** | Other Lease Information | Metric | March 31, 2023 | March 31, 2022 | | :---------------------------------- | :------------- | :------------- | | Operating cash flows used for operating leases | $367 | $297 | | Weighted average remaining lease term (years) | 3.1 | 4.1 | | Weighted average discount rate | 5.7% | 2.7% | [Note 14. Promissory Notes Payable to Related Parties](index=21&type=section&id=14.%20Promissory%20Notes%20Payable%20to%20Related%20Parties) Details the terms, balances, and activity of promissory notes with related parties Promissory Notes Payable to Related Parties (in thousands) | Metric | March 31, 2023 | December 31, 2022 | | :------------------------------------ | :------------- | :---------------- | | Current notes (Principal amounts) | $— | $20,000 | | Non-current notes (Principal amounts) | $100,000 | $500,000 | | Total promissory notes payable to related parties | $100,000 | $514,310 | - In December 2022, issued **$520,000 thousand** in unsecured promissory notes to Mr. Duggan (**$400,000 thousand** Duggan February Note, **$100,000 thousand** Duggan September Note) and Dr. Zanganeh (**$20,000 thousand** Zanganeh Note)[97](index=97&type=chunk) - The **$20,000 thousand** Zanganeh Note matured and was repaid on February 15, 2023[99](index=99&type=chunk) - The **$400,000 thousand** Duggan Promissory Note matured and was satisfied in connection with the 2023 Rights Offering, using cash proceeds and extinguishment of debt via share subscription[104](index=104&type=chunk) - Only the **$100,000 thousand** Duggan September Note remains outstanding, maturing on September 6, 2024[104](index=104&type=chunk) - Interest expense on promissory notes was **$8,327 thousand** for Q1 2023, significantly up from **$152 thousand** in Q1 2022[100](index=100&type=chunk) - Initial interest rate was 7.5%; adjusted to US prime + 50 bps for three months post-February 15, 2023, then US prime + 300 bps[102](index=102&type=chunk) [Note 15. Stock-Based Compensation and Warrants](index=22&type=section&id=15.%20Stock-Based%20Compensation%20and%20Warrants) Provides information on stock option activity, compensation expense, and outstanding warrants Stock Option Activity (Shares) | Metric | Three Months Ended March 31, 2023 | | :------------------------------------------ | :-------------------------------- | | Outstanding at December 31, 2022 | 19,476,359 | | Granted | 918,950 | | Forfeited | (38,250) | | Exercised | (177,237) | | **Outstanding at March 31, 2023** | **20,179,822** | | Exercisable at March 31, 2023 | 3,920,110 | Total Stock-Based Compensation Expense (in thousands) | Category | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Research and development | $1,086 | $1,874 | | General and administrative | $1,689 | $2,122 | | **Total** | **$2,775** | **$3,996** | - Outstanding and exercisable warrants: **5,821,137** with a weighted average exercise price of **$1.56** as of March 31, 2023[109](index=109&type=chunk) [Note 16. Related Party Transactions](index=23&type=section&id=16.%20Related%20Party%20Transactions) Describes significant transactions and agreements with related parties - Extended sublease agreement with Maky Zanganeh and Associates, Inc. (MZA) for office space through December 31, 2025, adding an additional 1,277 square feet effective August 1, 2022[110](index=110&type=chunk)[111](index=111&type=chunk) - Payments to MZA: **$189 thousand** (Q1 2023) and **$54 thousand** (Q1 2023) for the initial and second amendments, respectively[111](index=111&type=chunk) - December 2022 Note Purchase Agreement with Mr. Duggan and Dr. Zanganeh for **$520,000 thousand** in unsecured promissory notes[115](index=115&type=chunk) - Repaid **$20,000 thousand** Zanganeh Note and satisfied **$400,000 thousand** Duggan Promissory Note in Q1 2023[117](index=117&type=chunk) - Prepaid interest on notes paid in **9,720,291 shares** of common stock[118](index=118&type=chunk) - Dr. Yu (Michelle) Xia, founder of Akeso, Inc., appointed to the Board of Directors, and entered into a Supply Agreement with Akeso for drug substance purchase[119](index=119&type=chunk) - Mr. Duggan and Dr. Zanganeh fully subscribed to their basic rights in the 2023 Rights Offering[121](index=121&type=chunk) - Mr. Duggan's **$395,314 thousand** subscription price was satisfied by extinguishing a portion of his **$400,000 thousand** Duggan Promissory Note[121](index=121&type=chunk) [Note 17. Commitments and Contingencies](index=25&type=section&id=17.%20Commitments%20and%20Contingencies) Discloses the company's contractual obligations and potential contingent liabilities - No capital commitments as of March 31, 2023, with lease commitments for office and laboratory space remaining materially unchanged since Dec 31, 2022, and debt commitments detailed in Note 14[123](index=123&type=chunk)[124](index=124&type=chunk)[125](index=125&type=chunk) - Commitments under agreements with Akeso (milestones, royalties, manufacturing/purchase commitments), Wellcome Trust, University College London, and former Discuva personnel exist[127](index=127&type=chunk) - Unable to estimate the amount, timing, or likelihood of achieving milestones or making future product sales for these obligations[127](index=127&type=chunk) - The Company is not currently subject to any material legal proceedings[130](index=130&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Provides management's perspective on Summit Therapeutics Inc.'s financial condition and operational results for the three months ended March 31, 2023 [Company Overview](index=27&type=section&id=Company%20Overview) Provides a high-level summary of Summit Therapeutics Inc.'s business and strategic focus - Summit Therapeutics Inc. is a biopharmaceutical company focused on the discovery, development, and commercialization of medicinal therapies in oncology, aiming to improve quality of life and resolve unmet medical needs[133](index=133&type=chunk) [Recent Events](index=27&type=section&id=Recent%20Events) Highlights significant corporate and clinical developments impacting the company's operations and strategy - Entered into a Collaboration and License Agreement with Akeso, Inc. for ivonescimab, a bispecific antibody for oncology, in December 2022 (closed January 2023), representing a significant