Apellis Pharmaceuticals, Inc. (NASDAQ:APLS) Is Expected To Breakeven In The Near Future

With the business potentially at an important milestone, we thought we'd take a closer look at Apellis Pharmaceuticals, Inc.'s (NASDAQ:APLS) future prospects. Apellis Pharmaceuticals, Inc., a commercial-stage biopharmaceutical company, focuses on the discovery, development, and commercialization of therapeutic compounds through the inhibition of the complement system for autoimmune and inflammatory diseases. The US$7.2b market-cap company announced a latest loss of US$652m on 31 December 2022 for its most recent financial year result. The most pressing concern for investors is Apellis Pharmaceuticals' path to profitability – when will it breakeven? 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 Apellis Pharmaceuticals

According to the 16 industry analysts covering Apellis Pharmaceuticals, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2024, before generating positive profits of US$80m in 2025. So, the company is predicted to breakeven approximately 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2025? Working backwards from analyst estimates, it turns out that they expect the company to grow 60% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Apellis Pharmaceuticals' growth isn’t the focus of this broad overview, however, keep in mind that by and large a biotech has lumpy cash flows which are contingent on the product type and stage of development the company is in. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one issue worth mentioning. Apellis Pharmaceuticals currently has a relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Apellis Pharmaceuticals' case is 55%. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

There are key fundamentals of Apellis Pharmaceuticals 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 Apellis Pharmaceuticals, take a look at Apellis Pharmaceuticals' company page on Simply Wall St. We've also put together a list of pertinent factors you should look at:

1. Valuation: What is Apellis Pharmaceuticals 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 Apellis Pharmaceuticals 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 Apellis Pharmaceuticals’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.