Gemphire Therapeutics Inc.'s (NASDAQ:GEMP) Path To Profitability
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Gemphire Therapeutics Inc.'s (NASDAQ:GEMP): Gemphire Therapeutics Inc., a clinical-stage biopharmaceutical company, focuses on developing and commercializing therapies for the treatment of dyslipidemia and nonalcoholic fatty liver disease (NAFLD/NASH). The US$14m market-cap company’s loss lessens since it announced a -US$23.6m bottom-line in the full financial year, compared to the latest trailing-twelve-month loss of -US$20.2m, as it approaches breakeven. Many investors are wondering the rate at which GEMP will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for GEMP’s growth and when analysts expect the company to become profitable.
View our latest analysis for Gemphire Therapeutics
According to the industry analysts covering GEMP, breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of US$55m in 2021. So, GEMP is predicted to breakeven approximately 2 years from now. How fast will GEMP have to grow each year in order to reach the breakeven point by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 69% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, GEMP may become profitable much later than analysts predict.
Underlying developments driving GEMP’s growth isn’t the focus of this broad overview, though, take into account that typically a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
Before I wrap up, there’s one aspect worth mentioning. GEMP currently 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. This means that GEMP 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:
This article is not intended to be a comprehensive analysis on GEMP, so if you are interested in understanding the company at a deeper level, take a look at GEMP’s company page on Simply Wall St. I’ve also compiled a list of essential aspects you should further research:
Historical Track Record: What has GEMP'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 Gemphire Therapeutics’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.
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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.
