When Will Insmed Incorporated (NASDAQ:INSM) Become Profitable?

Insmed Incorporated's (NASDAQ:INSM): Insmed Incorporated, a biopharmaceutical company, focuses on the development and commercialization of therapies for patients with rare diseases. The US$2.05b market-cap posted a loss in its most recent financial year of -US$192.65m and a latest trailing-twelve-month loss of -US$223.76m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is INSM’s path to profitability – when will it breakeven? I’ve put together a brief outline of industry analyst expectations for INSM, its year of breakeven and its implied growth rate.

Expectation from Biotechs analysts is INSM is on the verge of breakeven. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$118.10m in 2021. Therefore, INSM is expected to breakeven roughly a couple of months from now! What rate will INSM 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 64.36%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving INSM’s growth isn’t the focus of this broad overview, though, keep in mind 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 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. INSM currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in INSM’s case is 69.61%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

There are too many aspects of INSM to cover in one brief article, but the key fundamentals for the company can all be found in one place – INSM’s company page on Simply Wall St. I’ve also compiled a list of key aspects you should look at:

1. Historical Track Record: What has INSM'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 Insmed’s board and the CEO’s back ground.
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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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article 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.