There’s a certain kind of customer who’ll pay cash for a blood test that hunts for dozens of cancers at once. TD Cowen’s Dan Brennan calls them the “worried, wealthy and well,” and Grail (GRAL) is on track to sell about 250,000 Galleri tests this year, mostly to them. On Sept. 21 we wrote that a Food and Drug Administration advisory panel was about to weigh the test. It has since backed it, and the stock has nearly doubled in a month. In Friday’s Heard on the Street, David Wainer asks the two questions the rally skipped: does it find cancer early enough to matter, and who pays?
The promise is real. Galleri reads fragments of DNA that tumors shed into the blood, and its best case is the cancers nobody screens for — pancreatic, ovarian, liver. When we wrote about it last month, the Journal’s editorial board was making the case on how many more cancers Galleri finds. Wainer’s question is which ones. The catch is biology: more advanced tumors shed more DNA, so they’re easier to spot. Across the U.K. trial’s 140,000-plus participants, Galleri picked up roughly one Stage 1 cancer in seven (about 14%), against 60% of Stage 4 cases. And the trial fell short of its main target: Stage 4 diagnoses dropped but Stage 3 climbed — possibly a sign some cancers were caught a stage sooner — so late-stage cases overall didn’t shrink.
Priced for a yes
FDA approval looks likely; the agency usually sides with its advisers. The prize is Medicare, and that’s far from settled. A law passed this year opens a path for Medicare to cover multi-cancer screening as early as 2029, but it doesn’t promise payment — the Centers for Medicare and Medicaid Services still has to judge the test “reasonable and necessary.” Wolfe Research’s math: about $50 a share if Medicare says no, $150 if it says yes. The stock trades around $150, nearly the whole upside, while Wolfe’s Paige Chamberlain rates the odds nearer a coin flip. Even a yes builds slowly: coverage would open only to people 50 to 65, with the age cap rising a year at a time after that. Meanwhile Grail is expected to keep losing hundreds of millions a year, and Abbott (ABT), Natera (NTRA) and Guardant Health (GH) are lining up rival tests.
Our read
Start at the kitchen table, because this is Health Costs. Today Galleri is mostly a cash purchase, and Medicare can’t pick it up before 2029. Read the trial the way your doctor would: a test that misses most Stage 1 cancers can’t hand you an all-clear, and a positive can lead to scans and biopsies — billed separately, sometimes for nothing. Before paying, ask your doctor whether it belongs alongside the screenings you’re already due for, not instead of them, and ask your insurer what the follow-up would cost. One wrinkle for older readers: on the Journal’s description, the first coverage band stops at 65 and the cap moves up only a year at a time, so someone already past 65 when coverage starts wouldn’t be in it — and the article doesn’t say how fast, or whether, the cap would reach them. The law’s fine print will settle that; ask, don’t assume.
Then the brokerage account — Investments/Risk (IN04). A stock priced at the top of an analyst’s range for a ruling a regulator hasn’t made is a binary bet. At $150 you’re paying for the yes; on Wolfe’s own model, a no leaves the value at about a third of that. Wainer grants that multi-cancer screening is probably coming; the question is the price and the wait, with a likely capital raise along the way. Grail isn’t owned in any of our model books, nothing’s added, and we’re watching. If a cash-pay test or a hot biotech has crept into your plan, bring it to the next review; the umbrella’s easiest to find while the sky’s still blue.