Breakeven On The Horizon For Alpha Cognition Inc. (CSE:ACOG)

Alpha Cognition Inc. (CSE:ACOG) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Alpha Cognition Inc., a clinical stage biopharmaceutical company, develops treatments for Alzheimer’s disease and amyotrophic lateral sclerosis (ALS). The company’s loss has recently broadened since it announced a US$14m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$17m, moving it further away from breakeven. Many investors are wondering about the rate at which Alpha Cognition will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

View our latest analysis for Alpha Cognition

According to some industry analysts covering Alpha Cognition, breakeven is near. They expect the company to post a final loss in 2024, before turning a profit of US$3.4m in 2025. So, the company is predicted to breakeven just over a year 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 66%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for Alpha Cognition given that this is a high-level summary, though, keep in mind that generally 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.

One thing we would like to bring into light with Alpha Cognition is its debt-to-equity ratio of over 2x. Generally, the rule of thumb is 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 around investing in the loss-making company.

Next Steps:

There are key fundamentals of Alpha Cognition 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 Alpha Cognition, take a look at Alpha Cognition's company page on Simply Wall St. We've also compiled a list of pertinent aspects you should further research:

1. Historical Track Record: What has Alpha Cognition'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 Alpha Cognition'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.

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