change in strategy[134](index=134&type=chunk) - Terminating prior ridinilazole development and reviewing anti-infectives for partnership opportunities, with future operations focusing on ivonescimab development and other oncology activities[135](index=135&type=chunk) - Completed a 2023 Rights Offering, generating **$500,000 thousand** in gross proceeds from **476,190,471 shares** at **$1.05 per share**[136](index=136&type=chunk) - Increased authorized common stock to **1,000,000,000 shares**[137](index=137&type=chunk) - Repaid **$20,000 thousand** Zanganeh Note and satisfied **$400,000 thousand** Duggan Promissory Note[138](index=138&type=chunk) - Announced plans to initiate Phase III clinical studies for ivonescimab in non-small cell lung cancer (NSCLC) in May 2023 (HARMONi and HARMONi-3), with the first US-based patient enrolled in the Phase III HARMONi study in May 2023[139](index=139&type=chunk) - Re-prioritizing investments and financial resources towards ivonescimab development, leading to reduced investment in infectious diseases programs and associated costs[140](index=140&type=chunk) [Results of Operations](index=28&type=section&id=Results%20of%20Operations) Analyzes the company's financial performance, including revenue, expenses, and net loss, for the reporting period Consolidated Results of Operations (in millions) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Change ($ millions) | Change (%) | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :------------------ | :--------- | | Revenue | $— | $0.3 | $(0.3) | -100% | | Research and development | $9.9 | $20.6 | $(10.7) | -51.9% | | In-process research and development | $520.9 | $— | $520.9 | N/A | | General and administrative | $6.9 | $6.7 | $0.2 | 3.0% | | Total operating expenses | $537.7 | $27.3 | $510.4 | 1869.6% | | Other operating income | $0.6 | $4.8 | $(4.2) | -87.5% | | Operating loss | $(537.1) | $(22.2) | $(514.9) | 2319.4% | | Other (expense) income, net | $(5.2) | $0.8 | $(6.0) | -750% | | Net loss | $(542.3) | $(21.4) | $(520.9) | 2434.1% | - Revenue decreased to **$0** in Q1 2023 from **$0.3 million** in Q1 2022, as all milestones from the Eurofarma license agreement were fully recognized by 2022, and the Company decided to seek partners or divest ridinilazole[142](index=142&type=chunk) Research and Development Expenses by Category (in millions) | Category | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Oncology | $2.4 | $— | | Anti-infectives | $0.4 | $12.5 | | Compensation related costs (excl. stock-based) | $4.8 | $5.0 | | Stock-based compensation | $1.1 | $1.9 | | Other R&D costs | $1.2 | $1.2 | | **Total** | **$9.9** | **$20.6** | - R&D Expenses decreased by **$10.7 million**, primarily due to a **$12.1 million** decrease from winding down anti-infective programs and a **$0.8 million** decrease in stock-based compensation, partially offset by a **$2.4 million** investment in oncology (ivonescimab)[145](index=145&type=chunk) - In-process R&D: **$520.9 million** expense in Q1 2023, mainly from the **$500 million** upfront payment for the ivonescimab License Agreement, including cash and common stock components[148](index=148&type=chunk) General and Administrative Expenses by Category (in millions) | Category | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Compensation related costs (excl. stock-based) | $2.5 | $2.0 | | Stock-based compensation | $1.7 | $2.0 | | Legal fees and professional services | $1.7 | $1.6 | | Other G&A expenses | $1.0 | $1.1 | | **Total** | **$6.9** | **$6.7** | - G&A Expenses increased by **$0.2 million**, driven by a **$0.5 million** increase in compensation-related expenses for building the executive management team, partially offset by a **$0.3 million** decrease in stock-based compensation[150](index=150&type=chunk) Other Operating Income by Category (in millions) | Category | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Research and development tax credits | $0.6 | $1.7 | | Funding income from BARDA | $— | $2.6 | | Grant income from CARB-X | $— | $0.5 | | **Total** | **$0.6** | **$4.8** | - Other Operating Income decreased by **$4.2 million**, primarily due to the cessation of BARDA funding (**$2.6 million** decrease) and CARB-X grant income (**$0.5 million** decrease) as anti-infective programs wound down, and a **$1.1 million** decrease in U.K. R&D tax credits[152](index=152&type=chunk)[153](index=153&type=chunk)[154](index=154&type=chunk) Other (Expense) Income, net (in millions) | Category | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Foreign currency gains (losses) | $0.5 | $0.9 | | Interest expense on promissory notes payable to related parties | $(8.3) | $(0.1) | | Investment income | $1.8 | $— | | Reclassification of cumulative currency translation gain | $0.4 | $— | | Other income (expense) | $0.4 | $— | | **Total** | **$(5.2)** | **$0.8** | - Other (Expense) Income, net decreased by **$6.0 million**, mainly due to an **$8.2 million** increase in interest expense on related party promissory notes, partially offset by **$1.8 million** in investment income and a **$0.4 million** reclassification of cumulative foreign currency translation gains from dissolved dormant entities[156](index=156&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses the company's ability to meet its financial obligations and fund future operations - Operations financed through common stock issuances, license/collaboration agreements, government funding (BARDA, CARB-X, Innovate UK, Wellcome Trust), and related party promissory notes[157](index=157&type=chunk) Key Liquidity Metrics (in millions) | Metric | As of March 31, 2023 | | :------------------------------------ | :------------------- | | Net loss (three months ended) | $(542.4) | | Cash flows used in operating activities (three months ended) | $(13.1) | | Accumulated deficit | $(920.7) | | Cash and cash equivalents | $71.0 | | Short-term investments (U.S. treasury securities) | $170.963 | | Current and long-term U.K. R&D tax credits receivable | $5.0 | - Current financial resources are expected to fund operating costs and working capital for ivonescimab clinical trials into the second half of 2024[164](index=164&type=chunk) - Significant additional capital will be required for ongoing operations and potential