We feel now is a pretty good time to analyse ADC Therapeutics SA's (NYSE:ADCT) business as it appears the company may be on the cusp of a considerable accomplishment. ADC Therapeutics SA, a clinical-stage oncology-focused biotechnology company, develops antibody drug conjugates (ADC) for patients suffering from hematological malignancies and solid tumors. The US$2.8b market-cap company posted a loss in its most recent financial year of US$116.5m and a latest trailing-twelve-month loss of US$236.7m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on ADC 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.
ADC Therapeutics is bordering on breakeven, according to the 3 American Biotechs analysts. They expect the company to post a final loss in 2022, before turning a profit of US$94m in 2023. The company is therefore projected to breakeven around 3 years from today. 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 63%, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.
Given this is a high-level overview, we won’t go into details of ADC Therapeutics' upcoming projects, however, bear 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 we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 18% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.
There are key fundamentals of ADC Therapeutics which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at ADC Therapeutics, take a look at ADC Therapeutics' company page on Simply Wall St. We've also compiled a list of key factors you should look at:
- Historical Track Record: What has ADC 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.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on ADC Therapeutics' board and the CEO’s background.
- 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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