U.S. Markets close in 1 hr 13 mins

Lysogene S.A.'s (EPA:LYS) Path To Profitability

Simply Wall St

Lysogene S.A.'s (EPA:LYS): Lysogene S.A. engages in the research and clinical development of gene therapy for neurodegenerative disorders. The €25m market-cap company’s loss lessens since it announced a -€10.9m bottom-line in the full financial year, compared to the latest trailing-twelve-month loss of -€5.6m, as it approaches breakeven. The most pressing concern for investors is LYS’s path to profitability – when will it breakeven? In this article, I will touch on the expectations for LYS’s growth and when analysts expect the company to become profitable.

Check out our latest analysis for Lysogene

LYS is bordering on breakeven, according to the 2 Biotechs analysts. They expect the company to post a final loss in 2021, before turning a profit of €69m in 2022. Therefore, LYS is expected to breakeven roughly 3 years from now. How fast will LYS have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 58% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, LYS may become profitable much later than analysts predict.

ENXTPA:LYS Past and Future Earnings, November 14th 2019

Given this is a high-level overview, I won’t go into details of LYS’s upcoming projects, though, bear in mind that generally biotechs, depending on the stage of product development, have irregular periods of cash flow. 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 LYS has managed its capital judiciously, with debt making up 13% of equity. This means that LYS 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:

There are too many aspects of LYS to cover in one brief article, but the key fundamentals for the company can all be found in one place – LYS’s company page on Simply Wall St. I’ve also put together a list of relevant aspects you should further research:

  1. Valuation: What is LYS 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 LYS 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 Lysogene’s board and the CEO’s back ground.
  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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.