milestone payments to Akeso (up to **$4.5 billion**)[165](index=165&type=chunk) - The Company is exploring various financing options (equity, debt, collaborations) but there is no assurance of availability or acceptable terms, which could impact development and commercialization efforts[165](index=165&type=chunk) [Cash Flows](index=34&type=section&id=Cash%20Flows) Analyzes the company's cash inflows and outflows from operating, investing, and financing activities Summary of Cash Flows (in millions) | Cash Flow Activity | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(13.1) | $(19.0) | | Net cash used in investing activities | $(645.1) | $(0.4) | | Net cash provided by financing activities | $80.1 | $25.2 | - Net cash used in operating activities decreased to **$13.1 million** (Q1 2023) from **$19.0 million** (Q1 2022), despite a higher net loss, due to adjustments for non-cash charges and cash payments reclassified to investing activities for the Akeso upfront payment[168](index=168&type=chunk)[169](index=169&type=chunk) - Net cash used in investing activities significantly increased to **$645.1 million** (Q1 2023) from **$0.4 million** (Q1 2022), primarily due to **$475.0 million** cash payment to Akeso for the License Agreement and **$170.0 million** for short-term investments[170](index=170&type=chunk) - Net cash provided by financing activities was **$80.1 million** (Q1 2023), mainly from **$104.1 million** net proceeds from the 2023 Rights Offering (net of **$395.3 million** debt extinguishment) and **$0.7 million** from employee stock awards, offset by **$24.7 million** repayment of related party promissory notes[171](index=171&type=chunk) [Critical Accounting Policies and Significant Judgments and Estimates](index=34&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) Discusses the key accounting policies and estimates that require significant management judgment - Financial statements require estimates and judgments for revenue recognition, R&D costs, intangible assets, stock-based compensation, and income taxes[173](index=173&type=chunk) - No material changes to critical accounting policies and estimates were reported since the Annual Report on Form 10-K for the year ended December 31, 2022[175](index=175&type=chunk) [Contractual obligations and commitments](index=35&type=section&id=Contractual%20obligations%20and%20commitments) Outlines the company's contractual obligations and future financial commitments - Lease commitments for office and laboratory space remain materially unchanged since December 31, 2022[176](index=176&type=chunk) - Contingent payment obligations include commitments under agreements with Akeso (milestones, royalties, manufacturing/purchase), Wellcome Trust, University College London, and former Discuva personnel[177](index=177&type=chunk) - The amount, timing, or likelihood of these contingent payments cannot be estimated as of March 31, 2023[177](index=177&type=chunk) - Most contracts for clinical trials, preclinical research, manufacturing, and other services are cancellable upon notice[178](index=178&type=chunk) [Off-Balance Sheet Arrangements](index=35&type=section&id=Off-Balance%20Sheet%20Arrangements) Discloses any off-balance sheet transactions or arrangements that could have a material effect on the financial condition - The Company did not have any off-balance sheet arrangements during the periods presented[179](index=179&type=chunk) [Recently Issued Accounting Pronouncements](index=35&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) Refers to the discussion of new accounting standards and their potential impact - Refer to Note 3 for a discussion of recently issued or adopted accounting pronouncements[180](index=180&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a "smaller reporting company" under SEC regulations, Summit Therapeutics Inc. is not required to provide quantitative and qualitative disclosures about market risk - The Company is exempt from providing quantitative and qualitative disclosures about market risk as it qualifies as a "smaller reporting company"[181](index=181&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Details the evaluation of Summit Therapeutics Inc.'s disclosure controls and procedures and reports on changes in internal control over financial reporting [Disclosure Controls and Procedures](index=35&type=section&id=Disclosure%20Controls%20and%20Procedures) Reports on the effectiveness of the company's disclosure controls and procedures - Management, including Co-Chief Executive Officers and Chief Financial Officer, concluded that disclosure controls and procedures were effective at a reasonable level of assurance as of March 31, 2023[183](index=183&type=chunk) [Changes in Internal Control over Financial Reporting](index=36&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) Describes any material changes in the company's internal control over financial reporting - A new Enterprise Resource Planning (ERP) system was implemented during Q1 2023, leading to necessary updates in internal control over financial reporting processes[184](index=184&type=chunk) - No other material changes to internal control over financial reporting occurred during the period[184](index=184&type=chunk) [PART II - OTHER INFORMATION](index=36&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) Contains supplementary disclosures including legal proceedings, risk factors, and exhibit listings [Item 1. Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) Summit Therapeutics Inc. is not currently involved in any material legal proceedings - The Company is not currently subject to any material legal proceedings[186](index=186&type=chunk) [Item 1A. Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) This section refers to the comprehensive discussion of risk factors in the Company's Annual Report on Form 10-K, noting that no material changes to these risks have occurred since that filing - Information regarding risk factors is discussed in the "Risk Factors" section of the Company's Annual Report on Form 10-K for the year ended December 31, 2023[187](index=187&type=chunk) - No material changes to the previously disclosed risk factors have occurred[187](index=187&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=36&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There are no unregistered sales of equity securities or use of proceeds to report for the period - No unregistered sales of equity securities and use of proceeds to report[188](index=188&type=chunk) [Item 3. Defaults Upon Senior Securities](index=36&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The Company has not experienced any defaults upon senior securities during the reporting period - No defaults upon senior securities to report[189](index=189&type=chunk) [Item 4. Mine Safety Disclosures](index=36&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) There are no mine safety disclosures applicable to Summit Therapeutics Inc - No mine safety disclosures to report[191](index=191&type=chunk) [Item 5. Other Information](index=36&type=section&id=Item%205.%20Other%20Information) No other information is required to be reported in this section - No other information to report[192](index=192&type=chunk) [Item 6. Exhibits](index=37&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including corporate governance documents, certifications, and XBRL data files - Key exhibits include: - Amendment No. 2 to Restated Certificate of Incorporation[194](index=194&type=chunk) - Certifications of Chairman and CEO, Co-CEO, and Principal Financial Officer (pursuant to Sarbanes-Oxley Act)[194](index=194&type=chunk) - XBRL Taxonomy Extension Schema, Calculation, Definition, Label, and Presentation Linkbase Documents[194](index=194&type=chunk) - Cover Page Interactive Data File[194](index=194&type=chunk) [Signatures](index=37&type=section&id=Signatures) The report is duly signed on behalf of Summit Therapeutics Inc. by its Chief Financial Officer - The report was signed by Ankur Dhingra, Chief Financial Officer, on May 11, 2023[197](index=197&type=chunk)

Financial Data and Key Metrics Changes - The net loss for the quarter was $542.4 million, which included $520.9 million in IP R&D expenses related to the upfront payment made to Akeso for ivonescimab [16] - Excluding the one-time payment, the pro forma net loss was approximately $22 million, with operating expenses at $16.8 million [16] - The company exited the quarter with $242 million in cash and investments, which is deemed sufficient to fund operating costs and working capital needs for planned clinical trials into the second half of 2024 [34] Business Line Data and Key Metrics Changes - The company announced it would cease investment in its anti-infectives business to focus resources on the development of ivonescimab [15] - Significant groundwork has been laid for the announcement of two late-stage multi-region trials and the treatment of the first patient in the initial trial [17] Market Data and Key Metrics Changes - The collaboration with Akeso includes rights to ivonescimab in the U.S., Canada, Europe, and Japan, with an upfront payment of $500 million and potential regulatory and commercialization milestones totaling up to $4.5 billion [12] Company Strategy and Development Direction - The company aims to make a significant positive impact on human healthcare by improving the quality and duration of patient lives through ivonescimab [6] - The strategic focus is on executing multiple large clinical trials and building an experienced oncology team [34] - The company is preparing to expand its supply chain for clinical and commercial supply for multiple sources [30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to make a meaningful impact on patients' lives with ivonescimab, particularly in non-small cell lung cancer and other solid tumors [13] - The company is actively engaging with health authorities, including the FDA, to discuss Phase III clinical trials for ivonescimab [28] Other Important Information - The company has initiated its first clinical study, HARMONi, and enrolled the first patient within 3.5 months after closing the deal with Akeso [30] - The company has added Dr. Michelle Xia, CEO of Akeso, to its Board of Directors, enhancing corporate governance and expertise [25] Q&A Session Summary Question: Will the company be able to submit data compiled by Akeso for the Phase III clinical trials? - Yes, the company will utilize information from both Akeso and its own generated data, having designed trials in agreement with the FDA [38] Question: What can the company do to seek FDA designations such as breakthrough therapy and Fast Track? - The company has appreciated and incorporated FDA feedback in finalizing the design of its clinical studies and is likely to pursue Fast Track designation [20][49]

Financial Data and Key Metrics Changes - The company closed a fully subscribed $500 million rights offering, which was oversubscribed with over 1,500 accounts acquiring shares [12][13] - The company currently has approximately $235 million in cash and cash equivalents, with a loan of $100 million on the balance sheet [15] Business Line Data and Key Metrics Changes - The company is focusing entirely on the development of ivonescimab, transitioning away from anti-infectives and other discovery-related work [15][16] - The upfront payment of $500 million to Akeso was made in two tranches, totaling $474.9 million, with Akeso also acquiring 10 million shares of Summit common stock valued at $25.1 million [14] Market Data and Key Metrics Changes - The partnership with Akeso allows Summit to develop ivonescimab in North America and Europe, with ongoing Phase III trials in China [10][11] - Ivonescimab has received breakthrough therapy designations in three indications in China [10] Company Strategy and Development Direction - The company aims to build a significant presence in the late-stage bispecific oncology space, focusing on clinical trials for ivonescimab [11][15] - Summit is establishing manufacturing capabilities outside of China to mitigate geopolitical risks [17] Management's Comments on Operating Environment and Future Outlook - Management expressed enthusiasm about the potential of ivonescimab and the strategic partnership with Akeso, emphasizing the importance of improving patient outcomes [5][6] - The company is in communication with the FDA and other health authorities to align on development strategies for clinical trials [11][21] Other Important Information - The company has