Vital Therapies Inc’s (NASDAQ:VTL): Vital Therapies, Inc., a biotherapeutic company, focuses on developing a human hepatic cell-based therapy targeting the treatment of acute forms of liver failure in the United States. With the latest financial year loss of -US$40.97M and a trailing-twelve month of -US$49.22M, the US$249.02M market-cap amplifies its loss by moving further away from its breakeven target. Many investors are wondering the rate at which VTL will turn a profit, with the big question being “when will the company breakeven?” In this article, I will touch on the expectations for VTL’s growth and when analysts expect the company to become profitable.

View our latest analysis for Vital Therapies

Expectation from analysts is VTL is on the verge of breakeven. They expect the company to post a final loss in 2021, before turning a profit of US$54.81M in 2022. Therefore, VTL is expected to breakeven roughly 4 years from now. What rate will VTL 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 20.18%, which is extremely buoyant. If this rate turns out to be too aggressive, VTL may become profitable much later than analysts predict.

Given this is a high-level overview, I won’t go into detail the detail of VTL’s upcoming projects, however, keep in mind that typically biotechs, depending on the stage of product development, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

Before I wrap up, there’s one aspect worth mentioning. VTL currently has no debt on its balance sheet, which is rare for a loss-making biotech, which typically has high debt relative to its equity. VTL 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 VTL 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 VTL, take a look at VTL’s company page on Simply Wall St. I’ve also compiled a list of pertinent aspects you should look at:

1. Historical Track Record: What has VTL’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 Vital Therapies’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.

To help readers see pass 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.