Grail (GRAL 4.25%) stock rose by more than 16% by midday. The move follows a couple of days of brutal declines after the release of top-line results from its three-year, 142,000-person trial of its Galleri multi-cancer early detection (MCED) test with England's National Health Service.
What went wrong for Grail
I discussed the stock's decline on the first day of trading after the release, and the market punished it again on Monday. However, let's focus on why the market may be optimistic about future developments.
As a reminder, the primary endpoint of the trial (which it missed) was to achieve a statistical significant reduction in combined Stage III and Stage IV cancers across 12 deadly indications.
Image source: Getty Images.
The test itself won't reduce cancer, but if the Galleri test is working in the early stages, a given population treated after relatively early stage detection will see fewer late-stage detections. Unfortunately, the trial did not demonstrate a statistically meaningful reduction in Stage III and Stage IV (combined) detection in the tested group compared to the control group.
CEO Bob Ragusa argued on the earnings call that "we don't think that this finding is going to impact the approvability of Galleri with the FDA." Still, insurers might not be willing to pay for a test that doesn't meet its primary endpoint.
Where next for Grail
The main hope, noted by an analyst on the earnings call, is that the 6-month to 12-month follow-up data (Grail is extending the trial) will "prove out" the study. Ragusa acknowledged that "we probably should have allowed for a longer follow-up period."
NASDAQ: GRAL
Key Data Points
It can do so in two main ways. First, unfortunately, the control group could see growth in cancer. Second, the high incidence of cancers detected at Stage III in the tested group can be treated, leading to an even bigger reduction in Stage IV detection.
While predicting this probability is complicated, it's not zero. Especially, as President Joshua Ofman argued that the trial did show "the ability to shift the stage at diagnosis for the population in a randomized clinical trial."
