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Loss-Making Paradigm Biopharmaceuticals Limited (ASX:PAR) Expected To Breakeven In The Medium-Term

·3 min read

With the business potentially at an important milestone, we thought we'd take a closer look at Paradigm Biopharmaceuticals Limited's (ASX:PAR) future prospects. Paradigm Biopharmaceuticals Limited, a drug repurposing company, engages in the research and development of therapeutic products for human use in Australia. The AU$345m market-cap company announced a latest loss of AU$39m on 30 June 2022 for its most recent financial year result. As path to profitability is the topic on Paradigm Biopharmaceuticals' 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.

See our latest analysis for Paradigm Biopharmaceuticals

Expectations from some of the Australian Biotechs analysts is that Paradigm Biopharmaceuticals is on the verge of breakeven. They anticipate the company to incur a final loss in 2023, before generating positive profits of AU$2.5m in 2024. So, the company is predicted to breakeven approximately 2 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 58%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
earnings-per-share-growth

We're not going to go through company-specific developments for Paradigm Biopharmaceuticals given that this is a high-level summary, however, bear in mind that typically biotechs, depending on the stage of product development, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

One thing we’d like to point out is that Paradigm Biopharmaceuticals has no debt on its balance sheet, which is rare for a loss-making biotech, which usually has a high level of 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:

This article is not intended to be a comprehensive analysis on Paradigm Biopharmaceuticals, so if you are interested in understanding the company at a deeper level, take a look at Paradigm Biopharmaceuticals' company page on Simply Wall St. We've also compiled a list of pertinent factors you should look at:

  1. Valuation: What is Paradigm Biopharmaceuticals 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 Paradigm Biopharmaceuticals is currently mispriced by the market.

  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Paradigm Biopharmaceuticals’s board and the CEO’s background.

  3. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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