Here's Why Grail Soared, Again, in November

Grail (NASDAQ: GRAL) is a leader in the multi-cancer early detection market (MCED), and its stock rose 20.1% in November, according to data provided by S&P Global Market Intelligence. The move comes as the company's third-quarter results and analyst day (both in mid-November) encouraged investors to feel optimistic about the company's strategic development.

Grail's quest

The company's Galleri test is designed to screen for over 50 types of cancer and is the first MCED on the market. It has already achieved commercial sales, but it has not yet been approved by the Food and Drug Administration (FDA) -- a goal management hopes to achieve in the first half of 2026.

It's a potentially lucrative market, but Galleri is not without competition. For example, Exact Sciences (NASDAQ: EXAS), a much larger company, has its CancerGuard MCED commercially available.

As such, Grail's strategic aims include growing commercial sales of Galleri while reducing cash burn. Meanwhile, it's working on FDA approval and demonstrating the efficacy and early detection capability of Galleri by conducting studies. Grail is demonstrating progress on that front with 39% year-over-year growth in Galleri tests in the third quarter, resulting in $32.6 million in revenue from Galleri tests. In addition, Grail reduced its cash burn to $59 million from $71.8 million in the previous quarter and $105.2 million in the same period a year ago.

Thanks to a successful private placement (in itself a sign of market confidence), Grail now has a cash position of $850 million (no long-term debt), which provides ample resources for the company before it, hopefully, receives FDA approval for Galleri.

Takeover fever hits the multi-cancer early detection market.

In addition to the positive progress on its strategic goals, the announcement of a definitive agreement for Abbott Labs (NYSE: ABT) to acquire Exact Sciences for a huge premium highlights the attraction of the MCED, and raises the inevitable question: who's next? That answer could be Grail.

Image source: Getty Images.

It makes sense for larger companies to acquire companies like Grail and Exact Sciences because they have the resources and market presence to establish relationships with healthcare providers. In fact, Grail is arguably a better acquisition target than Exact Sciences, as the latter already has a commercially successful, FDA-approved colon cancer test, Cologuard.

As such, the opportunity for a larger company to acquire Grail is potentially larger, because it could add more value than Abbott might be able to do with Exact Sciences.

Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Abbott Laboratories. The Motley Fool recommends Exact Sciences and Grail. The Motley Fool has a disclosure policy.