Innovative drugs are a gamble, a big gamble. Once the research and development fails, the stock price collapses and financing is unavailable. On the contrary, if the gamble is won, it is not impossible for the stock price to soar. Especially in the US stock market, it has always been so violent. For the losers, there are only two options: disband on the spot or fight back. The so-called fight back means finding a way to start the next round of innovation gambling. This requires both money and the courage to gamble. Summit is an old "gambler" who plans to gamble again.

After its establishment in 2003, Summit focused on the anti-infection field, and its core product was benchmarked against vancomycin, the "last line of defense for antibiotics." It landed on Nasdaq in 2015, but because the core product ridinilazole did not perform well in the final clinical data, the stock price fell all the way. This also led to the long-term slump of Summit's stock price. In August 2022, Summit completed a $100 million additional financing with the investment of the actual controller Duggan and survived. But such a Summit has no value. Duggan knew this well. Since Summit was not working, he would create another valuable Summit. Summit was unknown, but Duggan was well-known. Back then, he saved and led Pharmacyclics to develop ibrutinib.

Everyone knows the story behind it. Ibrutinib was very successful, and AbbVie spent $21 billion to acquire Pharmacyclics. Through this transaction, Duggan benefited about $3.5 billion and became the big winner.

Just four months after Duggan invested, Summit, which had a market value of only $150 million, announced a big BD, reached a $5 billion cooperation with Kangfang Bio, and introduced AK112, a dual antibody for PD-1/VEGF. This transaction refreshed the ceiling of domestic innovative drug license out. Among them, the down payment alone was as high as $500 million, which was approximately equal to 3.3 Summits. This also made the market question whether Summit had the strength to complete the transaction. After all, the company only had $120 million in cash on its account at the time. In order to take a gamble, Summit decided to borrow money from the major shareholder at a high interest rate, and then complete the capital replacement through financing in the capital market through AK112.

Now it seems that Duggan's purpose of introducing AK112 is to win again. After all, he is very familiar with this script.

AK112 has the potential to become a new option for lung cancer treatment. The phase III clinical trial of single-drug head-to-head K drug had entered the substantive research stage at that time. Zebutinib from China defeated Ibrutinib. Can AK112 from China defeat K drug? In any case, the gimmick of becoming K drug me better is definitely not less than Ibrutinib me better. What's more, AK112 at that time also initially showed this potential.

On the day the transaction was announced, Summit's stock price soared 196%, directly saving the company's stock price on the verge of delisting.

In the new gamble, Summit bet all its wealth. Fortunately, the people at the table are still willing to believe it. In Summit's story of making a fortune, failure is not terrible. What's important is whether you have the capital and courage to start over?

Only by daring to gamble can there be a future. However, for most domestic biotechs, the courage to gamble again after failure is lacking. For example, a biotech with technology once raised a large sum of money by relying on the new crown vaccine, but after the failure of the new crown, it chose to introduce a vaccine on the market. So far, its new story is no longer research and development, but commercialization.

The question is, will commercialization be the strength of biotech? The market has chosen to vote with its feet. In fact, this lack of courage is undoubtedly caused by many reasons. The pharmaceutical company’s own technical reserves and market resources are insufficient, and the market votes with its feet...

Of course, it may also be because the major shareholders are not as rich as Duggan. After all, innovative drug research and development cannot be done without money. In this gamble, the most important thing is that the market is willing to believe you. The reason why the market is willing to believe Summit is not only because of Duggan, a master of operation, but also because it has initially seen the potential of AK112.

Let me ask, who can refuse a potential pipeline that can challenge K drug? But in the final analysis, it is still because the overseas market is willing to believe such a story -

License in, with a good drug, is enough to change fate. Whether it is overseas or domestic, the license in model is like gambling on stones. It looks good, but you may lose all your money if you cut it with a knife. The key is to see whether the company can find a very valuable product. On this basis, the "origin" of the product is not that important.

