So, my pet Saphira is a level twenty-nine dragon. She has three stars of Genetic Power and zero degeneration.

Mer opponent was a level thirty temple guardian... I believe it was a Roc? With only grade two Genetic Power.

Saphira still lost.

So... how did it happen? It was on auto-battle.

Later on, my level five male dragon, Tundra(who also has grade 3 GP) lost to a level seven temple unicorn with grade 2 GP. How?

There are a lot of variables in battles, and the outcome to them is to a fair degree random.
Trying the battles manually can give you an idea - perhaps the opponent has fancy genetics like regeneration, perhaps they are gaining extra turns because of certain genetic traits, maybe they happen to have a high critical hit rate, or maybe it's just dumb luck that they manage to often use the counter-move to your attack.

GP gives you a boost to basic stats, and as such an edge in battle, but there are more things at play, both things you can control (through breeding), and things that are just random chance.