Key Takeaways:
Grail's Galleri blood test missed its primary endpoint in the NHS England trial, yet the company still generates revenue without FDA approval.
Grail's stock trades near $70, down 50 percent from its January record of $116.06, after the Galleri trial failed its primary endpoint, erasing $2.2 billion in market value.
"We're focused on when GRAIL and its management knew that the need for a longer follow-up period diverged from the touted three-year duration," Reed Kathrein, partner at Hagens Berman Sobol Shapiro, said.
The trial aimed to demonstrate a statistically significant reduction in late-stage (Stage III and IV) cancer diagnoses. On Feb. 19, Grail announced the trial did not meet its primary endpoint, admitting it "probably should have allowed for a longer follow-up period." Shares collapsed 50.55 percent the next day, from $101.53 to $50.21 per share.
The trial was considered a crucial stepping stone toward FDA approval in the U.S., which would clear the way for private insurance and Medicare coverage. Without it, Grail sells Galleri on a cash-only basis for $749 to $949 per test, with analysts projecting revenue growth from $147 million in 2025 to $281 million in 2028.
Trial Failure Triggers Class Action, $2.2B Wipeout
The Feb. 19 disclosure triggered a securities fraud class action, with the lead plaintiff deadline set for Aug. 4. The lawsuit, Robbins v. Grail, Inc., No. 26-cv-05428, is pending in the U.S. District Court for the Northern District of California. It alleges Grail and senior executives misrepresented the clinical design and progress of the NHS-Galleri trial, claiming the three-year follow-up period was sufficient when internal data from the first screening round suggested otherwise.
The complaint cites a timeline of alleged misrepresentations: May 13, 2025, when Grail announced positive top-line results but withheld detailed positive predictive value numbers; Aug. 12, when the company confirmed statistical powering was sufficient; and Nov. 12, when the Q3 earnings call repeated high-PPV messaging without updated risk disclosures.
Multiple firms are soliciting investors, including Rosen Law Firm, Pomerantz LLP, Berger Montague PC, Bleichmar Fonti & Auld LLP, and Robbins Geller Rudman & Dowd LLP. Hagens Berman's investigation focuses on when management first recognized the three-year follow-up was insufficient.
Cash-Only Model Buys Time, But FDA Approval Remains the Prize
Despite the trial setback, Grail continues to sell Galleri directly to consumers, employers, hospital pilots, and telehealth programs. The NHS England trial wasn't a complete failure: Galleri users had fewer Stage IV cancers detected and achieved earlier detection of the deadliest cancers.
Mizuho raised its price target on Grail to $65 with a Neutral rating on July 16, while the company's Q2 2026 results are due Aug. 5. Grail also expanded access to Galleri through a partnership with Priority Health for employers announced July 16.
The company trades at 17 times this year's sales, a premium that reflects the potential of the multi-cancer early detection market. Illumina, which spun off Grail in 2024, retains a significant stake. Exact Sciences and Guardant Health are among the competitors in the liquid biopsy space, though Galleri's multi-cancer approach differs from their single-cancer or minimal residual disease tests.
Grail's cash position and revenue trajectory will be key watch items when it reports Q2 results. The company's ability to sustain its cash-only model while pursuing FDA approval will determine whether the stock can recover from the trial failure.
This article is for informational purposes only and does not constitute investment advice.
