We feel now is a pretty good time to analyse Legend Biotech Corporation’s (NASDAQ:LEGN) business as it appears the company may be on the cusp of a considerable accomplishment. Legend Biotech Corporation, a clinical-stage biopharmaceutical company, through its subsidiaries, engages in the discovery and development of novel cell therapies for oncology and other indications in North America and internationally. The company’s loss has recently broadened since it announced a US$303m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$340m, moving it further away from breakeven. Many investors are wondering about the rate at which Legend Biotech will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.
Consensus from 4 of the American Biotechs analysts is that Legend Biotech is on the verge of breakeven. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$183m in 2023. The company is therefore projected to breakeven around 2 years from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 67% is expected, 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 Legend Biotech given that this is a high-level summary, but, bear in mind that generally 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.
One thing we’d like to point out is that Legend Biotech 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. The company currently operates purely off its shareholder funding and has no debt obligation, reducing concerns around repayments and making it a less risky investment.
There are key fundamentals of Legend Biotech 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 Legend Biotech, take a look at Legend Biotech’s company page on Simply Wall St. We’ve also compiled a list of key aspects you should further research:
Valuation: What is Legend Biotech worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Legend Biotech is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Legend Biotech’s 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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