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We feel now is a pretty good time to analyse Aurinia Pharmaceuticals Inc.'s (TSE:AUP) business as it appears the company may be on the cusp of a considerable accomplishment. Aurinia Pharmaceuticals Inc., a clinical stage biopharmaceutical company, develops and commercializes therapies to treat various diseases in the United States and China. The CA$2.6b market-cap company posted a loss in its most recent financial year of US$124m and a latest trailing-twelve-month loss of US$142m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which Aurinia Pharmaceuticals will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Aurinia Pharmaceuticals is bordering on breakeven, according to the 9 Canadian Biotechs analysts. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$61m in 2022. The company is therefore projected to breakeven around 2 years from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 75% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving Aurinia Pharmaceuticals' growth isn’t the focus of this broad overview, though, 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. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up -0.05% 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.
This article is not intended to be a comprehensive analysis on Aurinia Pharmaceuticals, so if you are interested in understanding the company at a deeper level, take a look at Aurinia Pharmaceuticals' company page on Simply Wall St. We've also put together a list of pertinent factors you should further research:
Valuation: What is Aurinia 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 Aurinia Pharmaceuticals is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Aurinia Pharmaceuticals’s board and the CEO’s background.
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.
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. 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.
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