Aridis Pharmaceuticals, Inc. (NASDAQ:ARDS) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Aridis Pharmaceuticals, Inc., a late-stage biopharmaceutical company, focuses on the discovery and development of targeted immunotherapy using fully human monoclonal antibodies (mAb) to treat life-threatening infections. The company’s loss has recently broadened since it announced a US$22m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$24m, moving it further away from breakeven. Many investors are wondering about the rate at which Aridis Pharmaceuticals will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
According to the 4 industry analysts covering Aridis Pharmaceuticals, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$6.0m in 2023. Therefore, the company is expected to breakeven roughly 2 years from today. 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 79%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Given this is a high-level overview, we won’t go into details of Aridis Pharmaceuticals' upcoming projects, however, take into account 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.
Before we wrap up, there’s one issue worth mentioning. Aridis Pharmaceuticals currently has negative equity on its balance sheet. Accounting methods used to deal with losses accumulated over time can cause this to occur. This is because liabilities are carried forward into the future until it cancels. Oftentimes, losses exist only on paper but other times, it can be a red flag.
This article is not intended to be a comprehensive analysis on Aridis Pharmaceuticals, so if you are interested in understanding the company at a deeper level, take a look at Aridis Pharmaceuticals' company page on Simply Wall St. We've also put together a list of key aspects you should look at:
Historical Track Record: What has Aridis Pharmaceuticals' 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 Aridis Pharmaceuticals' 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.