Grail has big plans for its blood cancer tests. The first step: Finding a new owner
In March, Paul Schneider was diagnosed with pancreatic cancer. The 77-year-old retired firefighter was grateful to receive the news.
He was symptom-free, and a blood test from the company Grail detected the often-incurable disease. After scans confirmed the diagnosis, he underwent chemotherapy that has kept the cancer at bay.
“I’ve had friends get diagnosed with pancreatic cancer and die in three months. So I’m very grateful to have caught this,” Schneider said.
But the program that found his disease and tested 1,400 firefighters — a $1.17 million effort from the San Francisco Firefighters Cancer Prevention Foundation — isn’t in the budget for future years. Grail’s test isn’t covered by Medicare or by the vast majority of insurers. The company’s future — and access to people like Schneider — depends on winning over these payers.
Grail hopes to obtain FDA approval by 2027 and secure Medicare coverage the following year, according to an internal company email reviewed by Endpoints News.
Doing so would be pivotal for the company, a pioneer in an emerging field that screens for multiple cancers in a blood sample. Revenue this year from Grail’s $949 test is projected to climb to $90 million, but the company operates at a steep loss. And its deep-pocketed owner, Illumina, just announced plans to sell or spin out the business after US and European regulators challenged the ill-fated $8 billion acquisition.
In a statement, Grail said that it has not publicly disclosed any dates on FDA and Medicare review, and that the timing of government actions is connected to “maturing” clinical trial data.
But Grail isn’t waiting on a regulatory system that’s still taking shape, drawing both praise and calls for caution. At stake is Illumina’s ability to fetch a good price for the company — and Grail’s quest to go from niche product to mainstream test.
“That’s a very limited opportunity, right? We think we can grow,” Grail president Josh Ofman told Endpoints. “But you know, until we get FDA approval and broad reimbursement, it’s not going to have the public health impact that we aspire to have.”
Only 14% of cancers are diagnosed via recommended screenings. Most are found when symptoms arise or incidentally during other medical care, according to the National Opinion Research Center at the University of Chicago. Cancers detected in late stages typically have a worse prognosis.
Tests like Grail’s, known broadly as multi-cancer early detection tests, are meant to allay the problem. Grail, the market leader, got an early jump over competitors like Freenome and Exact Sciences. Launched in 2021, more than 130,000 of Grail’s tests have been sold under a provision that doesn’t require full regulatory approval.
Grail’s prescription-only test, Galleri, picks up trace amounts of DNA shed by tumors and is designed to detect 50 cancers. It has caught on with affluent consumers and life sciences companies. But in many cases, Grail has struggled to attract or retain customers.
The San Francisco Firefighters Cancer Prevention Foundation footed the $1.17 million bill to test Schneider and others. Anthony Stefani, the president of the group, said it had hoped to implement biannual screening but doesn’t have the money. Amid cutbacks, it’s highly unlikely that funding will come from the city of San Francisco, which controls the firefighting budget.
“I don’t think I could see this happening anytime soon,” Stefani said.
Galleri is covered by small health plans like Point32Health. But Medicare and large insurers are waiting on regulatory approval and additional data before making any decisions.
Powerful tool, or drain on the health system?
Grail has lobbied for a bill that would authorize Medicare to pay for the tests once regulators give the OK. The company’s 2027 timeline — considered aggressive by some — may fuel skeptics who believe Grail needs to slow down and more carefully validate its tests before a larger rollout.
In a recent trial of 6,621 people, Grail’s test detected a cancer signal in 92 patients. Thirty-five were ultimately diagnosed with cancer, but 57 had a false positive, according to a company-funded study that was recently published in The Lancet.
The needless anxiety of a false positive was experienced by Jim Coyne, one of the San Francisco firefighters who was tested under the now-defunct program. The test detected multiple myeloma, a rare blood cancer. But after more bloodwork and a bone marrow biopsy, the retired firefighter didn’t have cancer after all.
Still, on balance, he’s in favor of using the tests, particularly in firefighters who are especially vulnerable to cancer.
“For others, this could be important,” Coyne said.
