Loss-Making Denali Therapeutics Inc. (NASDAQ:DNLI) Set To Breakeven
Denali Therapeutics Inc. (NASDAQ:DNLI) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Denali Therapeutics Inc., a biopharmaceutical company, discovers and develops therapeutic candidates for neurodegenerative diseases in the United States. The US$3.3b market-cap company posted a loss in its most recent financial year of US$197.6m and a latest trailing-twelve-month loss of US$215.8m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on Denali Therapeutics' investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
View our latest analysis for Denali Therapeutics
Consensus from 8 of the American Biotechs analysts is that Denali Therapeutics is on the verge of breakeven. They expect the company to post a final loss in 2019, before turning a profit of US$314m in 2020. Therefore, the company is expected to breakeven roughly 12 months from now or less. At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of -27%,
We're not going to go through company-specific developments for Denali Therapeutics given that this is a high-level summary, but, take into account that generally a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. So, periods of lower growth in the upcoming years 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 Denali Therapeutics 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.
Next Steps:
There are too many aspects of Denali Therapeutics to cover in one brief article, but the key fundamentals for the company can all be found in one place – Denali Therapeutics' company page on Simply Wall St. We've also compiled a list of important factors you should further examine:
Historical Track Record: What has Denali 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 Denali 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.
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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