BTIG starts Gritstone Oncology at buy; PT $26

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BTIG launched coverage of Gritstone Oncology (NASDAQ:GRTS) with a “buy” rating and $26 price target. The stock closed at $15.17 on Oct. 22.

Gritstone is a clinical-phase oncology company that specializes in focusing a patient’s immune system on specific tumor neoantigens, which are antigens encoded by tumor-specific mutated genes.

Analyst Thomas Shrader writes that Gritstone’s neoantigen vaccines are designed to increase the efficacy of general immune stimulators while reducing overall toxicity.

The company recently began the first clinical trial of a 20-neoantigen patient specific vaccine as part of the GRANITE program. Gritstone also plans to begin clinical testing of off-the-shelf shared-neoantigen vaccines (SLATE) vaccines in 2019.

Mr. Shrader said that tumors are full of mutated proteins, but only about 1% is presented as “foreign” to the immune system as neoantigens. “Gritstone has solved the neoantigen identification problem through analysis of HLA-complexed peptides presented by tumor cells. These rules take into account peptide-HLA binding along with peptide expression, processing and transport. The resulting EDGE prediction algorithms are as much as 10 times more accurate than currently used approaches,” he added.

Michelle Carr