Loss-Making Advicenne S.A. (EPA:ADVIC) Set To Breakeven

With the business potentially at an important milestone, we thought we'd take a closer look at Advicenne S.A.'s (EPA:ADVIC) future prospects. Advicenne S.A., a late-stage biopharmaceutical company, develops pediatric therapeutics for the treatment of orphan renal diseases and niche neurology indications. With the latest financial year loss of €14m and a trailing-twelve-month loss of €15m, the €111m market-cap company amplified its loss by moving further away from its breakeven target. The most pressing concern for investors is Advicenne's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Advicenne

According to some industry analysts covering Advicenne, breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of €5.3m in 2021. So, the company is predicted to breakeven approximately 12 months from now or less. How fast will the company have to grow to reach the consensus forecasts that anticipate breakeven by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 100% year-on-year, on average, which is rather optimistic! 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 Advicenne given that this is a high-level summary, but, take into account that by and large pharmaceuticals, 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.

Before we wrap up, there’s one issue worth mentioning. Advicenne currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Advicenne's case is 84%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of Advicenne to cover in one brief article, but the key fundamentals for the company can all be found in one place – Advicenne's company page on Simply Wall St. We've also compiled a list of important factors you should further examine:

1. Valuation: What is Advicenne 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 Advicenne 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 Advicenne’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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