When Will Newron Pharmaceuticals S.p.A. (VTX:NWRN) Turn A Profit?

Newron Pharmaceuticals S.p.A.’s (VTX:NWRN): Newron Pharmaceuticals S.p.A., a clinical stage biopharmaceutical company, focuses on the research and development, manufacture, and distribution of therapies for the treatment of central and peripheral nervous system in Italy and internationally. The CHF115m market-cap company announced a latest loss of -€15.0m on 31 December 2018 for its most recent financial year result. As path to profitability is the topic on NWRN’s investors mind, I’ve decided to gauge market sentiment. I’ve put together a brief outline of industry analyst expectations for NWRN, its year of breakeven and its implied growth rate.

View our latest analysis for Newron Pharmaceuticals

NWRN is bordering on breakeven, according to the 5 Pharmaceuticals analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of €94m in 2021. Therefore, NWRN is expected to breakeven roughly 2 years from today. What rate will NWRN have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 65%, which is rather optimistic! If this rate turns out to be too aggressive, NWRN may become profitable much later than analysts predict.

SWX:NWRN Past and Future Earnings, July 29th 2019
SWX:NWRN Past and Future Earnings, July 29th 2019

Underlying developments driving NWRN’s growth isn’t the focus of this broad overview, but, take into account that generally pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

Before I wrap up, there’s one aspect worth mentioning. NWRN currently has no debt on its balance sheet, which is rare for a loss-making pharma, which typically has high debt relative to its equity. This means that NWRN has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of NWRN which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at NWRN, take a look at NWRN’s company page on Simply Wall St. I’ve also compiled a list of relevant aspects you should look at:

  1. Valuation: What is NWRN 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 NWRN 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 Newron Pharmaceuticals’s board and the CEO’s back ground.
  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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.