Kala Pharmaceuticals, Inc.’s (NASDAQ:KALA): Kala Pharmaceuticals, Inc., a biopharmaceutical company, focuses on the development and commercialization of therapies using its proprietary nanoparticle-based Mucus Penetrating Particles (MPP) technology for the treatment of eye diseases. The company’s loss has recently broadened since it announced a -US$42.2m loss in the full financial year, compared to the latest trailing-twelve-month loss of -US$52.8m, moving it further away from breakeven. The most pressing concern for investors is KALA’s path to profitability – when will it breakeven? I’ve put together a brief outline of industry analyst expectations for KALA, its year of breakeven and its implied growth rate.
Consensus from the 5 Pharmaceuticals analysts is KALA is on the verge of breakeven. They anticipate the company to incur a final loss in 2020, before generating positive profits of US$86m in 2021. So, KALA is predicted to breakeven approximately 2 years from now. How fast will KALA 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 61% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
Given this is a high-level overview, I won’t go into details of KALA’s upcoming projects, but, keep in mind that typically pharmaceuticals, 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 KALA has managed its capital prudently, with debt making up 36% of equity. This means that KALA 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 KALA to cover in one brief article, but the key fundamentals for the company can all be found in one place – KALA’s company page on Simply Wall St. I’ve also compiled a list of important factors you should further examine:
- Historical Track Record: What has KALA’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 Kala 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 email@example.com.