With the business potentially at an important milestone, we thought we'd take a closer look at CymaBay Therapeutics, Inc.'s (NASDAQ:CBAY) future prospects. CymaBay Therapeutics, Inc., a clinical-stage biopharmaceutical company, focuses on developing and providing therapies to treat liver and other chronic diseases. The US$812m market-cap company announced a latest loss of US$106m on 31 December 2022 for its most recent financial year result. The most pressing concern for investors is CymaBay Therapeutics' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for CymaBay Therapeutics

CymaBay Therapeutics is bordering on breakeven, according to the 7 American Pharmaceuticals analysts. They expect the company to post a final loss in 2024, before turning a profit of US$19m in 2025. The company is therefore projected to breakeven around 2 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 60%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving CymaBay Therapeutics' growth isn’t the focus of this broad overview, but, keep in mind that typically pharmaceuticals, 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 issue worth mentioning. CymaBay Therapeutics currently has a debt-to-equity ratio of 143%. 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 in investing in the loss-making company.

Next Steps:

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

1. Valuation: What is CymaBay Therapeutics 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 CymaBay Therapeutics is currently mispriced by the market.

2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on CymaBay Therapeutics’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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

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