SynAct Pharma AB (STO:SYNACT) About To Shift From Loss To Profit

We feel now is a pretty good time to analyse SynAct Pharma AB's (STO:SYNACT) business as it appears the company may be on the cusp of a considerable accomplishment. SynAct Pharma AB, a clinical stage biotechnology company, researches and develops medicines for the treatment of inflammatory diseases in Sweden. With the latest financial year loss of kr111m and a trailing-twelve-month loss of kr112m, the kr990m market-cap company amplified its loss by moving further away from its breakeven target. As path to profitability is the topic on SynAct Pharma's investors mind, we've decided to gauge market sentiment. In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

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SynAct Pharma is bordering on breakeven, according to the 2 Swedish Biotechs analysts. They expect the company to post a final loss in 2025, before turning a profit of kr52m in 2026. The company is therefore projected to breakeven around a year from now or less! At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 65%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

We're not going to go through company-specific developments for SynAct Pharma given that this is a high-level summary, but, take into account that by and large biotechs, depending on the stage of product development, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

See our latest analysis for SynAct Pharma

Before we wrap up, there’s one aspect worth mentioning. SynAct Pharma 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. This means that the company 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:

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

1. Historical Track Record: What has SynAct Pharma'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 SynAct Pharma's 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.