Ocumension Therapeutics (HKG:1477): Are Analysts Optimistic?

Ocumension Therapeutics (HKG:1477) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Ocumension Therapeutics, together with its subsidiaries, operates as an ophthalmic pharmaceutical platform company in the People's Republic of China. On 31 December 2022, the HK$6.2b market-cap company posted a loss of CN¥403m for its most recent financial year. The most pressing concern for investors is Ocumension Therapeutics' 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.

View our latest analysis for Ocumension Therapeutics

Consensus from 4 of the Hong Kong Pharmaceuticals analysts is that Ocumension Therapeutics is on the verge of breakeven. They expect the company to post a final loss in 2024, before turning a profit of CN¥532m in 2025. So, the company is predicted to breakeven approximately 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 60% is expected, which is rather optimistic! Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Ocumension Therapeutics' growth isn’t the focus of this broad overview, however, take into account that by and large 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’d like to point out is that Ocumension Therapeutics has no debt on its balance sheet, which is quite unusual for a cash-burning 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:

There are too many aspects of Ocumension Therapeutics to cover in one brief article, but the key fundamentals for the company can all be found in one place – Ocumension Therapeutics' company page on Simply Wall St. We've also put together a list of relevant factors you should further research:

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.