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:
Insurance coverage hinges on a series of contingent regulatory approvals and success is improbable.
- GRAIL is a commercial-stage company currently trying to bring its Multi-Cancer Early Detection (MCED) test to market. MCED tests aim to detect multiple cancers simultaneously, often from a single blood sample. GRAIL claims its Galleri test can identify over 50 types of cancer—significantly more than any competitor. The company’s viability depends on securing insurance coverage for its test.
- While the company is currently selling the test as a Lab Developed Test (LDT), Galleri has neither FDA approval nor widespread coverage. We believe investors are unrealistically optimistic about the company’s prospects, with the bull case hinging on a precarious chain of contingencies required for widespread commercialization: FDA approval ? USPSTF guideline inclusion ? CMS reimbursement ? Private payor coverage. Each step is uncertain on its own and collectively improbable.
- A worldwide leading cancer expert and former executive told us “that FDA approval does not translate into guideline approval, does not translate into screening recommendations, nor does it translate into coverage.” The reason for this is simple: GRAIL must demonstrate clinical utility—specifically mortality reduction—to be included in USPSTF guidelines, which in turn is the pathway to getting insurance coverage.
- However, GRAIL’s registrational trials, NHS-Galleri and PATHFINDER 2—are not designed to show real mortality reduction. GRAIL’s acting CFO even acknowledged in March 2025: “We’re not going to have mortality data because it would take 10 years and probably $0.5 billion to get there.” Instead, PATHFINDER 2 and NHS-Galleri focus on safety and effectiveness, just meeting the minimum bar for FDA approval, while NHS-Galleri is allegedly designed to evaluate stage shifts as well.
- Bulls often point to the recently reintroduced MCED bill as a path to bypass regulatory hurdles and enable broad insurance coverage by 2028. However, the fine print reveals that coverage would only apply to a narrow segment of Medicare enrollees—specifically, those aged 67 and younger in 2028. Furthermore, the bill stipulates that Medicare would only cover the MCED test if the CMS determines that adoption is appropriate.
Anticipated FDA approval for 50+ cancers can be categorically excluded.
- According to leading experts and former employees, an FDA approval for 50+ cancers is improbable. An Illumina expert testified that Galleri has only been shown to detect seven types of early-stage cancer, not the marketed 50+ cancers. Former GRAIL scientist told us that if Galleri ever gets FDA approval, the approved test will be curtailed to a few niche cancers: “I don’t believe they will approve all 50 at all. […] they’re going to get breast and prostate out of there […].”
- GRAIL’s former CEO has admitted under oath that GRAIL’s Galleri Test is not as sensitive as the SOC screening methods. Our analysis of GRAIL’s data shows high early-stage sensitivity in only six rare cancers, with prevalence rates ranging from 0.019% (liver/bile duct) to 0.144% (colon/rectum)—significantly lower than more common cancers like prostate (0.61%) and breast (0.67%).
- These low-prevalence cancers underscore Galleri’s role as a niche test. At best, if GRAIL were to get FDA Approval, it would be limited to a significantly smaller subset of cancers. A curtailed Galleri test will re-position it as a niche diagnostic application rather than a widespread screening tool, raising serious doubts about its commercial potential and cost-benefit surplus for insurers.
- While the refined Galleri test reports a 43.1% PPV, our in-depth analysis discovered that it was overfitted to hematologic malignancies (blood cancer)—resulting in a decline in PPV from 46.3% to 39.6% for solid tumors, which represent nearly 91% of nationwide cancer prevalence. This trade-off further erodes the cost-benefit surplus of GRAIL’s MCED test for CMS and private payors.
Payors have designated Galleri as “unproven,” “not medically necessary,” and “not covered.”
- A former GRAIL sales manager told us that the Big 5 insurers have designated Galleri as “investigative and experimental (I&E),” a classification that—when tied to CPT code 81479—effectively blocks reimbursement: “If you get that designation in their claim system, they’re not paying for the test, no matter what.” They added, “That’s a killer from a testing standpoint. You want to avoid I&Es.”
- We reviewed the current BUCAH medical policies and discovered that Aetna labeled the Galleri test “experimental, investigational, or unproven,” UnitedHealthcare called it “not medically necessary,” and Blue Cross deemed it “investigational; therefore, not covered.” Both Humana and Cigna listed it as “not covered,” with Cigna applying this to all cfDNA analyses.
- Even TRICARE’s recently announced Galleri “coverage” falls into this category, as GRAIL’s own ordering guide confirms the test is billed under the scrutinized CPT code 81479. TRICARE’s reimbursement is significantly limited, conditional, and subject to strict preauthorization—reflecting administrative ambiguity rather than meaningful market adoption.
GRAIL’s comparison to standard screening tools is materially misleading.
- At a recent Jeffries conference, GRAIL’s CEO trumpeted that “the positive predictive value for Galleri in the population — in the study population was 43%, which is an order of magnitude higher than leading single cancer screening tests.“ GRAIL is repeating materially misleading claims about its PPV in comparison to existing screening methods.
- GRAIL contrasts its touted 43.1% PPV with far lower figures from established single-cancer tests (e.g., FIT, LDCT, mammography) while ignoring critical differences in study design, population, and prevalence. When recalculated using CCGA3 data and CDC prevalence rates, for example, Galleri’s PPV drops to 5.17% for lung cancer (vs. 3.8% in LDCT) and 3.27% for breast cancer (vs. 4.4% in mammography)—figures that directly undercut the company’s narrative of diagnostic superiority.
Experts and former scientists ring the alarm on GRAIL
- A leading expert at MD Anderson Cancer Center and former scientific advisor to GRAIL warned the company that its trial design was “fundamentally flawed,” and later concluded that the company surrounded itself with “people who had drunk the Kool-Aid.” Other leading oncology experts questioned why the Galleri test—described as showing “so little promise” in earlier trials—was being tested on UK patients.
- A BMJ article uncovered internal emails suggesting “behind closed doors” agreements, further fueling doubts about the trial’s legitimacy. The Chair of the UK’s National Screening Committee voiced “serious concerns” about the NHS-Galleri trial and its cost-benefit surplus.
GRAIL’s toxic culture: former staff cite executive hubris and questionable decision-making.
- A former high-ranking manager told us “I think that the executive team was not a well-functioning team at all. I think decisions were made for reasons other than what’s the best way to show this test works.”. Additionally, all former employees we spoke to described the corporate culture as “toxic,” “terrible,” and “challenging.”
- According to former staff, “The executive team at GRAIL was rated the worst-performing unit within GRAIL for three straight years. The feedback given was very specific.” In the fourth year, management stopped disclosing its internal survey results, with one former interpreting “But it was one of the worst cases of hubris ever, like: yeah, we don’t really care, and you don’t count.”
- Moreover, three lawsuits have alleged a toxic workplace culture marked by racism and sexism, portraying GRAIL as a fraternity-like environment—complete with free alcohol at all times and drinking during sales strategy meetings.
GRAIL’s valuation hinges on cash reserves amid regulatory uncertainty
- GRAIL’s actual sales have massively underperformed projections—achieving only 10% of the original 2020 revenue estimates ($75M in 2023 vs. projected $462M, and $108M in 2024 vs. projected $892M). Losing hundreds of millions per year, GRAIL is burning through the Illumina-funded cash position at a rate that calls into question its runway.
- Management expects GRAIL’s cash reserves to last until 2028. However, we believe that by then, reimbursement and broad market adoption will still be absent. Therefore, GRAIL’s fair value should remain anchored to its projected cash reserves through 2025—approximately $14.28 per share.