G1 Therapeutics, Inc.

GTHX Details

G1 Therapeutics, Inc. (NASDAQ: GTHX) operates as a commercial-stage biopharmaceutical company engaged in developing and marketing next-generation therapies to improve the lives of cancer patients. It holds an extensive clinical pipeline, with a primary focus on COSELA (trilaciclib). It is currently conducting a tumor-agnostic development plan encompassing many solid tumors, such as colorectal, breast cancer, lung, and bladder cancers.

Positive Findings in COSELA Study: On October 07, 2021, GTHX released the pooled results of three randomized trilaciclib studies showing that people with advanced-stage small-cell lung cancer (ES-SCLC) who received COSELA before each chemotherapy treatment used fewer overall supportive care therapies for chemotherapy-induced myelosuppression than those who received placebo. The findings of the retrospective study were published in the Cancer Medicine journal's online edition.

Receipt of J-code from CMS: The company announced on October 01, 2021, that the COSELA permanent J-code (previously approved by the Centers for Medicare & Medicaid Services (CMS) in July 2021) became effective for provider billing for all sites of care. J-codes are permanent, product-specific payment codes allocated to outpatient and physician-administered "buy and bill" items under Medicare Part B and are used by commercial insurers and government payers to streamline and standardize claim submissions and reimbursements for medications.

Q2FY21 Results: The company reported a steep 208.60% increase in total revenues to USD 6.60 million in Q2FY21 (ended June 30, 2021) compared to USD 2.14 million in Q2FY20, primarily due to the commencement of revenue generation from COSELA sales in March 2021. However, net loss for Q2FY21 increased to USD 39.42 million from USD 31.21 million in Q2FY20. As of June 30, 2021, the company had cash & cash equivalents of USD 224.02 million and total debt of USD 30.09 million.

Key Risks: GTHX currently has a single product offering, i.e., COSELA. Therefore, any failure in the commercialization of this therapy could adversely impact its financials. Moreover, its future product candidates will also be subject to extensive pre and post-marketing regulatory requirements and could be subject to restrictions/withdrawal from the market and even penalties if they fail to comply with regulatory requirements.

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.

GTHX Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: GTHX's stock price decreased 45.98% in the past six months and is currently leaning towards the lower end of its 52-week range of USD 10.81 to USD 37.07. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 38.62. We have valued the stock using the EV/Sales multiple-based relative valuation methodology and arrived at a target price of USD 15.72. Considering the significant correction in the stock price, strong balance sheet, commercialization of COSELA, current valuation, and associated risks, we recommend a "Speculative Buy" rating on the stock at the current price of USD 12.70, up 0.40% as of October 15, 2021, 12:42 PM ET.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

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