Intrinsic value of Agios Pharmaceuticals - AGIO

Previous Close

$71.12

  Intrinsic Value

$1.90

stock screener

  Rating & Target

str. sell

-97%

  Value-price divergence*

-136%

Previous close

$71.12

 
Intrinsic value

$1.90

 
Up/down potential

-97%

 
Rating

str. sell

 
Value-price divergence*

-136%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of AGIO stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 3.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  18.64
  57.10
  51.89
  47.20
  42.98
  39.18
  35.76
  32.69
  29.92
  27.43
  25.18
  23.17
  21.35
  19.71
  18.24
  16.92
  15.73
  14.65
  13.69
  12.82
  12.04
  11.33
  10.70
  10.13
  9.62
  9.16
  8.74
  8.37
  8.03
  7.73
  7.45
Revenue, $m
  70
  110
  167
  246
  352
  489
  664
  881
  1,145
  1,459
  1,827
  2,250
  2,730
  3,269
  3,865
  4,519
  5,229
  5,996
  6,817
  7,690
  8,616
  9,593
  10,619
  11,695
  12,820
  13,994
  15,217
  16,490
  17,814
  19,190
  20,621
Variable operating expenses, $m
 
  331
  503
  741
  1,060
  1,475
  2,002
  2,657
  3,452
  4,398
  5,506
  6,781
  8,229
  9,852
  11,649
  13,620
  15,762
  18,071
  20,545
  23,179
  25,969
  28,912
  32,006
  35,249
  38,639
  42,177
  45,863
  49,700
  53,691
  57,839
  62,150
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  271
  331
  503
  741
  1,060
  1,475
  2,002
  2,657
  3,452
  4,398
  5,506
  6,781
  8,229
  9,852
  11,649
  13,620
  15,762
  18,071
  20,545
  23,179
  25,969
  28,912
  32,006
  35,249
  38,639
  42,177
  45,863
  49,700
  53,691
  57,839
  62,150
Operating income, $m
  -201
  -221
  -336
  -495
  -708
  -985
  -1,338
  -1,775
  -2,306
  -2,939
  -3,679
  -4,531
  -5,499
  -6,583
  -7,784
  -9,101
  -10,532
  -12,075
  -13,728
  -15,488
  -17,353
  -19,320
  -21,387
  -23,554
  -25,819
  -28,183
  -30,646
  -33,210
  -35,877
  -38,649
  -41,530
EBITDA, $m
  -195
  -214
  -325
  -478
  -683
  -951
  -1,291
  -1,714
  -2,226
  -2,837
  -3,551
  -4,374
  -5,308
  -6,354
  -7,513
  -8,784
  -10,166
  -11,656
  -13,251
  -14,950
  -16,750
  -18,648
  -20,644
  -22,735
  -24,922
  -27,203
  -29,581
  -32,056
  -34,630
  -37,306
  -40,086
Interest expense (income), $m
  0
  0
  -5
  -3
  0
  3
  8
  14
  22
  31
  42
  55
  70
  87
  106
  127
  150
  175
  201
  230
  261
  293
  328
  364
  402
  441
  482
  525
  570
  616
  665
Earnings before tax, $m
  -198
  -221
  -331
  -492
  -708
  -989
  -1,346
  -1,789
  -2,328
  -2,970
  -3,721
  -4,586
  -5,569
  -6,670
  -7,890
  -9,227
  -10,682
  -12,250
  -13,930
  -15,719
  -17,614
  -19,613
  -21,715
  -23,918
  -26,221
  -28,624
  -31,129
  -33,735
  -36,447
  -39,265
  -42,195
Tax expense, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Net income, $m
  -198
  -221
  -331
  -492
  -708
  -989
  -1,346
  -1,789
  -2,328
  -2,970
  -3,721
  -4,586
  -5,569
  -6,670
  -7,890
  -9,227
  -10,682
  -12,250
  -13,930
  -15,719
  -17,614
  -19,613
  -21,715
  -23,918
  -26,221
  -28,624
  -31,129
  -33,735
  -36,447
  -39,265
  -42,195

