G1 Therapeutics, Inc.

GTHX Details

G1 Therapies, Inc. (NASDAQ: GTHX) is a commercial-stage biotechnology company that develops and commercializes innovative small molecule therapeutics to treat cancer patients. COSELA (Trilaciclib), the company's first US Food and Drug Administration (FDA) approved medicine, is the first and only therapy authorized to help protect bone marrow from the damage caused by chemotherapy.

Latest News:

• Inducement Grants: GTHX announced the grant of inducement stock options for an aggregate of 166,700 shares of its common stock to eight employees under its Inducement Equity Incentive Plan on February 1, 2022, and a sum of 153,900 shares of its common stock to 23 employees under its previously-announced Sales Force Inducement Equity Incentive Plan on February 1, 2022.
• Expansion Plans for Sales Growth: GTHX announced on December 16, 2021, that it would hire and deploy an additional 20 oncology salespeople, bringing the total number of oncology salespeople to 34. The expansion will allow the company to target all accounts to speed up sales and increase COSELA adoption.

9MFY21 Results:

• Flat Topline: Total revenues fell by 10.64% to USD 25.68 million during 9MFY21 (ended September 30, 2021) from USD 28.74 million in 9MFY20, owing to USD 28.7 million in revenue recognized from upfront licence payments from Genor, EQRx, and ARC licence agreements, as well as clinical trial reimbursements from EQRx.
• Healthy Balance Sheet: As of September 30, 2021, the company's cash balance stood at USD 212.09 million, with a total debt of USD 30.27 million.
• Rise in Financing Activities: Due to proceeds from public offerings and stock options exercised, net cash provided by financing activities during the 9MFY21 was USD 102.1 million, compared to USD 21.22 million during the 9MFY20.

Risks:

• Product Concentration Risk: The company is nearly reliant on COSELA's commercial success, putting it at risk of product concentration.
• Reliance on Third Parties: The company does not own or run any manufacturing facilities and has no intentions to do so shortly. It relies on third parties (contract manufacturing organizations or CMOs) to manufacture its product candidates and expects to continue to do so. Suppose these third parties fail to fulfil their contractual obligations or meet planned timelines. In that case, the firm may not acquire marketing approval for its product candidates, putting its prospects at risk.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation  

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

 Stock Recommendation:

GTHX's share price has fallen 53.95% in the past nine months and is currently trading towards the lower-band of its 52-week range of USD 8.04 to USD 37.07. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 12.60.

Considering the correction in the stock price in the past nine months, growth strategies, healthy balance sheet, current valuation, and associated risks, we recommend a "Speculative Buy" rating on the stock at the closing price of USD 10.09, down 3.17% as of February 11, 2022.

Three-Year Technical Price Chart (as of February 11, 2022). Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary:

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors' appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the valuation has been achieved and subject to the factors discussed above. 

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