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GRAIL (NASDAQ: GRAL): Why Galleri Will Fail the Real Test: Regulatory Approval and Widespread Commercialization All But Impossible We are short GRAIL, Inc. (NASDAQ: GRAL), because, in our opinion, the company’s overly ambitious approach to cancer screening has created insurmountable regulatory roadblocks. Additionally, leadership's persistent disregard for expert advice and a dysfunctional corporate culture have led to significant operational missteps, disappointing sales, and looming financial distress.
In the end, we believe GRAIL’s cancer detection test is backed by data that is just enough to create investor hype, but far too weak to convince experts, regulators, or insurers of its clinical utility.
In our opinion, GRAIL's commercial story has increasingly diverged from its scientific promise. While the company entered the market with bold ambitions to redefine cancer screening, we believe its strategy has failed to account for the full scope of regulatory, reimbursement, and operational challenges that ultimately determine market access in U.S. healthcare.
At the heart of the problem is the Galleri test’s positioning as a screening tool without robust clinical evidence of mortality reduction—an essential benchmark for guideline inclusion and broad insurance coverage. The test is currently offered as a Lab Developed Test, but this pathway lacks reimbursement support from both Medicare and private payors. Multiple insurers have classified the test as “investigational” or “not medically necessary,” effectively cutting off payment channels.
We believe GRAIL’s future rests on a sequence of contingencies: FDA approval → USPSTF recommendation → CMS reimbursement → private payor adoption. Each step presents a significant hurdle; taken together, success is just improbable.
Critically, GRAIL’s registrational studies—PATHFINDER 2 and NHS-Galleri—are built around surrogate endpoints such as stage shift, rather than mortality reduction. This presents a structural barrier to USPSTF recommendation and CMS reimbursement, as both require clinical utility demonstrated through survival benefit. According to GRAIL’s CFO, no such mortality data will be pursued due to prohibitive time and cost. Without mortality reduction data, the test cannot gain the regulatory traction needed for broad reimbursement—regardless of FDA approval.
Meanwhile, GRAIL continues to promote headline figures like a 43.1% PPV, often in isolation and without cancer-specific breakdowns. These numbers, drawn from select populations and case-control studies, don’t reflect real-world screening conditions. When adjusted for cancer prevalence using CDC data, Galleri’s cancer-specific PPVs align with—or fall below—those of established single-cancer screening tools. Yet GRAIL continues to compare these inflated figures with lower benchmarks, a practice we view as materially misleading.
Compounding these scientific and commercial challenges is a corporate culture that former employees have characterized as dysfunctional, opaque, and even toxic. Multiple lawsuits and insider testimony paint a picture of executive-level hubris, strategic disarray, and a disregard for internal and external feedback. Even as GRAIL hemorrhages cash and misses revenue targets by wide margins, management appears more focused on narrative control than substantive course correction.
Looking ahead, investor enthusiasm appears tethered to speculative catalysts—most notably, the proposed MCED legislation. However, even under optimistic interpretations, the MCED bill would enable only limited reimbursement for a narrow Medicare subset, and only if CMS deems the test appropriate. We think that is a tenuous foundation for a company with high capital intensity and persistent regulatory risk.
In our opinion, GRAIL’s fair value should be anchored to its projected cash reserves—approximately $14.28 per share—reflecting a business with no viable reimbursement path, eroding scientific credibility, and limited strategic runway.