In a May 7 research note, H.C. Wainwright & Co. analyst Sean Lee reported how Gritstone bio Inc. (GRTS:NASDAQ) performed financially during Q1/21 and what stock catalysts investors may expect in H2/21.
The biotech surpassed earnings expectations in Q1/21. It garnered $39.7 million in collaboration and contribution revenues and posted a net earnings loss of $0.10 per share. In comparison, consensus estimated revenue was $12.2 million, less than one-third of the actual figure. It projected a net earnings loss of $0.39 per share, nearly four times that of the reported amount. Lee indicated that Gritstone having recognized the upfront payment from Gilead mainly accounts for the differences.
At quarter's end, the California-based company had $198 million in cash and cash equivalents, which Lee noted "is sufficient to fund operations into 1H23."
Looking ahead to Gritstone's full-year 2021 earnings, H.C. Wainwright forecasts total revenue to come in at about $48.7 million and the net loss to be roughly $1.43 per share.
As for the upcoming potential stock-moving events, Lee highlighted two. The first is "the most important clinical update for the company in 2021," he wrote. It is data from the Phase 1/2 clinical trial of GRANITE, a personalized cancer vaccine, which Gritstone is slated to announce at the European Society for Medical Oncology (ESMO) meeting in September.
There, Gritstone will likely announce two sets of GRANITE results, those of additional Phase 2 expansion cohort patients and those of long-term follow-up of Phase 1 patients.
Later this year, the life sciences firm plans to further advance GRANITE in the clinic by launching two randomized Phase 2 studies, evaluating it in earlier-stage patients.
"Positive results at ESMO could bode well for the success of these upcoming studies," Lee commented.
Gritstone's second catalyst is initial results from the Phase 1 CORAL trial of a second-generation COVID-19 vaccine, the result of a collaboration between Gritstone and the National Institute of Allergy and Infectious Diseases. Data are expected in Q3/21. A successful vaccine of this type could meet a significant need, Lee noted.
"Despite the wide availability of first-gen COVID vaccines, we believe there remains a significant untapped market for immunocompromised patients and for booster shots that are effective against newly arisen virus variants," he added.
H.C. Wainwright has a Buy rating and a $24 per share target price on Gritstone, the stock of which is trading now at about $8.14 per share.[NLINSERT]
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Disclosures from H.C. Wainwright & Co., Gritstone bio Inc., Earnings Update, May 7, 2021
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, Sean Lee, Swayampakula Ramakanth, Ph.D., Sean Kang and Arthur He, Ph.D., 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 bio, Inc. (including, without limitation, any option, right, warrant, future, long or short position).
As of April 30, 2021 neither the Firm nor its affiliates beneficially own 1% or more of any class of common equity securities of Gritstone bio, 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 received compensation from Gritstone bio, Inc. for non-investment banking services in the previous 12 months.
The Firm or its affiliates did not receive compensation from Gritstone bio, 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 bio, Inc. as of the date of this research report.