Tuesday - Needham has adjusted its outlook on G1 Therapeutics (NASDAQ:GTHX), lowering the price target to $6 from the previous $12, while maintaining a Buy rating on the stock. The revision follows the announcement that the combination treatment of Trilaciclib with gemcitabine and carboplatin did not show a significant overall survival benefit in comparison to the use of gemcitabine and carboplatin alone.
The median overall survival (mOS) was reported at 17.4 months for the combination treatment versus 17.8 months for the standard treatment, with a p-value of 0.884, indicating no statistical significance.
G1 Therapeutics has decided not to pursue further development of Trilaciclib, also known as trila, outside of its use in small cell lung cancer (SCLC). Instead, the company will concentrate its efforts on the commercial execution of its products. Despite the setback, Trilaciclib continues to exhibit hematological protective properties, which has been a consistent feature of the drug.
The firm has reaffirmed its sales guidance for Cosela for the fiscal year 2024, projecting revenues to be in the range of $60-70 million. Additionally, G1 Therapeutics has indicated that due to reduced expenditures, it expects to extend its cash runway and achieve profitability in the second half of 2025.
The adjustment in the price target reflects the removal of any potential value attributed to the treatment of triple-negative breast cancer (TNBC) from the valuation and a revision of the sales estimate for SCLC. Needham suggests that the company's strategic realignment may attract interest from potential acquirers, given the updated financial outlook and continued commercial focus.
In other recent news, G1 Therapeutics has experienced a series of developments. The company's Phase 3 PRESERVE 2 trial of Cosela in triple-negative breast cancer did not meet its primary endpoint, leading H.C. Wainwright to reduce the stock target from $9 to $3, while maintaining a Buy rating.
Despite this, G1 Therapeutics reported a 34% increase in net sales year-over-year and a 4% increase in vial volume growth for Cosela in their first-quarter earnings call for 2024. The company also maintains a revenue guidance of $60 million to $70 million for the year.
Furthermore, G1 Therapeutics secured a licensing deal with Pepper Bio, potentially bringing in up to $135 million in payments. On a positive note, Phase 2 clinical trial results showed an improvement in overall survival and a reduction in adverse events for trilaciclib in combination with a TROP2 ADC in patients with metastatic Triple Negative Breast Cancer. These findings are set to be presented at the 2024 American Society of Clinical Oncology meeting.
With these recent developments, G1 Therapeutics plans to focus on expanding its extensive-stage small cell lung cancer business and exploring other applications for trilaciclib. The company is also taking strategic steps to streamline operations and extend its cash runway, supporting its path to profitability in the second half of 2025.
InvestingPro Insights
As G1 Therapeutics (NASDAQ:GTHX) pivots its strategy following the recent clinical results, real-time data from InvestingPro reveals critical financial metrics that investors may find informative. The company's market capitalization stands at a modest $116.06 million, reflecting the market's adjusted expectations. Notably, GTHX boasts a high gross profit margin of 91.89% over the last twelve months as of Q1 2023, underscoring the company's ability to maintain profitability at the gross level despite broader challenges.
One of the InvestingPro Tips highlights that GTHX holds more cash than debt on its balance sheet, which could provide a cushion against operational uncertainties and support the firm's commitment to achieving profitability by the second half of 2025. Additionally, four analysts have revised their earnings upwards for the upcoming period, suggesting a potential rebound or positive outlook on the horizon.
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