Intrinsic value of Keryx Biopharmaceuticals - KERX

Previous Close

$2.94

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$2.94

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

We calculate the intrinsic value of KERX 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 0.3

 

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
  97
  150
  224
  325
  459
  631
  847
  1,112
  1,431
  1,807
  2,244
  2,744
  3,307
  3,935
  4,627
  5,382
  6,200
  7,078
  8,017
  9,013
  10,066
  11,175
  12,339
  13,558
  14,831
  16,158
  17,540
  18,978
  20,473
  22,027
Variable operating expenses, $m
  94
  144
  216
  313
  442
  607
  815
  1,070
  1,376
  1,738
  2,158
  2,639
  3,181
  3,784
  4,450
  5,176
  5,962
  6,807
  7,710
  8,668
  9,681
  10,747
  11,867
  13,039
  14,263
  15,539
  16,868
  18,251
  19,689
  21,183
Fixed operating expenses, $m
  130
  133
  136
  139
  142
  145
  148
  151
  154
  158
  161
  165
  169
  172
  176
  180
  184
  188
  192
  196
  201
  205
  209
  214
  219
  224
  229
  234
  239
  244
Total operating expenses, $m
  224
  277
  352
  452
  584
  752
  963
  1,221
  1,530
  1,896
  2,319
  2,804
  3,350
  3,956
  4,626
  5,356
  6,146
  6,995
  7,902
  8,864
  9,882
  10,952
  12,076
  13,253
  14,482
  15,763
  17,097
  18,485
  19,928
  21,427
Operating income, $m
  -126
  -127
  -127
  -126
  -124
  -121
  -116
  -109
  -100
  -89
  -75
  -60
  -42
  -22
  1
  26
  54
  83
  115
  149
  185
  223
  263
  305
  349
  395
  443
  493
  545
  599
EBITDA, $m
  -125
  -125
  -124
  -122
  -118
  -113
  -105
  -95
  -82
  -67
  -48
  -27
  -2
  26
  57
  91
  129
  169
  212
  258
  307
  358
  412
  469
  528
  591
  655
  723
  793
  866
Interest expense (income), $m
  0
  7
  6
  11
  17
  26
  38
  53
  72
  95
  124
  157
  195
  239
  289
  344
  406
  472
  544
  622
  704
  792
  885
  983
  1,086
  1,193
  1,306
  1,423
  1,544
  1,671
  1,803
Earnings before tax, $m
  -133
  -133
  -138
  -144
  -150
  -159
  -169
  -181
  -195
  -213
  -232
  -255
  -281
  -311
  -343
  -379
  -419
  -461
  -507
  -556
  -608
  -662
  -720
  -781
  -844
  -910
  -980
  -1,051
  -1,126
  -1,204
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
  -133
  -133
  -138
  -144
  -150
  -159
  -169
  -181
  -195
  -213
  -232
  -255
  -281
  -311
  -343
  -379
  -419
  -461
  -507
  -556
  -608
  -662
  -720
  -781
  -844
  -910
  -980
  -1,051
  -1,126
  -1,204

