Intrinsic value of Paratek Pharmaceuticals - PRTK

Previous Close

$10.60

  Intrinsic Value

$0.75

stock screener

  Rating & Target

str. sell

-93%

Previous close

$10.60

 
Intrinsic value

$0.75

 
Up/down potential

-93%

 
Rating

str. sell

We calculate the intrinsic value of PRTK 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

Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Shares outstanding, mln

 

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, %
  -100.00
  60.00
  54.50
  49.55
  45.10
  41.09
  37.48
  34.23
  31.31
  28.68
  26.31
  24.18
  22.26
  20.53
  18.98
  17.58
  16.32
  15.19
  14.17
  13.26
  12.43
  11.69
  11.02
  10.42
  9.87
  9.39
  8.95
  8.55
  8.20
  7.88
  7.59
Revenue, $m
  0
  21
  32
  48
  70
  98
  135
  182
  238
  307
  387
  481
  588
  709
  844
  992
  1,154
  1,329
  1,517
  1,719
  1,932
  2,158
  2,396
  2,645
  2,906
  3,179
  3,464
  3,760
  4,068
  4,389
  4,722
Variable operating expenses, $m
 
  78,796
  121,740
  182,062
  264,163
  372,696
  512,371
  687,752
  903,062
  1,162,021
  1,467,727
  1,822,584
  2,228,284
  2,685,832
  3,195,609
  3,757,469
  4,370,839
  5,034,839
  5,748,400
  6,510,362
  7,319,579
  8,174,998
  9,075,722
  10,021,071
  11,010,614
  12,044,197
  13,121,965
  14,244,364
  15,412,151
  16,626,384
  17,888,421
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
  110
  78,796
  121,740
  182,062
  264,163
  372,696
  512,371
  687,752
  903,062
  1,162,021
  1,467,727
  1,822,584
  2,228,284
  2,685,832
  3,195,609
  3,757,469
  4,370,839
  5,034,839
  5,748,400
  6,510,362
  7,319,579
  8,174,998
  9,075,722
  10,021,071
  11,010,614
  12,044,197
  13,121,965
  14,244,364
  15,412,151
  16,626,384
  17,888,421
Operating income, $m
  -109
  -78,775
  -121,708
  -182,014
  -264,094
  -372,598
  -512,236
  -687,571
  -902,824
  -1,161,715
  -1,467,340
  -1,822,103
  -2,227,696
  -2,685,123
  -3,194,766
  -3,756,477
  -4,369,685
  -5,033,510
  -5,746,882
  -6,508,643
  -7,317,647
  -8,172,840
  -9,073,327
  -10,018,426
  -11,007,707
  -12,041,018
  -13,118,501
  -14,240,604
  -15,408,083
  -16,621,995
  -17,883,699
EBITDA, $m
  -107
  -78,775
  -121,707
  -182,013
  -264,092
  -372,595
  -512,233
  -687,566
  -902,818
  -1,161,708
  -1,467,331
  -1,822,092
  -2,227,683
  -2,685,107
  -3,194,747
  -3,756,455
  -4,369,659
  -5,033,480
  -5,746,848
  -6,508,604
  -7,317,603
  -8,172,791
  -9,073,273
  -10,018,366
  -11,007,642
  -12,040,946
  -13,118,423
  -14,240,519
  -15,407,991
  -16,621,896
  -17,883,592
Interest expense (income), $m
  2
  6
  2
  4
  8
  12
  18
  26
  36
  48
  62
  79
  99
  121
  147
  175
  206
  240
  277
  317
  359
  404
  451
  501
  554
  609
  666
  726
  788
  853
  920
Earnings before tax, $m
  -112
  -78,782
  -121,710
  -182,019
  -264,101
  -372,610
  -512,254
  -687,597
  -902,860
  -1,161,762
  -1,467,402
  -1,822,182
  -2,227,795
  -2,685,244
  -3,194,913
  -3,756,652
  -4,369,891
  -5,033,751
  -5,747,159
  -6,508,960
  -7,318,006
  -8,173,243
  -9,073,778
  -10,018,927
  -11,008,261
  -12,041,626
  -13,119,167
  -14,241,330
  -15,408,871
  -16,622,848
  -17,884,619
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
  -112
  -78,782
  -121,710
  -182,019
  -264,101
  -372,610
  -512,254
  -687,597
  -902,860
  -1,161,762
  -1,467,402
  -1,822,182
  -2,227,795
  -2,685,244
  -3,194,913
  -3,756,652
  -4,369,891
  -5,033,751
  -5,747,159
  -6,508,960
  -7,318,006
  -8,173,243
  -9,073,778
  -10,018,927
  -11,008,261
  -12,041,626
  -13,119,167
  -14,241,330
  -15,408,871
  -16,622,848
  -17,884,619

