Lipum AB (publ) (STO:LIPUM): When Will It Breakeven?

With the business potentially at an important milestone, we thought we'd take a closer look at Lipum AB (publ)'s (STO:LIPUM) future prospects. Lipum AB (publ), a biopharmaceutical company, engages in the discovery and development of treatment for chronic inflammatory diseases in Sweden. The company’s loss has recently broadened since it announced a kr38m loss in the full financial year, compared to the latest trailing-twelve-month loss of kr41m, moving it further away from breakeven. Many investors are wondering about the rate at which Lipum 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 Lipum

According to some industry analysts covering Lipum, breakeven is near. They expect the company to post a final loss in 2024, before turning a profit of kr23m in 2025. The company is therefore projected to breakeven just over a year from today. 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 64% is expected, which signals high confidence from analysts. 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 Lipum given that this is a high-level summary, however, take into account 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. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital prudently, with debt making up 12% 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 too many aspects of Lipum to cover in one brief article, but the key fundamentals for the company can all be found in one place – Lipum's company page on Simply Wall St. We've also compiled a list of pertinent aspects you should look at:

1. Historical Track Record: What has Lipum'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 Lipum'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.