IDNA - Gritstone bio: Potential To Advance Colorectal Cancer Treatment

• Microsatellite stable colorectal cancer patients who had a molecular response who took GRANITE combination exceeded mOS of 18 months and mOS has not yet been reached.
• The global market opportunity for colorectal cancer is expected to reach $18.5 billion by 2023.
• Results from the phase 2 study, using SLATE-KRAS, for the treatment of patients with colorectal cancer and non-small cell lung cancer are expected in the 2nd half of 2022.
• Gritstone bio had $186.8 million in cash as of March 31, 2022; Enough cash to fund its operations for at least the next 12 months.

Gritstone bio, Inc. ( GRTS ) is a speculative biotech that should be on everyone's radar. That's because it is making great progress in using its individualized neoantigen vaccine candidate known as GRANITE, which is being used to treat various types of solid tumors. It noted in a phase 1/2 study that specific colorectal cancer patients given GRANITE in combination with Opdivo (PD-1 checkpoint inhibitor) and Yervoy (ipilimumab) have obtained an overall survival ((OS)) advantage. Specifically, this was observed in a subset of patients who obtained a molecular response.

Having said that, this is a great program because there are several other studies which are being initiated. This phase 1/2 I just noted had colorectal cancer patients who took 2 prior lines of therapy. The goal is to target these very same patients who are newly diagnosed or earlier lines of therapy. In addition, there is a catalyst for investors to look forward to. This will be results from the phase 2 study using SLATE-KRAS for the treatment of patients with non-small cell lung cancer ((NSCLC)) and colorectal cancer ((CRC)) in the 2nd half of 2022.

GRANITE Combination Is Promising For Patients With Colorectal Cancer

An advanced program in the pipeline is the use of GRANITE, which is being developed for the treatment of patients with microsatellite stable ((MSS)) colorectal cancer. Colorectal cancer is, as the name suggests, a type of cancer of the colon or rectum. It is a part of the lower end of the digestive tract. In the early stages, the issue first starts up as noncancerous polyps. At this early stage point, patients experience no symptoms at all. However, patients must get screened by Doctors to see if these polyps come about. That's why it is said that people should get checked at the age of 50, but earlier for someone who is at more severe risk. Patients who are at the cancerous stage of colorectal cancer (colon cancer) will have several symptoms such as:

• Abdominal pain
• Diarrhea
• Constipation
• blood in the stool

These are just some of the symptoms that are involved, there are plenty more. It is not only an unmet medical need, but it is a pretty good sized population as well, which I believe will be a good market opportunity. The global market opportunity for colorectal cancer is expected to reach $18.5 billion by 2023 . It is expected that there are more than 200,000 U.S. cases per year. The thing is that it is important to also understand the different between Microsatellite stable colorectal cancer (MSS CRC) and Microsatellite instable-High (MSI-H) colorectal cancer. In MSI-H, there is a mismatch/repair DNA problem that exists, and the immune system is easily attracted to this type. It is said that there are about 15% of patients who have MSI-High colorectal cancer. On the other hand, with MSS colorectal cancer, it doesn't have the DNA repair issues associated with the other type. It is said that about 85% of the entire colorectal cancer population has this type. That's the good news, however, with MSS CRC the tumors are "cold." They don't attract the immune system, thus it is as not easy as a target indication.

Why I think that Gritstone has huge potential is that it has a specific avenue to target or subset of patients who are likely to respond to GRANITE treatment. In essence, I think the biotech can do well if it targets/treats those who do have a molecular response. Was this proven? It definitely was proven, as I noted at the beginning above, from the ESMO 2021 medical conference. This was shown in a phase 1/2 study which used GRANITE plus Opdivo and Yervoy for the treatment of patients with solid tumors. A total of 26 patients with solid tumors were recruited. Such solid tumors that these patients had were as follows:

• Gastroesophageal adenocarcinoma
• Non-small cell lung cancer
• Colorectal cancer

The focus of Gritstone bio for the purpose of the ESMO 2021 presentation was to make note of the MSS CRC patients. It was noted that out of 9 patients with MSS CRC, this was the breakdown of molecular response:

• 4 patients with molecular response
• 5 patients with no molecular response

Why do I bring this up exactly? That's because there is one major finding to note, which I think could eventually lead to a possible approval pathway. It noted that the 4 patients who had a molecular response had and continue to have a huge overall survival ((OS)) advantage, compared to those who didn't have a molecular response. The patients who didn't have a molecular response obtained a median OS of 7.8 months. This is what you would typically see for such MSS CRC patients who have taken 2 prior therapies. On the other hand, the 4 patients who had a molecular response exceed a mOS of 18 months and the mOS had not yet been reached .

