Market Sentiment Around Loss-Making Rakovina Therapeutics Inc. (CVE:RKV)

Rakovina Therapeutics Inc. (CVE:RKV) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Rakovina Therapeutics Inc., a biopharmaceutical research company, engages in the research and development of cancer treatments based on novel series of small-molecule DNA-damage response targets. The company’s loss has recently broadened since it announced a CA$4.1m loss in the full financial year, compared to the latest trailing-twelve-month loss of CA$8.3m, moving it further away from breakeven. As path to profitability is the topic on Rakovina Therapeutics' investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

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According to some industry analysts covering Rakovina Therapeutics, breakeven is near. They anticipate the company to incur a final loss in 2025, before generating positive profits of CA$38m in 2026. Therefore, the company is expected to breakeven just over a year from now. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 17%, which is relatively reasonable. However, if this rate turns out to be too buoyant, the company may become profitable later than analysts predict.

We're not going to go through company-specific developments for Rakovina Therapeutics given that this is a high-level summary, but, keep 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, a double-digit growth rate is not abnormal as the company is beginning to reap the benefits of earlier investments.

See our latest analysis for Rakovina Therapeutics

Before we wrap up, there’s one issue worth mentioning. Rakovina Therapeutics currently has a debt-to-equity ratio of 138%. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Rakovina Therapeutics, so if you are interested in understanding the company at a deeper level, take a look at Rakovina Therapeutics' company page on Simply Wall St. We've also put together a list of relevant factors you should further research:

1. Historical Track Record: What has Rakovina Therapeutics' 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 Rakovina Therapeutics' board and the CEO’s background.
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.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.