By Nigam Arora & Dr. Natasha Arora
Better Than Gold Standard
In a Phase 3 study, Summit Therapeutics Inc’s (SMMT) drug showed a statistically significant 5.3 months of improvement in progression free survival versus Keytruda in treatment of PD-L1- positive advanced non-small cell lung cancer. Keytruda from MRK is the gold standard.
Buyout Target
SMMT has also become a buyout target. To date 196 Arora portfolio companies have been bought out, producing a fortune for members who consistently invest in buyouts.
MRK Has Blazed The Trail
MRK has already blazed the trail by getting approval for Keytruda for a number of cancers. Since MRK has already laid down the path, if the scientific data continues to be positive, SMMT simply has to follow the path laid down by MRK. Herein lies the attractiveness of this investment.
Zones
SMMT had run up after release of the data, but it has now pulled back to the buy zone.
For those following the Good Way, the Buy Now rating is *** (To see the locked content, please take a 30 day free trial) as long as the stock is under $***.
For those following the Best Way, the buy zone is $*** – $***. SMMT is trading at $22.84 as of this writing.
The maximum recommended quantity is 10%, but reduce it based on personal risk preference.
The first target zone is $38 – $44. The second target zone is $136 – $151.
The mental stop zone is $*** – $***.
The Plan
If the stock gets hit along with other biotech stocks, the tentative plan is to buy more.
Caution
Here are the key points:
- Remember SMMT is a biotech. Biotech stocks can go to $0.
- A stock such as SMMT can gap down. In such an event, stops may not protect you. To learn the solution, read the First Line Of Defense section of the Trade Management Guidelines.
- Before buying this stock, completely read and understand the section titled Speculative Positions of the Trade Management Guidelines.
- There is no guarantee of a buyout.
- There is no guarantee that the drug will get approval.
- Another risk is that studies appear to have been done in China.
Note: Signal Limited is a Signal(s) with a great record in similar situations but does not meet all of the stringent criteria. Typically, Signal Limited has higher risk-reward.
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Nigam Arora
Nigam Arora is known for his accurate stock market calls. Nigam is a distinguished master of the macro. He is a popular columnist with over 100 million page views, an engineer, and nuclear physicist by background. Nigam has founded two Inc. 500 fastest growing companies and has been involved in over 50 entrepreneurial ventures. He is the developer of Theory ZYX of Successful Change Management and is the author of the book on Theory ZYX, as well as the developer of the ZYX Change Method for Investing.
Dr. Natasha Arora
Dr. Natasha Arora has significant expertise in investment analysis especially biotech, healthcare, and technology. Natasha is a graduate of Harvard Medical School followed by a postdoc at MIT. She has published several peer reviewed research papers in top science journals.
