When Will Kazia Therapeutics Limited (ASX:KZA) Turn A Profit?

Kazia Therapeutics Limited (ASX:KZA) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Kazia Therapeutics Limited, an oncology-focused biotechnology company, develops anti-cancer drugs. The AU$184m market-cap company posted a loss in its most recent financial year of AU$12m and a latest trailing-twelve-month loss of AU$13m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on Kazia Therapeutics' investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Kazia Therapeutics

Consensus from 3 of the Australian Biotechs analysts is that Kazia Therapeutics is on the verge of breakeven. They anticipate the company to incur a final loss in 2022, before generating positive profits of AU$32m in 2023. So, the company is predicted to breakeven approximately 2 years from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 97%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Kazia Therapeutics' growth isn’t the focus of this broad overview, however, take into account that generally biotechs, 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.

One thing we’d like to point out is that Kazia Therapeutics has no debt on its balance sheet, which is rare for a loss-making biotech, which usually has a high level of 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 Kazia Therapeutics to cover in one brief article, but the key fundamentals for the company can all be found in one place – Kazia Therapeutics' company page on Simply Wall St. We've also compiled a list of pertinent factors you should look at:

1. Valuation: What is Kazia Therapeutics 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 Kazia Therapeutics 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 Kazia Therapeutics’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. 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.
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