Gritstone bio, Inc. (GRTS) is a clinical-stage biotechnology company that is pioneering the development of the world’s most potent vaccines. Founded in 2015 and headquartered in Emeryville, California, Gritstone has established itself as a leading innovator in the field of vaccine-based immunotherapies, with a focus on both oncology and infectious diseases.
Company Background
The company’s origin story can be traced back to the founders’ vision of harnessing the power of the immune system to combat some of the most challenging medical conditions. Recognizing the limitations of existing vaccine approaches, Gritstone set out to develop novel technologies that could elicit a more robust and durable immune response, particularly targeting the critical CD8+ T cell subclass.
Since its inception, Gritstone has invested heavily in research and development activities and establishing its manufacturing capabilities. The company operates in the biotechnology segment, focusing on developing vaccine-based immunotherapy candidates against cancer and infectious disease. In March 2020, Gritstone took a significant step forward by internalizing the majority of the outsourced elements of the manufacturing process for its programs. This move has allowed the company to have greater control over its production processes and potentially reduce costs in the long run.
Gritstone’s operations are not limited to its Emeryville headquarters. The company also has a presence in Boston, Massachusetts, and maintains a manufacturing facility in Pleasanton, California. This geographical diversity allows Gritstone to tap into different pools of talent and resources, enhancing its ability to innovate and scale its operations.
Clinical Programs
Gritstone’s clinical pipeline is divided into two main segments: Oncology Programs and Infectious Disease Programs.
In the oncology space, Gritstone is advancing two clinical-stage programs: GRANITE and SLATE. GRANITE is an individualized neoantigen-based vaccine program designed to destroy tumors through the activation of CD8+ killer T cells. The company is currently conducting a randomized, controlled Phase 2/3 clinical trial evaluating GRANITE as a maintenance treatment in patients with front-line metastatic microsatellite-stable colorectal cancer (MSS-CRC). As of April 1, 2024, 104 patients had been randomized in this trial, with 67 patients included in the preliminary dataset. Gritstone expects to report mature progression-free survival data and additional long-term circulating tumor DNA data from this ongoing Phase 2 trial in the third quarter of 2024, and overall survival data in mid-2025.
SLATE is an off-the-shelf neoantigen-based vaccine program. In March 2024, Gritstone reported interim results from a Phase 1 clinical trial of SLATE, which discovered a novel immunodominance hierarchy of tumor neoantigens. This hierarchy was then leveraged to develop SLATE-KRAS, a KRAS-directed candidate that demonstrated superior immunogenicity in a subsequent Phase 2 trial and is currently being evaluated in a combination trial with the National Cancer Institute.
In the infectious disease realm, Gritstone’s CORAL program is exploring the potential of self-amplifying mRNA (samRNA) technology to deliver next-generation COVID-19 vaccines. The CORAL program has comprised three Phase 1 clinical trials evaluating multiple samRNA candidates across various patient populations and settings. Results to date have demonstrated induction and persistence of high neutralizing antibody levels through at least 12 months, as well as broad T cell responses.
In September 2023, Gritstone entered into a contract with the Biomedical Advanced Research and Development Authority (BARDA) valued at up to $433 million to conduct a 10,000-participant randomized Phase 2b comparative study evaluating Gritstone’s next-generation COVID-19 vaccine candidate against an approved COVID-19 vaccine. However, as of June 30, 2024, BARDA had not made the decision to proceed with the option periods beyond the initial $10 million base period of the contract, and Gritstone had not been awarded a new agreement by the Rapid Response Partnership Vehicle (RRPV) Consortium, which BARDA indicated would be administering any potential additional funding.
Additionally, Gritstone is collaborating with Gilead Sciences to develop an HIV-specific therapeutic vaccine program.
Financials
Gritstone’s financial performance has been marked by the challenges typical of a clinical-stage biotechnology company. In 2023, the company reported total revenue of 1.33 million, a decrease from 9.27 million in 2022. This decline can be attributed to the winding down of certain collaboration agreements, as Gritstone has primarily focused its resources on advancing its internal pipeline. The company’s net loss for 2023 stood at 138.49 million, compared to a net loss of 119.69 million in 2022.
For the most recent quarter (Q2 2024), Gritstone reported revenue of $57,000, a significant decrease from the same quarter in the prior year. This decline was primarily due to lower revenue recognized from the 2seventy bio and Gilead collaboration agreements. The company saw a 343,000 decrease in collaboration and license revenues and a 691,000 decrease in grant revenues compared to the same quarter in the prior year. The net loss for Q2 2024 was $23.396 million.
