Biotechnology stocks can be thrilling and profitable when you’re on the winning side of a trade. G1 Therapeutics’ (NASDAQ:GTHX) started hot, but then the bottom fell out after an unfortunate announcement. With that in mind, G1 Therapeutics stock is just too risky to recommend right now.
Based in North Carolina, G1 Therapeutics specializes in oncology (cancer) treatments. To be fair and balanced, I’ll start off with some positive news pertaining to G1 Therapeutics. Then, however, I’ll have to release a bombshell that will make you think twice about investing in G1 Therapeutics.
G1 Therapeutics: Index Inclusion and More
To start off, G1 Therapeutics just got added to the small-cap Russell 2000 and broad-market Russell 3000 indexes. This means that some index-fund investors will indirectly invest in G1 Therapeutics, so that’s certainly positive news for the company.
Next, G1 Therapeutics started off 2024 with some encouraging financial stats. Impressively, the company grew its revenue from $10.492 million in the year-earlier quarter to $14.079 million in Q1 of 2024. Also during that time frame, G1 Therapeutics narrowed its net earnings loss from $27.595 million to $10.219 million.
Furthermore, in May, G1 Therapeutics disclosed positive results from the company’s combination-therapy clinical trial of trilaciclib in the treatment of a specific type of breast cancer. The results were highly encouraging, but the story of G1 Therapeutics’ progress with trilaciclib in combating breast cancer would soon take an unfortunate turn.
A Textbook Example of Biotech-Stock Risk
When it comes to biotechnology stocks, things could seem to go great for a while. Then, a single announcement can cause fear and wealth destruction. A textbook example is when G1 Therapeutics stock fell 41.1% on June 24.
On that day, G1 Therapeutics revealed that it “did not demonstrate a statistically significant treatment effect” with “trilaciclib administered prior to chemotherapy” in certain breast cancer patients. G1 Therapeutics CEO Jack Bailey described this outcome as “unexpected” and “disappointing.”
Undoubtedly, G1 Therapeutics’ shareholders were disappointed, as well. This is a textbook example of how volatile biotech stocks can be.
It’s also an example of how a biotechnology company might have to “go back to the drawing board” after a clinical-trial disappointment. G1 Therapeutics “plans to wind down” the aforementioned trilaciclib clinical trial that resulted in a disappointing outcome.
Bailey suggested that G1 Therapeutics will focus on other endeavors, including potential treatment(s) for extensive-stage small cell lung cancer.
G1 Therapeutics Stock: A Risky Roller Coaster
Investing in G1 Therapeutics now would be like riding a roller coaster without a seat belt. It might seem like a fun idea, but it’s just too dangerous to actually attempt it.
After the clinical-trial disappointment, G1 Therapeutics isn’t necessarily back to Square One, but it’s a huge setback. Indeed, the single-day share-price plunge should remind investors that biotechnology stocks are often high-risk assets.
Consequently, until the company demonstrates that it can get back on track and refocus on potentially profitable endeavors, it’s wise to avoid G1 Therapeutics stock.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) and positions in the securities mentioned in this article.