Why Gritstone Oncology Is Bolting Higher Today

What happened

Shares of the clinical-stage biotech Gritstone Oncology (NASDAQ:GRTS) rose by as much as 44% in pre-market trading Tuesday morning. The drugmaker’s stock is heating up today in response to an agreement with the National Institute of Allergy and Infectious Diseases (NIAID) to initiate a phase 1 trial of its second-generation SARS-CoV-2 vaccine candidate.

The NIAID is reportedly covering the cost of the vaccine’s early-stage trial through its Infectious Diseases Clinical Research Consortium. The Bill and Melinda Gates Foundation provided a grant to fund the vaccine’s pre-clinical evaluation — work that seems to indicate that this novel vaccine candidate may confer a more robust and prolonged immune response than the first wave of COVID-19 vaccines. 

A researcher inspecting vials of COVID-19 vaccine.

Image source: Getty Images.

So what

While there are already two COVID-19 vaccines approved under the FDA’s emergency use authorization program and three more vaccines in late-stage development inside the U.S., there are serious questions about the ability of any these first-generation vaccines to provide long-term immunity against SARS-CoV-2. Gritstone’s vaccine candidate is designed to fill this critical gap by evoking T-cell responses — the key to long-term immunity — across multiple forms of the virus. This novel vaccine, in effect, may play a major role in both curtailing the ongoing pandemic and perhaps transforming COVID-19 into a fairly rare seasonal ailment. Time will tell.  

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Now what

Is this tiny biotech stock a screaming buy on this news? Probably not. The long and short of it is that Gritstone’s COVID-19 vaccine is unlikely to ever advance into late-stage testing. That’s not to say that it can’t happen, but a lot has to go wrong within the current crop of COVID-19 options for there to be a real need for this early-stage vaccine. 


This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

View more information: https://www.fool.com/investing/2021/01/19/why-gritstone-oncology-is-bolting-higher-today/

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