When Will Ocumension Therapeutics (HKG:1477) Turn A Profit?

With the business potentially at an important milestone, we thought we'd take a closer look at Ocumension Therapeutics' (HKG:1477) future prospects. Ocumension Therapeutics, together with its subsidiaries, operates as an ophthalmic pharmaceutical platform company in the People's Republic of China. The HK$4.0b market-cap company’s loss lessened since it announced a CN¥380m loss in the full financial year, compared to the latest trailing-twelve-month loss of CN¥323m, as it approaches breakeven. As path to profitability is the topic on Ocumension Therapeutics' investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Check out our latest analysis for Ocumension Therapeutics

According to the 3 industry analysts covering Ocumension Therapeutics, the consensus is that breakeven is near. They expect the company to post a final loss in 2025, before turning a profit of CN¥177m in 2026. The company is therefore projected to breakeven just over a year from today. 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 97% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of Ocumension Therapeutics' upcoming projects, though, keep in mind that by and large pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

One thing we’d like to point out is that Ocumension Therapeutics has no debt on its balance sheet, which is rare for a loss-making pharma, which typically has high debt relative to its equity. This means that the company has been operating purely on its equity investment and has no debt burden. This aspect reduces the risk around investing in the loss-making company.

Next Steps:

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

1. Valuation: What is Ocumension 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 Ocumension 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 Ocumension 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.

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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.