G1 Therapeutics, Inc. (NASDAQ:GTHX) Is Expected To Breakeven In The Near Future

We feel now is a pretty good time to analyse G1 Therapeutics, Inc.'s (NASDAQ:GTHX) business as it appears the company may be on the cusp of a considerable accomplishment. G1 Therapeutics, Inc., a commercial-stage biopharmaceutical company, engages in the discovery, development, and commercialization of small molecule therapeutics for the treatment of patients with cancer in the United States. The US$118m market-cap company’s loss lessened since it announced a US$48m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$31m, as it approaches breakeven. Many investors are wondering about the rate at which G1 Therapeutics will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Check out our latest analysis for G1 Therapeutics

Consensus from 5 of the American Biotechs analysts is that G1 Therapeutics is on the verge of breakeven. They expect the company to post a final loss in 2025, before turning a profit of US$185m in 2026. So, the company is predicted to breakeven approximately 2 years from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 49%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving G1 Therapeutics' growth isn’t the focus of this broad overview, but, take into account that generally a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

Before we wrap up, there’s one issue worth mentioning. G1 Therapeutics currently has a debt-to-equity ratio of 155%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on G1 Therapeutics, so if you are interested in understanding the company at a deeper level, take a look at G1 Therapeutics' company page on Simply Wall St. We've also compiled a list of essential aspects you should further research:

1. Valuation: What is G1 Therapeutics worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether G1 Therapeutics is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on G1 Therapeutics’s board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com