For the three and six months ended June 30, 2024, Gritstone recognized $0.9 million and $2.7 million, respectively, in collaboration, license and grant revenue, primarily from its agreements with Gilead, CEPI, BARDA, and the Gates Foundation. Research and development expenses were $20.8 million and $53.9 million for the three and six month periods, respectively, with the decrease compared to the prior year primarily due to reductions in personnel-related, laboratory supply, and outside services expenses.
Liquidity
Despite these financial headwinds, Gritstone has maintained a relatively strong balance sheet. As of June 30, 2024, the company reported $50.9 million in cash and cash equivalents, $4.81 million in marketable securities, and $1.27 million in restricted cash. The company’s current ratio, a measure of its ability to meet short-term obligations, stood at 2.54, indicating a strong liquidity position. The quick ratio, which excludes inventory from current assets, was also 2.54, further confirming the company’s liquidity strength.
Gritstone’s debt-to-equity ratio, a gauge of its financial leverage, was 2.148, suggesting a relatively high level of debt compared to equity. The company has a $40.51 million long-term debt balance from a loan agreement with Hercules Capital and Silicon Valley Bank, entered into in July 2022. The loan agreement provides for up to $80 million in borrowing capacity across five potential tranches. As of June 30, 2024, the company had drawn $40 million under the loan agreement.
It’s important to note that Gritstone expects its current cash resources to be sufficient to fund its operations only into the fourth quarter of 2024, highlighting the need for additional funding in the near future.
Clinical Developments
Gritstone’s clinical pipeline has shown promising results, particularly in its flagship oncology program, GRANITE. In April 2024, the company announced preliminary data from the ongoing randomized Phase 2 clinical trial evaluating GRANITE in first-line metastatic microsatellite-stable colorectal cancer (MSS-CRC). The data suggested a favorable trend in progression-free survival (PFS) for GRANITE recipients, with a 21% relative risk reduction of progression or death compared to the control arm (hazard ratio of 0.79). Additionally, the company observed a 38% relative risk reduction in the high-risk subgroup, where events were more mature.
In the infectious disease space, Gritstone’s CORAL program has also generated encouraging data. The company presented updated Phase 1 results at the ESCMID Global 2024 conference, highlighting the durability and potential broad utility of its self-amplifying mRNA COVID-19 vaccine. The data showed that IgG levels and neutralizing antibodies against variants of concern persisted for at least 12 months, while antigen-specific T cell responses increased in the majority of participants, including those living with HIV.
Scientific Recognition
Gritstone’s innovative approach to vaccine development has garnered recognition from the scientific community. In March 2024, the company’s “off-the-shelf” neoantigen vaccine platform, SLATE, was the subject of a publication in Nature Medicine, detailing the optimization process and the discovery of a novel immunodominance hierarchy of tumor neoantigens.
The company’s unique EDGE platform, which leverages state-of-the-art machine learning techniques to predict and prioritize T cell epitopes, has also been a focus of attention. At the 2024 American Association for Cancer Research (AACR) conference, Gritstone presented data showcasing the platform’s ability to predict HLA Class I and Class II presentation with over 80% accuracy, further strengthening its potential in identifying potent neoantigens.
Challenges and Strategic Moves
However, Gritstone’s journey has not been without its challenges. In December 2023, the company announced that its Phase 2b CORAL clinical trial had been placed on clinical hold by the FDA. The agency identified certain CMC and clinical deficiencies that will require Gritstone to re-manufacture the vaccine and make minor protocol changes. The company is actively working to address the FDA’s concerns and is committed to resolving the clinical hold as soon as possible.
Despite this setback, Gritstone remains focused on advancing its pipeline and exploring strategic alternatives to maximize shareholder value. The company’s recent decision to file for Chapter 11 bankruptcy, announced in October 2024, is part of a broader strategic process to restructure and secure a stalking horse bidder. Gritstone aims to preserve the value of its assets and continue its mission to develop innovative immunotherapies and vaccines.
Conclusion
In conclusion, Gritstone bio, Inc. (GRTS) is a pioneering biotechnology company that is pushing the boundaries of vaccine development in both oncology and infectious diseases. With a strong intellectual property portfolio, a diverse pipeline of promising candidates, and a commitment to innovation, Gritstone is well-positioned to contribute to the advancement of transformative therapies. However, the company faces significant financial challenges, with a limited cash runway and the need for additional funding in the near future. As Gritstone navigates the complexities of clinical development, regulatory hurdles, and financial restructuring, investors will closely monitor its progress and ability to execute on its strategic priorities in the competitive and rapidly evolving biotechnology landscape.
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