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Aurinia Pharmaceuticals Inc’s (TSE:AUP) Shift From Loss To Profit

Casey Hall

Aurinia Pharmaceuticals Inc’s (TSE:AUP): Aurinia Pharmaceuticals Inc., a clinical stage biopharmaceutical company, engages in the research, development, and commercialization of therapeutic drugs for the treatment of autoimmune diseases in Canada, the United States, China, and Switzerland. The US$583.74m market-cap company’s loss lessens since it announced a -US$70.79m bottom-line in the full financial year, compared to the latest trailing-twelve-month loss of -US$34.33m, as it approaches breakeven. The most pressing concern for investors is AUP’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for AUP.

See our latest analysis for Aurinia Pharmaceuticals

AUP 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$36.87m in 2021. AUP is therefore projected to breakeven around a few months from now. What rate will AUP 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 71.13%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

TSX:AUP Past Future Earnings August 9th 18

Underlying developments driving AUP’s growth isn’t the focus of this broad overview, but, keep in mind that typically biotechs, depending on the stage of product development, have irregular periods of cash flow. 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 AUP 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 AUP 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 key fundamentals of AUP which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at AUP, take a look at AUP’s company page on Simply Wall St. I’ve also compiled a list of relevant factors you should look at:

  1. Historical Track Record: What has AUP’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 Aurinia Pharmaceuticals’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.