GRTS - Gritstone bio: Q4 2023 Data Readout Is Going To Be Major Inflection Point

2023-04-23 04:25:21 ET

Summary

• Results from the phase 2/3 GRANITE study using GRANITE immunotherapy to treat patients with metastatic microsatellite stable colorectal cancer are expected in Q4 of 2023.
• It is said that the global colorectal cancer market is expected to grow from $18.6 billion in 2022 to $24.07 billion by 2028.
• Of the 13 patients with MSS-CRC, 6 experienced a molecular response which was a ?30% reduction in circulating tumor DNA.
• Gritstone bio had $185.2 million in cash as of December 31, 2022; enough cash to fund its operations briefly and in my opinion will likely have to raise cash in 2023 after a positive news announcement.

Gritstone bio ( GRTS ) is a good speculative biotech play to look into. That's because it is going to release preliminary results from the GRANITE phase 2/3 study using GRANITE, which is an individualized neoantigen-based immunotherapy, by the end of this year. The use of this immunotherapy is being explored in this study as a maintenance treatment for front-line (newly diagnosed) metastatic microsatellite-stable colorectal cancer [MSS-CRC] who have completed FOLFOX-bevacizumab induction therapy. Again, I believe it's very important to highlight this biotech because it intends to release preliminary results from the GRANITE phase 2/3 study by Q4 of 2023. In a prior article I wrote titled " Gritstone bio; Early Data For SLATE Candidate Sets Up 2023 Catalyst " I noted that the biotech had reported positive preliminary data from the GRANITE phase 1/2 study. What's different with the newly reported data, as I will show below, is that the median overall survival [mOS] had still not yet been reached and mOS now exceeds 22 months (increased by 4 months). This therapy continues to prove longevity for those who, when given GRANITE, achieve a molecular response.

GRANITE For The Treatment Of Patients With Metastatic Satellite Stable Colorectal Cancer

GRANITE is being used for the treatment of patients with metastatic microsatellite stable colorectal cancer [MSS-CRC]. To understand what microsatellite stable colorectal cancer is, it is first important to understand what colorectal cancer is. From there, I can then state what MSS-CRC is. Colorectal cancer is a type of cancer of the colon or rectum, which is located in the digestive tract lower end. It starts of early as being noncancerous in the form of polyps. There often are no symptoms at this point, but if the patient goes to the hospital to get screened, then it can be detected. That's why it is important for patients who are over the age of 50 to be screened. Colorectal cancer symptoms that can be found in these patients are as follows:

• Change in bowel movements
• Stool inconsistency
• Blood found in the stools
• Upset stomach

The treatment options for these patients range from several types and they are as follows: Surgery, chemotherapy, and radiation therapy as well. It is said that colorectal cancer starts in the innermost layer of the mucosa and then can grow outward through some or all of the other layers. From there, the cancer can grow onto blood vessels or lymph vessels. Lastly, after that, they start to spread to nearby lymph nodes or to other distant parts of the body. Now that you know what colorectal cancer is, it is then important to understand what MSS-CRC is. Microsatellite stable colorectal cancer is derived from genomic instability. How so? Well, it's important to point out that there are two types of chromosomal instability and they are as follows:

• Chromosomal instability
• Microsatellite instability

Chromosomal instability is the most common type of colorectal cancer which is found in up to 85% of the CRC patients. Then, you have microsatellite instability [MSI] which is found in up to 15% of patients. MSI tumors are a subset of CRC which occur, because of mismatch repair genes [MMR] which fail to repair errors that occur in repetitive DNA sequences called microsatellites. It is said that the global colorectal cancer market is expected to grow from $18.6 billion in 2022 to $24.07 billion by 2028 . This is going to be a large market opportunity for Gritstone Bio even if it is only targeting 15% of the entire colorectal cancer patient population.

There is a phase 2/3 study which had been initiated known as GRANITE-CRC-1L trial . This randomized study is evaluating the use of GRANITE in combination with atezolizumab [TECENTRIQ] and ipilimumab [YERVOY] as a first-line maintenance treatment in metastatic microsatellite-stable colorectal cancer [MSS-CRC] who have received prior therapy. Such prior therapy might include fluoropyrimidine, oxaliplatin, and bevacizumab. The first patient for this phase 2/3 study was enrolled back on January 13, 2022 . Why is it important that I bring up this study for Gritstone Bio? It is because the biotech remains on track to report preliminary results from this phase 2/3 GRANITE-CRC-1L trial in Q4 of 2023. This is going to include molecular response relating to circulating tumor DNA [ctDNA] and also progression-free survival [PFS] which is being evaluated using both RECIST and iRECIST criteria on patients completing at least 4 months of treatment.

