Intrinsic value of Adaptimmune Therapeutics plc - ADAP

Previous Close

$3.88

  Intrinsic Value

$0.50

stock screener

  Rating & Target

str. sell

-87%

Previous close

$3.88

 
Intrinsic value

$0.50

 
Up/down potential

-87%

 
Rating

str. sell

We calculate the intrinsic value of ADAP 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 0.4

 

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
  61
  63
  64
  66
  68
  70
  73
  75
  78
  81
  84
  88
  91
  95
  99
  104
  108
  113
  118
  124
  129
  135
  142
  148
  156
  163
  171
  179
  188
  197
Variable operating expenses, $m
  64
  66
  67
  69
  71
  73
  75
  78
  81
  84
  83
  87
  90
  94
  98
  103
  107
  112
  117
  122
  128
  134
  140
  147
  154
  161
  169
  177
  186
  195
Fixed operating expenses, $m
  82
  84
  85
  87
  89
  91
  93
  95
  97
  99
  102
  104
  106
  108
  111
  113
  116
  118
  121
  124
  126
  129
  132
  135
  138
  141
  144
  147
  150
  154
Total operating expenses, $m
  146
  150
  152
  156
  160
  164
  168
  173
  178
  183
  185
  191
  196
  202
  209
  216
  223
  230
  238
  246
  254
  263
  272
  282
  292
  302
  313
  324
  336
  349
Operating income, $m
  -85
  -87
  -88
  -90
  -92
  -94
  -96
  -98
  -100
  -102
  -101
  -103
  -105
  -108
  -110
  -112
  -115
  -117
  -120
  -122
  -125
  -128
  -131
  -133
  -136
  -139
  -142
  -145
  -148
  -152
EBITDA, $m
  -73
  -75
  -77
  -78
  -80
  -81
  -83
  -85
  -87
  -88
  -90
  -92
  -94
  -95
  -97
  -99
  -101
  -103
  -105
  -107
  -109
  -110
  -112
  -114
  -116
  -118
  -120
  -122
  -124
  -127
Interest expense (income), $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
Earnings before tax, $m
  -85
  -87
  -88
  -90
  -92
  -94
  -96
  -98
  -101
  -103
  -101
  -104
  -106
  -108
  -111
  -113
  -116
  -119
  -121
  -124
  -127
  -130
  -133
  -136
  -139
  -142
  -145
  -148
  -152
  -155
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
  -85
  -87
  -88
  -90
  -92
  -94
  -96
  -98
  -101
  -103
  -101
  -104
  -106
  -108
  -111
  -113
  -116
  -119
  -121
  -124
  -127
  -130
  -133
  -136
  -139
  -142
  -145
  -148
  -152
  -155

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
  94
  96
  98
  101
  104
  108
  111
  115
  119
  124
  129
  134
  140
  146
  152
  159
  166
  173
  181
  189
  198
  207
  217
  227
  238
  250
  262
  274
  287
  301
Adjusted assets (=assets-cash), $m
  94
  96
  98
  101
  104
  108
  111
  115
  119
  124
  129
  134
  140
  146
  152
  159
  166
  173
  181
  189
  198
  207
  217
  227
  238
  250
  262
  274
  287
  301
Revenue / Adjusted assets
  0.649
  0.656
  0.653
  0.653
  0.654
  0.648
  0.658
  0.652
  0.655
  0.653
  0.651
  0.657
  0.650
  0.651
  0.651
  0.654
  0.651
  0.653
  0.652
  0.656
  0.652
  0.652
  0.654
  0.652
  0.655
  0.652
  0.653
  0.653
  0.655
  0.654
Average production assets, $m
  40
  41
  42
  43
  44
  46
  47
  49
  51
  53
  55
  57
  59
  62
  65
  68
  71
  74
  77
  81
  84
  88
  92
  97
  101
  106
  111
  117
  122
  128
Working capital, $m
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -8
Total debt, $m
  1
  1
  2
  3
  4
  5
  6
  8
  9
  10
  12
  14
  16
  17
  20
  22
  24
  26
  29
  32
  35
  38
  41
  44
  48
  51
  55
  59
  64
  68
Total liabilities, $m
  30
  31
  32
  33
  34
  35
  36
  37
  39
  40
  42
  44
  45
  47
  49
  52
  54
  56
  59
  62
  64
  67
  71
  74
  77
  81
  85
  89
  93
  98
Total equity, $m
  63
  65
  66
  68
  70
  73
  75
  78
  81
  84
  87
  91
  94
  98
  103
  107
  112
  117
  122
  128
  134
  140
  147
  153
  161
  168
  177
  185
  194
  203
Total liabilities and equity, $m
  93
  96
  98
  101
  104
  108
  111
  115
  120
  124
  129
  135
  139
  145
  152
  159
  166
  173
  181
  190
  198
  207
  218
  227
  238
  249
  262
  274
  287
  301
Debt-to-equity ratio
  0.010
  0.020
  0.030
  0.040
  0.060
  0.070
  0.080
  0.100
  0.110
  0.120
  0.140
  0.150
  0.160
  0.180
  0.190
  0.200
  0.210
  0.230
  0.240
  0.250
  0.260
  0.270
  0.280
  0.290
  0.300
  0.300
  0.310
  0.320
  0.330
  0.330
Adjusted equity ratio
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675
  0.675

