Active Biotech AB (publ) (STO:ACTI): When Will It Breakeven?

With the business potentially at an important milestone, we thought we'd take a closer look at Active Biotech AB (publ)'s (STO:ACTI) future prospects. Active Biotech AB (publ), a biotechnology company, engages in the research, development, and production of pharmaceutical products in Sweden. The kr271m market-cap company posted a loss in its most recent financial year of kr39m and a latest trailing-twelve-month loss of kr40m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is Active Biotech's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

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Active Biotech is bordering on breakeven, according to some Swedish Biotechs analysts. They anticipate the company to incur a final loss in 2026, before generating positive profits of kr114m in 2027. The company is therefore projected to breakeven around 2 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 94% is expected, 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 Active Biotech's upcoming projects, however, keep in mind 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, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

View our latest analysis for Active Biotech

One thing we’d like to point out is that Active Biotech 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 Active Biotech 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 Active Biotech, take a look at Active Biotech's company page on Simply Wall St. We've also compiled a list of important factors you should further examine:

1. Historical Track Record: What has Active Biotech'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 Active Biotech'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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.