Other patients might not be as understanding, and the consequences of a false positive can be serious. Grail critics are concerned that too often a cancer signal turns out to be nothing, leading to invasive procedures, apprehension and steep costs on an already strained healthcare system.
“The exciting data in these studies should not outshine more sobering concerns such as low sensitivity, overlap with existing, proven approaches, and unknown mortality benefit and cost-effectiveness,” wrote cancer researchers Richard Lee and Hilary Robbins in an editorial accompanying the Lancet results.
Grail notes that its test is intended to complement, not replace, existing screenings. The company is working to improve accuracy. And proponents say the tests could be a powerful tool in the fight to slash cancer deaths.
“It’s such a novel approach,” said Whitney Jones, a former senior medical director at Grail. “It’s taking time for experts to wrap their heads around it.”
Gautam Kollu, Grail’s chief commercial officer from 2019 to 2021, said the company had a difficult time finding a path for reimbursement during his tenure. But he’s encouraged by recent developments, including the launch of a study in the Medicare population.
“But a lot would need to fall into place for the 2027 timeline to happen,” Kollu said.
The FDA has never before approved a test like Grail’s. Regulations are still a work in progress, in part because the benefit-risk profile is much harder to calculate than for a single-cancer test.
“There’s no predicate here, right? There’s no guidance document. There’s nothing that you’re going to be able to get your hands on that’s going to tell you, ‘Oh, this is the endpoint that they’re going to look at that’s going to define whether they’re gonna approve it,’” Ofman said.
Last month, tension over how fast regulators should act burst open at an FDA advisory meeting on how to design trials for multi-cancer detection tests, and whether trials should be required to gather data on whether they cut deaths, a measure known as a mortality endpoint.
“The companies need to have their feet held to the fire and really have mortality endpoints. And I recognize that that slows progress. But we’ve seen too many things that have gone out the door without true validation,” Philip Castle, cancer prevention director at the National Cancer Institute, argued during the meeting.
Patients spoke at the FDA session as well. One of them, a man named Roger Royse, urged the FDA not to go too slow. Royse took a Grail test and was diagnosed with pancreatic cancer, which typically results in quick death in part because of how late it’s often detected. For him, it was caught early enough to surgically remove.
“Without multi-cancer early detection, I would be dead now,” Royse said.
Grail has a 140,000-person trial in the UK, but the study won’t directly analyze whether Galleri lessens mortality. Waiting for participant deaths in dozens of cancers would take a decade or longer to read out results, the company argues.
In that area, the FDA may be on the company’s side. Timothy Stenzel, FDA director of the office of in vitro diagnostics, said during the meeting that the agency hasn’t required mortality data from earlier studies and it wouldn’t make sense to start now. He reiterated the position after probing questions from Castle.
Yet it’s unclear if the agency will go for Grail’s clinical trial designs: model mortality and look for a reduction in late-stage disease.
“There will still be the question of what endpoints are appropriate, but Tim Stenzel’s position eliminates the endpoint that would have been hardest to meet,” attorney Jeff Gibbs said.
In response to a request for comment from Endpoints, an FDA spokesperson said Stenzel was unavailable.
The company’s aggressive push for FDA approval has drawn both concern and admiration, sometimes from the same person.
“Maybe we’ve been too cautious. We haven’t searched for efficiencies that will shorten the pipeline,” said Ruth Etzioni, a biostatistician at Fred Hutch Cancer Center. “Yet it’s a good scientific question to ask: When is it OK to shortcut?”
A future without Illumina
Regulatory approval would be key for unlocking what Illumina called a $50 billion market upon buying the company in 2021. But after losing a lengthy antitrust battle, Illumina said last week that it would divest Grail.
Any new owner of Grail will have to take on a business that, for now, is far from profitable. Grail has routinely missed or come in at the low end of Illumina sales projections for the business, and the company posted a $155 million non-GAAP operating loss in the third quarter.
Before the divestiture was announced, Ofman said Grail will succeed under various scenarios, including new ownership.
“We have a great opportunity to achieve our goals, our business plans, our long-range plan, and our aspirations to make a dramatic improvement in public health,” Ofman said.