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ArQule Inc (NASDAQ:ARQL) Is Expected To Breakeven

ArQule Inc’s (NASDAQ:ARQL): ArQule, Inc., a biopharmaceutical company, researches and develops therapeutics for the treatment of cancer and rare diseases in the United States. The US$548.4m market-cap company’s loss lessens since it announced a -US$29.2m bottom-line in the full financial year, compared to the latest trailing-twelve-month loss of -US$15.8m, as it approaches breakeven. As path to profitability is the topic on ARQL’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for ARQL’s growth and when analysts expect the company to become profitable.

View our latest analysis for ArQule

According to the industry analysts covering ARQL, breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$22.2m in 2021. Therefore, ARQL is expected to breakeven roughly a few months from now. In order to meet this breakeven date, I calculated the rate at which ARQL must grow year-on-year. It turns out an average annual growth rate of 24.3% is expected, which is extremely buoyant. If this rate turns out to be too aggressive, ARQL may become profitable much later than analysts predict.

NasdaqGM:ARQL Past Future Earnings September 19th 18
NasdaqGM:ARQL Past Future Earnings September 19th 18

Underlying developments driving ARQL’s growth isn’t the focus of this broad overview, however, keep in mind that generally a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

One thing I would like to bring into light with ARQL is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in ARQL’s case is 53.6%. Note that a higher debt obligation increases the risk around investing in the loss-making company.

Next Steps:

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

  1. Historical Track Record: What has ARQL’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 ArQule’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.

To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.

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