Here's Why We Are Strongly Bullish On Genocea Biosciences Inc (NASDAQ:GNCA)

Genocea Biosciences Inc (NASDAQ:GNCA) is a biotechnology stock worth putting on your radar for the next 12 to 24 months. It is up close to 50% year to date and gained 14% during the last 30 days alone.The driver behind this appreciation is a fundamental advance in the company's clinical development pipeline. Specifically, and most recently, Genocea just put out 12-month data from its lead development program and the data has hit press as overwhelmingly positive, which has translated into some recent upside momentum.If the program plays out successfully going forward, however, as we very much expect it will, this recent run is just the start of a longer-term upside revaluation for Genocea. This, in turn, makes it an attractive exposure at current prices, even with the latest gains taken into consideration.With this in mind, here is what we just learned from the latest numbers and what we are watching for going forward as supportive of our longer-term full thesis.So, as mentioned, this one is a biotechnology stock and the company is trying to bring to market a treatment targeting the herpes infection. It has been decades since this circa 400 million individual global population has had access to a new treatment type and, if Genocea can get this asset to market, it will have an addressable target population of 11 million individuals in the US alone, amounting to a sales potential at peak of more than $2 billion a year.To add some perspective, Genocea's market capitalization comes in at just $175 million right now.The drug in question is called GEN-003 and it is an immunotherapy type asset designed to induce a T cell response against the herpes virus in patients. Importantly, the only real option these patients have right now is a daily administration pill. It is effective in some patients as far as reducing viral load is concerned, but it doesn't have a reliable impact on outbreaks and it is not really conducive to a reduction in the chances of transmission between partners.GEN-003 is administered as part of three injections spread across a 21 day period and is designed to both control outbreak frequency and severity as well as reduce transmission potential.At the start of the trial that just completed, the main goal was to prove that, with just three injections, the drug can maintain efficacy across a full twelve months. Last year, and earlier this year, we got three-month and six-month data that fell in line with shorter-term endpoints, but the twelve-month numbers were what markets really wanted to see.That's what the company just released and they came out great.The drug reduced the median genital lesion rate (or percent days with genital lesions) versus placebo by 49% (p=0.01) over the 12 months’ post dosing at the 60 µg per antigen / 50 µg of adjuvant dose.Not only is this a strong endpoint hit, it's also important because of its implications for what comes next – a pivotal trial. The company intends to conduct a phase 3 trial in this indication using exactly the same dose as was offered to patients in the just completed phase 2b trial. Not only that, but it also intends to judge the efficacy of the drug against the same primary endpoint – median genital lesion rate versus placebo.What this means, then, is that the company only has to replicate the results that it just put out (albeit in a larger population) in order to meet the endpoint of its pivotal study, which will then underpin a registration application in the US.Cash on hand as of March 31, 2017, came in at a little over $34 million, which should be plenty to carry out the upcoming phase III trial. There is some degree of risk rooted in the potential for an equity raise pre-commercialization, but we should see price rise considerably between now and then (assuming the data is positive) meaning any raise shouldn't really have too much of an impact on the risk equation are things stand.Cowen has a $40 target on the stock against a current price of $6.17.We will be updating our subscribers as soon as we know more. For the latest updates on GNCA, sign up below!Image courtesy of Ed Uthman via FlickrDisclosure: We have no position in GNCA and have not been compensated for this article.