Evoke Pharma, Inc.’s (NASDAQ:EVOK): Evoke Pharma, Inc., a specialty pharmaceutical company, primarily focuses on the development of drugs for the treatment of gastroenterological disorders and diseases. The US$44m market-cap posted a loss in its most recent financial year of -US$12.2m and a latest trailing-twelve-month loss of -US$6.1m shrinking the gap between loss and breakeven. The most pressing concern for investors is EVOK’s path to profitability – when will it breakeven? I’ve put together a brief outline of industry analyst expectations for EVOK, its year of breakeven and its implied growth rate.
According to the 3 industry analysts covering EVOK, the consensus is breakeven is near. They expect the company to post a final loss in 2019, before turning a profit of US$21m in 2020. Therefore, EVOK is expected to breakeven roughly a few months from now. What rate will EVOK have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 66%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving EVOK’s growth isn’t the focus of this broad overview, but, bear in mind that generally a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business 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 I’d like to point out is that EVOK has no debt on its balance sheet, which is rare for a loss-making pharma, which usually has a high level of debt relative to its equity. This means that EVOK 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.
There are key fundamentals of EVOK which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at EVOK, take a look at EVOK’s company page on Simply Wall St. I’ve also compiled a list of relevant aspects you should look at:
- Historical Track Record: What has EVOK’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 Evoke Pharma’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.