Loss-Making Global Blood Therapeutics, Inc. (NASDAQ:GBT) Expected To Breakeven In The Medium-Term
We feel now is a pretty good time to analyse Global Blood Therapeutics, Inc.'s (NASDAQ:GBT) business as it appears the company may be on the cusp of a considerable accomplishment. Global Blood Therapeutics, Inc., a clinical-stage biopharmaceutical company, engages in the discovery, development, and delivery of treatments for underserved patient communities. The company’s loss has recently broadened since it announced a US$267m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$282m, moving it further away from breakeven. As path to profitability is the topic on Global Blood Therapeutics' investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
View our latest analysis for Global Blood Therapeutics
Global Blood Therapeutics is bordering on breakeven, according to the 20 American Biotechs analysts. They expect the company to post a final loss in 2022, before turning a profit of US$134m in 2023. Therefore, the company is expected to breakeven roughly 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 71%, 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 Global Blood Therapeutics' growth isn’t the focus of this broad overview, though, bear in mind that generally 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 we wrap up, there’s one aspect worth mentioning. The company has managed its capital prudently, with debt making up 16% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.
Next Steps:
This article is not intended to be a comprehensive analysis on Global Blood Therapeutics, so if you are interested in understanding the company at a deeper level, take a look at Global Blood Therapeutics' company page on Simply Wall St. We've also compiled a list of important aspects you should look at:
Valuation: What is Global Blood 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 Global Blood 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 Global Blood 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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