With the business potentially at an important milestone, we thought we'd take a closer look at XOMA Royalty Corporation's (NASDAQ:XOMA) future prospects. XOMA Royalty Corporation operates as a biotech royalty aggregator in the United States and the Asia Pacific. The US$239m market-cap company announced a latest loss of US$19m on 31 December 2024 for its most recent financial year result. The most pressing concern for investors is XOMA Royalty's path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Consensus from 3 of the American Biotechs analysts is that XOMA Royalty is on the verge of breakeven. They anticipate the company to incur a final loss in 2025, before generating positive profits of US$4.0m in 2026. So, the company is predicted to breakeven just over a year from now. 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 is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving XOMA Royalty's growth isn’t the focus of this broad overview, 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.

See our latest analysis for XOMA Royalty

One thing we would like to bring into light with XOMA Royalty is its debt-to-equity ratio of 144%. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of XOMA Royalty 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 XOMA Royalty, take a look at XOMA Royalty's company page on Simply Wall St. We've also put together a list of important factors you should look at:

1. Valuation: What is XOMA Royalty 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 XOMA Royalty 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 XOMA Royalty’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.