Analysts Are Optimistic We'll See A Profit From Fennec Pharmaceuticals Inc. (NASDAQ:FENC)

We feel now is a pretty good time to analyse Fennec Pharmaceuticals Inc.'s (NASDAQ:FENC) business as it appears the company may be on the cusp of a considerable accomplishment. Fennec Pharmaceuticals Inc., a biopharmaceutical company, develops product candidates for use in the treatment of cancer in the United States. On 31 December 2020, the US$163m market-cap company posted a loss of US$18m for its most recent financial year. As path to profitability is the topic on Fennec Pharmaceuticals' investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

View our latest analysis for Fennec Pharmaceuticals

According to the 2 industry analysts covering Fennec Pharmaceuticals, the consensus is that breakeven is near. They expect the company to post a final loss in 2020, before turning a profit of US$35m in 2021. So, the company is predicted to breakeven approximately a year from now or less! We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 48% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

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We're not going to go through company-specific developments for Fennec Pharmaceuticals given that this is a high-level summary, however, take into account that typically 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.

Before we wrap up, there’s one aspect worth mentioning. Fennec Pharmaceuticals currently has no debt on its balance sheet, which is quite unusual for a cash-burning biotech, which usually has a high level of 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 Fennec Pharmaceuticals, so if you are interested in understanding the company at a deeper level, take a look at Fennec Pharmaceuticals' company page on Simply Wall St. We've also put together a list of pertinent aspects you should look at:

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

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. 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.

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