UK Markets closed

When Will Fennec Pharmaceuticals Inc. (NASDAQ:FENC) Turn A Profit?

Simply Wall St

Want to participate in a research study? Help shape the future of investing tools and earn a $60 gift card!

Fennec Pharmaceuticals Inc.'s (NASDAQ:FENC): Fennec Pharmaceuticals Inc., a biopharmaceutical company, develops product candidates for use in the treatment of cancer in the United States. On 31 December 2018, the US$101m market-cap posted a loss of -US$9.9m for its most recent financial year. The most pressing concern for investors is FENC’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for FENC.

Check out our latest analysis for Fennec Pharmaceuticals

Consensus from the 3 Biotechs analysts is FENC is on the verge of breakeven. They anticipate the company to incur a final loss in 2019, before generating positive profits of US$64m in 2020. FENC is therefore projected to breakeven around a couple of months from now! What rate will FENC have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 43%, which is extremely buoyant. If this rate turns out to be too aggressive, FENC may become profitable much later than analysts predict.

NasdaqCM:FENC Past and Future Earnings, April 4th 2019

Underlying developments driving FENC’s growth isn’t the focus of this broad overview, though, take into account 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.

One thing I’d like to point out is that FENC 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. FENC 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 FENC to cover in one brief article, but the key fundamentals for the company can all be found in one place – FENC’s company page on Simply Wall St. I’ve also compiled a list of essential aspects you should further research:

  1. Historical Track Record: What has FENC'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 Fennec 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.