Flexion Therapeutics, Inc.’s (NASDAQ:FLXN): Flexion Therapeutics, Inc., a biopharmaceutical company, focuses on the discovery, development, and commercialization of anti-inflammatory and analgesic therapies for the treatment of patients with musculoskeletal conditions. With the latest financial year loss of -US$169.7m and a trailing-twelve month of -US$169.6m, the US$381m market-cap alleviates its loss by moving closer towards its target of breakeven. As path to profitability is the topic on FLXN’s investors mind, I’ve decided to gauge market sentiment. Below I will provide a high-level summary of the industry analysts’ expectations for FLXN.
FLXN is bordering on breakeven, according to the 9 Biotechs analysts. They expect the company to post a final loss in 2021, before turning a profit of US$81m in 2022. FLXN is therefore projected to breakeven around 3 years from today. What rate will FLXN have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 68%, which is extremely buoyant. If this rate turns out to be too aggressive, FLXN may become profitable much later than analysts predict.
Underlying developments driving FLXN’s growth isn’t the focus of this broad overview, however, take into account that typically 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.
Before I wrap up, there’s one issue worth mentioning. FLXN currently has a debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, which in FLXN’s case, it has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.
There are too many aspects of FLXN to cover in one brief article, but the key fundamentals for the company can all be found in one place – FLXN’s company page on Simply Wall St. I’ve also put together a list of important aspects you should further examine:
- Historical Track Record: What has FLXN’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.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Flexion Therapeutics’s board and the CEO’s back ground.
- 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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