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Breakeven On The Horizon For Newron Pharmaceuticals S.p.A. (VTX:NWRN)

Simply Wall St

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Newron Pharmaceuticals S.p.A.'s (VTX:NWRN): Newron Pharmaceuticals S.p.A., a clinical stage biopharmaceutical company, focuses on the research and development, manufacture, and distribution of therapies for the treatment of central and peripheral nervous system in Italy and internationally. On 31 December 2018, the CHF111m market-cap posted a loss of -€15.0m for its most recent financial year. The most pressing concern for investors is NWRN’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for NWRN.

See our latest analysis for Newron Pharmaceuticals

NWRN is bordering on breakeven, according to the 5 Pharmaceuticals analysts. They expect the company to post a final loss in 2020, before turning a profit of €94m in 2021. So, NWRN is predicted to breakeven approximately 2 years from today. In order to meet this breakeven date, I calculated the rate at which NWRN must grow year-on-year. It turns out an average annual growth rate of 65% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

SWX:NWRN Past and Future Earnings, June 18th 2019

Given this is a high-level overview, I won’t go into details of NWRN’s upcoming projects, however, take into account that typically a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before I wrap up, there’s one aspect worth mentioning. NWRN currently has no debt on its balance sheet, which is quite unusual for a cash-burning pharma, which usually has a high level of debt relative to its equity. This means that NWRN 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 NWRN to cover in one brief article, but the key fundamentals for the company can all be found in one place – NWRN’s company page on Simply Wall St. I’ve also put together a list of key aspects you should look at:

  1. Valuation: What is NWRN 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 NWRN 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 Newron 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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. Thank you for reading.