When Will Ascelia Pharma AB (publ) (STO:ACE) Become Profitable?

With the business potentially at an important milestone, we thought we'd take a closer look at Ascelia Pharma AB (publ)'s (STO:ACE) future prospects. Ascelia Pharma AB (publ), a biotech company, focuses on orphan oncology treatments in Sweden. With the latest financial year loss of kr109m and a trailing-twelve-month loss of kr62m, the kr260m market-cap company alleviated its loss by moving closer towards its target of breakeven. As path to profitability is the topic on Ascelia Pharma's 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.

See our latest analysis for Ascelia Pharma

According to the 2 industry analysts covering Ascelia Pharma, the consensus is that breakeven is near. They expect the company to post a final loss in 2026, before turning a profit of kr70m in 2027. So, the company is predicted to breakeven approximately 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2027? Working backwards from analyst estimates, it turns out that they expect the company to grow 47% year-on-year, on average, which is extremely buoyant. 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 Ascelia Pharma given that this is a high-level summary, however, keep in mind that by and large biotechs, depending on the stage of product development, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

One thing we’d like to point out is that The company has managed its capital judiciously, with debt making up 24% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of Ascelia Pharma to cover in one brief article, but the key fundamentals for the company can all be found in one place – Ascelia Pharma's company page on Simply Wall St. We've also compiled a list of essential aspects you should further research:

1. Valuation: What is Ascelia Pharma 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 Ascelia Pharma 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 Ascelia Pharma’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.