Summit Therapeutics Plunges 23.75%—What’s Next for the Biotech Giant?

Summary
• Summit Therapeutics (NASDAQ:SMMT) crashes 23.75% intraday, trading at $19.81 as of 19:10 ET.
• Disappointing lung cancer drug data sparks regulatory doubts and analyst downgrades.
• Options volatility surges, with 20 contracts trading at implied volatilities above 75%.

Summit Therapeutics is reeling from a catastrophic intraday selloff, driven by damning clinical data for its flagship drug ivonescimab. The stock has collapsed from a 52-week high of $36.91 to trade near its 52-week low of $15.55, with analysts divided on the drug’s regulatory prospects. The biotech sector remains in turmoil as investors grapple with the implications of a potential FDA rejection and the absence of partnership deals at favorable valuations.

Lung Cancer Drug Data Sparks Regulatory Concerns
Summit Therapeutics’ stock collapse stems from the release of underwhelming longer-term follow-up data for ivonescimab, its investigational lung cancer therapy. The global trial revealed potential overall survival harm in North American and European patients, contradicting earlier promising signals from Chinese studies. Analysts like Daina M. Graybosch of Leerink Partners have downgraded the stock, citing 'unlikely FDA approval' and 'no substantial partnership valuation.' Meanwhile, Citibank’s Reni Benjamin remains cautiously optimistic, viewing the drop as a buying opportunity. The lack of FDA engagement on the latest results has left investors in limbo, amplifying volatility in the options market.

Options Volatility and Technical Divergence Signal High-Risk Opportunities
• MACD: -0.512 (bearish divergence), Signal Line: -0.312, Histogram: -0.201 (negative momentum)
• RSI: 46.13 (oversold territory), Bollinger Bands: $22.91 (lower band) vs. current $19.81
• 200D MA: $22.06 (price below key support)

Summit’s technicals paint a bearish picture, with price action breaking below critical moving averages and RSI hovering near oversold levels. The stock is trading at 76% of its 52-week high, with support/resistance levels at $17.84–$18.24 (200D range) and $26.65–$26.77 (30D range). The most liquid options contracts—SMMT20250919P19 and SMMT20250919P20—offer high leverage and volatility, making them prime candidates for short-term bearish plays.

Top Options Contracts:
• SMMT20250919P19 (Put):
- Strike: $19, Expiration: 2025-09-19, IV: 76.96%, Leverage: 25.52%, Delta: -0.374, Theta: -0.0155, Gamma: 0.138, Turnover: 82,953
- IV (high volatility), Leverage (amplifies downside), Delta (moderate sensitivity), Gamma (strong price sensitivity).
- This put option stands out for its high implied volatility and leverage, offering significant returns if the stock continues to decline. A 5% downside to $18.82 would yield a payoff of $0.99 per contract.
• SMMT20250919P20 (Put):
- Strike: $20, Expiration: 2025-09-19, IV: 75.48%, Leverage: 15.72%, Delta: -0.520, Theta: -0.0054, Gamma: 0.148, Turnover: 107,867
- IV (high volatility), Delta (strong downside bias), Gamma (heightened sensitivity).
- This contract’s high delta and gamma make it ideal for a sharp move below $20. A 5% drop to $18.82 would generate a $1.18 payoff per contract.

Trading Setup: Aggressive bears should prioritize SMMT20250919P19 and SMMT20250919P20 for short-term plays. Watch for a breakdown below $19.10 (intraday low) to trigger further selling. If the stock stabilizes above $20, consider closing short positions to lock in gains.

Backtest Summit Therapeutics Stock Performance
Below is an interactive event-study report that evaluates how Summit Therapeutics (SMMT.O) behaved after each ≥ 24 % intraday plunge since 2022.Key observations (high-level):• Only five such extreme plunges occurred in the period, limiting statistical power. • Average cumulative return over the next 30 trading days was –5 % versus +21 % for the benchmark, with no day showing statistical significance. • Win rate (positive performance) stayed around 40 %, indicating mean-reversion was weak and inconsistent. Feel free to explore the full interactive tables and charts in the module above.

Summit’s Crossroads: Regulatory Hurdles or a Buying Opportunity?
Summit Therapeutics’ 23.75% plunge has created a high-stakes inflection point. While the FDA’s stance on ivonescimab remains uncertain, the stock’s technicals and options volatility suggest continued downside risk. Investors should monitor the $18.24 support level and the sector leader Amgen (AMGN), which fell 1.51% today, for broader biotech sentiment. For those willing to bet on a rebound, Citibank’s 'buy the dip' thesis offers a counterpoint—but only if Summit can address regulatory red flags. Action: Short-term bears target $19.10 breakdown; long-term bulls watch for a rebound above $20.50 to re-enter.