When Will Merrimack Pharmaceuticals Inc (NASDAQ:MACK) Turn A Profit?

Merrimack Pharmaceuticals Inc’s (NASDAQ:MACK): Merrimack Pharmaceuticals, Inc., a biopharmaceutical company, engages in discovering, developing, and commercializing medicines consisting of novel therapeutics paired with diagnostics for the treatment of cancer primarily in the United States. With the latest financial year loss of -US$151.74M and a trailing-twelve month of -US$99.16M, the US$150.60M market-cap alleviates its loss by moving closer towards its target of breakeven. The most pressing concern for investors is MACK’s path to profitability – when will it breakeven? In this article, I will touch on the expectations for MACK’s growth and when analysts expect the company to become profitable.

See our latest analysis for Merrimack Pharmaceuticals

According to the industry analysts covering MACK, breakeven is near. They expect the company to post a final loss in 2016, before turning a profit of US$480.45M in 2017. MACK is therefore projected to breakeven around a couple of months from now! What rate will MACK 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 -83.22%,

NasdaqGM:MACK Past Future Earnings Feb 27th 18
NasdaqGM:MACK Past Future Earnings Feb 27th 18

I’m not going to go through company-specific developments for MACK given that this is a high-level summary, but, 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 low or volatile growth rate in the near future is not unusual, especially if the company is currently in an investment period.

One thing I’d like to point out is that MACK has managed its capital judiciously, with debt making up 44.69% of equity. This means that MACK has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on MACK, so if you are interested in understanding the company at a deeper level, take a look at MACK’s company page on Simply Wall St. I’ve also put together a list of important aspects you should look at:

  1. Historical Track Record: What has MACK’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 Merrimack Pharmaceuticals’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.