Grail (GRAL +15.35%) is a loss-making diagnostics company with an innovative technology that has the potential to grow significantly in the future under the right circumstances. As such, it's precisely the kind of stock that could respond violently to positive news flow, as it did in October with a 55.5% increase, according to data provided by S&P Global Market Intelligence. Here's why.
Grail's quest
The company's Galleri test is commercially available, but it has not yet been approved by the Food and Drug Administration (FDA). It's a so-called multi-cancer early detection (MCED) screening test capable of detecting "a cancer signal shared by over 50 types of cancer, over 45 of which do not have recommended screening guidelines," according to its Securities and Exchange Commission (SEC) filings.
Grail is working on FDA approval under a Breakthrough Device Designation, which is expected to accelerate the review process. The company plans to complete a premarket approval (PMA) submission to the FDA during the first six months of 2026.
Image source: Getty Images.
As such, the key drivers of the stock are likely progress on the FDA approval pathway, securing funding for the business while it remains loss-making, and establishing partnerships that could expand its commercial opportunities. The good news is that Grail delivered on all three objectives in October.
Grail's super October
First, regarding financing, the company announced that it had entered into a private placement to sell 4,639,543 shares of common stock at $70.05, raising approximately $325 million in financing.
NASDAQ: GRAL
Key Data Points
Second, in mid-October, Grail announced that it had signed a binding letter of intent to bring Galleri to Asian markets in collaboration with Samsung. The Korean company also agreed to invest $100 million into Grail at a price of $70.05. Samsung C&T's Executive Vice President of Life Science Business, Jaywoo Kim, described it as "a strategic business partnership that provides Samsung with a strong foothold for expanding into the cancer screening field and delivering one of these promising technologies to customers in South Korea and across Asia."
Finally, management announced positive results in a study (SYMPLIFY) using Galleri that diagnosed cancer in a third of participants who had previously been believed to have had a false positive diagnosis -- emphasizing the importance and accuracy of the Galleri test.
What's next for Grail
Wall Street expects the company to incur losses for the next few years, and the value of the stock still rests largely on FDA approval. Nevertheless, the recent progress is excellent, and the involvement of Samsung and other investors raises confidence in the company's future.
