Market Sentiment Around Loss-Making La Jolla Pharmaceutical Company (NASDAQ:LJPC)

We feel now is a pretty good time to analyse La Jolla Pharmaceutical Company's (NASDAQ:LJPC) business as it appears the company may be on the cusp of a considerable accomplishment. La Jolla Pharmaceutical Company, a biopharmaceutical company, focuses on the discovery, development, and commercialization of therapeutics for life-threatening diseases. The US$195m market-cap company’s loss lessened since it announced a US$117m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$61m, as it approaches breakeven. As path to profitability is the topic on La Jolla Pharmaceutical's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

View our latest analysis for La Jolla Pharmaceutical

La Jolla Pharmaceutical is bordering on breakeven, according to the 3 American Biotechs analysts. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$23m in 2023. Therefore, the company is expected to breakeven roughly 2 years from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 61%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving La Jolla Pharmaceutical's growth isn’t the focus of this broad overview, but, take into account that generally biotechs, depending on the stage of product development, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one issue worth mentioning. La Jolla Pharmaceutical currently has negative equity on its balance sheet. This can sometimes arise from accounting methods used to deal with accumulated losses from prior years, which are viewed as liabilities carried forward until it cancels out in the future. These losses tend to occur only on paper, however, in other cases it can be forewarning.

Next Steps:

There are key fundamentals of La Jolla Pharmaceutical 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 La Jolla Pharmaceutical, take a look at La Jolla Pharmaceutical's company page on Simply Wall St. We've also compiled a list of essential factors you should look at:

1. Valuation: What is La Jolla Pharmaceutical worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether La Jolla Pharmaceutical is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on La Jolla Pharmaceutical’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. 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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