Aurinia Pharmaceuticals Inc.'s (TSE:AUP): Aurinia Pharmaceuticals Inc., a clinical stage biopharmaceutical company, engages in the research, development, and commercialization of therapeutic drugs for the treatment of various diseases in the United States and China. On 31 December 2018, the CA$768m market-cap posted a loss of -US$64.1m for its most recent financial year. Many investors are wondering the rate at which AUP will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for AUP’s growth and when analysts expect the company to become profitable.

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View our latest analysis for Aurinia Pharmaceuticals

AUP is bordering on breakeven, according to the 4 Biotechs analysts. They expect the company to post a final loss in 2020, before turning a profit of US$67m in 2021. Therefore, AUP is expected to breakeven roughly 2 years from now. How fast will AUP have to grow each year in order to reach the breakeven point by 2021? Working backwards from analyst estimates, it turns out that they expect the company to grow 60% year-on-year, on average, which signals high confidence from analysts. If this rate turns out to be too aggressive, AUP may become profitable much later than analysts predict.

I’m not going to go through company-specific developments for AUP given that this is a high-level summary, however, bear in mind that typically 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.

One thing I’d like to point out is that AUP has no debt on its balance sheet, which is quite unusual for a cash-burning biotech, which typically has high debt relative to its equity. AUP 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 too many aspects of AUP to cover in one brief article, but the key fundamentals for the company can all be found in one place – AUP’s company page on Simply Wall St. I’ve also compiled a list of relevant factors you should further research:

1. Valuation: What is AUP 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 AUP is currently mispriced by the market.

2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Aurinia Pharmaceuticals’s board and the CEO’s back ground.

3. 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.