Loss-Making Rakovina Therapeutics Inc. (CVE:RKV) Expected To Breakeven In The Medium-Term

With the business potentially at an important milestone, we thought we'd take a closer look at Rakovina Therapeutics Inc.'s (CVE:RKV) future prospects. Rakovina Therapeutics Inc., a biopharmaceutical research company, engages in the research and development of cancer treatments based on novel series of small-molecule DNA-damage response targets. With the latest financial year loss of CA$4.1m and a trailing-twelve-month loss of CA$7.6m, the CA$9.3m market-cap company amplified its loss by moving further away from its breakeven target. Many investors are wondering about the rate at which Rakovina Therapeutics 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.

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Rakovina Therapeutics is bordering on breakeven, according to some Canadian Biotechs analysts. They expect the company to post a final loss in 2025, before turning a profit of CA$38m in 2026. So, the company is predicted to breakeven just over a year 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 18%, which is relatively reasonable. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Rakovina Therapeutics' growth isn’t the focus of this broad overview, but, bear 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, a double-digit growth rate is not abnormal as the company is beginning to reap the benefits of earlier investments.

Check out our latest analysis for Rakovina Therapeutics

One thing we would like to bring into light with Rakovina Therapeutics is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Rakovina Therapeutics' case is 79%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Rakovina Therapeutics 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 Rakovina Therapeutics, take a look at Rakovina Therapeutics' company page on Simply Wall St. We've also put together a list of essential aspects you should further research:

1. Historical Track Record: What has Rakovina Therapeutics' 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 Rakovina Therapeutics' 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.