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  541
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  619
  123
  186
  274
  392
  545
  741
  983
  1,277
  1,627
  2,037
  2,508
  3,044
  3,644
  4,309
  5,038
  5,830
  6,684
  7,599
  8,573
  9,606
  10,694
  11,839
  13,038
  14,292
  15,600
  16,964
  18,383
  19,859
  21,394
  22,988
Adjusted assets (=assets-cash), $m
  78
  123
  186
  274
  392
  545
  741
  983
  1,277
  1,627
  2,037
  2,508
  3,044
  3,644
  4,309
  5,038
  5,830
  6,684
  7,599
  8,573
  9,606
  10,694
  11,839
  13,038
  14,292
  15,600
  16,964
  18,383
  19,859
  21,394
  22,988
Revenue / Adjusted assets
  0.897
  0.894
  0.898
  0.898
  0.898
  0.897
  0.896
  0.896
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
  0.897
Average production assets, $m
  25
  38
  58
  86
  123
  171
  233
  309
  401
  511
  639
  787
  956
  1,144
  1,353
  1,582
  1,830
  2,099
  2,386
  2,692
  3,016
  3,357
  3,717
  4,093
  4,487
  4,898
  5,326
  5,771
  6,235
  6,717
  7,217
Working capital, $m
  472
  -108
  -165
  -242
  -347
  -482
  -655
  -869
  -1,129
  -1,439
  -1,801
  -2,218
  -2,692
  -3,223
  -3,811
  -4,456
  -5,156
  -5,912
  -6,721
  -7,583
  -8,496
  -9,458
  -10,471
  -11,531
  -12,640
  -13,798
  -15,004
  -16,259
  -17,564
  -18,921
  -20,332
Total debt, $m
  0
  -150
  -92
  -13
  93
  231
  407
  624
  889
  1,204
  1,573
  1,997
  2,479
  3,020
  3,618
  4,274
  4,987
  5,756
  6,579
  7,456
  8,385
  9,365
  10,395
  11,474
  12,603
  13,780
  15,007
  16,285
  17,613
  18,994
  20,430
Total liabilities, $m
  261
  110
  168
  247
  353
  491
  667
  884
  1,149
  1,464
  1,833
  2,257
  2,739
  3,280
  3,878
  4,534
  5,247
  6,016
  6,839
  7,716
  8,645
  9,625
  10,655
  11,734
  12,863
  14,040
  15,267
  16,545
  17,873
  19,254
  20,690
Total equity, $m
  359
  12
  19
  27
  39
  55
  74
  98
  128
  163
  204
  251
  304
  364
  431
  504
  583
  668
  760
  857
  961
  1,069
  1,184
  1,304
  1,429
  1,560
  1,696
  1,838
  1,986
  2,139
  2,299
Total liabilities and equity, $m
  620
  122
  187
  274
  392
  546
  741
  982
  1,277
  1,627
  2,037
  2,508
  3,043
  3,644
  4,309
  5,038
  5,830
  6,684
  7,599
  8,573
  9,606
  10,694
  11,839
  13,038
  14,292
  15,600
  16,963
  18,383
  19,859
  21,393
  22,989
Debt-to-equity ratio
  0.000
  -12.210
  -4.960
  -0.490
  2.370
  4.230
  5.490
  6.350
  6.960
  7.400
  7.720
  7.960
  8.150
  8.290
  8.400
  8.480
  8.550
  8.610
  8.660
  8.700
  8.730
  8.760
  8.780
  8.800
  8.820
  8.830
  8.850
  8.860
  8.870
  8.880
  8.890
Adjusted equity ratio
  -2.333
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100
  0.100

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -198
  -221
  -331
  -492
  -708
  -989
  -1,346
  -1,789
  -2,328
  -2,970
  -3,721
  -4,586
  -5,569
  -6,670
  -7,890
  -9,227
  -10,682
  -12,250
  -13,930
  -15,719
  -17,614
  -19,613
  -21,715
  -23,918
  -26,221
  -28,624
  -31,129
  -33,735
  -36,447
  -39,265
  -42,195
Depreciation, amort., depletion, $m
  6
  8
  12
  17
  25
  34
  47
  62
  80
  102
  128
  157
  191
  229
  271
  316
  366
  420
  477
  538
  603
  671
  743
  819
  897
  980
  1,065
  1,154
  1,247
  1,343
  1,443
Funds from operations, $m
  226
  -214
  -319
  -475
  -683
  -954
  -1,299
  -1,728
  -2,248
  -2,868
  -3,593
  -4,429
  -5,378
  -6,441
  -7,619
  -8,911
  -10,316
  -11,830
  -13,453
  -15,180
  -17,011
  -18,942
  -20,971
  -23,099
  -25,323
  -27,645
  -30,063
  -32,581
  -35,200
  -37,922
  -40,751
Change in working capital, $m
  187
  -39
  -56
  -78
  -104
  -136
  -173
  -214
  -260
  -310
  -362
  -417
  -474
  -531
  -588
  -645
  -701
  -756
  -809
  -862
  -913
  -963
  -1,012
  -1,061
  -1,109
  -1,157
  -1,206
  -1,255
  -1,306
  -1,357
  -1,410
Cash from operations, $m
  39
  -174
  -263
  -397
  -579
  -819
  -1,127
  -1,514
  -1,988
  -2,558
  -3,231
  -4,012
  -4,904
  -5,910
  -7,031
  -8,266
  -9,615
  -11,075
  -12,643
  -14,319
  -16,098
  -17,979
  -19,959
  -22,038
  -24,214
  -26,487
  -28,857
  -31,326
  -33,894
  -36,565
  -39,341
Maintenance CAPEX, $m
  0
  -5
  -8
  -12
  -17
  -25
  -34
  -47
  -62
  -80
  -102
  -128
  -157
  -191
  -229
  -271
  -316
  -366
  -420
  -477
  -538
  -603
  -671
  -743
  -819
  -897
  -980
  -1,065
  -1,154
  -1,247
  -1,343
New CAPEX, $m
  -10
  -14
  -20
  -28
  -37
  -48
  -61
  -76
  -92
  -110
  -129
  -148
  -168
  -188
  -209
  -229
  -249
  -268
  -287
  -306
  -324
  -342
  -359
  -377
  -394
  -411
  -428
  -446
  -463
  -482
  -501
Cash from investing activities, $m
  -119
  -19
  -28
  -40
  -54
  -73
  -95
  -123
  -154
  -190
  -231
  -276
  -325
  -379
  -438
  -500
  -565
  -634
  -707
  -783
  -862
  -945
  -1,030
  -1,120
  -1,213
  -1,308
  -1,408
  -1,511
  -1,617
  -1,729
  -1,844
Free cash flow, $m
  -80
  -193
  -291
  -436
  -633
  -891
  -1,222
  -1,636
  -2,142
  -2,748
  -3,462
  -4,288
  -5,230
  -6,290
  -7,469
  -8,766
  -10,180
  -11,709
  -13,350
  -15,102
  -16,960
  -18,924
  -20,990
  -23,158
  -25,427
  -27,795
  -30,265
  -32,837
  -35,512
  -38,294
  -41,185
Issuance/(repayment) of debt, $m
  0
  -150
  57
  79
  106
  138
  176
  218
  265
  315
  369
  425
  482
  540
  598
  656
  713
  769
  823
  877
  929
  980
  1,030
  1,079
  1,129
  1,178
  1,227
  1,277
  1,328
  1,381
  1,435
Issuance/(repurchase) of shares, $m
  170
  416
  338
  501
  719
  1,004
  1,365
  1,814
  2,358
  3,005
  3,762
  4,634
  5,622
  6,730
  7,956
  9,300
  10,761
  12,335
  14,021
  15,816
  17,717
  19,722
  21,829
  24,037
  26,346
  28,755
  31,265
  33,877
  36,594
  39,419
  42,354
Cash from financing (excl. dividends), $m  
  170
  266
  395
  580
  825
  1,142
  1,541
  2,032
  2,623
  3,320
  4,131
  5,059
  6,104
  7,270
  8,554
  9,956
  11,474
  13,104
  14,844
  16,693
  18,646
  20,702
  22,859
  25,116
  27,475
  29,933
  32,492
  35,154
  37,922
  40,800
  43,789
Total cash flow (excl. dividends), $m
  89
  73
  104
  144
  192
  251
  319
  395
  480
  572
  669
  771
  875
  980
  1,086
  1,191
  1,294
  1,395
  1,494
  1,591
  1,686
  1,778
  1,869
  1,959
  2,048
  2,137
  2,227
  2,318
  2,411
  2,506
  2,605
Retained Cash Flow (-), $m
  -14
  -416
  -338
  -501
  -719
  -1,004
  -1,365
  -1,814
  -2,358
  -3,005
  -3,762
  -4,634
  -5,622
  -6,730
  -7,956
  -9,300
  -10,761
  -12,335
  -14,021
  -15,816
  -17,717
  -19,722
  -21,829
  -24,037
  -26,346
  -28,755
  -31,265
  -33,877
  -36,594
  -39,419
  -42,354
Prev. year cash balance distribution, $m
 
  541
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  198
  -234
  -357
  -527
  -753
  -1,047
  -1,418
  -1,877
  -2,433
  -3,093
  -3,863
  -4,748
  -5,750
  -6,870
  -8,110
  -9,467
  -10,940
  -12,527
  -14,225
  -16,031
  -17,944
  -19,960
  -22,079
  -24,298
  -26,618
  -29,038
  -31,559
  -34,184
  -36,913
  -39,749
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  190
  -214
  -311
  -434
  -584
  -760
  -958
  -1,173
  -1,398
  -1,622
  -1,835
  -2,026
  -2,186
  -2,306
  -2,381
  -2,406
  -2,380
  -2,307
  -2,190
  -2,037
  -1,856
  -1,656
  -1,447
  -1,238
  -1,035
  -847
  -677
  -529
  -403
  -299
Current shareholders' claim on cash, %
  100
  50.0
  12.7
  3.3
  0.9
  0.2
  0.1
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Agios Pharmaceuticals, Inc. is a clinical-stage biopharmaceutical company. The Company's therapeutic areas of focus are cancer and rare genetic metabolic disorders, which are a group of over 600 rare genetic diseases caused by mutations, or defects, of single metabolic genes. The Company's cancer product candidates are enasidenib and ivosidenib (AG-120), which target mutated isocitrate dehydrogenase 2 (IDH2) and isocitrate dehydrogenase 1 (IDH1), respectively, and AG-881, which targets both mutated IDH1 and mutated IDH2. These mutations are found in a range of hematological malignancies and solid tumors. The lead product candidate in its rare genetic metabolic disorder (RGD), programs, AG-348, targets pyruvate kinase-R for the treatment of pyruvate kinase deficiency. Pyruvate kinase deficiency is a rare disorder that often results in severe hemolytic anemia due to inherited mutations in the pyruvate kinase enzyme within red blood cells.

FINANCIAL RATIOS  of  Agios Pharmaceuticals (AGIO)

Valuation Ratios
P/E Ratio -15.2
Price to Sales 42.9
Price to Book 8.4
Price to Tangible Book
Price to Cash Flow 77
Price to Free Cash Flow 103.5
Growth Rates
Sales Growth Rate 18.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -50%
Cap. Spend. - 3 Yr. Gr. Rate 58.5%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets -38.1%
Ret/ On Assets - 3 Yr. Avg. -26.5%
Return On Total Capital -56.3%
Ret/ On T. Cap. - 3 Yr. Avg. -35.5%
Return On Equity -56.3%
Return On Equity - 3 Yr. Avg. -35.5%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin -274.3%
EBITDA Margin - 3 Yr. Avg. -183.6%
Operating Margin -287.1%
Oper. Margin - 3 Yr. Avg. -190.6%
Pre-Tax Margin -282.9%
Pre-Tax Margin - 3 Yr. Avg. -188.6%
Net Profit Margin -282.9%
Net Profit Margin - 3 Yr. Avg. -188.6%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

AGIO stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the AGIO stock intrinsic value calculation we used $70 million for the last fiscal year's total revenue generated by Agios Pharmaceuticals. The default revenue input number comes from 2016 income statement of Agios Pharmaceuticals. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our AGIO stock valuation model: a) initial revenue growth rate of 57.1% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for AGIO is calculated based on our internal credit rating of Agios Pharmaceuticals, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Agios Pharmaceuticals.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of AGIO stock the variable cost ratio is equal to 301.4%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for AGIO stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for Agios Pharmaceuticals.

Corporate tax rate of 27% is the nominal tax rate for Agios Pharmaceuticals. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the AGIO stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for AGIO are equal to 35%.

Life of production assets of 4.1 years is the average useful life of capital assets used in Agios Pharmaceuticals operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for AGIO is equal to -98.6%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $359 million for Agios Pharmaceuticals - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 47.302 million for Agios Pharmaceuticals is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Agios Pharmaceuticals at the current share price and the inputted number of shares is $3.4 billion.

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COMPANY NEWS

▶ Agios Pharmaceuticals reports 2Q loss   [Aug-08-17 10:23PM  Associated Press]
▶ This Small Biotech Launched To A 9-Month High Today Here's Why   [Aug-02-17 04:07PM  Investor's Business Daily]
▶ Biotech Rally Stumbles As These Small Caps Pull Back   [Jun-26-17 04:10PM  Investor's Business Daily]
▶ Agio Pharma Sinks on Midstage Trial   [11:05AM  24/7 Wall St.]
▶ Agios Pharmaceuticals reports 1Q loss   [08:01AM  Associated Press]
▶ The 1 Stock I'd Buy Right Now   [Apr-26-17 08:04AM  Motley Fool]
▶ Agios Announces Closing of Public Offering   [Apr-24-17 04:01PM  GlobeNewswire]
▶ Agios Announces Proposed Offering of Common Stock   [Apr-17-17 04:01PM  GlobeNewswire]
▶ Biotechs Among 5 Stocks Setting Up for Major Breakouts   [Mar-12-17 02:40PM  TheStreet.com]
▶ Agios Pharmaceuticals 4Q Loss $1.48 Per Share   [Feb-17-17 12:30PM  at Investopedia]
Financial statements of AGIO
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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