We feel now is a pretty good time to analyse Aurinia Pharmaceuticals Inc.'s (TSE:AUP) business as it appears the company may be on the cusp of a considerable accomplishment. Aurinia Pharmaceuticals Inc., a biopharmaceutical company, develops and commercializes therapies to treat various diseases with unmet medical need in Japan and China. The CA$1.8b market-cap company posted a loss in its most recent financial year of US$103m and a latest trailing-twelve-month loss of US$127m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which Aurinia Pharmaceuticals will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
According to the 9 industry analysts covering Aurinia Pharmaceuticals, the consensus is that breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of US$113m in 2023. The company is therefore projected to breakeven around 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 75% year-on-year, on average, which signals high confidence from analysts. 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 Aurinia Pharmaceuticals given that this is a high-level summary, though, bear in mind that typically 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 Aurinia Pharmaceuticals has no debt on its balance sheet, which is rare for a loss-making 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.
There are key fundamentals of Aurinia Pharmaceuticals which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Aurinia Pharmaceuticals, take a look at Aurinia Pharmaceuticals' company page on Simply Wall St. We've also put together a list of pertinent aspects you should further research:
- Valuation: What is Aurinia Pharmaceuticals 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 Aurinia Pharmaceuticals is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Aurinia Pharmaceuticals’s board and the CEO’s background.
- 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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