Summit Therapeutics Plunges 7.89%: What's Fueling the Selloff?

Summary
• Summit Therapeutics (SMMT) slumps 7.93% intraday to $24.84, a sharp reversal from its 52-week high of $36.91.
• H.C. Wainwright raises price target to $50, citing 'momentous' survival data for ivonescimab in lung cancer.
• Intraday range spans $24.26 to $26.34, with 2.54% turnover and a dynamic PE of -14.68.

Summit Therapeutics has experienced its most volatile trading day since early 2025, with a 7.89% drop to $24.85. The selloff follows mixed analyst ratings, profit-taking pressure, and anticipation of key clinical data presentations at the World Conference on Lung Cancer. Investors are now weighing whether this drop signals a buying opportunity or a deeper correction.

Clinical Optimism Clashes with Profit-Taking Pressure
The intraday selloff reflects a tug-of-war between clinical optimism and profit-taking. While H.C. Wainwright’s $50 price target and positive ivonescimab data in non-small cell lung cancer (NSCLC) have historically driven SMMT higher, the stock’s 100% annual return has attracted short-term traders. The recent 6.9% premarket drop and mixed analyst ratings—including Piper Sandler’s Neutral stance—have amplified volatility. Additionally, the stock’s -3.52 beta and 199.99% implied volatility on the SMMT20250905C24.5 call suggest heightened sensitivity to market sentiment and rapid price swings.

Biotech Sector Mixed as Amgen Drives Caution
The biotech sector remains fragmented, with Amgen (AMGN) down 0.85% despite its $200B market cap. While SMMT’s clinical focus on lung cancer aligns with sector trends, its 7.93% drop outpaces AMGN’s modest decline, highlighting SMMT’s speculative nature. The sector’s reliance on regulatory outcomes and clinical data—evident in SMMT’s HARMONi trials—creates divergent performance trajectories. However, SMMT’s sell-off appears decoupled from broader sector dynamics, driven instead by its own technical and fundamental catalysts.

Options Playbook: Leverage Volatility with Gamma-Driven Contracts
• 200-day average: 21.94 (below current price)
• RSI: 41.28 (oversold)
• MACD: 0.097 (bullish divergence)
• Bollinger Bands: 24.65–29.42 (price near lower band)

Key levels to monitor include the 200-day MA at $21.94 and the Bollinger lower band at $24.65. The RSI’s oversold reading (41.28) and MACD’s positive divergence suggest a potential rebound, though the stock’s -3.52 beta and 199.99% implied volatility on the SMMT20250905C24.5 call indicate high volatility. With no leveraged ETFs available, options remain the primary vehicle for directional bets.

Top Options Picks:

• SMMT20250905P24 (Put, $24 strike, 2025-09-05):
- IV: 67.09% (moderate)
- Leverage: 28.76%
- Delta: -0.4078 (moderate sensitivity)
- Theta: -0.0066 (slow decay)
- Gamma: 0.14297 (high sensitivity)
- Turnover: 435 (liquid)
- Payoff (5% downside): $0.84 per share (3.47x strike price)
- Why it stands out: High gamma and moderate IV make it ideal for a bearish breakout if SMMT breaks below $24.

• SMMT20250905C24.5 (Call, $24.5 strike, 2025-09-05):
- IV: 64.46% (moderate)
- Leverage: 23.74%
- Delta: 0.5180 (moderate sensitivity)
- Theta: -0.1015 (rapid decay)
- Gamma: 0.1528 (high sensitivity)
- Turnover: 22,029 (highly liquid)
- Payoff (5% upside): $1.09 per share (4.45x strike price)
- Why it stands out: High gamma and moderate IV position it as a gamma scalping play if SMMT bounces off the lower Bollinger band.

Hook: Aggressive bulls may consider SMMT20250905C24.5 into a bounce above $24.5, while bears should watch SMMT20250905P24 for a breakdown below $24.

Backtest Summit Therapeutics Stock Performance
The strategy of buying the SMMT after an intraday plunge of -8% has historically led to positive returns. The 3-day win rate is 52.70%, the 10-day win rate is 58.10%, and the 30-day win rate is 63.67%, indicating a higher probability of positive returns in the short term. The maximum return during the backtest period was 25.10%, which occurred on day 59, suggesting that there is potential for significant gains following the intraday plunge.

Act Now: Position for Catalyst-Driven Volatility
Summit Therapeutics’ 7.93% drop underscores the stock’s susceptibility to technical triggers and analyst sentiment. With key data presentations at the World Conference on Lung Cancer in September and HARMONi-2 OS results expected by year-end, the stock’s trajectory hinges on clinical validation and regulatory momentum. Investors should prioritize the SMMT20250905P24 and SMMT20250905C24.5 options to capitalize on short-term volatility. Meanwhile, Amgen’s -0.85% decline highlights sector caution, but SMMT’s unique catalysts—namely ivonescimab’s potential to disrupt Keytruda’s $30B market—justify a tactical, options-driven approach. Watch for a breakdown below $24 or a rebound above $24.5 to confirm direction.