We feel now is a pretty good time to analyse Karyopharm Therapeutics Inc.'s (NASDAQ:KPTI) business as it appears the company may be on the cusp of a considerable accomplishment. Karyopharm Therapeutics Inc., a pharmaceutical company, engages in the discovery, development, and commercialization of various drugs directed against nuclear export and related targets for the treatment of cancer and other diseases. The US$758m market-cap company announced a latest loss of US$196m on 31 December 2020 for its most recent financial year result. As path to profitability is the topic on Karyopharm Therapeutics' investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
According to the 9 industry analysts covering Karyopharm Therapeutics, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$5.2m in 2023. Therefore, the company is expected to breakeven roughly 2 years from today. 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 61% is expected, 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 Karyopharm Therapeutics given that this is a high-level summary, however, keep in mind that by and large a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. 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 issue worth mentioning. Karyopharm Therapeutics currently has a debt-to-equity ratio of over 2x. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk in investing in the loss-making company.
There are too many aspects of Karyopharm Therapeutics to cover in one brief article, but the key fundamentals for the company can all be found in one place – Karyopharm Therapeutics' company page on Simply Wall St. We've also compiled a list of relevant aspects you should further research:
Valuation: What is Karyopharm Therapeutics 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 Karyopharm Therapeutics 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 Karyopharm Therapeutics’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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