Loss-Making Spago Nanomedical AB (publ) (STO:SPAGO) Expected To Breakeven In The Medium-Term

With the business potentially at an important milestone, we thought we'd take a closer look at Spago Nanomedical AB (publ)'s (STO:SPAGO) future prospects. Spago Nanomedical AB (publ), a clinical phase nanomedicine company, engages in the development of nanomedicines for cancer diagnostics and treatment primarily in Sweden. On 31 December 2023, the kr68m market-cap company posted a loss of kr42m for its most recent financial year. As path to profitability is the topic on Spago Nanomedical's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

View our latest analysis for Spago Nanomedical

According to the 2 industry analysts covering Spago Nanomedical, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2025, before generating positive profits of kr46m in 2026. So, the company is predicted to breakeven approximately 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2026? Working backwards from analyst estimates, it turns out that they expect the company to grow 56% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for Spago Nanomedical given that this is a high-level summary, however, take into account that typically a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

One thing we’d like to point out is that Spago Nanomedical has no debt on its balance sheet, which is quite unusual for a cash-burning biotech, which typically has high debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

There are too many aspects of Spago Nanomedical to cover in one brief article, but the key fundamentals for the company can all be found in one place – Spago Nanomedical's company page on Simply Wall St. We've also compiled a list of essential factors you should further examine:

1. Valuation: What is Spago Nanomedical worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Spago Nanomedical is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Spago Nanomedical’s board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.