Will the phase 2/3 results to be released from the GRANITE-CRC-1L trial, using GRANITE in combination with TECENTRIQ and YERVOY as a front-line maintenance treatment in metastatic microsatellite-stable colorectal cancer [MSS-CRC], be successful? This honestly remains to be seen, but a prior phase 1/2 study using GRANITE in combination with PD-1 checkpoint inhibitor Opdivo and subcutaneous anti-CTLA-4 antibody ipilimumab in advanced solid tumor patients, achieved a successful outcome. This trial enrolled a total of 29 patients with previously treated metastatic solid tumors including patients with colorectal cancer, gastroesophageal adenocarcinoma, and non-small cell lung cancer [NSCLC]. Of the 13 patients with MSS-CRC, 6 experienced a molecular response which was a ?30% reduction in circulating tumor DNA [ctDNA]. It is important to note that those who had a good overall survival [OS] number are those who had a molecular response. Those without a molecular response did not achieve a better overall survival [OS] rate compared to those who did have a molecular response in this study. The 6 patients with a molecular response had a median OS rate exceeding 22 months with median OS not yet being reached. This, compared to the other patients who did not have a molecular response with this therapy where median OS was 7.8 months.

Financials

According to the 10-K SEC Filing Gritstone Bio had cash, cash equivalents, marketable securities and restricted cash of $185.2 million as of December 31, 2022. The reason why it has the cash on hand that it does is because in October of 2022, it raised $45 million through a private offering investment agreement through public equity financing. This is where it sold shares in order to raise cash so that it could fund its pipeline forward. A good thing about Gritstone Bio is that it is not funding the pipeline on its own for the most part. Matter of fact, it recorded $1.6 million in collaboration revenue relating to the Gilead Sciences partnership agreement, $7.7 million in collaboration revenue relating to the 2seventy bio Agreement. Additional grant revenue came in relation to the $9.5 million grant revenue and then the $1.2 million in grant revenue relating to the Gates Agreement which was generate as well. The downside is that it doesn't have much cash on its own, thus I would expect that at some point during this year in 2023, it will have to raise additional cash. In addition, it burns about $33 million per quarter to fund its operations, therefore, it is going to need additional cash to keep its pipeline moving along. The way it could raise additional cash is either by selling shares of its common stock, taking on debt, or by any other financial means necessary.

Risks To Business

There are a few risks that traders/investors should be aware of before investing in this biotech. The first major risk to consider would be with respect to the randomized GRANITE-CRC-1L trial itself. That's because there is no guarantee that the outcome will be successful, despite having achieved prior positive preliminary results from the prior phase 1/2 GRANITE study. Again, results from this late-stage study are going to be released in Q4 of 2023. A second risk to consider would be the cash on hand it has. I believe that it will need to raise cash again at some point in 2023, which would dilute shareholders further.

Conclusion

Gritstone Bio is a good speculative biotech play to look into. That's because it had established initial proof of concept in being able to use GRANITE to treat patients with previously treated metastatic tumors. It was shown that when a molecular response was achieved with this therapy in 6 MSS-CRC patients, median overall survival was improved substantially compared to those who didn't achieve a molecular response. There is a good opportunity for traders/investors in that the biotech expects to release 4 months results from the randomized phase 2/3 study known as GRANITE-CRC-1L trial. This randomized trial is exploring the use of GRANITE in combination with atezolizumab [TECENTRIQ] and ipilimumab [YERVOY] as a first-line maintenance treatment in metastatic microsatellite-stable colorectal cancer [MSS-CRC] who have received prior therapy. Results from this study are expected to be released in Q4 of 2023 and if successful will be a huge positive for its shareholders. With established proof of concept in previously treated metastatic tumors in a phase 1/2 study using GRANITE, plus a major data readout expected in Q4 of 2023, these are the reasons why I believe that Gritstone Bio is a good speculative biotech play to look into.

For further details see: