Botanix Pharmaceuticals Limited’s (ASX:BOT): Botanix Pharmaceuticals Limited, a clinical stage cannabinoid therapeutics company, develops therapeutics for serious skin diseases in Australia. On 30 June 2019, the AU$91m market-cap posted a loss of -AU$17.0m for its most recent financial year. As path to profitability is the topic on BOT’s investors mind, I’ve decided to gauge market sentiment. In this article, I will touch on the expectations for BOT’s growth and when analysts expect the company to become profitable.
View our latest analysis for Botanix Pharmaceuticals
BOT is bordering on breakeven, according to Pharmaceuticals analysts. They expect the company to post a final loss in 2021, before turning a profit of AU$29m in 2022. BOT is therefore projected to breakeven around 2 years from today. How fast will BOT 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 88% year-on-year, on average, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.
I’m not going to go through company-specific developments for BOT given that this is a high-level summary, though, keep in mind that by and large 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 I’d like to point out is that BOT 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 BOT 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 BOT to cover in one brief article, but the key fundamentals for the company can all be found in one place – BOT’s company page on Simply Wall St. I’ve also put together a list of essential aspects you should further examine:
- Valuation: What is BOT 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 BOT 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 back ground.
- 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.
If you spot an error that warrants correction, please contact the editor at [email protected]. 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.
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. Thank you for reading.
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