Gritstone’s Unique Approach Can Set Its 2nd Gen COVID-19 Vaccine Apart, Says Analyst

Stock Market

Think coronavirus stocks are so 2020? Think again.

Shares of Gritstone Oncology (GRTS) took off by a whooping 302% over the past two trading sessions, after the company disclosed promising news concerning the development of its second-generation coronavirus vaccine.

The company has entered an agreement with the National Institute of Allergy and Infectious Diseases (NIAID) to initiate a phase 1 trial which focuses on Gritstone’s heterologous prime-boost strategyfor vaccination and makes use of the company’s EDGE algorithm for T-cell epitope selection.

Phase 1 is anticipated to kick off in 1H21, and should it prove successful, a Phase 2 study will follow in 2H21.

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The vaccine’s pre-clinical testing has been funded by a grant from the Bill and Melinda Gates Foundation and the vaccine’s early-stage study’s costs are being taken care of by The NIAID’s Infectious Diseases Clinical Research Consortium.

While two Covid-19 vaccines have already been granted EUA (emergency use approval) by the FDA and others are currently in late-stage trials, there is still doubt whether these first gen vaccines will offer long term immunity against the coronavirus.

The pre-clinical evaluation has indicated Gritstone’s vaccine could potentially lead to wider and longer lasting immune protection due to the fact it is designed to produce strong CD8+ T cell responses against several conserved viral epitopes.

Gritstone’s platform has already shown promise in another indication which Cowen analyst Marc Frahm thinks bodes well for its Covid-19 program.

“We have been generally impressed with Gritstone’s EDGE platform for the selection of CD8+ T cell epitopes and the ability of its heterologous prime-boost vaccine platform to elicit robust T cell responses against these epitopes, even in late-stage cancer patients with compromised immune systems,” the 5-star analyst said. “We therefore think the development of a next-generation SARS-CoV-2 vaccine makes sense in this context, particularly with the support and non-dilutive funding of outside organizations.”

To this end, Frahm reiterated an Outperform rating on GRTS shares without providing a fixed price target. (To watch Frahm’s track record, click here)

Overall, GRTS presents a conundrum to Street analysts. Based on 3 Buys and 1 Hold and Sell, each, the stock has a Moderate Buy consensus rating. However, given the recent strong share gains and the $13.25 average price target, a 48% drop could be in the cards. (See GRTS stock analysis on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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