Santhera Pharmaceuticals Holding AG (VTX:SANN): Is Breakeven Near?

Santhera Pharmaceuticals Holding AG's (SWX:SANN): Santhera Pharmaceuticals Holding AG, a specialty pharmaceutical company, engages in the development and commercialization of products for the treatment of mitochondrial and neuromuscular diseases in the areas of various orphan and niche indications in the European Union and internationally. With the latest financial year loss of -CHF35.41M and a trailing-twelve month of -CHF40.16M, the CHF142.55M market-cap amplifies its loss by moving further away from its breakeven target. As path to profitability is the topic on SANN’s investors mind, I’ve decided to gauge market sentiment. Below I will provide a high-level summary of the industry analysts’ expectations for SANN.

According to the industry analysts covering SANN, breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of CHF53.00M in 2021. SANN is therefore projected to breakeven around 3 years from now. In order to meet this breakeven date, I calculated the rate at which SANN must grow year-on-year. It turns out an average annual growth rate of 58.05% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, SANN may become profitable much later than analysts predict.

I’m not going to go through company-specific developments for SANN given that this is a high-level summary, but, take into account that by and large 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.

Before I wrap up, there’s one issue worth mentioning. SANN currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in SANN’s case is 94.98%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of SANN which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at SANN, take a look at SANN’s company page on Simply Wall St. I’ve also compiled a list of key aspects you should further research:

1. Valuation: What is SANN 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 SANN 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 Santhera Pharmaceuticals Holding’s board and the CEO’s back ground.
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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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article 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.