When Will Lipocine Inc. (NASDAQ:LPCN) Turn A Profit?

We feel now is a pretty good time to analyse Lipocine Inc.'s (NASDAQ:LPCN) business as it appears the company may be on the cusp of a considerable accomplishment. Lipocine Inc., a clinical-stage biopharmaceutical company, focuses on the development of pharmaceutical products for the treatment of metabolic and endocrine disorders. The US$119m market-cap company announced a latest loss of US$21m on 31 December 2020 for its most recent financial year result. The most pressing concern for investors is Lipocine's 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.

See our latest analysis for Lipocine

According to the 3 industry analysts covering Lipocine, the consensus is that breakeven is near. They expect the company to post a final loss in 2021, before turning a profit of US$22m in 2022. So, the company is predicted 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 50% is expected, which is extremely buoyant. 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 Lipocine's upcoming projects, but, keep in mind that generally pharmaceuticals, 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 36% 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:

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

1. Historical Track Record: What has Lipocine'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 Lipocine'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. 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.
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