Flexion Therapeutics, Inc.'s (NASDAQ:FLXN): Flexion Therapeutics, Inc., a biopharmaceutical company, focuses on the discovery, development, and commercialization of anti-inflammatory and analgesic therapies for the treatment of patients with musculoskeletal conditions. With the latest financial year loss of -US$149.8m and a trailing-twelve month of -US$145.0m, the US$623m market-cap alleviates its loss by moving closer towards its target of breakeven. The most pressing concern for investors is FLXN’s path to profitability – when will it breakeven? In this article, I will touch on the expectations for FLXN’s growth and when analysts expect the company to become profitable.
According to the 9 industry analysts covering FLXN, the consensus is breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$65m in 2023. FLXN is therefore projected to breakeven around 3 years from now. How fast will FLXN have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 70% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, FLXN may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for FLXN given that this is a high-level summary, however, take into account that generally biotechs, depending on the stage of product development, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.
Before I wrap up, there’s one issue worth mentioning. FLXN 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 FLXN, so if you are interested in understanding the company at a deeper level, take a look at FLXN’s company page on Simply Wall St. I’ve also put together a list of relevant aspects you should further examine:
- Historical Track Record: What has FLXN'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.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Flexion Therapeutics’s board and the CEO’s back ground.
- 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.
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