Yahoo Finance Cassava Sciences, Inc. (NASDAQ:SAVA): Is Breakeven Near?
With the business potentially at an important milestone, we thought we'd take a closer look at Cassava Sciences, Inc.'s (NASDAQ:SAVA) future prospects. Cassava Sciences, Inc., a clinical stage biotechnology company, develops drugs for neurodegenerative diseases. The US$1.2b market-cap company posted a loss in its most recent financial year of US$97m and a latest trailing-twelve-month loss of US$15m shrinking the gap between loss and breakeven. The most pressing concern for investors is Cassava Sciences' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.
See our latest analysis for Cassava Sciences
Consensus from 2 of the American Pharmaceuticals analysts is that Cassava Sciences is on the verge of breakeven. They anticipate the company to incur a final loss in 2024, before generating positive profits of US$85m in 2025. The company is therefore projected to breakeven just over a year from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 159% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.
We're not going to go through company-specific developments for Cassava Sciences given that this is a high-level summary, though, keep in mind that by and large a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
One thing we’d like to point out is that Cassava Sciences has no debt on its balance sheet, which is rare for a loss-making pharma, 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:
There are key fundamentals of Cassava Sciences 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 Cassava Sciences, take a look at Cassava Sciences' company page on Simply Wall St. We've also put together a list of pertinent factors you should further examine:
Historical Track Record: What has Cassava Sciences' 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 Cassava Sciences' 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.
