Market Sentiment Around Loss-Making SynAct Pharma AB (STO:SYNACT)

SynAct Pharma AB (STO:SYNACT) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. SynAct Pharma AB, a clinical stage biotechnology company, researches and develops medicines for the treatment of inflammatory diseases in Sweden. The kr438m market-cap company’s loss lessened since it announced a kr216m loss in the full financial year, compared to the latest trailing-twelve-month loss of kr155m, as it approaches breakeven. As path to profitability is the topic on SynAct Pharma's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for SynAct Pharma

According to some industry analysts covering SynAct Pharma, breakeven is near. They anticipate the company to incur a final loss in 2025, before generating positive profits of kr124m in 2026. So, the company is predicted to breakeven just over a year 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 99%, which is rather optimistic! 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 SynAct Pharma given that this is a high-level summary, though, bear in mind that generally biotechs, depending on the stage of product development, have irregular periods of cash flow. 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. SynAct Pharma currently 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. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.

Next Steps:

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

1. Valuation: What is SynAct Pharma 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 SynAct Pharma 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 SynAct 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.