Loss-Making Sernova Biotherapeutics Inc (TSE:SVA) Expected To Breakeven In The Medium-Term

Sernova Biotherapeutics Inc (TSE:SVA) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Sernova Biotherapeutics Inc operates as a clinical-stage biotechnology company in Canada. With the latest financial year loss of CA$32m and a trailing-twelve-month loss of CA$19m, the CA$55m market-cap company alleviated its loss by moving closer towards its target of breakeven. As path to profitability is the topic on Sernova Biotherapeutics' investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

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According to the 4 industry analysts covering Sernova Biotherapeutics, the consensus is that breakeven is near. They expect the company to post a final loss in 2026, before turning a profit of CA$11m in 2027. So, the company is predicted to breakeven approximately 2 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 55% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Sernova Biotherapeutics' growth isn’t the focus of this broad overview, but, take into account 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.

View our latest analysis for Sernova Biotherapeutics

Before we wrap up, there’s one issue worth mentioning. Sernova Biotherapeutics currently has negative equity on its balance sheet. This can sometimes arise from accounting methods used to deal with accumulated losses from prior years, which are viewed as liabilities carried forward until it cancels out in the future. These losses tend to occur only on paper, however, in other cases it can be forewarning.

Next Steps:

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

1. Historical Track Record: What has Sernova Biotherapeutics' performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Sernova Biotherapeutics' 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.