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$49.94M market-cap posted a loss in its most recent financial year of -US$27.36M and a latest trailing-twelve-month loss of -US$27.14M shrinking the gap between loss and breakeven. The most pressing concern for investors is CATB’s path to profitability – when will it breakeven? I’ve put together a brief outline of industry analyst expectations for CATB, its year of breakeven and its implied growth rate.
According to the industry analysts covering CATB, breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of US$19.93M in 2022. Therefore, CATB is expected to breakeven roughly 4 years from today. 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 11.10% year-on-year, on average, which seems realistic. Should the business grow at a slower rate, it will become profitable at a later date than expected.
I’m not going to go through company-specific developments for CATB given that this is a high-level summary, though, bear in mind that by and large a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. This means a double-digit growth rate is not unusual, especially if the company is currently in an investment period.
Before I wrap up, there’s one aspect worth mentioning. CATB has managed its capital judiciously, with debt making up 12.81% 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.
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 pertinent aspects you should further research:
- 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.
- 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.
- 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.