We Might See A Profit From Aurinia Pharmaceuticals Inc. (NASDAQ:AUPH) Soon

We feel now is a pretty good time to analyse Aurinia Pharmaceuticals Inc.'s (NASDAQ:AUPH) business as it appears the company may be on the cusp of a considerable accomplishment. Aurinia Pharmaceuticals Inc., a commercial-stage biopharmaceutical company, focuses on developing and commercializing therapies to treat various diseases with unmet medical need in the United States. The US$1.3b market-cap company posted a loss in its most recent financial year of US$78m and a latest trailing-twelve-month loss of US$23m shrinking the gap between loss and breakeven. The most pressing concern for investors is Aurinia Pharmaceuticals' path to profitability – when will it breakeven? 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 Aurinia Pharmaceuticals

According to the 7 industry analysts covering Aurinia Pharmaceuticals, the consensus is that breakeven is near. They expect the company to post a final loss in 2023, before turning a profit of US$4.5m in 2024. So, the company is predicted to breakeven approximately 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 52%, which is extremely buoyant. 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 Aurinia Pharmaceuticals given that this is a high-level summary, however, take into account that generally biotechs, depending on the stage of product development, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we’d like to point out is that Aurinia Pharmaceuticals has no debt on its balance sheet, which is quite unusual for a cash-burning biotech, which typically has high 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 Aurinia Pharmaceuticals 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 Aurinia Pharmaceuticals, take a look at Aurinia Pharmaceuticals' company page on Simply Wall St. We've also compiled a list of relevant aspects you should look at:

1. Valuation: What is Aurinia Pharmaceuticals 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 Aurinia Pharmaceuticals 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 Aurinia Pharmaceuticals’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.