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -85
  -87
  -88
  -90
  -92
  -94
  -96
  -98
  -101
  -103
  -101
  -104
  -106
  -108
  -111
  -113
  -116
  -119
  -121
  -124
  -127
  -130
  -133
  -136
  -139
  -142
  -145
  -148
  -152
  -155
Depreciation, amort., depletion, $m
  11
  12
  12
  12
  12
  13
  13
  13
  14
  14
  11
  11
  12
  12
  13
  13
  14
  14
  15
  16
  17
  17
  18
  19
  20
  21
  22
  23
  24
  25
Funds from operations, $m
  -73
  -75
  -77
  -78
  -80
  -82
  -83
  -85
  -87
  -89
  -91
  -92
  -94
  -96
  -98
  -100
  -102
  -104
  -106
  -108
  -110
  -112
  -114
  -117
  -119
  -121
  -123
  -125
  -128
  -130
Change in working capital, $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 from operations, $m
  -73
  -75
  -77
  -78
  -80
  -82
  -83
  -85
  -87
  -89
  -90
  -92
  -94
  -96
  -98
  -100
  -102
  -104
  -106
  -108
  -110
  -112
  -114
  -116
  -118
  -121
  -123
  -125
  -127
  -130
Maintenance CAPEX, $m
  -8
  -8
  -8
  -8
  -8
  -9
  -9
  -9
  -10
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -17
  -17
  -18
  -19
  -20
  -21
  -22
  -23
  -24
New CAPEX, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
  -4
  -4
  -4
  -4
  -4
  -5
  -5
  -5
  -5
  -6
  -6
Cash from investing activities, $m
  -9
  -9
  -9
  -9
  -9
  -10
  -11
  -11
  -12
  -12
  -12
  -13
  -13
  -15
  -15
  -16
  -16
  -17
  -17
  -19
  -20
  -21
  -21
  -22
  -24
  -25
  -26
  -27
  -29
  -30
Free cash flow, $m
  -82
  -84
  -86
  -88
  -90
  -92
  -94
  -96
  -98
  -101
  -103
  -105
  -108
  -110
  -113
  -115
  -118
  -121
  -124
  -127
  -130
  -133
  -136
  -139
  -142
  -145
  -149
  -152
  -156
  -160
Issuance/(repayment) of debt, $m
  1
  1
  1
  1
  1
  1
  1
  1
  1
  1
  2
  2
  2
  2
  2
  2
  2
  2
  3
  3
  3
  3
  3
  3
  4
  4
  4
  4
  4
  5
Issuance/(repurchase) of shares, $m
  86
  88
  90
  92
  94
  97
  99
  101
  103
  106
  105
  107
  110
  112
  115
  118
  121
  124
  127
  130
  133
  136
  139
  143
  146
  149
  153
  157
  161
  165
Cash from financing (excl. dividends), $m  
  87
  89
  91
  93
  95
  98
  100
  102
  104
  107
  107
  109
  112
  114
  117
  120
  123
  126
  130
  133
  136
  139
  142
  146
  150
  153
  157
  161
  165
  170
Total cash flow (excl. dividends), $m
  5
  5
  5
  5
  6
  6
  6
  6
  7
  7
  3
  4
  4
  4
  4
  5
  5
  5
  5
  6
  6
  6
  7
  7
  7
  8
  8
  9
  9
  10
Retained Cash Flow (-), $m
  -86
  -88
  -90
  -92
  -94
  -97
  -99
  -101
  -103
  -106
  -105
  -107
  -110
  -112
  -115
  -118
  -121
  -124
  -127
  -130
  -133
  -136
  -139
  -143
  -146
  -149
  -153
  -157
  -161
  -165
Prev. year cash balance distribution, $m
  185
  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
  104
  -83
  -85
  -87
  -89
  -91
  -93
  -95
  -97
  -99
  -101
  -104
  -106
  -108
  -111
  -113
  -116
  -118
  -121
  -124
  -127
  -130
  -132
  -135
  -139
  -142
  -145
  -148
  -152
  -155
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
  99
  -76
  -74
  -71
  -69
  -66
  -63
  -59
  -56
  -52
  -48
  -44
  -40
  -36
  -33
  -29
  -25
  -22
  -19
  -16
  -13
  -11
  -9
  -7
  -5
  -4
  -3
  -2
  -2
  -1
Current shareholders' claim on cash, %
  54.3
  29.4
  15.9
  8.6
  4.7
  2.6
  1.4
  0.8
  0.4
  0.2
  0.1
  0.1
  0.0
  0.0
  0.0
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Adaptimmune Therapeutics plc is a clinical-stage biopharmaceutical company. The Company is focused on cancer immunotherapy products based on its Specific Peptide Enhanced Affinity Receptor (SPEAR) T-cell platform. The Company has developed a platform that enables it to identify cancer targets, find and genetically engineer TCR, and produce TCR therapeutic candidates for administration to patients. The Company engineers TCRs to increase the affinity to cancer specific peptides in order to destroy cancer cells in patients. The Company is developing multiple SPEAR T-cells to different target peptides in selected disease indications to increase the probability of treating patients with a given disease indication and potentially the ability for re-treatment of patients with a different SPEAR T-cell. It has three SPEAR T-cells in clinical trials, which are directed to cancer testis antigens, NY-ESO-1, MAGE-A4 and MAGE-A10.

