G1 Therapeutics, Inc.'s (NASDAQ:GTHX) Shift From Loss To Profit

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. On 31 December 2023, the US$218m 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? 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

G1 Therapeutics is bordering on breakeven, according to the 5 American Biotechs analysts. They anticipate the company to incur a final loss in 2025, before generating positive profits of US$187m in 2026. The company is therefore projected to breakeven around 2 years from today. 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! Should the business grow at a slower rate, it will become profitable at a later date than expected.

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We're not going to go through company-specific developments for G1 Therapeutics given that this is a high-level summary, though, keep in mind that typically biotechs, depending on the stage of product development, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

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. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are too many aspects of G1 Therapeutics to cover in one brief article, but the key fundamentals for the company can all be found in one place – G1 Therapeutics' company page on Simply Wall St. We've also compiled a list of essential factors you should further examine:

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.