Grail is Still Undervalued Even After NFL-Mention Rise

By Larry Ramer

The shares of Grail (NASDAQ:GRAL), whose Galleri blood test screens for more than 50 types of cancer, jumped about 40% between the market close on Oct. 24 and the Dec. 3 close. 

Galleri is a leader in early cancer testing in a category known as multi-cancer early detection (MCED).  

It’s likely that the rally was triggered by a mention during ESPN’s coverage of the Oct. 27  Dallas Cowboys game. During the match-up with the San Francisco 49ers, the conversation turned to Cowboys front-office staffer Tad Carper, whose life may have been saved by the Galleri test.

Galleri Caught Carper's Cancer Early

Perhaps it’s just a coincidence that the biotech firm’s Menlo Park, California HQ is just a 20-minute ride up the highway from the 49ers’ Levi’s Stadium where that game was played in October.

 Carper, the Cowboys' senior vice president of communication, was diagnosed with Stage 2 throat cancer in September. (Specifically, he had a tumor on his tonsil.) 

And the only reason that Carper, who has since undergone surgery and radiation, was tested for the disease was because earlier in the year, GRAIL's Galleri diagnostic tool had indicated that he may have had head or neck cancer. 

Carper credited Cowboys' quarterback Dak Prescott with likely saving his life. That's because the quarterback's Faith, Fight, Finish Foundation paid for many of the team's employees, including Carper, to take the Galleri test, and Carper took the test at Prescott's personal invitation. 

Tonsil cancer is a type of oropharyngeal cancer. According to WebMD, those with oropharyngeal cancer that hasn’t spread have an 85% five-year survival rate, while patients with tonsil cancer "that has spread to nearby lymph nodes, tissues, or organs" have a 68% five-year survival rate. Finally, those whose cancer "has spread to distant parts of the body" have a five-year survival rate of 40%. 

After Carper received treatment, one of his lymph nodes was enlarged, and he was told to undergo "low-dose radiation."

Positive Publicity for Grail

In an email to InvestorThread, Carper wrote that his story was "mentioned" on the Sunday Night Football broadcast on Oct 27. An average of almost 24 million viewers tune into the game. 

And while Carper doesn’t recall that the name of the test that he took was mentioned during that broadcast, the discussion likely led many viewers to consider taking early-detection cancer tests, and Grail is a leading name in the space. 

On Thanksgiving Day, Fox told Carper's story during the Cowboys game. And this time, the name "Galleri" was mentioned during the broadcast, Carper stated. He reported that an average of about 38.5 million people watched the contest.

Google Trends shows a spike around that time in searches for “galleri”, with similar “breakout” levels for “dak prescott cancer” and “tad carper”.

Finally, on Thanksgiving Day, The Dallas Morning News published a feature about Carper, along with an article about Grail and its Galleri test.  

Publicity Can Push Congress to Act

A bill currently before Congress would allow Medicare to cover MCED tests such as Galleri. In addition to being backed by 318 sponsors in the House and 63 sponsors in the Senate, it was approved by a 38-0 margin by the House Ways and Means Committee.   

Carper wrote to Congressional leaders backing the bill. As a result of the massive publicity that Carper’s case generated for Galleri and the MCED category in general, I believe that the chances of the legislation passing have meaningfully increased. 

Grail is Growing Rapidly and Appears To Be Undervalued

The Cowboys hoopla aside, Grail’s overall sales jumped 38% last quarter versus the same period a year earlier to $28.7 million, while the revenue generated by Galleri soared 52% year-over-year to $25.4 million.  

In 2020, Illumina announced that it had agreed to buy Grail for $3.5 billion of cash and $4.5 billion of Illumina stock, which was subject to a collar. 

Today GRAL stock has a market capitalization of $638 million. Illumina held a 14.5% stake in Grail as of June.

THAT huge discrepancy between the sum that Illumina agreed to pay in 2020 and the value of the shares now indicates that GRAL stock is severely undervalued at its current levels.

Disclaimer: The author did not hold a position in any of the securities mentioned above. The information provided in this article is for educational and informational purposes only and should not be construed as investment advice. Always conduct your own research or consult with a licensed financial professional before making any investment decisions. Past performance is not indicative of future results.

Larry Ramer is currently ranked 274 out of 30,171 financial bloggers analyzed by TipRanks, with a 15.1% return on his buy and sell ratings. He is one of the founding contributors to this newsletter. 

Larry focuses on contrary investing and specializes in the renewable energy and consumer discretionary sectors. Among his highly successful, contrarian picks have been Plug Power, Exxon Mobil, solar stocks, and airline stocks. On the downside, he was an early predictor of the collapse of cryptocurrencies, marijuana stocks, Ocugen, and Meta Platforms.