Onconova Therapeutics Inc's (NASDAQ:ONTX) Path To Profitability

Onconova Therapeutics Inc's (NASDAQ:ONTX): Onconova Therapeutics, Inc., a clinical-stage biopharmaceutical company, focuses on discovering and developing small molecule drug candidates to treat cancer. The US$21.86M market-cap posted a loss in its most recent financial year of -US$19.67M and a latest trailing-twelve-month loss of -US$23.33M leading to an even wider gap between loss and breakeven. Many investors are wondering the rate at which ONTX will turn a profit, with the big question being “when will the company breakeven?” Below I will provide a high-level summary of the industry analysts’ expectations for ONTX.

ONTX is bordering on breakeven, according to analysts. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$17.72M in 2021. ONTX is therefore projected to breakeven around 3 years from today. What rate will ONTX 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 37.57%, which signals high confidence from analysts. If this rate turns out to be too aggressive, ONTX may become profitable much later than analysts predict.

Given this is a high-level overview, I won’t go into detail the detail of ONTX’s upcoming projects, but, keep in mind that typically 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 I wrap up, there’s one issue worth mentioning. ONTX currently has negative equity on its balance sheet. Accounting methods used to deal with losses accumulated over time can cause this to occur. This is because liabilities are carried forward into the future until it cancels. Oftentimes, losses exist only on paper but other times, it can be a red flag.

Next Steps:

There are key fundamentals of ONTX 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 ONTX, take a look at ONTX’s company page on Simply Wall St. I’ve also put together a list of pertinent factors you should further research:

1. Historical Track Record: What has ONTX'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 Onconova Therapeutics’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.