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  128
  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
  136
  47
  73
  109
  158
  223
  307
  412
  541
  696
  879
  1,091
  1,334
  1,608
  1,913
  2,249
  2,616
  3,014
  3,441
  3,897
  4,381
  4,893
  5,433
  5,998
  6,591
  7,209
  7,854
  8,526
  9,225
  9,952
  10,708
Adjusted assets (=assets-cash), $m
  8
  47
  73
  109
  158
  223
  307
  412
  541
  696
  879
  1,091
  1,334
  1,608
  1,913
  2,249
  2,616
  3,014
  3,441
  3,897
  4,381
  4,893
  5,433
  5,998
  6,591
  7,209
  7,854
  8,526
  9,225
  9,952
  10,708
Revenue / Adjusted assets
  0.000
  0.447
  0.438
  0.440
  0.443
  0.439
  0.440
  0.442
  0.440
  0.441
  0.440
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
  0.441
Average production assets, $m
  2
  5
  7
  11
  16
  22
  31
  41
  54
  69
  88
  109
  133
  160
  191
  224
  261
  300
  343
  388
  437
  488
  541
  598
  657
  719
  783
  850
  919
  992
  1,067
Working capital, $m
  112
  -6
  -9
  -14
  -20
  -28
  -38
  -51
  -67
  -87
  -109
  -136
  -166
  -200
  -238
  -280
  -325
  -375
  -428
  -485
  -545
  -609
  -676
  -746
  -820
  -897
  -977
  -1,060
  -1,147
  -1,238
  -1,332
Total debt, $m
  40
  20
  43
  76
  120
  178
  254
  348
  464
  603
  768
  959
  1,178
  1,424
  1,699
  2,002
  2,332
  2,690
  3,074
  3,485
  3,921
  4,382
  4,867
  5,376
  5,909
  6,466
  7,047
  7,651
  8,280
  8,934
  9,614
Total liabilities, $m
  64
  42
  66
  98
  142
  201
  276
  371
  486
  626
  791
  982
  1,200
  1,447
  1,722
  2,024
  2,355
  2,712
  3,097
  3,507
  3,943
  4,404
  4,889
  5,399
  5,932
  6,488
  7,069
  7,674
  8,303
  8,957
  9,637
Total equity, $m
  72
  5
  7
  11
  16
  22
  31
  41
  54
  70
  88
  109
  133
  161
  191
  225
  262
  301
  344
  390
  438
  489
  543
  600
  659
  721
  785
  853
  923
  995
  1,071
Total liabilities and equity, $m
  136
  47
  73
  109
  158
  223
  307
  412
  540
  696
  879
  1,091
  1,333
  1,608
  1,913
  2,249
  2,617
  3,013
  3,441
  3,897
  4,381
  4,893
  5,432
  5,999
  6,591
  7,209
  7,854
  8,527
  9,226
  9,952
  10,708
Debt-to-equity ratio
  0.556
  4.230
  5.910
  6.930
  7.580
  7.990
  8.270
  8.450
  8.580
  8.680
  8.740
  8.790
  8.830
  8.860
  8.880
  8.900
  8.910
  8.930
  8.930
  8.940
  8.950
  8.950
  8.960
  8.960
  8.970
  8.970
  8.970
  8.970
  8.980
  8.980
  8.980
Adjusted equity ratio
  -7.000
  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
  -112
  -78,782
  -121,710
  -182,019
  -264,101
  -372,610
  -512,254
  -687,597
  -902,860
  -1,161,762
  -1,467,402
  -1,822,182
  -2,227,795
  -2,685,244
  -3,194,913
  -3,756,652
  -4,369,891
  -5,033,751
  -5,747,159
  -6,508,960
  -7,318,006
  -8,173,243
  -9,073,778
  -10,018,927
  -11,008,261
  -12,041,626
  -13,119,167
  -14,241,330
  -15,408,871
  -16,622,848
  -17,884,619
Depreciation, amort., depletion, $m
  2
  1
  1
  1
  2
  2
  3
  4
  5
  7
  9
  11
  13
  16
  19
  22
  26
  30
  34
  39
  44
  49
  54
  60
  66
  72
  78
  85
  92
  99
  107
Funds from operations, $m
  -89
  -78,781
  -121,709
  -182,018
  -264,100
  -372,608
  -512,251
  -687,593
  -902,854
  -1,161,755
  -1,467,393
  -1,822,172
  -2,227,781
  -2,685,228
  -3,194,893
  -3,756,630
  -4,369,865
  -5,033,721
  -5,747,125
  -6,508,921
  -7,317,962
  -8,173,195
  -9,073,724
  -10,018,868
  -11,008,195
