[Reporter Reading Securities Report] Organoid Science to Turn Profitable in 2027... New Material Evaluation Solution Performance 'Crucial'

Development of Organoid-Based Regenerative Therapeutics and New Material Efficacy Evaluation Solutions
Continued Losses Through Q3 Last Year... "Profitability Expected by 2027"
New Material Evaluation Solutions Projected to Account for Over 50% of Total Sales at Break-Even Point

Organoid Science has submitted a securities registration statement and officially entered the public offering process for listing on the KOSDAQ. The company, entering the stock market through a technology evaluation, is expected to turn profitable only by 2027. The business area that will have the greatest impact on performance is the new material evaluation solution sector. Since the timing of profitability is expected to vary depending on the growth of this sector, highlighting growth potential is likely to become increasingly important.

Organoid Science was established in 2018. The company’s main business is developing treatments for intractable diseases using 'organoid' technology, which reproduces human organs by three-dimensional culturing of stem cells. Organoids exhibit excellent regenerative abilities when transplanted into damaged tissues. Due to their high fidelity in mimicking the human body, they are widely used as models to evaluate the efficacy of new materials such as new drugs, health functional foods, and cosmetics.

The company’s business areas currently consist of three main categories: new material evaluation solutions, RUO product sales, and others (such as technology transfers). The new material evaluation solution business is conducted through the organoid-based new material efficacy evaluation solution called 'ODISEI.' This service evaluates and predicts the effects of various new materials, including new drugs, foods, and cosmetics, when applied to the human body. RUO refers to reagents used for organoid research and development (R&D).

Organoid Science plans to enter the stock market through a technology special case listing. Companies listed via technology special cases often operate at a loss, and Organoid Science is no exception. As of the third quarter of last year, the consolidated operating revenue was 586.89 million KRW, with an operating loss of 10.1 billion KRW.

Accordingly, the company presented future projected performance. The break-even point is expected in 2027. Last year’s projected sales and operating loss were 1.956 billion KRW and 11.965 billion KRW, respectively. Sales are expected to reach 5.894 billion KRW this year and achieve 28.767 billion KRW by 2027. During the same period, operating loss is expected to improve from a loss of 13.574 billion KRW to a profit of 475 million KRW.

The most critical factor for turning profitable is expected to be the new material evaluation solution. The company has a total of three subsidiaries. Including Organoid Science and its three subsidiaries, the proportion of new material solution sales in total sales by 2027 is expected to be 56.07% (16.131 billion KRW).

Through the securities registration statement, the company explained, "From this year, with the full-scale operation of overseas subsidiaries, sales are expected not only domestically but also internationally. Recently, the gut organoid-based ODISEI-GUT and skin organoid-based ODISEI-SKIN have also successfully established themselves in the market, and discussions are underway to sign project contracts with several clients."

The lead underwriter, Korea Investment & Securities, used the price-earnings ratio (PER) to calculate the desired public offering price. The performance used was the estimated net income for 2028 of 12.494 billion KRW. Comparable companies included Hyundai BioLand, DreamCIS, HK Inno.N, and C&R Research. Their average price-earnings ratio (PER) is 15.30 times. Using these figures, the per-share valuation was calculated at 27,908 KRW. Applying a discount rate of 24.75% to 39.09%, the desired public offering price was proposed at 17,000 to 21,000 KRW.

However, since the break-even point is expected in 2027, it seems important to appeal to investors regarding future growth potential. This is because many technology special case companies have failed to meet their expected break-even timelines and have continued to experience poor performance.