In a March 7 research note, analyst Swayampakula Ramakanth reported that H.C. Wainwright & Co. initiated coverage on Gritstone Oncology Inc. (GRTS:NASDAQ), a developer of neoantigen-targeting therapies for cancer, with a Buy and a $17 per share price target (versus the current share price of $10.93).
Ramakanth reviewed the company's assets. Gritstone has two cancer vaccines based on its proprietary EDGE technology, which are GRANITE-001, a "personalized heterologous prime/boost vaccine," and SLATE-001, an off-the-shelf vaccine. Both "have the potential to be best-in-class therapies due to the superior accuracy of EDGE and the ability for heterologous prime/boost vaccines to elicit stronger immune responses compared to the homologous vaccines used by competitors," Ramakanth commented.
EDGE is an artificial intelligence (AI) platform that identifies potential tumor neoantigens. It has shown an accuracy that is up to nine times better than other prediction algorithms, such as MHCflurry and NetMHC.
As for revenue, H.C. Wainwright projects sales of both vaccines to reach $6.5 billion by 2030, Ramakanth indicated. The market potential for GRANITE-001 could be much greater given it could become the first vaccine to be used for several cancer types. Along with the $20 million that bluebird bio Inc. (BLUE:NASDAQ) paid to it upfront, Gritstone could garner up to $1.2 billion in milestones, constituting potential added upside.
Initial clinical data should come this year. Gritstone is currently evaluating GRANITE-001 in a Phase 1 study across four cancer types in combination with checkpoint inhibitors: nonsmall cell lung, colorectal, gastric and bladder. Findings from this trial are expected in H2/19. "These results would provide an important first-look at how well Gritstone's technological edge in neoantigen identification and vaccine design is able to translate into clinical efficacy," noted Ramakanth. If it can, "it could be a major catalyst for the stock."
The analyst pointed out that Gritstone's August 2018 agreement with bluebird, "one of the top cancer cell therapy players," validates Gritstone's technology. The two firms are collaborating on using the EDGE AI platform to identify novel tumor targets for cell-based therapies.[NLINSERT]
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Disclosures from H.C. Wainwright & Co., Gritstone Oncology Inc., Initiating Coverage, March 7, 2019
Investment Banking Services include, but are not limited to, acting as a manager/co-manager in the underwriting or placement of securities, acting as financial advisor, and/or providing corporate finance or capital markets-related services to a company or one of its affiliates or subsidiaries within the past 12 months.
I, Swayampakula Ramakanth, Ph.D., Sean Lee and Sean Kang, certify that 1) all of the views expressed in this report accurately reflect my personal views about any and all subject securities or issuers discussed; and 2) no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report; and 3) neither myself nor any members of my household is an officer, director or advisory board member of these companies.
None of the research analysts or the research analyst's household has a financial interest in the securities of Gritstone Oncology, Inc. and Advaxis, Inc. (including, without limitation, any option, right, warrant, future, long or short position).
As of February 28, 2019 neither the Firm nor its affiliates beneficially own 1% or more of any class of common equity securities of Gritstone Oncology, Inc. and Advaxis, Inc.
Neither the research analyst nor the Firm has any material conflict of interest in of which the research analyst knows or has reason to know at the time of publication of this research report.
The research analyst principally responsible for preparation of the report does not receive compensation that is based upon any specific investment banking services or transaction but is compensated based on factors including total revenue and profitability of the Firm, a substantial portion of which is derived from investment banking services.
The Firm or its affiliates did not receive compensation from Gritstone Oncology, Inc. and Advaxis, Inc. for investment banking services within twelve months before, but will seek compensation from the companies mentioned in this report for investment banking services within three months following publication of the research report.
The Firm does not make a market in Gritstone Oncology, Inc. and Advaxis, Inc. as of the date of this research report.