- Here we reflect on the past quarter for GRTS.
- Subsequent to the Phase 1a/1b data update on 7/14/20 GRTS lost 50% of its market capitalization ($155M) in a single day with ~30% of outstanding shares (38M) being traded in a single day.
- In the proceeding 3 months GRTS continued to bleed down -67% from its high on 7/12/20 and has received little to no buying support/interest from investors. We re-entered around $3.70 thinking the company was under valued; the market did not agree.
- Since then GRTS CEO Andrew Allen has presented at multiple investor conferences sharing the data. Not much has changed signaling to us that investors want to see more data and RECIST responses (see Figure 1)
- Recently on 10/23/20, GRTS signed an option and license and development agreement with Genevant Sciences to use Genevanta’s lipid nanoparticle (LNP) technology. Per the agreement GRTS paid $2M upfront and potentially up to $75M in development, regulatory, and commercial milestones for a single indication. Although this is not bad news, we are not surprised that the stock continued to flounder.
- If successful, the agreement will take months to years to add meaningful value for shareholders. In our view, this is another expense for a company with a financial overhang. As of 6/30/20 GRTS had $92M in cash and marketable securities and a quarterly cash burn of $26M meaning it needs to finance before summer 2021.
- Due to the early stage of development of its assets (most advanced is entering Phase 2 next year) GRTS will need to continue to raise capital for years to come, foregoing any partnerships with big pharma.
- The next milestone we are watching for is data from cohort 4 in the company’s dose-ascending Phase 1b clinical study. The data update on 7/13/20 consisted of cohorts 1 thru 3. At the last investor presentation Dr. Allen said they would have the data imminently. Its unsettling that GRTS has not shared that data with the market yet.
- While investigators saw encouraging safety and efficacy signals in some patients, they did not meet the threshold for response evaluation criteria in solid tumors (aka RECIST responders).
- In other words, no patient had a response to GRTS’s GRANITE/SLATE therapy that could be characterized as complete response, partial response, etc. which reflect the degree of tumor shrinkage (Figure 1).
- Because of these factors, we do not feel that GRTS offers an adequate risk-reward profile at this time to qualify for core position status.
- The data update for cohort 4 could help reignite interest in the company, if positive.
- However, given the significant delay of the data compared to cohorts 1-3 we are neutral on the data update.
- The next big milestone/catalyst will be Phase 2 data which is 6-months to a year away.
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