I’m always on the lookout for the next big innovative breakthrough in the stock market. And I think I may have found it in a headline that has been flying under the radar…
Healthcare diagnostic testing company Illumina (ILMN) recently spun off a company that’sat the forefront of multi-cancer early detection (MCED) technology.
The company is Grail (GRAL).
It was previously owned by Illumina and then spun off into a private company. Illumina tried to buy it back. However, the purchase was blocked by regulatory agencies – pushing the company to get creative. So, Illumina purchased Grail for $8 billion in 2021 but was forced by both U.S. and European regulators to divest of the company by spinning it off into its own publicly traded entity.
That’s where we are today. Grail began trading on the Nasdaq on June 25 with Illumina holding on to a 14.5% minority stake in the business.
The firm boasts a market cap of $615 million – well below what Illumina’s investment valued it at just a few years ago. So is Grail a steal at current prices? Or is the market telling us something about the future of this cutting-edge MCED company?
Well, let’s consider some more details…
Grail is the maker of the Galleri MCED test that could be an absolute game changer in the future. The blood test looks for compounds called methyl groups that attach to segments of DNA – while competitors’ tests only look for mutations.
The company believes MCEDs have the potential to eliminate 104 deaths per 100,000 people every year. That’s 26% of all cancer-related deaths.
And one Grail study found that out of a group of 15,000 people, its false positives rate was only 0.5%.
Early cancer detection is a niche and innovative sector – but it’s becoming a crowded place to try and become a first mover. However, Grail has as good a chance as anyone. The estimated global economic cost of cancer is $25.2 trillion between 2020 and 2050. You can see how big this market could be for a company trading with a valuation of less than $1 billion.
The chart below shows the expected growth of MCED testing – and I believe it’s greatly underestimating how large it could get once the industry begins receiving FDA approvals and insurance cooperation.
Considering cancer is the second leading cause of mortality and accounts for approximately 1 in 6 deaths globally, we need as many new innovations as we can get. Early detection technologies could be our first big step toward greatly reducing cancer-related deaths.
I still have some research to do in terms of analyzing Grail as an investment opportunity. The company has been on my radar for years thanks to my passion for preventative healthcare innovations. But until recently it was a private company, and it wasn’t possible for the average person to invest.
That has finally changed. And I’m excited to dive in further.
As you can see below, the stock has been on a wild ride since it began trading on the Nasdaq last month. It’s a trader’s dream. But as investors, we need to let the initial volatility settle before making any long-term decisions.
Whether or not Grail becomes a part of it, I anticipate recommending a basket of early-detection companies to subscribers of my investment newsletters in the months and years ahead. We’re still a bit early in this trend. But there’s massive upside potential in this niche sector, and I have no intention of missing an opportunity to invest in a company that could truly change the world.
Stay tuned. I expect to have plenty more on this topic soon.
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