Intrinsic value of Arbutus Biopharma Corporation - ABUS

Previous Close

$3.53

  Intrinsic Value

$0.83

stock screener

  Rating & Target

str. sell

-76%

Previous close

$3.53

 
Intrinsic value

$0.83

 
Up/down potential

-76%

 
Rating

str. sell

We calculate the intrinsic value of ABUS 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 0001), $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 0.2

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  6
  6
  6
  7
  7
  7
  7
  8
  8
  8
  8
  9
  9
  10
  10
  10
  11
  11
  12
  12
  13
  14
  14
  15
  16
  16
  17
  18
  19
  20
Variable operating expenses, $m
  34
  34
  35
  36
  37
  38
  40
  41
  43
  44
  45
  47
  49
  51
  53
  55
  58
  60
  63
  66
  69
  72
  76
  79
  83
  87
  91
  95
  100
  105
Fixed operating expenses, $m
  65
  67
  68
  70
  71
  73
  75
  76
  78
  80
  81
  83
  85
  87
  89
  91
  93
  95
  97
  99
  101
  103
  106
  108
  110
  113
  115
  118
  120
  123
Total operating expenses, $m
  99
  101
  103
  106
  108
  111
  115
  117
  121
  124
  126
  130
  134
  138
  142
  146
  151
  155
  160
  165
  170
  175
  182
  187
  193
  200
  206
  213
  220
  228
Operating income, $m
  -93
  -95
  -97
  -99
  -102
  -104
  -107
  -110
  -113
  -116
  -118
  -121
  -124
  -128
  -132
  -136
  -140
  -144
  -148
  -152
  -157
  -162
  -167
  -172
  -178
  -183
  -189
  -195
  -202
  -208
EBITDA, $m
  -90
  -92
  -94
  -97
  -99
  -101
  -104
  -107
  -110
  -112
  -116
  -119
  -122
  -125
  -129
  -133
  -137
  -141
  -145
  -149
  -154
  -158
  -163
  -168
  -173
  -179
  -185
  -190
  -197
  -203
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
Earnings before tax, $m
  -93
  -95
  -97
  -100
  -102
  -105
  -107
  -110
  -113
  -116
  -118
  -122
  -125
  -129
  -133
  -137
  -141
  -145
  -149
  -154
  -159
  -164
  -169
  -174
  -180
  -186
  -192
  -198
  -205
  -211
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
Net income, $m
  -93
  -95
  -97
  -100
  -102
  -105
  -107
  -110
  -113
  -116
  -118
  -122
  -125
  -129
  -133
  -137
  -141
  -145
  -149
  -154
  -159
  -164
  -169
  -174
  -180
  -186
  -192
  -198
  -205
  -211

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $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 assets, $m
  118
  120
  123
  127
  131
  135
  140
  145
  150
  156
  162
  168
  175
  183
  191
  199
  208
  217
  227
  238
  249
  260
  273
  285
  299
  313
  328
  344
  361
  378
Adjusted assets (=assets-cash), $m
  118
  120
  123
  127
  131
  135
  140
  145
  150
  156
  162
  168
  175
  183
  191
  199
  208
  217
  227
  238
  249
  260
  273
  285
  299
  313
  328
  344
  361
  378
Revenue / Adjusted assets
  0.051
  0.050
  0.049
  0.055
  0.053
  0.052
  0.050
  0.055
  0.053
  0.051
  0.049
  0.054
  0.051
  0.055
  0.052
  0.050
  0.053
  0.051
  0.053
  0.050
  0.052
  0.054
  0.051
  0.053
  0.054
  0.051
  0.052
  0.052
  0.053
  0.053
Average production assets, $m
  49
  51
  52
  53
  55
  57
  59
  61
  63
  65
  68
  71
  74
  77
  80
  84
  87
  91
  96
  100
  105
  109
  115
  120
  126
  132
  138
  145
  152
  159
Working capital, $m
  -7
  -7
  -7
  -7
  -8
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -11
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -20
  -21
  -22
Total debt, $m
  1
  1
  2
  3
  4
  5
  6
  7
  9
  10
  12
  13
  15
  17
  18
  21
  23
  25
  27
  30
  33
  35
  38
  41
  45
  48
  52
  56
  60
  64
Total liabilities, $m
  28
  29
  30
  31
  32
  33
  34
  35
  36
  38
  39
  41
  42
  44
  46
  48
  50
  53
  55
  58
  60
  63
  66
  69
  72
  76
  79
  83
  87
  92
Total equity, $m
  89
  91
  94
  96
  99
  102
  106
  110
  114
  118
  123
  128
  133
  139
  145
  151
  158
  165
  172
  180
  189
  197
  207
  216
  227
  238
  249
  261
  274
  287
Total liabilities and equity, $m
  117
  120
  124
  127
  131
  135
  140
  145
  150
  156
  162
  169
  175
  183
  191
  199
  208
  218
  227
  238
  249
  260
  273
  285
  299
  314
  328
  344
  361
  379
Debt-to-equity ratio
  0.010
  0.020
  0.020
  0.030
  0.040
  0.050
  0.060
  0.070
  0.080
  0.080
  0.090
  0.100
  0.110
  0.120
  0.130
  0.140
  0.140
  0.150
  0.160
  0.170
  0.170
  0.180
  0.190
  0.190
  0.200
  0.200
  0.210
  0.210
  0.220
  0.220
Adjusted equity ratio
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758
  0.758

