In This Article:
Cynata Therapeutics Limited’s (ASX:CYP): Cynata Therapeutics Limited, together with its subsidiaries, develops and commercializes a proprietary mesenchymal stem cell technology under the Cymerus brand name for human therapeutic use in Australia. On 30 June 2018, the AU$116m market-cap posted a loss of -AU$5m for its most recent financial year. The most pressing concern for investors is CYP’s path to profitability – when will it breakeven? Below I will provide a high-level summary of the industry analysts’ expectations for CYP.
Check out our latest analysis for Cynata Therapeutics
CYP is bordering on breakeven, according to Biotechs analysts. They anticipate the company to incur a final loss in 2019, before generating positive profits of AU$4m in 2020. So, CYP is predicted to breakeven approximately a couple of months from now! What rate will CYP 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 99%, which is extremely buoyant. If this rate turns out to be too aggressive, CYP may become profitable much later than analysts predict.
I’m not going to go through company-specific developments for CYP given that this is a high-level summary, but, bear in mind 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 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 CYP 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. This means that CYP 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 key fundamentals of CYP 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 CYP, take a look at CYP’s company page on Simply Wall St. I’ve also put together a list of pertinent aspects you should further examine:
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Valuation: What is CYP 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 CYP is currently mispriced by the market.
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Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Cynata Therapeutics’s board and the CEO’s back ground.
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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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.