Breakeven On The Horizon For Fennec Pharmaceuticals Inc. (NASDAQ:FENC)

Fennec Pharmaceuticals Inc. (NASDAQ:FENC) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Fennec Pharmaceuticals Inc., a biopharmaceutical company, develops product candidates for use in the treatment of cancer in the United States. The US$168m market-cap company announced a latest loss of US$18m on 31 December 2020 for its most recent financial year result. The most pressing concern for investors is Fennec 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.

See our latest analysis for Fennec Pharmaceuticals

According to the 2 industry analysts covering Fennec Pharmaceuticals, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$7.2m in 2022. Therefore, the company is expected 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 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 86% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Given this is a high-level overview, we won’t go into details of Fennec Pharmaceuticals' upcoming projects, though, 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. 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 Fennec 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 too many aspects of Fennec Pharmaceuticals to cover in one brief article, but the key fundamentals for the company can all be found in one place – Fennec Pharmaceuticals' company page on Simply Wall St. We've also compiled a list of relevant factors you should look at:

1. Historical Track Record: What has Fennec Pharmaceuticals' 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 Fennec Pharmaceuticals' 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. 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.
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