When Will Epigenomics AG (ETR:ECX) Breakeven?

We feel now is a pretty good time to analyse Epigenomics AG's (ETR:ECX) business as it appears the company may be on the cusp of a considerable accomplishment. Epigenomics AG, a cancer molecular diagnostics company, develops and commercializes blood-based diagnostic tests across multiple cancer indications with high medical needs in Europe, North America, Asia, and internationally. The €15m market-cap company posted a loss in its most recent financial year of €17m and a latest trailing-twelve-month loss of €16m shrinking the gap between loss and breakeven. As path to profitability is the topic on Epigenomics' investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Epigenomics

According to the 3 industry analysts covering Epigenomics, the consensus is that breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of €4.5m in 2023. Therefore, the company is expected to breakeven roughly 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 42% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of Epigenomics' upcoming projects, though, 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. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we’d like to point out is that Epigenomics has no debt on its balance sheet, which is quite unusual for a cash-burning biotech, which usually has a high level of debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

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

1. Valuation: What is Epigenomics 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 Epigenomics 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 Epigenomics’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.

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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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