Summit Therapeutics (Summit Therapeutics (SMMT)) reported second-quarter results on Thursday that beat Wall Street expectations, but the real story is the company's warning that it might not have enough cash to keep the lights on for another year.
The biotech posted an adjusted loss of 19 cents per share, better than the consensus estimate of a 28-cent loss. As of June 30, it had $690.7 million in cash, cash equivalents, and short-term investments. That sounds like a lot, but the company says it's not sufficient to fund its planned operations for at least the next 12 months.
During the second quarter, Summit raised $230.8 million in gross proceeds through its at-the-market (ATM) equity facility. After the quarter ended, it raised another $68.4 million the same way. But the company's accumulated deficit stands at a staggering $2.7 billion, and it expects to keep generating operating losses for the foreseeable future.
In its quarterly SEC filing, Summit acknowledged that these conditions raise substantial doubt about its ability to continue as a going concern. If it can't secure additional funding when needed, the company may have to delay or reduce its research and development programs, product portfolio expansion, or future commercialization efforts.
On a brighter note, earlier this month Summit agreed to sell ridinilazole, an investigational Phase 3 precision antibiotic, to Toronto-based Biossil, Inc. The deal includes $500,000 upfront and up to $104.5 million in regulatory and commercial milestones, plus tiered royalties on net sales. That could provide some cash down the road, but it's not enough to solve the immediate funding gap.
Summit shares were down 6.78% at $13.96 on Friday as investors digested the news.
