Verona Pharma plc (NASDAQ:VRNA) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Verona Pharma plc, a clinical stage biopharmaceutical company, focuses on development and commercialization of therapies for the treatment of respiratory diseases with unmet medical needs. The US$2.9b market-cap company posted a loss in its most recent financial year of US$54m and a latest trailing-twelve-month loss of US$154m leading to an even wider gap between loss and breakeven. Many investors are wondering about the rate at which Verona Pharma 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 7 of the American Pharmaceuticals analysts is that Verona Pharma is on the verge of breakeven. They anticipate the company to incur a final loss in 2025, before generating positive profits of US$16m in 2026. 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 73% 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.

Given this is a high-level overview, we won't go into details of Verona Pharma's upcoming projects, but, take into account that generally a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

One thing we would like to bring into light with Verona Pharma is its relatively high level of debt. Generally, the rule of thumb is debt shouldn't exceed 40% of your equity, which in Verona Pharma's case is 92%. 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 Verona Pharma, so if you are interested in understanding the company at a deeper level, take a look at Verona Pharma's company page on Simply Wall St. We've also compiled a list of important aspects you should look at:

1. Historical Track Record: What has Verona 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 Verona 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.