  -12,041,555
  -13,119,089
  -14,241,245
  -15,408,779
  -16,622,749
  -17,884,513
Change in working capital, $m
  5
  -2
  -3
  -4
  -6
  -8
  -10
  -13
  -16
  -19
  -23
  -26
  -30
  -34
  -38
  -42
  -46
  -49
  -53
  -57
  -60
  -64
  -67
  -70
  -74
  -77
  -80
  -84
  -87
  -90
  -94
Cash from operations, $m
  -94
  -78,779
  -121,706
  -182,013
  -264,094
  -372,600
  -512,241
  -687,579
  -902,838
  -1,161,736
  -1,467,371
  -1,822,145
  -2,227,751
  -2,685,194
  -3,194,856
  -3,756,588
  -4,369,819
  -5,033,671
  -5,747,072
  -6,508,864
  -7,317,902
  -8,173,131
  -9,073,657
  -10,018,797
  -11,008,122
  -12,041,478
  -13,119,008
  -14,241,162
  -15,408,692
  -16,622,658
  -17,884,419
Maintenance CAPEX, $m
  0
  0
  0
  -1
  -1
  -2
  -2
  -3
  -4
  -5
  -7
  -9
  -11
  -13
  -16
  -19
  -22
  -26
  -30
  -34
  -39
  -44
  -49
  -54
  -60
  -66
  -72
  -78
  -85
  -92
  -99
New CAPEX, $m
  -1
  -2
  -3
  -4
  -5
  -6
  -8
  -10
  -13
  -15
  -18
  -21
  -24
  -27
  -30
  -34
  -37
  -40
  -43
  -45
  -48
  -51
  -54
  -56
  -59
  -62
  -64
  -67
  -70
  -72
  -75
Cash from investing activities, $m
  -75
  -2
  -3
  -5
  -6
  -8
  -10
  -13
  -17
  -20
  -25
  -30
  -35
  -40
  -46
  -53
  -59
  -66
  -73
  -79
  -87
  -95
  -103
  -110
  -119
  -128
  -136
  -145
  -155
  -164
  -174
Free cash flow, $m
  -169
  -78,781
  -121,709
  -182,017
  -264,100
  -372,608
  -512,251
  -687,593
  -902,855
  -1,161,757
  -1,467,396
  -1,822,175
  -2,227,786
  -2,685,234
  -3,194,902
  -3,756,640
  -4,369,878
  -5,033,737
  -5,747,144
  -6,508,944
  -7,317,989
  -8,173,226
  -9,073,759
  -10,018,908
  -11,008,240
  -12,041,605
  -13,119,145
  -14,241,307
  -15,408,846
  -16,622,823
  -17,884,593
Issuance/(repayment) of debt, $m
  20
  -39
  23
  32
  44
  58
  75
  94
  116
  140
  165
  191
  219
  246
  275
  303
  330
  358
  384
  410
  436
  461
  485
  509
  533
  557
  581
  605
  629
  654
  680
Issuance/(repurchase) of shares, $m
  71
  78,839
  121,713
  182,022
  264,106
  372,617
  512,263
  687,607
  902,872
  1,161,778
  1,467,420
  1,822,204
  2,227,819
  2,685,271
  3,194,943
  3,756,686
  4,369,928
  5,033,790
  5,747,202
  6,509,005
  7,318,054
  8,173,295
  9,073,832
  10,018,984
  11,008,320
  12,041,688
  13,119,231
  14,241,397
  15,408,941
  16,622,920
  17,884,695
Cash from financing (excl. dividends), $m  
  91
  78,800
  121,736
  182,054
  264,150
  372,675
  512,338
  687,701
  902,988
  1,161,918
  1,467,585
  1,822,395
  2,228,038
  2,685,517
  3,195,218
  3,756,989
  4,370,258
  5,034,148
  5,747,586
  6,509,415
  7,318,490
  8,173,756
  9,074,317
  10,019,493
  11,008,853
  12,042,245
  13,119,812
  14,242,002
  15,409,570
  16,623,574
  17,885,375
Total cash flow (excl. dividends), $m
  -78
  19
  27
  37
  51
  67
  87
  109
  133
  160
  189
  220
  251
  283
  316
  348
  380
  411
  442
  472
  501
  530
  558
  585
  613
  640
  667
  695
  723
  752
  782
Retained Cash Flow (-), $m
  29
  -78,839
  -121,713
  -182,022
  -264,106
  -372,617
  -512,263
  -687,607
  -902,872
  -1,161,778
  -1,467,420
  -1,822,204
  -2,227,819
  -2,685,271
  -3,194,943
  -3,756,686
  -4,369,928
  -5,033,790
  -5,747,202
  -6,509,005
  -7,318,054
  -8,173,295
  -9,073,832
  -10,018,984
  -11,008,320
  -12,041,688
  -13,119,231
  -14,241,397
  -15,408,941
  -16,622,920
  -17,884,695
Prev. year cash balance distribution, $m
 