taken noncash charges, including impairments of anti-infectives-based intangible assets, as part of its transition to focus solely on oncology [16] - The collaboration with Akeso is specific to ivonescimab, with no other products included in the deal [22] Q&A Session Summary Question: Does the company have rights to manufacture the product elsewhere besides China? - Yes, the company has entered into a supply agreement and plans to establish manufacturing capabilities within its licensed territories [17] Question: Have clinical trials from another country been accepted in the United States? - The company is working through its development strategy and plans to provide more information based on FDA feedback [21] Question: Is the deal specific to SMT112 or are there other Akeso products involved? - The transaction is entirely specific to SMT112 [22] Question: What percentage of Summit does Akeso currently own, and did they participate in the rights offering? - Akeso's participation in the rights offering is not public information, but they elected to acquire 10 million shares as part of the upfront payment [23]

[PART I](index=7&type=section&id=PART%20I) [Business](index=7&type=section&id=Item%201.%20Business) Summit Therapeutics pivoted to oncology with ivonescimab, discontinuing anti-infective programs and relying on third-party manufacturing and regulatory compliance [Overview and Strategic Shift](index=7&type=section&id=Overview%20and%20Strategic%20Shift) - The company has shifted its strategic focus to oncology following the in-licensing of ivonescimab from Akeso, Inc. in December 2022[26](index=26&type=chunk)[27](index=27&type=chunk) - Development and marketing activities for the previous lead anti-infective candidate, ridinilazole, are being terminated, and the asset is being reviewed for partnership or divestiture[27](index=27&type=chunk)[28](index=28&type=chunk) - Future operations will be centered on the development of ivonescimab[27](index=27&type=chunk) [Akeso Collaboration and License Agreement](index=7&type=section&id=Akeso%20Collaboration%20and%20License%20Agreement) - Summit obtained the rights to develop and commercialize ivonescimab (SMT112) in the United States, Canada, Europe, and Japan[26](index=26&type=chunk)[30](index=30&type=chunk) - An upfront payment was made in Q1 2023, consisting of **$474.9 million** in cash and 10 million shares of common stock (in lieu of **$25.1 million** cash)[30](index=30&type=chunk) - Akeso retains development and commercialization rights for all other regions, including China[30](index=30&type=chunk) [Ivonescimab (SMT112)](index=8&type=section&id=Ivonescimab%20(SMT112)) - Ivonescimab is a novel, potential first-in-class PD-1/VEGF bispecific antibody that combines immunotherapy (PD-1 blockade) with anti-angiogenesis (VEGF blockade) in a single molecule[32](index=32&type=chunk) - The drug has received Breakthrough Therapy Designation status in China for three separate indications in non-small cell lung cancer (NSCLC)[33](index=33&type=chunk)[35](index=35&type=chunk) - In a Phase II study in China for NSCLC patients who failed EGFR-TKI treatment, ivonescimab combined with chemotherapy showed an overall response rate (ORR) of **68.4%** and a median Progression-Free Survival (mPFS) of **8.2 months**[33](index=33&type=chunk) - Summit is initiating its own development activities for ivonescimab, starting with NSCLC indications in its licensed territories[35](index=35&type=chunk) [Status of Anti-Infectives Pipeline](index=9&type=section&id=Status%20of%20Anti-Infectives%20Pipeline) - The company is seeking partners or divestiture for ridinilazole, its former lead candidate for C. difficile infection, and has discontinued its pediatric clinical trial[28](index=28&type=chunk) - The Discuva Platform, a technology for discovering new antibiotics, will no longer receive further investment. An impairment charge of **$8.5 million** was recognized for the intangible asset in 2022[42](index=42&type=chunk) - The company will continue to pursue partnerships for the further development of SMT-738, a preclinical candidate for combating carbapenem-resistant Enterobacteriaceae (CRE) infections[29](index=29&type=chunk)[44](index=44&type=chunk) [Competition](index=13&type=section&id=Competition) - Ivonescimab is the most advanced PD-1/VEGF bispecific antibody in clinical development, with no known approved competitors in its class in the licensed territories[64](index=64&type=chunk)[65](index=65&type=chunk) - The NSCLC market is highly competitive, with established treatments including immuno-oncology drugs like pembrolizumab, atezolizumab, nivolumab, and durvalumab, often used in combination with chemotherapy[66](index=66&type=chunk) - The company faces competition from major pharmaceutical and biotechnology companies with significantly greater financial resources and expertise[61](index=61&type=chunk) [Manufacturing](index=14&type=section&id=Manufacturing) - The company does not own or operate manufacturing facilities and relies on third parties for the production of its product candidates[67](index=67&type=chunk) - Akeso will be the initial sole supplier of the drug substance for ivonescimab for both clinical and commercial use in the licensed territory, as per a forthcoming Supply Agreement[68](index=68&type=chunk) [Intellectual Property](index=15&type=section&id=Intellectual%20Property) Patent Portfolio Summary (as of Dec 31, 2022) | Program/Technology | Granted Patents (U.S. & Foreign) | Pending Applications (Worldwide) | Expected Expiration | | :--- | :--- | :--- | :--- | | **Discuva Platform** | 14 | N/A | 2032 | | **Ridinilazole Program** | 23 | 22 | 2043 | | **SMT-738 Program** | 4 | 23 | 2042 | - The company has in-licensed rights to various Akeso patent applications for ivonescimab in the licensed territory and has rights to control their prosecution in collaboration with Akeso[75](index=75&type=chunk) [Government Regulation](index=16&type=section&id=Government%20Regulation) - The company is subject to extensive regulation by the FDA in the United States and comparable authorities in other countries, covering all stages from research and development to post-approval marketing[82](index=82&type=chunk) - The U.S. drug approval process involves preclinical