Yahoo Finance Market Sentiment Around Loss-Making Botanix Pharmaceuticals Limited (ASX:BOT)
We feel now is a pretty good time to analyse Botanix Pharmaceuticals Limited's (ASX:BOT) business as it appears the company may be on the cusp of a considerable accomplishment. Botanix Pharmaceuticals Limited, a clinical stage synthetic cannabinoid pharmaceutical company, engages in the research and development of dermatology and antimicrobial products in Australia. The AU$97m market-cap company announced a latest loss of AU$17m on 30 June 2020 for its most recent financial year result. The most pressing concern for investors is Botanix Pharmaceuticals' path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
Check out our latest analysis for Botanix Pharmaceuticals
Expectations from some of the Australian Pharmaceuticals analysts is that Botanix Pharmaceuticals is on the verge of breakeven. They anticipate the company to incur a final loss in 2021, before generating positive profits of AU$33m in 2022. Therefore, the company is expected to breakeven roughly 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2022? Working backwards from analyst estimates, it turns out that they expect the company to grow 119% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
We're not going to go through company-specific developments for Botanix Pharmaceuticals given that this is a high-level summary, however, keep in mind that typically pharmaceuticals, 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.
One thing we’d like to point out is that Botanix Pharmaceuticals has no debt on its balance sheet, which is quite unusual for a cash-burning pharma, which typically has high 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.
Next Steps:
There are too many aspects of Botanix Pharmaceuticals to cover in one brief article, but the key fundamentals for the company can all be found in one place – Botanix Pharmaceuticals' company page on Simply Wall St. We've also compiled a list of relevant factors you should further research:
Valuation: What is Botanix Pharmaceuticals 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 Botanix Pharmaceuticals 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 Botanix Pharmaceuticals’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.
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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