Analysts Expect Breakeven For ERYTECH Pharma S.A. (EPA:ERYP) Before Long

We feel now is a pretty good time to analyse ERYTECH Pharma S.A.'s (EPA:ERYP) business as it appears the company may be on the cusp of a considerable accomplishment. ERYTECH Pharma S.A., a clinical-stage biopharmaceutical company, develops red blood cell-based therapeutics for cancer and orphan diseases in France and the United States. On 31 December 2020, the €132m market-cap company posted a loss of €73m for its most recent financial year. As path to profitability is the topic on ERYTECH Pharma's 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.

Check out our latest analysis for ERYTECH Pharma

According to the 4 industry analysts covering ERYTECH Pharma, the consensus is that breakeven is near. They expect the company to post a final loss in 2022, before turning a profit of €3.6m in 2023. The company is therefore projected to breakeven around 2 years from today. 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 57%, which is extremely buoyant. 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 ERYTECH Pharma given that this is a high-level summary, however, 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 that a high growth rate is not unusual, especially if the company is currently in an investment period.

One thing we would like to bring into light with ERYTECH Pharma is its relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in ERYTECH Pharma's case is 63%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

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

1. Valuation: What is ERYTECH Pharma 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 ERYTECH Pharma 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 ERYTECH Pharma’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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