Intrinsic value of Clovis Oncology - CLVS

Previous Close

$15.08

  Intrinsic Value

$1.35

stock screener

  Rating & Target

str. sell

-91%

Previous close

$15.08

 
Intrinsic value

$1.35

 
Up/down potential

-91%

 
Rating

str. sell

We calculate the intrinsic value of CLVS 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 0.8

 

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, %
  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
  89
  137
  205
  298
  420
  578
  775
  1,018
  1,310
  1,654
  2,054
  2,512
  3,027
  3,602
  4,235
  4,927
  5,675
  6,479
  7,338
  8,250
  9,215
  10,230
  11,296
  12,411
  13,576
  14,791
  16,056
  17,372
  18,741
  20,164
Variable operating expenses, $m
  452,904
  699,733
  1,046,446
  1,518,337
  2,142,150
  2,944,959
  3,952,994
  5,190,528
  6,678,946
  8,436,049
  10,475,649
  12,807,484
  15,437,325
  18,367,370
  21,596,764
  25,122,222
  28,938,693
  33,040,014
  37,419,536
  42,070,666
  46,987,346
  52,164,432
  57,598,005
  63,285,587
  69,226,302
  75,420,976
  81,872,180
  88,584,255
  95,563,287
  102,817,086
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
  452,904
  699,733
  1,046,446
  1,518,337
  2,142,150
  2,944,959
  3,952,994
  5,190,528
  6,678,946
  8,436,049
  10,475,649
  12,807,484
  15,437,325
  18,367,370
  21,596,764
  25,122,222
  28,938,693
  33,040,014
  37,419,536
  42,070,666
  46,987,346
  52,164,432
  57,598,005
  63,285,587
  69,226,302
  75,420,976
  81,872,180
  88,584,255
  95,563,287
  102,817,086
Operating income, $m
  -452,816
  -699,595
  -1,046,241
  -1,518,039
  -2,141,730
  -2,944,381
  -3,952,218
  -5,189,510
  -6,677,636
  -8,434,395
  -10,473,594
  -12,804,973
  -15,434,298
  -18,363,768
  -21,592,529
  -25,117,296
  -28,933,018
  -33,033,535
  -37,412,198
  -42,062,416
  -46,978,131
  -52,154,202
  -57,586,709
  -63,273,176
  -69,212,726
  -75,406,185
  -81,856,124
  -88,566,882
  -95,544,546
  -102,796,923
EBITDA, $m
  -452,805
  -699,583
  -1,046,227
  -1,518,023
  -2,141,710
  -2,944,357
  -3,952,189
  -5,189,474
  -6,677,592
  -8,434,342
  -10,473,539
  -12,804,905
  -15,434,217
  -18,363,671
  -21,592,415
  -25,117,164
  -28,932,866
  -33,033,362
  -37,412,001
  -42,062,195
  -46,977,884
  -52,153,928
  -57,586,407
  -63,272,843
  -69,212,363
  -75,405,789
  -81,855,695
  -88,566,417
  -95,544,045
  -102,796,383
Interest expense (income), $m
  7
  15
  15
  26
  41
  61
  88
  122
  166
  219
  283
  359
  447
  548
  661
  788
  927
  1,079
  1,243
  1,420
  1,609
  1,810
  2,022
  2,245
  2,479
  2,725
  2,981
  3,248
  3,526
  3,816
  4,117
Earnings before tax, $m
  -452,831
  -699,610
  -1,046,266
  -1,518,080
  -2,141,791
  -2,944,469
  -3,952,341
  -5,189,676
  -6,677,855
  -8,434,678
  -10,473,953
  -12,805,420
  -15,434,845
  -18,364,429
  -21,593,316
  -25,118,222
  -28,934,096
  -33,034,778
  -37,413,618
  -42,064,025
  -46,979,941
  -52,156,224
  -57,588,954
  -63,275,655
  -69,215,451
  -75,409,166
  -81,859,372
  -88,570,409
  -95,548,362
  -102,801,039
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
  -452,831
  -699,610
  -1,046,266
  -1,518,080
  -2,141,791
  -2,944,469
  -3,952,341
  -5,189,676
  -6,677,855
  -8,434,678
  -10,473,953
  -12,805,420
  -15,434,845
  -18,364,429
  -21,593,316
  -25,118,222
  -28,934,096
  -33,034,778
  -37,413,618
  -42,064,025
  -46,979,941
  -52,156,224
  -57,588,954
  -63,275,655
  -69,215,451
  -75,409,166
  -81,859,372
  -88,570,409
  -95,548,362
  -102,801,039

