When Will Madrigal Pharmaceuticals, Inc. (NASDAQ:MDGL) Breakeven?

We feel now is a pretty good time to analyse Madrigal Pharmaceuticals, Inc.'s (NASDAQ:MDGL) business as it appears the company may be on the cusp of a considerable accomplishment. Madrigal Pharmaceuticals, Inc., a clinical-stage biopharmaceutical company, focuses on the development of therapeutics for the treatment of non-alcoholic steatohepatitis (NASH) in the United States. The company’s loss has recently broadened since it announced a US$374m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$519m, moving it further away from breakeven. Many investors are wondering about the rate at which Madrigal Pharmaceuticals will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Madrigal Pharmaceuticals

Consensus from 16 of the American Biotechs analysts is that Madrigal Pharmaceuticals is on the verge of breakeven. They expect the company to post a final loss in 2025, before turning a profit of US$126m in 2026. Therefore, the company is expected to breakeven roughly 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2026? Working backwards from analyst estimates, it turns out that they expect the company to grow 73% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of Madrigal Pharmaceuticals' upcoming projects, however, keep in mind that by and large 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.

One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 15% of equity. This means that it 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 Madrigal Pharmaceuticals, so if you are interested in understanding the company at a deeper level, take a look at Madrigal Pharmaceuticals' company page on Simply Wall St. We've also compiled a list of key factors you should look at:

1. Valuation: What is Madrigal Pharmaceuticals 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 Madrigal Pharmaceuticals 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 Madrigal Pharmaceuticals’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. 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. Simply Wall St has no position in any stocks mentioned.