A Blood Test That Screens for 50+ Cancers Just Moved Closer to Real-World Use. Here's What It Means for Grail Investors.

Multi-cancer early detection (MCED) test company Grail (NASDAQ: GRAL) is one of the most fascinating mid-cap healthcare stocks on the market. Usually, when a company misses a primary endpoint in a landmark trial, it's time to fold the hand and focus on the next one. The reality is that many investors did just that, and the stock is down more than 30% in 2026 as I write. Still, there's a case building for its MCED test to receive approval from the Food and Drug Administration (FDA) and coverage from medical insurers. Here's what you need to know before investing in the stock.

Grail's Galleri test

The Galleri MCED test is intended to detect more than 50 cancers at an early stage, and in doing so, improve patient outcomes while significantly reducing treatment costs -- late-stage cancers (III and IV) are far more costly and invasive to treat. To demonstrate Galleri's efficacy, Grail conducted two high-profile studies: a 35,900-person study in North America (PATHFINDER 2) and a three-year, 142,000-person trial in England (NHS-Galleri) with England's National Health Service (NHS).

Unfortunately, Grail had bad news for investors in February when it released top-line results from the NHS and outlined that it had missed its primary endpoint of demonstrating "statistically significant Stage III-IV reduction" in its trial. The idea is that, by detecting cancer at early stages (I-II), the tested group should see a reduction in Stage III-IV cancers compared to the control group.

The stock was, understandably, sold off heavily after the news broke, but has recovered about 18.4% as some investors are pricing in the possibility that Galleri could still receive FDA approval and coverage. Management sought to strengthen that case with a much-anticipated presentation at the American Society of Clinical Oncology (ASCO) annual meeting, only to receive a mixed reception from the market afterward.

Where next for Grail and Galleri

Despite missing a primary endpoint, management continues its iterative process with the FDA to secure approval for Galleri and provide more evidence of its suitability for medical coverage. There are potentially three factors that could favor the company achieving both.

Image source: Getty Images.

First, Grail believes 12-month follow-up data from the NHS trial will prove out the trial because "there are people in the control arm who have cancer that isn't being found because it hasn't presented clinically. So after another 12 months go by, more of those cancers will show up," according to CFO Aaron Freidin at a recent Goldman Sachs conference.

If the follow-up data from the control group show late-stage cancers, it will support the case that the Galleri test reduces late-stage cancer detection.

Second, management maintained "there was a favorable trend toward fewer Stage III-IV cancers in a pre-specified group of 12 deadly cancers" (anus, bladder, colorectal, esophagus, head and neck, liver/bile duct, lung, lymphoma, myeloma/plasma cell neoplasm, ovary, pancreas, stomach) in the NHS trial.

The difference between the 12 deadly cancers and the rest tested is starkly demonstrated by episode sensitivity (the rate at which the test detected cancer among all cancers eventually detected) between the two across both tests.

Data source: Grail presentations.

This may encourage insurers to focus on the cost-benefit of detecting the 12 deadly cancers rather than just looking at the 50+ cancers Galleri tests for.

Third, management believes that the positive predictive values (PPVs) from the studies strongly support adoption. PPV is the percentage of true positives that come out of an initially positive result from Galleri. These figures are hugely important for insurers as testing positive implies costs associated with diagnosing further, and a low PPV means a lot of money is effectively wasted testing a person who doesn't have cancer.

Data source: Grail presentations.

Management argues that these results are a strength of the tests compared to other cancer tests, but it isn't an apples-to-apples comparison based on pure PPV, as insurers will factor in the relative cost of the test and of diagnostics after Galleri MCED, as opposed to, say, a mammography or Cologuard.

Where next for Grail and Galleri?

Ultimately, the company's future is in the hands of the FDA and, more importantly, the financial analyses that medical insurers will conduct based on trial data and the follow-up period. Most retail investors will probably avoid such situations, as they are likely trading against people with a stronger edge on the matter, but the stock may interest risk-seeking investors, as the upside from insurer adoption could be significant.

Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group. The Motley Fool recommends Grail. The Motley Fool has a disclosure policy.