When Will Paradigm Biopharmaceuticals Limited (ASX:PAR) Turn A Profit?

We feel now is a pretty good time to analyse Paradigm Biopharmaceuticals Limited's (ASX:PAR) business as it appears the company may be on the cusp of a considerable accomplishment. Paradigm Biopharmaceuticals Limited, a biopharmaceutical company, engages in the research and development of therapeutic products for human use in Australia. On 30 June 2020, the AU$674m market-cap company posted a loss of AU$12m for its most recent financial year. Many investors are wondering about the rate at which Paradigm Biopharmaceuticals will turn a profit, with the big question being “when will the company breakeven?” In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

View our latest analysis for Paradigm Biopharmaceuticals

According to the 2 industry analysts covering Paradigm Biopharmaceuticals, the consensus is that breakeven is near. 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 3 years from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 40% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

We're not going to go through company-specific developments for Paradigm Biopharmaceuticals given that this is a high-level summary, however, keep in mind that generally a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 0.03% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Paradigm Biopharmaceuticals, so if you are interested in understanding the company at a deeper level, take a look at Paradigm Biopharmaceuticals' company page on Simply Wall St. We've also put together a list of relevant aspects you should look at:

1. Valuation: What is Paradigm Biopharmaceuticals 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 Paradigm Biopharmaceuticals 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 Paradigm Biopharmaceuticals’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.

If you’re looking to trade Paradigm Biopharmaceuticals, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.