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
  402
  621
  929
  1,347
  1,901
  2,613
  3,508
  4,606
  5,927
  7,486
  9,296
  11,365
  13,699
  16,299
  19,164
  22,293
  25,680
  29,319
  33,205
  37,333
  41,696
  46,290
  51,111
  56,158
  61,430
  66,927
  72,652
  78,608
  84,801
  91,238
Adjusted assets (=assets-cash), $m
  402
  621
  929
  1,347
  1,901
  2,613
  3,508
  4,606
  5,927
  7,486
  9,296
  11,365
  13,699
  16,299
  19,164
  22,293
  25,680
  29,319
  33,205
  37,333
  41,696
  46,290
  51,111
  56,158
  61,430
  66,927
  72,652
  78,608
  84,801
  91,238
Revenue / Adjusted assets
  0.221
  0.221
  0.221
  0.221
  0.221
  0.221
  0.221
  0.221
  0.221
  0.221
  0.221
  0.221
  0.221
  0.221
  0.221
  0.221
  0.221
  0.221
  0.221
  0.221
  0.221
  0.221
  0.221
  0.221
  0.221
  0.221
  0.221
  0.221
  0.221
  0.221
Average production assets, $m
  71
  110
  165
  239
  337
  464
  623
  817
  1,052
  1,328
  1,650
  2,017
  2,431
  2,892
  3,401
  3,956
  4,557
  5,203
  5,893
  6,625
  7,399
  8,215
  9,070
  9,966
  10,902
  11,877
  12,893
  13,950
  15,049
  16,191
Working capital, $m
  -29
  -45
  -67
  -97
  -137
  -189
  -253
  -333
  -428
  -541
  -672
  -821
  -990
  -1,178
  -1,385
  -1,611
  -1,856
  -2,119
  -2,400
  -2,698
  -3,013
  -3,345
  -3,694
  -4,058
  -4,439
  -4,837
  -5,250
  -5,681
  -6,128
  -6,593
Total debt, $m
  277
  474
  751
  1,127
  1,626
  2,267
  3,072
  4,060
  5,249
  6,652
  8,281
  10,143
  12,244
  14,584
  17,163
  19,978
  23,026
  26,302
  29,800
  33,514
  37,441
  41,575
  45,915
  50,457
  55,202
  60,149
  65,301
  70,662
  76,235
  82,029
Total liabilities, $m
  362
  559
  836
  1,213
  1,711
  2,352
  3,157
  4,145
  5,334
  6,737
  8,366
  10,229
  12,329
  14,669
  17,248
  20,064
  23,112
  26,387
  29,885
  33,599
  37,526
  41,661
  46,000
  50,542
  55,287
  60,234
  65,386
  70,747
  76,321
  82,114
Total equity, $m
  40
  62
  93
  135
  190
  261
  351
  461
  593
  749
  930
  1,137
  1,370
  1,630
  1,916
  2,229
  2,568
  2,932
  3,321
  3,733
  4,170
  4,629
  5,111
  5,616
  6,143
  6,693
  7,265
  7,861
  8,480
  9,124
Total liabilities and equity, $m
  402
  621
  929
  1,348
  1,901
  2,613
  3,508
  4,606
  5,927
  7,486
  9,296
  11,366
  13,699
  16,299
  19,164
  22,293
  25,680
  29,319
  33,206
  37,332
  41,696
  46,290
  51,111
  56,158
  61,430
  66,927
  72,651
  78,608
  84,801
  91,238
Debt-to-equity ratio
  6.880
  7.630
  8.080
  8.370
  8.550
  8.670
  8.760
  8.820
  8.860
  8.890
  8.910
  8.930
  8.940
  8.950
  8.960
  8.960
  8.970
  8.970
  8.970
  8.980
  8.980
  8.980
  8.980
  8.980
  8.990
  8.990
  8.990
  8.990
  8.990
  8.990
Adjusted equity ratio
  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
  -452,831
  -699,610
  -1,046,266
