Loss-Making Dancann Pharma A/S (NGM:DANCAN) Expected To Breakeven In The Medium-Term

Dancann Pharma A/S (NGM:DANCAN) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. DanCann Pharma A/S, a biopharmaceutical company, focuses on discovering, developing, manufacturing, and commercializing cannabinoid therapeutics in a range of disease areas. The kr.30m market-cap company announced a latest loss of kr.16m on 31 December 2022 for its most recent financial year result. Many investors are wondering about the rate at which Dancann Pharma will turn a profit, with the big question being “when will the company breakeven?” 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 Dancann Pharma

Expectations from some of the Swedish Pharmaceuticals analysts is that Dancann Pharma is on the verge of breakeven. They expect the company to post a final loss in 2024, before turning a profit of kr.1.0m in 2025. Therefore, the company is expected to breakeven roughly 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 59%, 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 Dancann Pharma given that this is a high-level summary, though, keep in mind that by and large a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

One thing we’d like to point out is that Dancann Pharma has no debt on its balance sheet, which is quite unusual for a cash-burning pharma, which typically has high 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:

This article is not intended to be a comprehensive analysis on Dancann Pharma, so if you are interested in understanding the company at a deeper level, take a look at Dancann Pharma's company page on Simply Wall St. We've also put together a list of relevant aspects you should further examine:

1. Historical Track Record: What has Dancann Pharma's 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 Dancann 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. 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.