Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!

Molecular Partners AG's (VTX:MOLN): Molecular Partners AG, a clinical-stage biopharmaceutical company, focuses on the discovery, development, and commercialization of various biopharmaceutical products. On 31 December 2018, the CHF375m market-cap posted a loss of -CHF37.0m for its most recent financial year. As path to profitability is the topic on MOLN’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for MOLN’s growth and when analysts expect the company to become profitable.

View our latest analysis for Molecular Partners

MOLN is bordering on breakeven, according to the 4 Biotechs analysts. They anticipate the company to incur a final loss in 2019, before generating positive profits of CHF57m in 2020. So, MOLN is predicted to breakeven approximately a couple of months from now! How fast will MOLN have to grow each year in order to reach the breakeven point by 2020? Working backwards from analyst estimates, it turns out that they expect the company to grow 41% year-on-year, on average, which is extremely buoyant. If this rate turns out to be too aggressive, MOLN may become profitable much later than analysts predict.

I’m not going to go through company-specific developments for MOLN given that this is a high-level summary, but, take into account that generally a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. 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 aspect worth mentioning. MOLN currently 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. MOLN 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 key fundamentals of MOLN which are not covered in this article, but I must stress again that this is merely a basic overview. For a more comprehensive look at MOLN, take a look at MOLN’s company page on Simply Wall St. I’ve also compiled a list of essential factors you should further examine:

1. Historical Track Record: What has MOLN'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.

2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Molecular Partners’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.