ESSA Pharma Inc. (NASDAQ:EPIX): Are Analysts Optimistic?

With the business potentially at an important milestone, we thought we'd take a closer look at ESSA Pharma Inc.'s (NASDAQ:EPIX) future prospects. ESSA Pharma Inc., a clinical stage pharmaceutical company, focuses the development of small molecule drugs for the treatment of prostate cancer. The US$70m market-cap company posted a loss in its most recent financial year of US$29m and a latest trailing-twelve-month loss of US$31m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which ESSA Pharma will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

According to the 3 industry analysts covering ESSA Pharma, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2026, before generating positive profits of US$36m in 2027. Therefore, the company is expected to breakeven roughly 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2027? Working backwards from analyst estimates, it turns out that they expect the company to grow 59% year-on-year, on average, 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 ESSA Pharma given that this is a high-level summary, however, take into account that generally 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.

View our latest analysis for ESSA Pharma

Before we wrap up, there’s one aspect worth mentioning. ESSA Pharma currently has no debt on its balance sheet, which is rare for a loss-making 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 ESSA Pharma 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 ESSA Pharma, take a look at ESSA Pharma's company page on Simply Wall St. We've also put together a list of important factors you should further examine:

1. Historical Track Record: What has ESSA 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 ESSA 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.