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With the business potentially at an important milestone, we thought we'd take a closer look at Karyopharm Therapeutics Inc.'s (NASDAQ:KPTI) future prospects. Karyopharm Therapeutics Inc., a pharmaceutical company, engages in the discovery, development, and commercialization of various drugs directed against nuclear export and related targets for the treatment of cancer and other diseases. The US$1.1b market-cap company posted a loss in its most recent financial year of US$200m and a latest trailing-twelve-month loss of US$189m shrinking the gap between loss and breakeven. Many investors are wondering about the rate at which Karyopharm Therapeutics will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Consensus from 9 of the American Biotechs analysts is that Karyopharm Therapeutics is on the verge of breakeven. They expect the company to post a final loss in 2022, before turning a profit of US$47m in 2023. So, the company is predicted to breakeven approximately 3 years from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 68%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for Karyopharm Therapeutics given that this is a high-level summary, however, 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 would like to bring into light with Karyopharm Therapeutics is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Karyopharm Therapeutics' case is 88%. Note that a higher debt obligation increases the risk around investing in the loss-making company.
There are key fundamentals of Karyopharm 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 Karyopharm Therapeutics, take a look at Karyopharm Therapeutics' company page on Simply Wall St. We've also compiled a list of pertinent factors you should further research:
Valuation: What is Karyopharm Therapeutics 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 Karyopharm Therapeutics 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 Karyopharm Therapeutics’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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