Why Grail Stock Popped Today
Key Points
The presentation at the annual American Society of Clinical Oncology conference drew mixed reactions, with investors initially selling the stock heavily.
The Galleri test has demonstrated commendable episode sensitivity for the 12 key cancers that cause death in the U.S.
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Shares in multi-cancer early detection (MCED) test company Grail (NASDAQ: GRAL) rose by 11.5% in early trading today, as investors took advantage of a dip in the share price following the company's much-anticipated presentation at the American Society of Clinical Oncology (ASCO) conference recently.
Grail's mixed presentation
Given the strong run-up before the presentation, it's not surprising that some investors sold after it. It's a combination of good old-fashioned "sell on the news" alongside recognition that the data presented was mixed and didn't provide compelling evidence for investors to conclude that Grail's MCED test, Galleri, will get FDA approval and receive insurance coverage, particularly Medicare coverage.
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As a reminder, the Galleri test failed to meet its primary endpoint of reducing the detection of late-stage cancers (Stage III and Stage IV) in a 3-year, 142,000-person trial conducted by England's National Health Service (NHS).
What investors are hoping for
Investors' hopes rest on the idea that the underlying data are compelling enough for the FDA to approve the test, and that insurers will be willing to cover it based on the NHS test, and a separate 35,000-test in the U.S.
In addition, Chief Scientific Officer, Harpal Kumar, acknowledged the belief that a potential 12-month follow-up to the trial (Grail is trying to get the NHS's agreement for it) might result in more "undiagnosed late-stage cancers being found in the controlled arm with longer follow-up." That could validate the trial's results, as the aim was to demonstrate a statistically significant reduction in the late-stage cancer detection rate (by detecting cancer in earlier stages) compared with the control group.
Image source: Getty Images.
One thing for investors to feel positive about
One plus from both trial results is that the test has relatively good episode sensitivity (how well the test catches cancers later diagnosed in patients) was 69.8% for the 12 cancers responsible for two-thirds of cancer deaths in the U.S." in the U.S. trial, and 54.7% in the NHS trial, compared to 39.3% and 30.7% respectively across all cancers.
It's not enough on its own to secure coverage, but in tandem with future FDA approval, it will increase the likelihood of coverage.
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Lee Samaha has no position in any of the stocks mentioned. The Motley Fool recommends Grail. The Motley Fool has a disclosure policy.
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