Seattle Genetics, Inc. (NASDAQ:SGEN): When Will It Breakeven?

Seattle Genetics, Inc.'s (NASDAQ:SGEN): Seattle Genetics, Inc., a biotechnology company, develops and commercializes therapies for the treatment of cancer in the United States and internationally. The US$19b market-cap posted a loss in its most recent financial year of -US$222.7m and a latest trailing-twelve-month loss of -US$304.3m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is SGEN’s path to profitability – when will it breakeven? In this article, I will touch on the expectations for SGEN’s growth and when analysts expect the company to become profitable.

See our latest analysis for Seattle Genetics

SGEN is bordering on breakeven, according to the 19 Biotechs analysts. They expect the company to post a final loss in 2020, before turning a profit of US$140m in 2021. Therefore, SGEN is expected to breakeven roughly a couple of months from now! In order to meet this breakeven date, I calculated the rate at which SGEN must grow year-on-year. It turns out an average annual growth rate of 61% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, SGEN may become profitable much later than analysts predict.

Given this is a high-level overview, I won’t go into details of SGEN’s upcoming projects, but, 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 I’d like to point out is that SGEN has no debt on its balance sheet, which is rare for a loss-making biotech, which usually has a high level of debt relative to its equity. This means that SGEN has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of SGEN to cover in one brief article, but the key fundamentals for the company can all be found in one place – SGEN’s company page on Simply Wall St. I’ve also compiled a list of important aspects you should further examine:

1. Valuation: What is SGEN 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 SGEN 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 Seattle Genetics’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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

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