Initiator Pharma A/S (STO:INIT): When Will It Breakeven?

We feel now is a pretty good time to analyse Initiator Pharma A/S' (STO:INIT) business as it appears the company may be on the cusp of a considerable accomplishment. Initiator Pharma A/S, a clinical stage life science company, develops drugs targeting unmet medical needs within the central and peripheral nervous system. The kr419m market-cap company posted a loss in its most recent financial year of kr.23m and a latest trailing-twelve-month loss of kr.12m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which Initiator Pharma will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

View our latest analysis for Initiator Pharma

Initiator Pharma 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 kr.35m in 2025. The company is therefore projected to breakeven just over a year 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 33% year-on-year, on average, 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 Initiator Pharma given that this is a high-level summary, though, keep in mind that by and large biotechs, depending on the stage of product development, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

One thing we’d like to point out is that Initiator Pharma has no debt on its balance sheet, which is rare for a loss-making 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 too many aspects of Initiator Pharma to cover in one brief article, but the key fundamentals for the company can all be found in one place – Initiator Pharma's company page on Simply Wall St. We've also put together a list of essential aspects you should look at:

1. Historical Track Record: What has Initiator 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 Initiator 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.