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Calithera Biosciences Inc’s (NASDAQ:CALA): Calithera Biosciences, Inc., a clinical-stage bio-pharmaceutical company, focuses on the discovery and development of small molecule drugs directed against tumor metabolism and tumor immunology targets for the treatment of cancer in the United States. On 31 December 2017, the US$236.57M market-cap posted a loss of -US$27.83M for its most recent financial year. The most pressing concern for investors is CALA’s path to profitability – when will it breakeven? I’ve put together a brief outline of industry analyst expectations for CALA, its year of breakeven and its implied growth rate.
According to the industry analysts covering CALA, breakeven is near. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$92.60M in 2021. Therefore, CALA is expected to breakeven roughly 3 years from today. How fast will CALA have to grow each year in order to reach the breakeven point by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 44.70% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, CALA may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for CALA given that this is a high-level summary, though, take into account 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’d like to point out is that CALA has no debt on its balance sheet, which is quite unusual for a cash-burning biotech, which usually has a high level of debt relative to its equity. CALA 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 CALA, so if you are interested in understanding the company at a deeper level, take a look at CALA’s company page on Simply Wall St. I’ve also put together a list of relevant factors you should further examine:
Valuation: What is CALA 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 CALA 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 Calithera Biosciences’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.