Is Gritstone Bio Stock A Buy?

The largest companies today were once tiny startups. Good businesses grow from their IPO price levels. And one of the best ways to begin growing your portfolio is by investing in smaller companies that have the potential to scale. Sure, there are greater risks involved – but the rewards could potentially pay off big time.

One such “smaller” company is Gritstone Bio (GRTS). Is Gritstone stock a buy? 

Gritstone Tailors Treatment to Body Chemistry

This biotech company is leading the charge in cancer treatments and even therapies for Covid patients. For instance, what if a cancer patient could be treated with a therapy tailored especially to their unique body chemistry? That’s just one of Gritstone’s many projects in the works. This personalized approach to cancer treatment, named Granite, is currently in Phase 2 of a clinical study.

Granite genetically sequences the DNA and RNA of a patient’s tumor(s). Then, with the help of AI, Granite predicts which antigens are likely on the surface of the tumor and most susceptible to attack by the patient’s immune cells. Then Gritstone creates an immunotherapy personalized to the patient with these specific antigens. That’s a lot of science-speak for “they make medicines that treat individuals, not entire populations”.

And this isn’t the only medical therapy the company is working on. Gritstone is also working on another cancer therapy currently in Phase 2 and a vaccine for Covid that’s currently in Phase 1.

Using the same approach as the cancer therapies, Gritstone’s messenger RNA platform effectively creates a vaccine that works uniquely with each patient’s body chemistry. It could be a game-changer – it could prove more successful than vaccines currently available for Covid and its many variants.

Gritstone isn’t the first to come up with a coronavirus vaccine – its trials are still in the first stages. Like its competitors, the vaccine works using messenger RNA tech. So, if Pfizer (PFE) and Moderna (MRNA) are already successful – how does Gritstone fit in?

The value here is in the way Gritstone’s vaccine works, in much the same way as its cancer therapy – by working with an individual’s own unique body chemistry.

Gritstone’s market capitalization is still less than $600 million. Looking ahead, if Gritstone’s current projects are successful, the company will either continue growing or get picked up by another, larger pharmaceutical company.

Gritstone and Its Competitors – What’s the Difference?

Gritstone specializes in immunotherapy – in other words, the company helps a patient fight off a disease using their own immune system. Until recently, Gritstone’s primary focus has been on cancer. The company currently has four cancer-focused programs, two of which are in Phase 2 trials.

When Covid arrived, Gritstone saw an opportunity to put its research to work. Sure, Gritstone might not be winning the coronavirus vaccine “race”, but it could definitely become a player once it does hit the market.

On the one hand, this is because of the company’s approach to medicine – working with a patient’s unique chemistry. But the potential Gritstone vaccine would have the ability to handle the variants of today and tomorrow, regardless of subsequent mutations. This could be a huge win resulting in revenue in the billions. Pfizer (PFE), Moderna (MRNA), and Johnson & Johnson’s (JNJ) vaccines can only provide cover for the original strain and the variants from the U.K. and South Africa.

Each subsequent strain changes due to a spike protein mutation, which is key – this is how the virus attaches to a cell to infect it.

All three of the above-mentioned vaccine makers have focused on this spike protein which provides the instructions for a person’s body to replicate said protein. Moderna has stated that the virus mutates only 1% from what the vaccine is encoded for.

Does Gritstone Have Staying Power?

Gritstone is behind as far as vaccine rollout. Being a 2nd generation vaccine means more time to study the virus – and more time to discover what doesn’t work. In addition to offering vaccine protection, Gritstone is considering the potential of its vaccine as a candidate for booster shots.

People who’ve already received a full dose series from other vaccine makers would qualify to use Gritstone as a booster shot. Unfortunately, other vaccine makers, like Pfizer, presently dominate the market.

This doesn’t mean, however, that other pharmaceutical and biotech companies should cede the market to Moderna and Pfizer. Experts in the CDC and WHO say coronavirus isn’t going away any time soon. Eventually, they claim that the current pandemic will transition to an endemic, meaning the coronavirus will always be found somewhere in the world. And that means people will continue to need protection.

It’s highly likely that people will need an annual covid booster, much the same as various populations are reminded to get an annual flu shot. Biotech companies regardless of their spot in the vaccine race still have time to get in on this need, and Gritstone is keeping steady pace.

What this means for the future is this: safer, more effective vaccines – those that can target any variant – will eventually rise to the top. Going forward, Gritstone is a company to watch – in the health arena and in the stock market.

By getting the job done with a lower dose, the company could save money and time during the manufacturing process – meaning faster time to market and greater revenues.

The Bottom Line: Time to Buy Gritstone?

But what about current shares of GRTS? Is Gritstone stock a buy? Presently, the stock is pretty shaky. But why, with all this positivity?

It’s simple: while the company has several products in the works and each one holds great promise, Gritstone has nothing on the market currently.

Gritstone has four prospects in its pipeline currently – two in cancer research (one of which is Granite) and two in infectious disease (one of which is the coronavirus vaccine therapy, Coral).

Its cancer research is farthest along and many treatments are currently in Phase 2. As for Coral, the covid treatment product, it probably won’t be ready for at least another year or so, long after Emergency Use Authorizations are a thing of the past and agencies return to normal evaluation processes. This means it could potentially be several years before Gritstone is able to see its coronavirus product on the market.

If you sense caution when it comes to GRTS, know this: it’s definitely a stock worth watching, but perhaps from the sidelines for now. If you have flexible funds, consider a smaller stake in Gritstone and see where it leads.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.