Market Sentiment Around Loss-Making Mendus AB (publ) (STO:IMMU)

Mendus AB (publ) (STO:IMMU) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Mendus AB (publ), a biopharmaceutical company, develops immunotherapies and relapse vaccines for the treatment of cancer. The kr325m market-cap company posted a loss in its most recent financial year of kr139m and a latest trailing-twelve-month loss of kr116m shrinking the gap between loss and breakeven. The most pressing concern for investors is Mendus' path to profitability – when will it 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 Mendus

Mendus is bordering on breakeven, according to the 2 Swedish Biotechs analysts. They expect the company to post a final loss in 2024, before turning a profit of kr385m in 2025. So, the company is predicted to breakeven approximately 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 79% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for Mendus given that this is a high-level summary, but, take into account that typically 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.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 14% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Mendus 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 Mendus, take a look at Mendus' company page on Simply Wall St. We've also compiled a list of important aspects you should further examine:

1. Valuation: What is Mendus 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 Mendus 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 Mendus’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.