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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$436m market-cap company announced a latest loss of AU$34m on 30 June 2021 for its most recent financial year result. The most pressing concern for investors is Paradigm Biopharmaceuticals' path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.
Paradigm Biopharmaceuticals is bordering on breakeven, according to the 2 Australian Biotechs analysts. They anticipate the company to incur a final loss in 2023, before generating positive profits of AU$38m in 2024. So, the company is predicted to breakeven approximately 3 years from now. 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 41%, which is rather optimistic! 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 Paradigm Biopharmaceuticals given that this is a high-level summary, though, bear in mind that typically biotechs, depending on the stage of product development, have irregular periods of cash flow. 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 too many aspects of Paradigm Biopharmaceuticals to cover in one brief article, but the key fundamentals for the company can all be found in one place – Paradigm Biopharmaceuticals' company page on Simply Wall St. We've also put together a list of essential factors you should look at:
Historical Track Record: What has Paradigm Biopharmaceuticals' 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 Paradigm Biopharmaceuticals' 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. 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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