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Market Sentiment Around Loss-Making Celsion Corporation (NASDAQ:CLSN)

Simply Wall St

Celsion Corporation's (NASDAQ:CLSN): Celsion Corporation, a development stage oncology drug company, focuses on the development and commercialization of directed chemotherapies, DNA-mediated immunotherapy, and RNA based therapies for the treatment of cancer. The US$38m market-cap posted a loss in its most recent financial year of -US$11.9m and a latest trailing-twelve-month loss of -US$7.4m shrinking the gap between loss and breakeven. As path to profitability is the topic on CLSN’s investors mind, I’ve decided to gauge market sentiment. Below I will provide a high-level summary of the industry analysts’ expectations for CLSN.

Check out our latest analysis for Celsion

According to the 2 industry analysts covering CLSN, the consensus is breakeven is near. They anticipate the company to incur a final loss in 2021, before generating positive profits of US$26m in 2022. CLSN is therefore projected to breakeven around 3 years from now. What rate will CLSN 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 72%, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

NasdaqCM:CLSN Past and Future Earnings, September 4th 2019
NasdaqCM:CLSN Past and Future Earnings, September 4th 2019

Given this is a high-level overview, I won’t go into details of CLSN’s upcoming projects, however, bear in mind that by and large 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.

Before I wrap up, there’s one issue worth mentioning. CLSN currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in CLSN’s case is 51%. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

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

  1. Historical Track Record: What has CLSN'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.

  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Celsion’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.