Though it is still a relative unknown, Gritstone Oncology (GRTS 28.87, +0.83, +2.96%)
has been a nice mover since its IPO debut in late September. The company is “an immuno-oncology company
developing tumor-specific cancer immunotherapies to fight multiple cancer types.
Its goal is to extend the
benefits of immunotherapy by leveraging new insights into the immune system's
ability to destroy cancer cells, based on the study of patients treated with
checkpoint inhibitors such as anti-PD-(L)1 antibodies.”
Many tumors contain markers that allow a person’s immune system to detect and then attack said tumor. However, there are also some tumors that are somehow able to evade a patient’s immune system despite having what should be detectable markers. Gritstone's approach seeks to generate a therapeutic immune response in these patients by destroying tumor cells through the patient's own immune system by helping it recognize short tumor-specific peptide sequences presented on cancer cells, referred to as tumor-specific neoantigens, or TSNA.
The importance of TSNA as targets for the immune system was first recognized in 2014 and 2015 in patients treated with checkpoint inhibitors by two of Gritstone's co-founders, Dr. Timothy Chan and Dr. Naiyer Rizvi. Leveraging these insights, the company has built its tumor-specific immunotherapy approach on two key pillars: first, its proprietary Gritstone EDGE machine learning-based platform, which provides a powerful ability to predict from a routine tumor biopsy the TSNA that are presented on a patient's tumor cells; and second, its ability to develop and manufacture potent immunotherapies using patients' TSNA to drive the patient's immune system to attack and destroy tumors.
Specifically, the Gritstone EDGE platform uses DNA/RNA sequence data derived from a patient's tumor biopsy to predict which mutations will generate TSNA most likely to be presented on the tumor cell surface. Applying its EDGE platform to data from human tumors, the company has shown a nine-fold improvement in the accuracy of prediction as compared to publicly available approaches. Gritstone believes that mutations selected by its EDGE platform have a much higher likelihood of being useful targets for immunization than mutations selected using industry standard methods.
Not a lot has happened since Gritstone went public. As expected, there have been a number of bullish initiations by sell side analyst firms, many probably were involved in the IPO. In terms of other news, Gritstone reported Q3 results in mid-November. The financials are not that important as GRTS does not have any product revenue yet and it's a long way from profitability.
Investors are not focusing on the financials, but there was a summary in Q3 report regarding what has been going on at the company. GRTS is advancing its first product candidate, GRANITE-001, into clinical development. And GRTS has established collaborations with two oncology companies: bluebird bio (BLUE) and Bristol-Myers Squibb (BMY).
The FDA has accepted the company's Investigational New Drug (IND) application for GRANITE-001, enabling the initiation of a Phase 1/2 clinical study (GO-004). A collaboration with bluebird was established to develop cancer cell therapies using Gritstone's proprietary EDGE artificial intelligence platform to identify both tumor-specific targets and therapeutically useful T cell receptors against those targets.
Since investors are not focusing on the financials, what will investors be keying in on over the next 12-15 months? For one, data demonstrating the predictive power of the EDGE platform in the identification of neoantigens and neoantigen-reactive T cells is in press at a peer-reviewed journal and expected to be published in the near term, according to the company. Also, an IND application for the initiation of a first-in-human study with SLATE-001, an immunotherapy candidate using shared neoantigens for an "off-the-shelf" therapy, is planned for submission in mid-2019. And finally, preliminary efficacy data from the Phase 1 portion of GO-004 in patients with metastatic lung, gastric, colorectal, and bladder cancers is expected to be reported in 2H19.
In sum, the timing of this IPO was not great. It made its debut in late September, right before the market sell-off in October. However, to its credit, GRTS has recovered nicely since then as investors apparently like the potential here. The IPO priced at $15, opened at $15.20 but fell below $12 in early October. Since then, the stock has roared back and is trading in the $28.50 area. It will be a name to keep on the radar in 2019.
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