studies, submitting an Investigational New Drug (IND) application, conducting Phase I, II, and III clinical trials, and submitting a New Drug Application (NDA) or Biologic Licensing Application (BLA) to the FDA[84](index=84&type=chunk) - In the European Union, marketing authorization requires submitting an MAA through a centralized, decentralized, or national procedure, with the centralized procedure being mandatory for certain innovative products like those the company is developing[144](index=144&type=chunk)[145](index=145&type=chunk) - Pricing and reimbursement are subject to significant government control and third-party payor negotiations in both the U.S. and E.U., which can impact commercial success[159](index=159&type=chunk)[166](index=166&type=chunk) [Human Capital](index=31&type=section&id=Human%20Capital) - As of December 31, 2022, the company had **77 total employees**, with **62%** in research and development[174](index=174&type=chunk) - The workforce is split geographically, with approximately **62%** in the U.S. and **38%** in the U.K.[174](index=174&type=chunk) - The company emphasizes diversity, with approximately **63%** of its employees and **62%** of its executive team being female[177](index=177&type=chunk) [Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) The company faces substantial financial, operational, and market risks, including heavy dependence on ivonescimab, need for capital, reliance on third parties, clinical trial uncertainties, intense competition, and complex regulatory and intellectual property challenges [Risks Related to Financial Position and Need for Additional Capital](index=33&type=section&id=Risks%20Related%20to%20our%20Financial%20Position%20and%20Need%20for%20Additional%20Capital) - The company's success is heavily dependent on a single product candidate, ivonescimab. Failure to successfully commercialize it would materially harm the business[188](index=188&type=chunk) - The company is a development-stage entity with a history of significant losses (**$78.8 million** net loss in 2022) and an accumulated deficit of **$378.3 million** as of year-end 2022[191](index=191&type=chunk) - Substantial additional capital is required to fund operations, make payments under the License Agreement (up to **$5.0 billion** in contingent payments), and service its **$100 million** in outstanding debt as of March 7, 2023[197](index=197&type=chunk)[201](index=201&type=chunk)[204](index=204&type=chunk) [Risks Related to Financial and Intellectual Property Dependencies on Third Parties](index=36&type=section&id=Risks%20Related%20to%20our%20Financial%20and%20Intellectual%20Property%20Dependencies%20on%20Third%20Parties) - The company depends on the intellectual property licensed from Akeso for ivonescimab. Termination of the License Agreement, for reasons such as a material breach or failure to make payments, would result in the loss of its primary product candidate[207](index=207&type=chunk)[209](index=209&type=chunk)[211](index=211&type=chunk) - Reliance on Akeso for the initial manufacturing and supply of ivonescimab presents risks. Any delays, quality issues, or failure to transfer manufacturing knowledge could materially and adversely affect the business[214](index=214&type=chunk)[215](index=215&type=chunk) - The company relies on third-party contract research organizations (CROs) to conduct clinical trials, which reduces direct control over these activities and introduces risks related to performance, compliance, and deadlines[229](index=229&type=chunk)[230](index=230&type=chunk) [Risks Related to Industry and Market](index=42&type=section&id=Risks%20Related%20to%20Our%20Industry%20and%20Market) - The company faces substantial competition in the NSCLC market from established immuno-oncology drugs and chemotherapies, as well as from other therapeutics in development[236](index=236&type=chunk)[237](index=237&type=chunk) - Many competitors have significantly greater financial resources and expertise in R&D, manufacturing, and marketing[240](index=240&type=chunk) [Risks Related to Development and Commercialization](index=43&type=section&id=Risks%20Related%20to%20the%20Development%20and%20Commercialization%20of%20our%20Product%20Candidates) - Clinical trials are expensive, lengthy, and uncertain. Failure to demonstrate safety and efficacy for ivonescimab could prevent or delay commercialization[245](index=245&type=chunk) - Even if approved, ivonescimab may not achieve market acceptance from physicians, patients, and payors, which is necessary for commercial success[254](index=254&type=chunk) - As a biologic, ivonescimab carries unique manufacturing risks, as production is often complex, costly, and requires specialized facilities and quality control[261](index=261&type=chunk) [Legal, Tax, Regulatory and Compliance Risks](index=46&type=section&id=Legal,%20Tax,%20Regulatory%20and%20Compliance%20Risks) - The business is subject to unfavorable pricing regulations, third-party reimbursement practices, and healthcare reform initiatives (like the Inflation Reduction Act of 2022) that could harm profitability[264](index=264&type=chunk)[308](index=308&type=chunk) - Reliance on Akeso exposes the company to risks associated with doing business in China, including political, economic, legal, and trade policy uncertainties[270](index=270&type=chunk)[271](index=271&type=chunk) - The marketing approval process is expensive and uncertain. Failure to obtain, or delays in obtaining, regulatory approvals from the FDA and other authorities would prevent commercialization[287](index=287&type=chunk) [Risks Related to Intellectual Property, Cybersecurity and Data Privacy](index=55&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property,%20Cybersecurity%20and%20Data%20Privacy) - The company's ability to obtain and maintain patent protection for its technology is uncertain and critical to its success. Patent rights may be challenged, invalidated, or circumvented by competitors[317](index=317&type=chunk)[319](index=319&type=chunk) - The company may become involved in expensive and time-consuming lawsuits to protect its patents or defend against infringement claims from third parties[327](index=327&type=chunk)[328](index=328&type=chunk) - Information technology systems are