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -93
  -95
  -97
  -100
  -102
  -105
  -107
  -110
  -113
  -116
  -118
  -122
  -125
  -129
  -133
  -137
  -141
  -145
  -149
  -154
  -159
  -164
  -169
  -174
  -180
  -186
  -192
  -198
  -205
  -211
Depreciation, amort., depletion, $m
  3
  3
  3
  3
  3
  3
  3
  3
  3
  3
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
  5
  5
  5
Funds from operations, $m
  -90
  -92
  -94
  -97
  -99
  -102
  -104
  -107
  -110
  -113
  -116
  -119
  -123
  -126
  -130
  -134
  -138
  -142
  -146
  -151
  -155
  -160
  -165
  -170
  -176
  -181
  -187
  -193
  -200
  -206
Change in working capital, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
Cash from operations, $m
  -90
  -92
  -94
  -97
  -99
  -101
  -104
  -107
  -110
  -113
  -116
  -119
  -122
  -126
  -129
  -133
  -137
  -141
  -146
  -150
  -155
  -159
  -164
  -170
  -175
  -181
  -186
  -192
  -199
  -205
Maintenance CAPEX, $m
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
New CAPEX, $m
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -7
Cash from investing activities, $m
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -7
  -7
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -10
  -12
  -12
  -12
Free cash flow, $m
  -93
  -95
  -97
  -100
  -102
  -105
  -108
  -111
  -114
  -117
  -120
  -124
  -128
  -131
  -135
  -139
  -144
  -148
  -153
  -158
  -163
  -168
  -173
  -179
  -185
  -191
  -197
  -204
  -210
  -218
Issuance/(repayment) of debt, $m
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
Issuance/(repurchase) of shares, $m
  95
  97
  100
  102
  105
  108
  111
  114
  117
  120
  123
  127
  130
  134
  139
  143
  147
  152
  157
  162
  167
  173
  178
  184
  190
  197
  203
  210
  217
  225
Cash from financing (excl. dividends), $m  
  96
  98
  101
  103
  106
  109
  112
  115
  118
  121
  124
  129
  132
  136
  141
  145
  149
  154
  159
  165
  170
  176
  181
  187
  193
  200
  207
  214
  221
  229
Total cash flow (excl. dividends), $m
  4
  3
  3
  3
  4
  4
  4
  4
  4
  5
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  8
  8
  8
  9
  9
  10
  10
  11
  11
Retained Cash Flow (-), $m
  -95
  -97
  -100
  -102
  -105
  -108
  -111
  -114
  -117
  -120
  -123
  -127
  -130
  -134
  -139
  -143
  -147
  -152
  -157
  -162
  -167
  -173
  -178
  -184
  -190
  -197
  -203
  -210
  -217
  -225
Prev. year cash balance distribution, $m
  113
  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
  21
  -94
  -97
  -99
  -101
  -104
  -107
  -110
  -113
  -116
  -119
  -122
  -126
  -130
  -133
  -137
  -142
  -146
  -150
  -155
  -160
  -165
  -170
  -176
  -181
  -187
  -193
  -200
  -206
  -213
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
  21
  -86
  -84
  -81
  -79
  -75
  -72
  -69
  -65
  -61
  -57
  -52
  -48
  -44
  -39
  -35
  -31
  -27
  -23
  -20
  -17
  -14
  -11
  -9
  -7
  -5
  -4
  -3
  -2
  -2
Current shareholders' claim on cash, %
  47.9
  23.1
  11.1
  5.3
  2.6
  1.2
  0.6
  0.3
  0.1
  0.1
  0.0
  0.0
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Arbutus Biopharma Corporation, formerly Tekmira Pharmaceuticals Corporation, is a therapeutic solutions company. The Company is engaged in discovering, developing and commercializing a cure for patients suffering from chronic hepatitis B infection (HBV), a disease of the liver caused by the hepatitis B virus (HBV). It is developing a pipeline focused on advancing Ribo Nucleic Acid interference therapeutics (RNAi) using its Lipid Nanoparticle technology. The Company's lead RNAi HBV candidate, ARB-1467, eliminates HBV surface antigen expression in patients chronically infected with HBV. ARB-1467 is being developed as a multi-component RNAi therapeutic that targets various sites on the HBV genome. It is also developing small molecule covalently closed circular deoxyribonucleic acid (cccDNA) formation inhibitors, multiple small molecule orally bioavailable inhibitors of HBV surface antigen production and secretion, cccDNA epigenetic modifiers and stimulator of interferon genes agonists.

