Flexion Therapeutics, Inc.’s (NASDAQ:FLXN): Flexion Therapeutics, Inc., a biopharmaceutical company, focuses on the development and commercialization of anti-inflammatory and analgesic therapies for the treatment of patients with musculoskeletal conditions. The company’s loss has recently broadened since it announced a -US$137.5m loss in the full financial year, compared to the latest trailing-twelve-month loss of -US$179.6m, moving it further away from breakeven. The most pressing concern for investors is FLXN’s path to profitability – when will it breakeven? In this article, I will touch on the expectations for FLXN’s growth and when analysts expect the company to become profitable.
Consensus from the 9 Biotechs analysts is FLXN is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of US$40m in 2021. Therefore, FLXN is expected to breakeven roughly 2 years from today. In order to meet this breakeven date, I calculated the rate at which FLXN must grow year-on-year. It turns out an average annual growth rate of 53% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, FLXN may become profitable much later than analysts predict.
Given this is a high-level overview, I won’t go into details of FLXN’s upcoming projects, however, take into account that by and large biotechs, depending on the stage of product development, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
Before I wrap up, there’s one issue worth mentioning. FLXN currently has a debt-to-equity ratio of 109%. Typically, debt shouldn’t exceed 40% of your equity, and FLXN has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
There are key fundamentals of FLXN which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at FLXN, take a look at FLXN’s company page on Simply Wall St. I’ve also put together a list of important aspects you should look at:
- 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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.