FINANCIAL RATIOS  of  Adaptimmune Therapeutics plc (ADAP)

Valuation Ratios
P/E Ratio -22.9
Price to Sales 117.7
Price to Book 9.9
Price to Tangible Book
Price to Cash Flow -34.3
Price to Free Cash Flow -27
Growth Rates
Sales Growth Rate 55.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 30%
Cap. Spend. - 3 Yr. Gr. Rate 67%
Financial Strength
Quick Ratio NaN
Current Ratio 0.4
LT Debt to Equity 0%
Total Debt to Equity 0%
Interest Coverage 0
Management Effectiveness
Return On Assets -27.6%
Ret/ On Assets - 3 Yr. Avg. -16.2%
Return On Total Capital -35.9%
Ret/ On T. Cap. - 3 Yr. Avg. -20.9%
Return On Equity -35.9%
Return On Equity - 3 Yr. Avg. -20.9%
Asset Turnover 0.1
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin -485.7%
EBITDA Margin - 3 Yr. Avg. -313.8%
Operating Margin -521.4%
Oper. Margin - 3 Yr. Avg. -340.5%
Pre-Tax Margin -507.1%
Pre-Tax Margin - 3 Yr. Avg. -328.3%
Net Profit Margin -514.3%
Net Profit Margin - 3 Yr. Avg. -323.3%
Effective Tax Rate -1.4%
Eff/ Tax Rate - 3 Yr. Avg. 2.9%
Payout Ratio 0%

ADAP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ADAP stock intrinsic value calculation we used $60 million for the last fiscal year's total revenue generated by Adaptimmune Therapeutics plc. The default revenue input number comes from 0001 income statement of Adaptimmune Therapeutics plc. 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 ADAP 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 ADAP is calculated based on our internal credit rating of Adaptimmune Therapeutics plc, 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 Adaptimmune Therapeutics plc.
    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 ADAP stock the variable cost ratio is equal to 105%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $80 million in the base year in the intrinsic value calculation for ADAP 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 Adaptimmune Therapeutics plc.

Corporate tax rate of 27% is the nominal tax rate for Adaptimmune Therapeutics plc. 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 ADAP 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 ADAP are equal to 65.2%.

Life of production assets of 5.1 years is the average useful life of capital assets used in Adaptimmune Therapeutics plc 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 ADAP is equal to -4.3%. 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 - $246.885 million for Adaptimmune Therapeutics plc - 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 104.693 million for Adaptimmune Therapeutics plc 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 Adaptimmune Therapeutics plc at the current share price and the inputted number of shares is $0.4 billion.

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