  135
  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
 
  3
  5
  8
  12
  17
  25
  34
  45
  60
  77
  97
  120
  147
  177
  211
  248
  288
  332
  379
  430
  483
  539
  599
  661
  727
  795
  866
  940
  1,017
  1,097
Cash available for distribution, $m
 
  -78,685
  -121,686
  -181,985
  -264,055
  -372,549
  -512,176
  -687,498
  -902,739
  -1,161,617
  -1,467,231
  -1,821,984
  -2,227,568
  -2,684,988
  -3,194,627
  -3,756,338
  -4,369,548
  -5,033,379
  -5,746,760
  -6,508,534
  -7,317,553
  -8,172,765
  -9,073,274
  -10,018,399
  -11,007,707
  -12,041,048
  -13,118,564
  -14,240,702
  -15,408,217
  -16,622,168
  -17,883,913
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
 
  -75,441
  -111,400
  -158,376
  -217,423
  -288,772
  -371,707
  -464,464
  -564,234
  -667,288
  -769,213
  -865,234
  -950,583
  -1,020,882
  -1,072,492
  -1,102,797
  -1,110,395
  -1,095,180
  -1,058,322
  -1,002,129
  -929,838
  -845,334
  -752,843
  -656,617
  -560,644
  -468,413
  -382,734
  -305,646
  -238,388
  -181,446
  -134,659
Current shareholders' claim on cash, %
  100
  50.0
  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
  0.0
  0.0
  0.0
  0.0
  0.0
  0.0

