89bio, Inc. (ETNB) Bundle
Understanding 89bio, Inc. (ETNB) Revenue Streams
Understanding 89bio, Inc.’s Revenue Streams
89bio, Inc. has not generated any revenue from commercial products as of September 30, 2024. The company continues to incur significant net losses and has an accumulated deficit of $706.2 million.
Breakdown of Primary Revenue Sources
As of the latest financial statements, the company has not reported revenue from any products or services, focusing instead on research and development activities. The company’s primary activities include the development of its lead product candidate, pegozafermin, and related clinical trials.
Year-over-Year Revenue Growth Rate
Since the company has not generated any revenue, the year-over-year revenue growth rate remains at 0%. The net losses for the nine months ended September 30, 2024, were $248.7 million, compared to $102.0 million for the same period in 2023, reflecting an increase in net losses rather than revenue growth.
Contribution of Different Business Segments to Overall Revenue
Given that the company has no revenue from commercial products, there are no contributions from different business segments to report. The financial focus remains on research and development expenses.
Analysis of Significant Changes in Revenue Streams
As of September 30, 2024, the company has seen substantial increases in operating expenses, particularly in research and development. For the nine months ended September 30, 2024, research and development expenses amounted to $233.7 million, an increase of $145.1 million from $88.6 million in the same period of 2023.
| Period | Research and Development Expenses (in $ thousands) | General and Administrative Expenses (in $ thousands) | Total Operating Expenses (in $ thousands) | Net Loss (in $ thousands) |
|---|---|---|---|---|
| 9 Months Ended September 30, 2024 | $233,734 | $28,917 | $262,651 | $248,725 |
| 9 Months Ended September 30, 2023 | $88,638 | $21,360 | $109,998 | $101,954 |
The increase in research and development expenses is primarily attributed to the costs associated with contract manufacturing and clinical development.
A Deep Dive into 89bio, Inc. (ETNB) Profitability
A Deep Dive into 89bio, Inc.'s Profitability
Gross Profit Margin: As of September 30, 2024, the gross profit margin was not applicable as the company reported zero revenue.
Operating Profit Margin: The operating loss for the nine months ended September 30, 2024, was $262.7 million, compared to an operating loss of $110.0 million for the same period in 2023.
Net Profit Margin: For the nine months ended September 30, 2024, the net loss was $248.7 million, resulting in a net profit margin of -100%.
Trends in Profitability Over Time
The following table illustrates the trend in profitability metrics over the past two years:
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Operating Loss ($ million) | $262.7 | $110.0 | +$152.7 |
| Net Loss ($ million) | $248.7 | $102.0 | +$146.7 |
Comparison of Profitability Ratios with Industry Averages
The average operating profit margin in the biotechnology industry typically ranges between -20% to -50%. The reported operating loss margin for the company significantly exceeds this range, indicating a higher level of operational inefficiency.
Analysis of Operational Efficiency
Operational efficiency metrics reveal the following:
- Research and Development Expenses: For the nine months ended September 30, 2024, R&D expenses totaled $233.7 million, a significant increase from $88.6 million in the same period of 2023.
- General and Administrative Expenses: General and administrative expenses rose to $28.9 million in 2024 from $21.4 million in 2023.
- Total Operating Expenses: Total operating expenses for the nine months ended September 30, 2024, were $262.7 million, compared to $110.0 million in 2023.
The increase in operating expenses is predominantly due to heightened research and development activities, reflecting the company's commitment to advancing its lead product candidate.
The operational inefficiency is further illustrated by the loss from operations, which was reported at $262.7 million for the nine months ended September 30, 2024, compared to a loss of $110.0 million in the same period of the previous year, marking a substantial increase in operational losses.
Debt vs. Equity: How 89bio, Inc. (ETNB) Finances Its Growth
Debt vs. Equity: How 89bio, Inc. Finances Its Growth
As of September 30, 2024, 89bio, Inc. had total debt obligations amounting to $35.0 million under its Loan Agreement, which is scheduled to mature on October 1, 2028. This agreement allows for interest-only payments until January 1, 2027, which may be extended upon achieving specific clinical milestones.
The company’s debt-to-equity ratio stands at approximately 0.09, indicating a relatively low reliance on debt compared to equity. This ratio is below the industry average of around 0.5, reflecting a conservative approach to leveraging.
In January 2023, 89bio entered into a Loan and Security Agreement with a maximum aggregate principal of $100.0 million, later amended in September 2024 to increase the amount to $150.0 million. The first tranche of $70.0 million includes $35.0 million funded at closing.
| Debt Type | Principal Amount | Maturity Date | Interest Rate | End of Term Fee |
|---|---|---|---|---|
| Term Loan | $35.0 million | October 1, 2028 | 9.75% | 5.95% |
In terms of recent debt activity, the company experienced a loss on extinguishment of debt amounting to $1.5 million during the third quarter of 2024 due to refinancing efforts. As of September 30, 2024, the company reported cash, cash equivalents, and marketable securities totaling $423.8 million, providing a solid liquidity cushion.
To balance its financing strategy, 89bio has utilized both debt and equity funding. In 2024, net cash provided by financing activities was $82.2 million, which included proceeds from the exercise of common stock warrants totaling $54.2 million and net proceeds of $21.0 million from at-the-market offerings.
As of September 30, 2024, the company had an accumulated deficit of $706.2 million, reflecting its ongoing investment in research and development. The company's equity financing activities include an amendment to its ATM facility, which allows for the sale of up to $150.0 million in shares.
89bio's strategy indicates a focus on maintaining a manageable level of debt while leveraging equity markets to fund growth initiatives. This balance allows the company to invest in clinical trials and product development without overextending its financial commitments.
Assessing 89bio, Inc. (ETNB) Liquidity
Assessing 89bio, Inc.'s Liquidity
As of September 30, 2024, 89bio, Inc. reported cash, cash equivalents, and marketable securities totaling $423.8 million. This reflects a significant increase in liquidity compared to previous periods, primarily due to capital raised through public offerings and warrant exercises.
Current and Quick Ratios
The company’s current liabilities stood at $39.1 million as of September 30, 2024. Given the cash and cash equivalents, the current ratio is calculated as follows:
| Metric | Value |
|---|---|
| Current Assets | $423.8 million |
| Current Liabilities | $39.1 million |
| Current Ratio | 10.83 |
The quick ratio, which excludes inventory (not applicable here as the company does not hold inventory), remains equivalent to the current ratio, indicating robust liquidity.
Analysis of Working Capital Trends
Working capital, defined as current assets minus current liabilities, was calculated as follows:
| Metric | Value |
|---|---|
| Working Capital | $384.7 million |
This positive working capital indicates that the company has sufficient short-term assets to cover its short-term liabilities, enhancing its financial stability.
Cash Flow Statements Overview
For the nine months ended September 30, 2024, cash flows from operating, investing, and financing activities were as follows:
| Cash Flow Activity | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Operating Activities | $(246,243) | $(94,893) |
| Investing Activities | $(60,688) | $(59,376) |
| Financing Activities | $82,181 | $350,940 |
The increase in cash used in operating activities is primarily due to a net loss of $248.7 million for the nine months ended September 30, 2024, compared to $102.0 million in the same period of 2023.
Potential Liquidity Concerns or Strengths
While the substantial cash reserves provide a strong liquidity position, the company has incurred significant net losses and negative cash flows from operations, with an accumulated deficit of $706.2 million as of September 30, 2024. The reliance on external financing through equity sales and term loans remains a concern, yet the current liquidity position suggests that the company can fund its operations for at least the next year.
Overall, the financial health as reflected in the liquidity and cash flow metrics indicates that 89bio, Inc. is well-positioned to meet its short-term obligations despite ongoing operational losses.
Is 89bio, Inc. (ETNB) Overvalued or Undervalued?
Valuation Analysis
In assessing the financial health of the company, various valuation metrics are crucial for determining whether it is overvalued or undervalued.
Price-to-Earnings (P/E) Ratio
The company's P/E ratio is currently N/A as it reported a net loss of $248.7 million for the nine months ended September 30, 2024, leading to no earnings per share (EPS).
Price-to-Book (P/B) Ratio
As of September 30, 2024, the book value per share is calculated based on total stockholders' equity of $378.1 million and 106,126,338 shares outstanding, resulting in a P/B ratio of approximately 0.35.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
Given the lack of positive EBITDA due to significant operational losses, the EV/EBITDA ratio is also currently N/A.
Stock Price Trends
The stock price has experienced volatility over the past 12 months, with a high of $16.25 following a public offering in March 2023 and a low of approximately $4.68 in October 2023. The current stock price as of September 30, 2024, is around $3.56.
Dividend Yield and Payout Ratios
There are no dividends paid, resulting in a dividend yield of 0% and a payout ratio of N/A.
Analyst Consensus on Stock Valuation
Analysts currently have a consensus rating of Hold, with a price target range between $3.00 and $5.00 per share, reflecting caution due to ongoing clinical trial expenses and operational losses.
| Metric | Value |
|---|---|
| P/E Ratio | N/A |
| P/B Ratio | 0.35 |
| EV/EBITDA Ratio | N/A |
| Stock Price (Current) | $3.56 |
| 12-Month High | $16.25 |
| 12-Month Low | $4.68 |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
| Price Target Range | $3.00 - $5.00 |
Key Risks Facing 89bio, Inc. (ETNB)
Key Risks Facing 89bio, Inc.
89bio, Inc. operates in a high-risk environment typical of clinical-stage biopharmaceutical companies. The following outlines the internal and external risks impacting the company's financial health.