  -1,518,080
  -2,141,791
  -2,944,469
  -3,952,341
  -5,189,676
  -6,677,855
  -8,434,678
  -10,473,953
  -12,805,420
  -15,434,845
  -18,364,429
  -21,593,316
  -25,118,222
  -28,934,096
  -33,034,778
  -37,413,618
  -42,064,025
  -46,979,941
  -52,156,224
  -57,588,954
  -63,275,655
  -69,215,451
  -75,409,166
  -81,859,372
  -88,570,409
  -95,548,362
  -102,801,039
Depreciation, amort., depletion, $m
  11
  12
  14
  16
  20
  24
  29
  36
  44
  53
  55
  67
  81
  96
  113
  132
  152
  173
  196
  221
  247
  274
  302
  332
  363
  396
  430
  465
  502
  540
Funds from operations, $m
  -452,820
  -699,598
  -1,046,252
  -1,518,063
  -2,141,771
  -2,944,445
  -3,952,312
  -5,189,640
  -6,677,812
  -8,434,625
  -10,473,898
  -12,805,353
  -15,434,764
  -18,364,332
  -21,593,203
  -25,118,091
  -28,933,945
  -33,034,605
  -37,413,422
  -42,063,804
  -46,979,694
  -52,155,950
  -57,588,652
  -63,275,323
  -69,215,088
  -75,408,770
  -81,858,943
  -88,569,944
  -95,547,860
  -102,800,500
Change in working capital, $m
  -11
  -16
  -22
  -30
  -40
  -51
  -65
  -79
  -95
  -113
  -131
  -150
  -169
  -188
  -207
  -226
  -245
  -263
  -281
  -298
  -315
  -332
  -348
  -365
  -381
  -397
  -414
  -430
  -448
  -465
Cash from operations, $m
  -452,809
  -699,582
  -1,046,230
  -1,518,033
  -2,141,731
  -2,944,394
  -3,952,247
  -5,189,561
  -6,677,716
  -8,434,513
  -10,473,768
  -12,805,203
  -15,434,596
  -18,364,145
  -21,592,996
  -25,117,865
  -28,933,700
  -33,034,342
  -37,413,141
  -42,063,506
  -46,979,379
  -52,155,618
  -57,588,303
  -63,274,958
  -69,214,707
  -75,408,372
  -81,858,529
  -88,569,513
  -95,547,413
  -102,800,034
Maintenance CAPEX, $m
  -1
  -2
  -4
  -5
  -8
  -11
  -15
  -21
  -27
  -35
  -44
  -55
  -67
  -81
  -96
  -113
  -132
  -152
  -173
  -196
  -221
  -247
  -274
  -302
  -332
  -363
  -396
  -430
  -465
  -502
New CAPEX, $m
  -26
  -39
  -55
  -74
  -98
  -126
  -159
  -195
  -234
  -277
  -321
  -367
  -414
  -461
  -509
  -555
  -601
  -646
  -690
  -732
  -774
  -815
  -856
  -896
  -936
  -976
  -1,016
  -1,057
  -1,099
  -1,142
Cash from investing activities, $m
  -27
  -41
  -59
  -79
  -106
  -137
  -174
  -216
  -261
  -312
  -365
  -422
  -481
  -542
  -605
  -668
  -733
  -798
  -863
  -928
  -995
  -1,062
  -1,130
  -1,198
  -1,268
  -1,339
  -1,412
  -1,487
  -1,564
  -1,644
Free cash flow, $m
  -452,837
  -699,624
  -1,046,288
  -1,518,113
  -2,141,837
  -2,944,531
  -3,952,421
  -5,189,777
  -6,677,978
  -8,434,824
  -10,474,133
  -12,805,625
  -15,435,077
  -18,364,687
  -21,593,601
  -25,118,533
  -28,934,433
  -33,035,140
  -37,414,004
  -42,064,435
  -46,980,374
  -52,156,680
  -57,589,433
  -63,276,156
  -69,215,974
  -75,409,711
  -81,859,941
  -88,571,000
  -95,548,977
  -102,801,678
