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We feel now is a pretty good time to analyse Aurinia Pharmaceuticals Inc.'s (TSE:AUP) business as it appears the company may be on the cusp of a considerable accomplishment. Aurinia Pharmaceuticals Inc., a biopharmaceutical company, develops and commercializes therapies to treat various diseases with unmet medical need in Japan and China. The CA$2.0b market-cap company announced a latest loss of US$103m on 31 December 2020 for its most recent financial year result. The most pressing concern for investors is Aurinia Pharmaceuticals' path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Aurinia Pharmaceuticals is bordering on breakeven, according to the 9 Canadian Biotechs analysts. They expect the company to post a final loss in 2022, before turning a profit of US$133m in 2023. 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 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 62% 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 Aurinia Pharmaceuticals' growth isn’t the focus of this broad overview, but, bear in mind that typically 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 Aurinia Pharmaceuticals has no debt on its balance sheet, which is quite unusual for a cash-burning biotech, which typically has high debt relative to its equity. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
There are key fundamentals of Aurinia Pharmaceuticals 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 Aurinia Pharmaceuticals, take a look at Aurinia Pharmaceuticals' company page on Simply Wall St. We've also compiled a list of essential aspects you should look at:
Valuation: What is Aurinia Pharmaceuticals 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 Aurinia Pharmaceuticals 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 Aurinia Pharmaceuticals’s 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.
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. 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.
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