Pediatric Oncology Adoption And Pipeline Expansion Will Drive Future Success

Key Takeaways

• Expanding adoption of OJEMDA and a growing clinical pipeline position the company for sustained revenue growth and reduced reliance on a single product.
  
• International regulatory progress and strong payer support enable broader market access, improved margins, and financial flexibility for further investment.
  
• Heavy reliance on a single product, unproven pipeline, high expenses, and competitive pressures risk limited revenue growth and margin improvement over time.

Catalysts

A commercial-stage company, focused on advancing class medicines for childhood and adult diseases with equal intensity in the United States.

• Rapidly increasing adoption and deepening penetration of OJEMDA across top-tier priority accounts, coupled with consistent growth in prescription volumes, suggest a clear pathway to continued revenue expansion as the product becomes established as the second-line standard of care for pediatric low-grade glioma (pLGG).
  
• Ongoing expansion of the clinical pipeline, including the anticipated FIREFLY-2 confirmatory trial completion in 2026 and advancement of DAY301 in adult solid tumors, positions Day One to participate in broader segments of the growing oncology market, supporting longer-term revenue growth and reduced product concentration risk.
  
• Regulatory momentum (such as the European Medicines Agency’s acceptance of tovorafenib for review) is opening additional international markets, increasing the total accessible patient pool and potential geographic revenue diversification, and benefiting from increasing healthcare access and supportive regulatory frameworks for novel pediatric therapies.
  
• Strong payer approval rates, relatively low off-label use, and prolonged treatment durations reflect an environment of increasing provider and patient acceptance, supporting higher realized net prices and potentially more robust net margins as experience and confidence with OJEMDA grows.
  
• Substantial cash reserves and disciplined financial management (with no anticipated need for external financing) provide a runway for strategic investment in new assets or business development, underpinning future earnings resilience without near-term shareholder dilution or heightened cost of capital.

Day One Biopharmaceuticals Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Day One Biopharmaceuticals's revenue will grow by 36.1% annually over the next 3 years.
• Analysts assume that profit margins will increase from -42.7% today to 10.2% in 3 years time.
• Analysts expect earnings to reach $41.6 million (and earnings per share of $0.3) by about July 2028, up from $-69.1 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $69.4 million in earnings, and the most bearish expecting $-70.9 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 94.2x on those 2028 earnings, up from -9.6x today. This future PE is greater than the current PE for the US Biotechs industry at 16.5x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.4%, as per the Simply Wall St company report.

Day One Biopharmaceuticals Future Earnings Per Share Growth

Risks

• Day One’s near-term revenue is highly concentrated in a single asset, OJEMDA, and physician adoption in key accounts remains conservative and gradual, making the company especially vulnerable to slower than expected uptake, physician reluctance, or clinical setbacks in this lead program, which would significantly impact overall revenue and future earnings growth.
  
• While the company reports strong initial growth, the pLGG population size and conservative pediatric oncology community—alongside competition from entrenched off-label therapies and other targeted agents—could cap market penetration and pricing power over time, potentially restraining long-term revenue and compressing net margins as broader adoption proves protracted.
  
• The company’s ability to diversify beyond OJEMDA remains unproven, with DAY301 and the broader pipeline still in early development phases and dependent on uncertain clinical results; failures, delays, or lackluster efficacy in these programs would perpetuate pipeline risk and hinder revenue diversification, ultimately limiting future earnings resilience.
  
• Ongoing high R&D and operating expenses relative to current revenues, with a need for continuous investment in sales, clinical development, and business development, could keep Day One in a prolonged phase of negative or low net margins, especially if additional asset in-licensing or commercial expansion is needed to drive growth, potentially pressuring earnings and risking future dilution.
  
• Growing competition in pediatric oncology from larger pharma companies and new entrants, as well as possible future regulatory or payer resistance to expensive specialty drugs, could intensify pricing pressures, slow adoption curves, or reduce realized net prices, all of which would threaten Day One’s ability to sustain revenue growth and improve margins in the medium to long term.

Valuation

• The analysts have a consensus price target of $26.25 for Day One Biopharmaceuticals based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $36.0, and the most bearish reporting a price target of just $18.0.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $407.8 million, earnings will come to $41.6 million, and it would be trading on a PE ratio of 94.2x, assuming you use a discount rate of 6.4%.
• Given the current share price of $6.57, the analyst price target of $26.25 is 75.0% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.