vulnerable to cybersecurity threats like ransomware, which could disrupt operations, compromise sensitive data (including clinical trial data), and result in significant costs and reputational harm[335](index=335&type=chunk)[337](index=337&type=chunk) - The company is subject to stringent and evolving data privacy laws, such as GDPR in Europe and CCPA in California, and failure to comply could lead to significant fines and penalties[341](index=341&type=chunk)[343](index=343&type=chunk)[345](index=345&type=chunk) [Risks Related to Corporate Governance and Employee Relations](index=60&type=section&id=Risks%20Related%20to%20Corporate%20Governance%20and%20Employee%20Relations) - The company is highly dependent on its key executives, including Executive Chairman and CEO Robert W. Duggan and co-CEO Dr. Mahkam Zanganeh[348](index=348&type=chunk) - As of December 31, 2022, Mr. Duggan beneficially owned approximately **81.8%** of the company's outstanding capital stock, giving him control over all matters submitted to stockholders for approval[350](index=350&type=chunk) - Due to Mr. Duggan's majority ownership, the company qualifies as a "controlled company" under Nasdaq rules, exempting it from certain corporate governance requirements, such as having a majority of independent directors[351](index=351&type=chunk) [Risks Related to Owning Our Common Stock](index=62&type=section&id=Risks%20Related%20to%20Owning%20Our%20Common%20Stock) - The stock price may be volatile and is subject to fluctuation based on clinical trial results, competition, and broader market conditions[353](index=353&type=chunk)[354](index=354&type=chunk) - Substantial future sales of common stock by the principal stockholder, who holds a large number of registered shares, could cause the stock price to decline[356](index=356&type=chunk)[357](index=357&type=chunk) - The company is a "smaller reporting company," which allows for reduced disclosure requirements that may make the stock less attractive to some investors[358](index=358&type=chunk) [Risks Related to the COVID-19 Pandemic](index=65&type=section&id=Risks%20Related%20to%20the%20COVID-19%20Pandemic) - The COVID-19 pandemic could continue to adversely affect business operations, including potential delays in clinical trial enrollment and disruptions to the supply chain for clinical materials[375](index=375&type=chunk)[377](index=377&type=chunk) [Unresolved Staff Comments](index=68&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None[380](index=380&type=chunk) [Properties](index=68&type=section&id=Item%202.%20Properties) The company leases three principal facilities for executive office and laboratory use in the United Kingdom and the United States Principal Leased Facilities (as of Dec 31, 2022) | Use | Location | Size (sq. ft.) | Lease Expiration | | :--- | :--- | :--- | :--- | | Executive office | Oxfordshire, UK | 6,781 | Feb 2027 | | Executive office | Menlo Park, CA, US | 5,777 | Dec 2025 | | Laboratory and office | Sawston, UK | 7,644 | Oct 2026 | [Legal Proceedings](index=68&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently subject to any material legal proceedings - The company is not currently a party to any material legal proceedings[382](index=382&type=chunk) [Mine Safety Disclosures](index=68&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[383](index=383&type=chunk) [PART II](index=69&type=section&id=PART%20II) [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=69&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on the Nasdaq Global Market under the symbol "SMMT" and has never paid cash dividends, with recent sales of unregistered securities funding operations and the Akeso license agreement - The company's common stock has traded on the Nasdaq Global Market under the symbol "SMMT" since September 21, 2020[386](index=386&type=chunk) - The company has never paid cash dividends and intends to retain future earnings to fund business development[388](index=388&type=chunk) - In December 2022, the company entered into a Note Purchase Agreement with its CEO and co-CEO for an aggregate of **$520 million** in unsecured promissory notes to help fund the Akeso license agreement[397](index=397&type=chunk) [Selected Financial Data](index=72&type=section&id=Item%206.%20Selected%20Financial%20Data) This item is reserved and no data is provided - Reserved[401](index=401&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=72&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The company's strategic shift to oncology impacted 2022 financials, resulting in a net loss of **$78.8 million** driven by reduced R&D and an impairment charge, with recent financing expected to fund operations into late 2024 [Results of Operations](index=79&type=section&id=Results%20of%20Operations) Comparison of Operations (in millions) | | Year Ended Dec 31, 2022 | Year Ended Dec 31, 2021 | $ Change | | :--- | :--- | :--- | :--- | | **Revenue** | $0.7 | $1.8 | $(1.1) | | **Research and development** | $52.0 | $85.4 | $(33.4) | | **General and administrative** | $26.7 | $23.6 | $3.1 | | **Impairment of intangible assets** | $8.5 | $— | $8.5 | | **Other operating income** | $14.4 | $21.0 | $(6.6) | | **Operating loss** | $(72.1) | $(86.2) | $14.1 | | **Net loss** | $(78.8) | $(88.6) | $9.8 | - Research and development expenses decreased by **$33.4 million**, primarily due to reduced clinical and manufacturing activity for the ridinilazole program following the decision to seek a partner or divestiture[439](index=439&type=chunk) - An impairment charge of **$8.5 million** was recognized for the Discuva Platform intangible asset due to the company's strategic shift to oncology[443](index=443&type=chunk) - Other operating income decreased by **$6.6 million**, mainly due to a **$10.7 million** decrease in U.K. R&D tax credits resulting from lower eligible spending on the ridinilazole program[444](index=444&type=chunk)[445](index=445&type=chunk) [Liquidity and Capital Resources](index=82&type=section&id=Liquidity%20and%20Capital%20Resources) - As of December 31, 2022, the company had cash and cash equivalents of **$348.6 million** and restricted cash of **$300.0 million**[452](index=452&type=chunk) - The company believes its financial resources, including proceeds from a March 2023 Rights