On Tuesday, JMP Securities adjusted its stance on Gritstone bio (NASDAQ:GRTS), downgrading the stock from Market Outperform to Market Perform. The decision followed the release of interim results from the Phase 2 portion of Gritstone's GRANITE cancer vaccine trial.
The trial, which targets first-line MSS-CRC, showed some promise in a low-risk subgroup but failed to generate significant enthusiasm among investors.
Gritstone's financial position also influenced the downgrade. The company reported having $62 million in cash at the end of the second quarter, alongside $40 million in debt with a minimum liquidity requirement. JMP Securities anticipates that, without a capital increase, Gritstone may reach this liquidity threshold by approximately year-end.
To address its financial challenges, Gritstone has taken proactive steps by hiring a financial advisor to explore strategic options aimed at maximizing shareholder value. Despite the downgrade, JMP Securities acknowledged the potential of Gritstone's GRANITE neoantigen technology but noted the limited opportunities for significant stock appreciation at this juncture.
The company's stock has experienced volatility in after-hours trading, with prices hovering just below the reported cash level. JMP Securities believes that Gritstone's current valuation aligns with the company's last-reported cash position, suggesting a fair market value at these levels.
In other recent news, Gritstone bio has reported promising interim Phase 2 data for its GRANITE immunotherapy, indicating a potential reduction in disease progression or death in patients with microsatellite stable colorectal cancer.
The treatment was well-tolerated and showed a 21% relative risk reduction in the overall treated population and a 38% reduction in a subgroup with low circulating tumor DNA. Gritstone bio has engaged Raymond James as its financial advisor to review potential strategies for further development of its immunotherapy.
In addition to this, Gritstone bio has seen positive ratings from JMP Securities, TD Cowen, and Piper Sandler, all maintaining their respective Market Outperform, Buy, and Overweight ratings. These ratings come as the company anticipates the release of mature progression-free survival data from its ongoing GRANITE study.
Other recent developments include the election of Elaine Jones, Ph.D., and Clare Fisher to Gritstone bio's Board of Directors, and the approval of executive officers' compensation by stockholders. The company reported a net loss of $23 million for the second quarter, with cash reserves of $62 million. As Gritstone bio continues to make strides, the market eagerly awaits the release of further data from the GRANITE study.
InvestingPro Insights
Recent data from InvestingPro provides additional context to Gritstone bio's current situation. The company's market capitalization stands at $68.49 million, which is slightly above the $62 million cash position reported at the end of Q2. This aligns with JMP Securities' assessment that the current valuation reflects the company's cash position.
InvestingPro Tips highlight some challenges facing Gritstone bio. The company is "quickly burning through cash," which corroborates the concerns raised about reaching the minimum liquidity threshold. Additionally, analysts anticipate a sales decline in the current year, potentially exacerbating the financial strain.
On a more positive note, InvestingPro data shows that Gritstone bio has experienced a strong return of 21.62% over the last month, despite a significant 75.32% decline over the past six months. This recent uptick could be related to the company's efforts to explore strategic options, as mentioned in the article.
For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips for Gritstone bio, providing a deeper understanding of the company's financial health and market position.
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