It is true that the United States is the global innovation highland, but innovation is a divergent competition. Therefore, even if Summit spends a lot of money to introduce innovative drugs from China, the market has no doubts, let alone the model itself. Otherwise, Summit's stock price will not rise sharply after the transaction. The sideways trend after a short surge shows that the market is still waiting and waiting for data verification.

Put yourself in the shoes of a domestic pharmaceutical company. If it spends a lot of money to introduce a pipeline from an innovative pharmaceutical company from Vietnam, how will the market react? It is highly likely that this pharmaceutical company will be criticized. In addition, in the past few years, license in has experienced a rapid cooling after a hot boom in the domestic market. There are more and more pessimism and doubts about this model.

It is undeniable that the disillusionment of the domestic license-in model is because it violates its original intention. A group of pharmaceutical companies spent money to introduce projects and obtain domestic rights and interests just to "complete" the pipeline. Once the market environment changes, it is only a matter of time before the collapse. However, when the market no longer believes, where will the Chinese version of Summit come from?

After the end of 2022, Summit's only job is to promote the overseas Phase 3 clinical trial of SMT112 (AK112). Whether Summit can repeat the clinical data in China will become the key to maintaining its market value. If it successfully defeats K drug overseas, Summit is likely to be acquired by a large pharmaceutical company, and Duggan will once again replicate the legend of Pharmacyclics, which he operates, being acquired by AbbVie.

Everyone is gambling. It's not easy to be a "gambler", especially a "gambler" of innovative drugs in China. In the normal logic of the innovative drug gambling game, the past achievements of pharmaceutical companies cannot represent the future, and past failures cannot mean that it will be difficult to succeed in the future. The wealth that can be brought by the successful development of innovative drugs is unprecedentedly high, but the probability of success is also unprecedentedly low. The success of a new drug may lead to the death of 10,000 drugs behind it.

So, in a sense, innovative pharmaceutical companies are "gamblers" and investors are "gamblers behind gamblers". When the market is good, these gamblers behind gamblers have enough tolerance and yearning for risks and losses, but in the long-lasting capital winter, many people have been trained by the market to be extremely risk-averse.

So, everything has changed. This has put the biopharmaceutical industry, which is extremely dependent on capital, into a "downward" spiral. Therefore, if it is in the domestic market, innovative pharmaceutical companies like Summit, which are extremely dependent on the license-in model, have a single pipeline, and do not have sufficient funds, may not be able to go public anywhere. Because the market has been scared by license-in, a single pipeline also means high risks, and no money means that new pipelines cannot be introduced or developed. Even if innovative pharmaceutical companies that have already gone public do this, they will only be criticized for capital operations and labeled as unforgivable crimes, and they should not think too much about financing.

However, without financing, it means that innovation in biopharmaceuticals may come to an abrupt end. Just like what the gambling king said, I am not afraid of you winning or being smart, I am afraid of you not coming. The innovative pharmaceutical company, the gambler, must also have the support of the gambler behind it. If the gambler behind it does not come, will the innovative pharmaceutical company still have the courage to open a new gamble? Looking at the choices of some domestic innovative pharmaceutical companies, the answer is not difficult to come to. It is not easy to be a gambler, and there is no way to talk about the Chinese version of Summit.

If Duggan can replicate his legend on ibrutinib, it will be a great blessing for Kangfang Biopharma. Not only can it get a huge milestone payment, but it also means that China's innovative drugs have once again proved that they are comparable to global star molecules and have entered the ranks of billion-dollar molecules. Unfortunately, such results eventually flowed overseas, and China failed to witness the birth of its own Summit.

This is caused by two different markets at home and abroad, and it is also something we need to reflect on. Regardless of whether Summit will eventually succeed, it has demonstrated a real innovative drug market-a place full of courage and dreams.

Here, pharmaceutical companies not only dare to take risks, but are also willing to accept challenges; even in the face of the ups and downs of the capital market, the market still believes in the power of innovation and is willing to take high risks for high returns. Of course, it is also important to have a wealthy and powerful major shareholder. All of this constitutes a complete ecosystem, where capital, industry and supervision are closely linked and spiral upward. The development of any market requires the maintenance of many participants.

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