FINANCIAL RATIOS  of  Arbutus Biopharma Corporation (ABUS)

Valuation Ratios
P/E Ratio -0.5
Price to Sales 193.6
Price to Book 1
Price to Tangible Book
Price to Cash Flow -3.3
Price to Free Cash Flow -3.1
Growth Rates
Sales Growth Rate -96%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 100%
Cap. Spend. - 3 Yr. Gr. Rate 32%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 5.9%
Total Debt to Equity 5.9%
Interest Coverage 0
Management Effectiveness
Return On Assets -77.7%
Ret/ On Assets - 3 Yr. Avg. -44.5%
Return On Total Capital -100.7%
Ret/ On T. Cap. - 3 Yr. Avg. -57.6%
Return On Equity -102.3%
Return On Equity - 3 Yr. Avg. -58.2%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin -48800%
EBITDA Margin - 3 Yr. Avg. -16452.4%
Operating Margin -49400%
Oper. Margin - 3 Yr. Avg. -16677.3%
Pre-Tax Margin -48900%
Pre-Tax Margin - 3 Yr. Avg. -16489.3%
Net Profit Margin -38400%
Net Profit Margin - 3 Yr. Avg. -12968%
Effective Tax Rate 21.5%
Eff/ Tax Rate - 3 Yr. Avg. 14.1%
Payout Ratio 0%

ABUS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ABUS stock intrinsic value calculation we used $6 million for the last fiscal year's total revenue generated by Arbutus Biopharma Corporation. The default revenue input number comes from 0001 income statement of Arbutus Biopharma Corporation. 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 ABUS stock valuation model: a) initial revenue growth rate of 2% 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 ABUS is calculated based on our internal credit rating of Arbutus Biopharma Corporation, 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 Arbutus Biopharma Corporation.
    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 ABUS stock the variable cost ratio is equal to 550%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $64 million in the base year in the intrinsic value calculation for ABUS 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 5.4% for Arbutus Biopharma Corporation.

Corporate tax rate of 27% is the nominal tax rate for Arbutus Biopharma Corporation. 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 ABUS 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 ABUS are equal to 808.2%.

Life of production assets of 39.4 years is the average useful life of capital assets used in Arbutus Biopharma Corporation 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 ABUS is equal to -110.5%. 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 - $200.234 million for Arbutus Biopharma Corporation - 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 57.285 million for Arbutus Biopharma Corporation 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 Arbutus Biopharma Corporation at the current share price and the inputted number of shares is $0.2 billion.

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