Industry Competition
The biopharmaceutical industry is highly competitive, with numerous companies developing therapies for similar indications. The company's lead product candidate, pegozafermin, faces competition from existing treatments and potential new entrants. If competing products receive regulatory approval before pegozafermin, it may adversely affect market share and profitability.
Regulatory Changes
The approval of pegozafermin is contingent upon meeting stringent regulatory requirements. Changes in regulatory policies or delays in approval processes can significantly impact the company's timelines and financial forecasts. The company has not generated any revenue from commercial products to date, and any delays could exacerbate its financial losses.
Operational Risks
89bio has reported an accumulated deficit of $706.2 million as of September 30, 2024. As the company progresses through clinical trials, it anticipates incurring substantial and increasing operating losses. The net loss for the nine months ended September 30, 2024, was $248.7 million, compared to $101.9 million for the same period in 2023.
Financial Risks
The company relies heavily on external financing to support its operations. As of September 30, 2024, it had cash, cash equivalents, and marketable securities totaling $423.8 million. However, there are no committed external sources of funding beyond sales made under its ATM facility. The company must successfully raise additional capital to fund ongoing clinical trials and operations.
Strategic Risks
89bio's focus on a single product candidate under clinical development increases the risk profile. If pegozafermin fails to achieve regulatory approval or does not demonstrate sufficient efficacy in clinical trials, the company's financial stability could be severely threatened. The company has incurred significant expenses related to clinical trials, with research and development expenses increasing by $145.1 million for the nine months ended September 30, 2024.
Mitigation Strategies
To mitigate these risks, 89bio is pursuing strategic collaborations and partnerships to bolster its financial position and operational capabilities. For instance, in April 2024, the company entered into a collaboration agreement for the construction of a production facility to secure manufacturing capacity. Additionally, 89bio has the option to raise funds through the exercise of outstanding warrants, which could provide liquidity if needed.
| Risk Factor | Description | Impact on Financial Health |
|---|---|---|
| Industry Competition | Competition from existing and emerging therapies for similar indications. | Potential loss of market share and revenue. |
| Regulatory Changes | Changes in regulatory requirements affecting approval timelines. | Delays could increase operating losses. |
| Operational Risks | Significant accumulated deficit and increasing operating losses. | As of September 30, 2024, accumulated deficit was $706.2 million. |
| Financial Risks | Heavy reliance on external financing and market conditions. | Cash, cash equivalents, and marketable securities totaled $423.8 million. |
| Strategic Risks | Dependence on a single product candidate. | Failure to achieve regulatory approval could threaten financial stability. |
Future Growth Prospects for 89bio, Inc. (ETNB)
Future Growth Prospects for 89bio, Inc.
Analysis of Key Growth Drivers
The company is focusing on substantial product innovations, particularly with its lead product candidate, pegozafermin, which is undergoing two Phase 3 clinical trials: ENLIGHTEN-Fibrosis and ENLIGHTEN-Cirrhosis.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, the total operating expenses were $262.7 million, reflecting a significant increase of $152.7 million compared to $109.9 million in the same period in 2023. The net loss for this period was $248.7 million, up from $102.0 million in 2023.
Strategic Initiatives or Partnerships That May Drive Future Growth
In April 2024, a collaboration agreement was established with BiBo Biopharma Engineering Co., Ltd. to construct a production facility specifically for pegozafermin. This facility is designed to meet commercial supply needs if the product receives regulatory approval.
Competitive Advantages That Position the Company for Growth
As of September 30, 2024, the company had cash, cash equivalents, and marketable securities totaling $423.8 million, providing substantial liquidity to fund ongoing clinical trials and operational needs.
| Period | Research and Development Expenses | General and Administrative Expenses | Total Operating Expenses | Net Loss |
|---|---|---|---|---|
| 9 Months Ended September 30, 2024 | $233.7 million | $28.9 million | $262.7 million | $248.7 million |
| 9 Months Ended September 30, 2023 | $88.6 million | $21.4 million | $110.0 million | $102.0 million |
Key Financial Metrics
As of September 30, 2024, the company reported an accumulated deficit of $706.2 million. The outstanding principal amount under the loan agreement was $35.0 million, scheduled to mature on October 1, 2028.
In terms of capital raising, net cash provided by financing activities for the nine months ended September 30, 2024, was $82.2 million, primarily from the exercise of common stock warrants generating $54.2 million and net proceeds of $21.0 million from the sale of common stock under the 2023 ATM Facility.
| Financing Activity | Amount (in millions) |
|---|---|
| Proceeds from exercise of common stock warrants | $54.2 |
| Net proceeds from 2023 ATM Facility | $21.0 |
| Net proceeds from public offerings (March 2023) | $296.8 |
| Net proceeds from public offerings (December 2023) | $161.8 |
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Resources:
- 89bio, Inc. (ETNB) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of 89bio, Inc. (ETNB)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View 89bio, Inc. (ETNB)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.