We feel now is a pretty good time to analyse Paradigm Biopharmaceuticals Limited's (ASX:PAR) business as it appears the company may be on the cusp of a considerable accomplishment. Paradigm Biopharmaceuticals Limited, a drug repurposing company, engages in the research and development of therapeutic products for human use in Australia. The AU$419m market-cap company announced a latest loss of AU$39m on 30 June 2022 for its most recent financial year result. The most pressing concern for investors is Paradigm Biopharmaceuticals' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Paradigm Biopharmaceuticals is bordering on breakeven, according to some Australian Biotechs analysts. They anticipate the company to incur a final loss in 2023, before generating positive profits of AU$13m in 2024. Therefore, the company is expected to breakeven just over a year from now. How fast will the company have to grow each year in order to reach the breakeven point by 2024? Working backwards from analyst estimates, it turns out that they expect the company to grow 82% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving Paradigm Biopharmaceuticals' growth isn’t the focus of this broad overview, though, take into account that typically a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.
Before we wrap up, there’s one aspect worth mentioning. Paradigm Biopharmaceuticals currently 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. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.
There are key fundamentals of Paradigm Biopharmaceuticals which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Paradigm Biopharmaceuticals, take a look at Paradigm Biopharmaceuticals' company page on Simply Wall St. We've also put together a list of key factors you should further examine:
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.
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.
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.
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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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