Paratek Pharmaceuticals, Inc. is a clinical-stage biopharmaceutical company. The Company is focused on the development and commercialization of therapeutics based upon tetracycline chemistry. Its product candidates are the antibacterials omadacycline and sarecycline. Omadacycline is an antibiotic being developed for use as an empiric monotherapy option for patients suffering from serious, community-acquired bacterial infections. Sarecycline is a tetracycline-derived compound designed for use in the treatment of acne and rosacea. Its other product candidates are tetracycline-derived, molecular entities and are designed to utilize the recognized immune-modulation, anti-inflammatory and other beneficial properties of the tetracycline class. These research stage programs include product candidates for multiple sclerosis, spinal muscular atrophy, systemic inflammatory diseases, such as rheumatoid arthritis and inflammatory bowel diseases.

FINANCIAL RATIOS  of  Paratek Pharmaceuticals (PRTK)

Valuation Ratios
P/E Ratio -2.2
Price to Sales 0
Price to Book 3.4
Price to Tangible Book
Price to Cash Flow -2.6
Price to Free Cash Flow -2.6
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity 55.6%
Total Debt to Equity 55.6%
Interest Coverage -55
Management Effectiveness
Return On Assets -78%
Ret/ On Assets - 3 Yr. Avg. -55.3%
Return On Total Capital -95.7%
Ret/ On T. Cap. - 3 Yr. Avg. -71.4%
Return On Equity -129.5%
Return On Equity - 3 Yr. Avg. -87%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. -150%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. -66.7%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. -150%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. -150%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. 0%
Payout Ratio 0%

PRTK stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the PRTK stock intrinsic value calculation we used $13 million for the last fiscal year's total revenue generated by Paratek Pharmaceuticals. The default revenue input number comes from 2016 income statement of Paratek 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 PRTK stock valuation model: a) initial revenue growth rate of 60% 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 PRTK is calculated based on our internal credit rating of Paratek 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 Paratek 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 PRTK stock the variable cost ratio is equal to 378828.5%.

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 PRTK 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 10.3% for Paratek Pharmaceuticals.

Corporate tax rate of 27% is the nominal tax rate for Paratek 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 PRTK stock is equal to 25%.

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 PRTK are equal to 22.6%.

Life of production assets of 10 years is the average useful life of capital assets used in Paratek 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 PRTK is equal to -28.2%. 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 - $82 million for Paratek 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 27 million for Paratek 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 Paratek Pharmaceuticals at the current share price and the inputted number of shares is $0.3 billion.

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COMPANY NEWS

▶ Paratek: 1Q Earnings Snapshot   [May-09-18 08:01AM  Associated Press]
▶ Heres Whats Moving Conatus And Paratek   [08:32AM  Market Exclusive]
▶ Top Growth Stocks To Buy Today   [Feb-14-18 11:02AM  Simply Wall St.]
▶ Why Paratek Pharmaceuticals Is Sinking Today   [Jan-18-18 04:09PM  Motley Fool]
▶ Paratek Announces Public Offering of Common Stock   [Jan-17-18 04:06PM  GlobeNewswire]
▶ Paratek Provides Update on Pipeline Progress   [Jan-03-18 07:00AM  GlobeNewswire]
▶ Best-In-Class NasdaqGM Growth Stocks   [Dec-10-17 11:02AM  Simply Wall St.]
▶ 3 Companies Spearheading the Antibiotics Space in 2018   [Nov-10-17 11:15AM  24/7 Wall St.]
▶ Paratek reports 3Q loss   [08:15AM  Associated Press]
▶ These Pharma Executives Are Showing Their Cards   [Oct-27-17 08:00AM  Bloomberg]
▶ Why Nabriva Therapeutics Shares Are Falling Today   [Sep-20-17 12:11PM  Motley Fool]
▶ Why Nabriva Therapeutics PLC Is Skyrocketing   [Sep-18-17 12:43PM  Motley Fool]
▶ Paratek reports 2Q loss   [Aug-02-17 11:06PM  Associated Press]
▶ Biotech Movers: Paratek, Opko, Endo   [Jun-30-17 09:22AM  TheStreet.com]
Financial statements of PRTK
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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