Offering, are sufficient to fund operations and planned clinical trials for ivonescimab into the second half of 2024[452](index=452&type=chunk) Cash Flow Summary (in millions) | | Year Ended Dec 31, 2022 | Year Ended Dec 31, 2021 | | :--- | :--- | :--- | | **Net cash used in operating activities** | $(41.6) | $(72.6) | | **Net cash used in investing activities** | $(0.6) | $(0.3) | | **Net cash provided by financing activities** | $620.2 | $77.9 | - Net cash from financing activities in 2022 was primarily driven by **$545.0 million** in proceeds from related-party promissory notes and **$99.9 million** from a rights offering[463](index=463&type=chunk) [Critical Accounting Policies and Significant Judgments and Estimates](index=87&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) - Key accounting policies requiring significant judgment include revenue recognition for licensing agreements, impairment of intangible assets, accrual of research and development expenses, valuation of stock-based compensation, and accounting for income taxes[477](index=477&type=chunk)[478](index=478&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=91&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk exposures are liquidity, foreign currency exchange rate fluctuations due to U.K. operations, and interest rate risk from variable-rate promissory notes - The company's primary market risks are liquidity, foreign currency, and interest rate risk[497](index=497&type=chunk) - Foreign currency risk stems from significant operations in the United Kingdom, with transactions in pounds sterling and euros, while financial statements are presented in U.S. dollars[499](index=499&type=chunk) - Interest rate risk exists due to variable interest rates on its outstanding promissory notes payable to related parties[501](index=501&type=chunk) [Financial Statements and Supplementary Data](index=92&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section contains the company's consolidated financial statements for the years ended December 31, 2022 and 2021, including the Report of Independent Registered Public Accounting Firm, Consolidated Balance Sheets, Statements of Operations and Comprehensive Loss, Statements of Stockholders' Equity, Statements of Cash Flows, and the accompanying notes - The financial statements required by this item are included in the Annual Report on Form 10-K, starting on page 88 of the original document[503](index=503&type=chunk)[520](index=520&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=92&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[504](index=504&type=chunk) [Controls and Procedures](index=92&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2022, with no attestation report required as a non-accelerated filer - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2022[505](index=505&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2022[508](index=508&type=chunk) [Other Information](index=93&type=section&id=Item%209B.%20Other%20Information) The Compensation Committee approved 2022 bonuses for executives, with co-CEO Dr. Zanganeh receiving **$452,500** and CFO Ankur Dhingra receiving **$381,918** on January 10, 2023 - On January 10, 2023, the company paid a discretionary cash bonus of **$202,500** and an extraordinary bonus of **$250,000** to co-CEO Dr. Zanganeh[511](index=511&type=chunk) - On January 10, 2023, the company paid a discretionary cash bonus of **$131,918** and an extraordinary bonus of **$250,000** to CFO Ankur Dhingra[511](index=511&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=93&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Not applicable[512](index=512&type=chunk) [PART III](index=93&type=section&id=PART%20III) [Directors, Executive Officers and Corporate Governance](index=93&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) Information for this item is incorporated by reference from the company's definitive Proxy Statement for its 2023 Annual Meeting of Stockholders - Information is incorporated by reference from the upcoming 2023 proxy statement[514](index=514&type=chunk) [Executive Compensation](index=93&type=section&id=Item%2011.%20Executive%20Compensation) Information for this item is incorporated by reference from the company's definitive Proxy Statement for its 2023 Annual Meeting of Stockholders - Information is incorporated by reference from the upcoming 2023 proxy statement[515](index=515&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=93&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information for this item is incorporated by reference from the company's definitive Proxy Statement for its 2023 Annual Meeting of Stockholders - Information is incorporated by reference from the upcoming 2023 proxy statement[516](index=516&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=93&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) Information for this item is incorporated by reference from the company's definitive Proxy Statement for its 2023 Annual Meeting of Stockholders - Information is incorporated by reference from the upcoming 2023 proxy statement[517](index=517&type=chunk) [Principal Accounting Fees and Services](index=93&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information for this item is incorporated by reference from the company's definitive Proxy Statement for its 2023 Annual Meeting of Stockholders - Information is incorporated by reference from the upcoming 2023 proxy statement[518](index=518&type=chunk) [PART IV](index=94&type=section&id=PART%20IV) [Exhibits, Financial Statement Schedules](index=94&type=section&id=Item%2015.%20Exhibits,%20Financial%20Statement%20Schedules) This section lists the exhibits filed as part of the Form 10-K, including corporate governance documents, material contracts, and certifications, with consolidated financial statements included and all schedules omitted as not applicable - The consolidated financial statements are included with the report[520](index=520&type=chunk) - All financial statement schedules have been omitted because they are not applicable or required[521](index=521&type=chunk) [Form 10-K Summary](index=99&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company reports no summary for this item - None[529](index=529&type=chunk)