Market Sentiment Around Loss-Making G1 Therapeutics, Inc. (NASDAQ:GTHX)

With the business potentially at an important milestone, we thought we'd take a closer look at G1 Therapeutics, Inc.'s (NASDAQ:GTHX) future prospects. 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. On 31 December 2023, the US$163m market-cap company posted a loss of US$48m for its most recent financial year. The most pressing concern for investors is G1 Therapeutics' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for G1 Therapeutics

According to the 5 industry analysts covering G1 Therapeutics, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2025, before generating positive profits of US$187m in 2026. So, the company is predicted to breakeven approximately 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2026? Working backwards from analyst estimates, it turns out that they expect the company to grow 55% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for G1 Therapeutics given that this is a high-level summary, however, keep in mind that by and large a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

One thing we would like to bring into light with G1 Therapeutics is its debt-to-equity ratio of 146%. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which 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 factors 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.