DiaMedica Therapeutics Inc.'s (NASDAQ:DMAC) Path To Profitability
With the business potentially at an important milestone, we thought we'd take a closer look at DiaMedica Therapeutics Inc.'s (NASDAQ:DMAC) future prospects. DiaMedica Therapeutics Inc., a clinical stage biopharmaceutical company, focuses on improving the lives of people suffering from serious diseases with a focus on acute ischemic stroke. On 31 December 2023, the US$107m market-cap company posted a loss of US$19m for its most recent financial year. Many investors are wondering about the rate at which DiaMedica Therapeutics will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.
View our latest analysis for DiaMedica Therapeutics
Consensus from 3 of the American Biotechs analysts is that DiaMedica Therapeutics is on the verge of breakeven. They expect the company to post a final loss in 2025, before turning a profit of US$32m in 2026. The company is therefore projected to breakeven around 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2026? Working backwards from analyst estimates, it turns out that they expect the company to grow 27% year-on-year, on average, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Underlying developments driving DiaMedica Therapeutics' growth isn’t the focus of this broad overview, however, bear in mind that generally a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing we’d like to point out is that DiaMedica Therapeutics has no debt on its balance sheet, which is rare for a loss-making biotech, which usually has a high level of debt relative to its equity. This means that the company 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 key fundamentals of DiaMedica Therapeutics which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at DiaMedica Therapeutics, take a look at DiaMedica Therapeutics' company page on Simply Wall St. We've also put together a list of key factors you should further research:
Historical Track Record: What has DiaMedica Therapeutics' 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 DiaMedica Therapeutics' board and the CEO’s background.
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.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
