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Catabasis Pharmaceuticals, Inc. (NASDAQ:CATB): When Will It Breakeven?

Simply Wall St

Catabasis Pharmaceuticals, Inc.'s (NASDAQ:CATB): Catabasis Pharmaceuticals, Inc., a clinical-stage biopharmaceutical company, focuses on the discovery, development, and commercialization of therapeutics based on safely metabolized and rationally targeted (SMART) linker drug discovery platform in the United States. The US$54m market-cap company’s loss lessens since it announced a -US$25.9m bottom-line in the full financial year, compared to the latest trailing-twelve-month loss of -US$24.9m, as it approaches breakeven. As path to profitability is the topic on CATB’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for CATB’s growth and when analysts expect the company to become profitable.

Check out our latest analysis for Catabasis Pharmaceuticals

According to the 2 industry analysts covering CATB, the consensus is breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$77m in 2022. CATB is therefore projected to breakeven around 3 years from now. How fast will CATB have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 66% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

NasdaqGM:CATB Past and Future Earnings, October 19th 2019

I’m not going to go through company-specific developments for CATB given that this is a high-level summary, however, bear in mind that by and large biotechs, depending on the stage of product development, have irregular periods of cash flow. 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. CATB has managed its capital judiciously, with debt making up -0.8% of equity. This means that CATB has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

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

  1. Historical Track Record: What has CATB'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 Catabasis 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.