The point I'm trying to make here is that Gritstone holds potential to specifically target biomarker patients who have a molecular response. On the one hand, while this does switch the focus to a subset of patients, it also puts the focus on patients who are likely to have great benefit from GRANITE treatment. Having a mOS that exceeds 18 months is huge, when such a finding is unheard of for MSS CRC patients who have already taken 2 prior therapies.

Expansion Opportunity For GRANITE Exists

The thing is that it is quite great that the GRANITE combination was able to get such a strong mOS number in those who had a molecular response. What would also be possible is to improve this number even further when exploring the use of this treatment in prior lines of therapy. As such, Gritstone is expanding the use of it in two other studies. In January of 2022 the phase 2/3 GRANITE-CRC-1L was initiated. This particular study is using GRANITE in combination with immune checkpoint blockade (like PD-1) for the treatment of newly diagnosed patients with metastatic, MSS CRC. Preliminary results from this study are expected in the 2nd half of 2023.

The other study to further explore GRANITE for CRC was initiated in March of 2022. This phase 2 study is known as GRANITE-CRC-ADJUVANT and is recruiting high risk MSS-CRC patients who are circulating tumor DNA (ctDNA)+ after surgery. The bottom line here is that if GRANITE worked well for the 3rd line patient population (specifically those with molecular response) then it's possible it could work even better for earlier lines of therapy (1st line/2nd line).

Financials

According to the 10-Q SEC Filing , Gritstone bio had cash, cash equivalents, marketable securities and restricted cash of $186.8 million as of March 31, 2022. A big reason for the cash on hand was that back in September of 2021 it announced a $55 million private investment in public equity ((PIPE)) financing from the sale of 5,000,000 shares of its common stock at a price of $11 per share. This PIPE was led by Frazier Life Sciences Public Fund, with additional participation by Redmile Group and Gilead Sciences ( GILD ). In October of 2019 it made a 2019 Shelf Registration Statement, which covered up to $250 million of various equity and debt securities, including the issuance of up to $75 million worth of shares of its common stock under the 2019 ATM Offering Program. Through March 31, 2022, it received net proceeds of its 2019 ATM Offering Program of $50 million.

It believes that its current cash on hand is enough to fund its operations for at least 12 months from the date of the 10Q SEC Filing, which was May 5, 2022. Based on its estimate, I believe it may need to raise cash at least before the end of 2022.

Risks To Business

There are several risks that investors should be aware of. The first biggest risk is that even though mOS has been beyond expectations using GRANITE in 4 MSS CRC patients who had a molecular response, this still needs to be replicated with a larger pool of patients. The other risk relates to the use of SLATE-KRAS which is being explored in a phase 2 study for the treatment of patients with colorectal cancer and non-small cell lung cancer ((NSCLC)) as well. There is no guarantee that this other treatment from Gritstone will end up being successful. Another risk involves the financials themselves. Based on the biotech's estimate, I believe that it may need to raise cash again before the end of 2022. As such, a cash raise would dilute shareholders and have a huge impact on the share price.

Conclusion

I believe that Gritstone bio is a great speculative biotech play to look into. That's because it has been able to far exceed expectations in 3rd line MSS CRC patients who had a molecular response. It did so by providing that mOS has exceeded 18 months and also has not yet been reached. It is possible that it may also accomplish such successful results in prior lines of therapies using GRANITE. Having said that, I believe that this biotech has great potential to advance a better treatment option for MSS CRC patients. For 3rd line MSS CRC patients, 6 to 7 months mOS is typically achieved. The fact that Gritstone has exceeded 18 months in these patients with a molecular response is very impressive. Based on recent progress for trial results in patents with MSS CRC using GRANITE, plus the trial readout of SLATE-KRAS in the 2nd half of 2022, these are the reasons why I believe that Gritstone bio is a great speculative biotech play to look into.

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