Issuance/(repayment) of debt, $m
  -6
  197
  277
  377
  498
  641
  805
  988
  1,189
  1,403
  1,629
  1,862
  2,100
  2,340
  2,579
  2,816
  3,048
  3,275
  3,498
  3,715
  3,927
  4,135
  4,339
  4,542
  4,744
  4,947
  5,152
  5,361
  5,574
  5,793
Issuance/(repurchase) of shares, $m
  452,986
  699,632
  1,046,297
  1,518,122
  2,141,846
  2,944,540
  3,952,430
  5,189,786
  6,677,987
  8,434,834
  10,474,134
  12,805,627
  15,435,079
  18,364,689
  21,593,603
  25,118,535
  28,934,435
  33,035,142
  37,414,007
  42,064,438
  46,980,377
  52,156,684
  57,589,436
  63,276,160
  69,215,978
  75,409,715
  81,859,945
  88,571,004
  95,548,981
  102,801,683
Cash from financing (excl. dividends), $m  
  452,980
  699,829
  1,046,574
  1,518,499
  2,142,344
  2,945,181
  3,953,235
  5,190,774
  6,679,176
  8,436,237
  10,475,763
  12,807,489
  15,437,179
  18,367,029
  21,596,182
  25,121,351
  28,937,483
  33,038,417
  37,417,505
  42,068,153
  46,984,304
  52,160,819
  57,593,775
  63,280,702
  69,220,722
  75,414,662
  81,865,097
  88,576,365
  95,554,555
  102,807,476
Total cash flow (excl. dividends), $m
  143
  206
  286
  386
  507
  650
  814
  998
  1,198
  1,413
  1,630
  1,864
  2,102
  2,342
  2,581
  2,818
  3,050
  3,278
  3,500
  3,718
  3,930
  4,138
  4,343
  4,546
  4,748
  4,951
  5,156
  5,365
  5,578
  5,798
Retained Cash Flow (-), $m
  -452,986
  -699,632
  -1,046,297
  -1,518,122
  -2,141,846
  -2,944,540
  -3,952,430
  -5,189,786
  -6,677,987
  -8,434,834
  -10,474,134
  -12,805,627
  -15,435,079
  -18,364,689
  -21,593,603
  -25,118,535
  -28,934,435
  -33,035,142
  -37,414,007
  -42,064,438
  -46,980,377
  -52,156,684
  -57,589,436
  -63,276,160
  -69,215,978
  -75,409,715
  -81,859,945
  -88,571,004
  -95,548,981
  -102,801,683
Prev. year cash balance distribution, $m
  482
  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
  -452,361
  -699,426
  -1,046,011
  -1,517,736
  -2,141,339
  -2,943,890
  -3,951,616
  -5,188,788
  -6,676,789
  -8,433,421
  -10,472,504
  -12,803,763
  -15,432,977
  -18,362,347
  -21,591,022
  -25,115,718
  -28,931,385
  -33,031,864
  -37,410,506
  -42,060,720
  -46,976,447
  -52,152,546
  -57,585,093
  -63,271,614
  -69,211,230
  -75,404,764
  -81,854,789
  -88,565,639
  -95,543,403
  -102,795,885
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
  -433,711
  -640,302
  -910,310
  -1,249,702
  -1,659,801
  -2,136,501
  -2,669,656
  -3,243,121
  -3,835,463
  -4,421,319
  -4,973,240
  -5,463,822
  -5,867,902
  -6,164,561
  -6,338,759
  -6,382,436
  -6,294,993
  -6,083,141
  -5,760,154
  -5,344,635
  -4,858,919
  -4,327,291
  -3,774,190
  -3,222,547
  -2,692,408
  -2,199,935
  -1,756,838
  -1,370,240
  -1,042,945
  -774,016
Current shareholders' claim on cash, %
  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

