Catalyst Pharmaceuticals Inc’s (NASDAQ:CPRX): Catalyst Pharmaceuticals, Inc., a biopharmaceutical company, focuses on developing and commercializing therapies for people with rare debilitating, chronic neuromuscular, and neurological diseases. The US$318.1m market-cap posted a loss in its most recent financial year of -US$18.4m and a latest trailing-twelve-month loss of -US$21.2m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is CPRX’s path to profitability – when will it breakeven? In this article, I will touch on the expectations for CPRX’s growth and when analysts expect the company to become profitable.
Expectation from Biotechs analysts is CPRX is on the verge of breakeven. They expect the company to post a final loss in 2019, before turning a profit of US$30.9m in 2020. So, CPRX is predicted to breakeven approximately a couple of months from now! What rate will CPRX 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 76.1%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving CPRX’s growth isn’t the focus of this broad overview, but, take into account 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.
One thing I’d like to point out is that CPRX 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. CPRX 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 CPRX, so if you are interested in understanding the company at a deeper level, take a look at CPRX’s company page on Simply Wall St. I’ve also put together a list of essential factors you should further research:
- Historical Track Record: What has CPRX’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 Catalyst 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 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 firstname.lastname@example.org.