Momenta Pharmaceuticals Inc’s (NASDAQ:MNTA): Momenta Pharmaceuticals, Inc., a biotechnology company, focuses on developing generic versions of complex drugs, biosimilars, and novel therapeutics for autoimmune diseases in the United States. The US$1.61B market-cap company announced a latest loss of -US$88.10M on 31 December 2017 for its most recent financial year result. The most pressing concern for investors is MNTA’s path to profitability – when will it breakeven? I’ve put together a brief outline of industry analyst expectations for MNTA, its year of breakeven and its implied growth rate.
According to the industry analysts covering MNTA, breakeven is near. They expect the company to post a final loss in 2019, before turning a profit of US$185.00K in 2020. MNTA is therefore projected to breakeven around 2 years from now. In order to meet this breakeven date, I calculated the rate at which MNTA must grow year-on-year. It turns out an average annual growth rate of 58.18% is expected, which is rather optimistic! If this rate turns out to be too aggressive, MNTA may become profitable much later than analysts predict.
Given this is a high-level overview, I won’t go into detail the detail of MNTA’s upcoming projects, however, bear in mind that by and large biotechs, depending on the stage of product development, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
Before I wrap up, there’s one aspect worth mentioning. MNTA currently has no debt on its balance sheet, which is rare for a loss-making biotech, which typically has high debt relative to its equity. MNTA currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
This article is not intended to be a comprehensive analysis on MNTA, so if you are interested in understanding the company at a deeper level, take a look at MNTA’s company page on Simply Wall St. I’ve also compiled a list of important aspects you should further research:
- Historical Track Record: What has MNTA’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.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Momenta Pharmaceuticals’s board and the CEO’s back ground.
- 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.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.