Clovis Oncology, Inc. is a biopharmaceutical company focused on acquiring, developing and commercializing anti-cancer agents in the United States, Europe and other international markets. The Company's product candidates include Rociletinib, Rubraca (Rucaparib) and Lucitanib. Rucaparib is an oral, small molecule poly adenosine diphosphate (ADP)-ribose polymerase (PARP) inhibitor of PARP1, PARP2 and PARP3 approved as a monotherapy for the treatment of patients with deleterious breast cancer (BRCA) (human genes associated with the repair of damaged deoxyribonucleic acid (DNA)) mutation (germline and/or somatic) associated advanced ovarian cancer. Lucitanib is an oral inhibitor of the tyrosine kinase activity of vascular endothelial growth factor receptors (VEGFR) 1-3, platelet-derived growth factor receptors (PDGFR) alpha and beta and fibroblast growth factor receptors (FGFR) 1-3. Rociletinib is an oral mutant-selective inhibitor of epidermal growth factor receptor (EGFR).

FINANCIAL RATIOS  of  Clovis Oncology (CLVS)

Valuation Ratios
P/E Ratio -1.7
Price to Sales 0
Price to Book -146
Price to Tangible Book
Price to Cash Flow -2.2
Price to Free Cash Flow -2.2
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -66.7%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity -7025%
Total Debt to Equity -7025%
Interest Coverage -53
Management Effectiveness
Return On Assets -63.6%
Ret/ On Assets - 3 Yr. Avg. -44.2%
Return On Total Capital -81.4%
Ret/ On T. Cap. - 3 Yr. Avg. -56.5%
Return On Equity -235%
Return On Equity - 3 Yr. Avg. -128.4%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. -366.7%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. -376.2%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. -376.2%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. -381%
Effective Tax Rate 8.4%
Eff/ Tax Rate - 3 Yr. Avg. 4.9%
Payout Ratio 0%

CLVS stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the CLVS stock intrinsic value calculation we used $55.511 million for the last fiscal year's total revenue generated by Clovis Oncology. The default revenue input number comes from 0001 income statement of Clovis Oncology. 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 CLVS 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 CLVS is calculated based on our internal credit rating of Clovis Oncology, 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 Clovis Oncology.
    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 CLVS stock the variable cost ratio is equal to 509932.1%.

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 CLVS 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 Clovis Oncology.

Corporate tax rate of 27% is the nominal tax rate for Clovis Oncology. 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 CLVS 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 CLVS are equal to 80.3%.

Life of production assets of 34.2 years is the average useful life of capital assets used in Clovis Oncology 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 CLVS is equal to -32.7%. 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 - $367.636 million for Clovis Oncology - 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 52.549 million for Clovis Oncology 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 Clovis Oncology at the current share price and the inputted number of shares is $0.8 billion.

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COMPANY NEWS

▶ Here's Why Clovis Oncology Got Crushed Today   [Oct-31-18 12:59PM  Motley Fool]
▶ Clovis: 3Q Earnings Snapshot   [04:42PM  Associated Press]
▶ These Companies Are Dragging Biotech Stocks Into A Pit On Cancer Tests   [Oct-22-18 04:26PM  Investor's Business Daily]
▶ Here's Why Clovis Oncology Inc. Is Losing Ground Today   [Oct-19-18 04:22PM  Motley Fool]
▶ How Clovis Calls Prices Increased Overnight   [Oct-17-18 03:12PM  TheStreet.com]
▶ Cancer Companies to Watch   [Oct-15-18 10:30AM  ACCESSWIRE]
▶ Clovis Oncology Appoints Two New Directors to its Board   [Oct-11-18 04:05PM  Business Wire]
▶ Major Action in Biotech and This is The Next Winner   [Oct-05-18 10:55AM  ACCESSWIRE]
▶ Company News For Oct 3, 2018   [10:03AM  Zacks]
▶ Biopharmaceutical company fined for misleading investors   [Sep-19-18 12:36PM  Associated Press]
▶ This Biotech Got A Bullish Pop On Its Experimental Cancer Regimen   [Sep-05-18 04:17PM  Investor's Business Daily]
▶ Tesaro CEO Says Its Drug 'Will Get There' Analysts Strongly Disagree   [Aug-03-18 04:09PM  Investor's Business Daily]
▶ Boulder biotech wants to settle with the SEC for $20 million   [Aug-02-18 12:00PM  American City Business Journals]
▶ Clovis: 2Q Earnings Snapshot   [06:05PM  Associated Press]
▶ Buy These 3 Risky Biotech Stocks   [Jul-25-18 01:31PM  TheStreet.com]
▶ Why A Tie-Up With Clovis Helped This Biotech Spike To An 18-Year High   [Jun-04-18 04:32PM  Investor's Business Daily]
▶ Clovis: 1Q Earnings Snapshot   [May-08-18 05:27PM  Associated Press]
▶ Clovis Oncology ovarian cancer drug receives fast-tracked FDA approval   [Apr-06-18 04:57PM  American City Business Journals]
▶ Clovis Pops After Cancer Drug Gets OK; Smaller Players Crash   [04:12PM  Investor's Business Daily]
▶ Tesaro Wants a Stronger Grip in Ovarian Cancer   [Mar-27-18 08:31PM  Motley Fool]

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