Selecta Biosciences Inc’s (NASDAQ:SELB) Shift From Loss To Profit

Selecta Biosciences Inc’s (NASDAQ:SELB): Selecta Biosciences, Inc., a clinical-stage biopharmaceutical company, researches and develops nanoparticle immunomodulatory drugs for the treatment and prevention of human diseases. The company’s loss has recently broadened since it announced a -US$65.32m loss in the full financial year, compared to the latest trailing-twelve-month loss of -US$66.07m, moving it further away from breakeven. The most pressing concern for investors is SELB’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for SELB.

Check out our latest analysis for Selecta Biosciences

SELB is bordering on breakeven, according to Biotechs analysts. They expect the company to post a final loss in 2020, before turning a profit of US$122.83m in 2021. Therefore, SELB is expected to breakeven roughly a few months from now. What rate will SELB 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 68.68%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

NasdaqGM:SELB Past Future Earnings July 4th 18
NasdaqGM:SELB Past Future Earnings July 4th 18

Underlying developments driving SELB’s growth isn’t the focus of this broad overview, but, take into account that typically a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. 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. SELB currently has a relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in SELB’s case is 50.81%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on SELB, so if you are interested in understanding the company at a deeper level, take a look at SELB’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 SELB’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 Selecta Biosciences’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.