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
  176
  272
  407
  590
  833
  1,145
  1,537
  2,018
  2,597
  3,280
  4,073
  4,980
  6,002
  7,141
  8,397
  9,768
  11,252
  12,846
  14,549
  16,357
  18,269
  20,282
  22,395
  24,606
  26,916
  29,324
  31,833
  34,442
  37,156
  39,976
Adjusted assets (=assets-cash), $m
  176
  272
  407
  590
  833
  1,145
  1,537
  2,018
  2,597
  3,280
  4,073
  4,980
  6,002
  7,141
  8,397
  9,768
  11,252
  12,846
  14,549
  16,357
  18,269
  20,282
  22,395
  24,606
  26,916
  29,324
  31,833
  34,442
  37,156
  39,976
Revenue / Adjusted assets
  0.551
  0.551
  0.550
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
  0.551
Average production assets, $m
  10
  15
  22
  32
  45
  62
  83
  109
  140
  177
  220
  269
  324
  386
  453
  527
  608
  694
  786
  883
  986
  1,095
  1,209
  1,329
  1,453
  1,583
  1,719
  1,860
  2,006
  2,159
Working capital, $m
  4
  6
  10
  14
  20
  27
  36
  48
  62
  78
  97
  118
  142
  169
  199
  231
  267
  304
  345
  388
  433
  481
  531
  583
  638
  695
  754
  816
  880
  947
Total debt, $m
  111
  197
  318
  483
  702
  983
  1,335
  1,768
  2,289
  2,904
  3,618
  4,434
  5,354
  6,379
  7,509
  8,743
  10,078
  11,514
  13,046
  14,674
  16,394
  18,206
  20,107
  22,097
  24,176
  26,344
  28,601
  30,950
  33,392
  35,931
Total liabilities, $m
  158
  245
  366
  531
  750
  1,031
  1,383
  1,816
  2,337
  2,952
  3,666
  4,482
  5,402
  6,427
  7,557
  8,791
  10,126
  11,562
  13,094
  14,722
  16,442
  18,254
  20,155
  22,145
  24,224
  26,392
  28,649
  30,998
  33,440
  35,979
Total equity, $m
  18
  27
  41
  59
  83
  115
  154
  202
  260
  328
  407
  498
  600
  714
  840
  977
  1,125
  1,285
  1,455
  1,636
  1,827
  2,028
  2,239
  2,461
  2,692
  2,932
  3,183
  3,444
  3,716
  3,998
Total liabilities and equity, $m
  176
  272
  407
  590
  833
  1,146
  1,537
  2,018
  2,597
  3,280
  4,073
  4,980
  6,002
  7,141
  8,397
  9,768
  11,251
  12,847
  14,549
  16,358
  18,269
  20,282
  22,394
  24,606
  26,916
  29,324
  31,832
  34,442
  37,156
  39,977
Debt-to-equity ratio
  6.280
  7.240
  7.820
  8.190
  8.420
  8.580
  8.690
  8.760
  8.820
  8.850
  8.880
  8.900
  8.920
  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
  8.980
  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
  -133
  -133
  -138
  -144
  -150
  -159
  -169
  -181
  -195
  -213
  -232
  -255
  -281
  -311
  -343
  -379
  -419
  -461
  -507
  -556
  -608
  -662
  -720
  -781
  -844
  -910
  -980
  -1,051
  -1,126
  -1,204
Depreciation, amort., depletion, $m
  1
  2
  3
  4
  6
  8
  11
  14
  18
  22
  27
  33
  40
  48
  56
  65
  75
  86
  97
  109
  122
  135
  149
  164
  179
  195
  212
  230
  248
  266
Funds from operations, $m
  -132
  -131
  -135
  -139
  -145
  -151
  -158
  -167
  -178
  -190
  -205
  -222
  -241
  -263
  -287
  -314
  -344
  -375
  -410
  -447
  -486
  -527
  -571
  -617
  -665
  -715
  -767
  -822
  -878
  -937
Change in working capital, $m
  2
  2
  3
  4
  6
  7
  9
  11
  14
  16
  19
  21
  24
  27
  30
  32
  35
  38
  40
  43
  45
  48
  50
  52
  55
  57
  59
  62
  64
  67
Cash from operations, $m
  -133
  -133
  -138
  -144
  -150
  -158
  -168
  -179
  -192
  -207
  -224
  -243
  -266
  -290
  -317
  -347
  -379
  -413
  -450
  -489
  -531
  -575
  -621
  -669
  -720
  -772
  -827
  -884
  -943
  -1,004
Maintenance CAPEX, $m
  -1
  -1
  -2
  -3
  -4
  -6
  -8
  -10
  -13
  -17
  -22
  -27
  -33
  -40
  -48
  -56
  -65
  -75
  -86
  -97
  -109
  -122
  -135
  -149
  -164
  -179
  -195
  -212
  -230
  -248
New CAPEX, $m
  -4
  -5
  -7
  -10
  -13
  -17
  -21
  -26
  -31
  -37
  -43
  -49
  -55
  -62
  -68
  -74
  -80
  -86
  -92
  -98
  -103
  -109
  -114
  -119
  -125
  -130
  -135
  -141
  -147
  -152
Cash from investing activities, $m
  -5
  -6
  -9
  -13
  -17
  -23
  -29
  -36
  -44
  -54
  -65
  -76
  -88
  -102
  -116
  -130
  -145
  -161
  -178
  -195
  -212
  -231
  -249
  -268
  -289
  -309
  -330
  -353
  -377
  -400
Free cash flow, $m
  -137
  -140
  -147
  -156
  -167
  -181
  -196
  -215
  -236
  -261
  -289
  -320
  -354
  -392
  -433
  -477
  -524
  -574
  -628
  -684
  -743
  -805
  -870
  -938
  -1,008
  -1,082
  -1,158
  -1,237
  -1,319
  -1,404
Issuance/(repayment) of debt, $m
  -14
  86
  121
  165
  218
  281
  353
  433
  521
  615
  714
  816
  920
  1,025
  1,130
  1,234
  1,335
  1,435
  1,533
  1,628
  1,720
  1,812
  1,901
  1,990
  2,079
  2,168
  2,257
  2,349
  2,442
  2,538
Issuance/(repurchase) of shares, $m
  213
  143
  151
  162
  175
  190
  208
  229
  253
  281
  312
  346
  384
  425
  469
  516
  567
  621
  677
  736
  799
  864
  931
  1,002
  1,075
  1,151
  1,230
  1,312
  1,397
  1,486
Cash from financing (excl. dividends), $m  
  199
  229
  272
  327
  393
  471
  561
  662
  774
  896
  1,026
  1,162
  1,304
  1,450
  1,599
  1,750
  1,902
  2,056
  2,210
  2,364
  2,519
  2,676
  2,832
  2,992
  3,154
  3,319
  3,487
  3,661
  3,839
  4,024
Total cash flow (excl. dividends), $m
  61
  89
  126
  171
  226
  290
  364
  447
  538
  635
  737
  842
  950
  1,058
  1,166
  1,273
  1,378
  1,481
  1,582
  1,680
  1,776
  1,870
  1,963
  2,054
  2,146
  2,237
  2,330
  2,424
  2,521
  2,620
Retained Cash Flow (-), $m
  -213
  -143
  -151
  -162
  -175
  -190
  -208
  -229
  -253
  -281
  -312
  -346
  -384
  -425
  -469
  -516
  -567
  -621
  -677
  -736
  -799
  -864
  -931
  -1,002
  -1,075
  -1,151
  -1,230
  -1,312
  -1,397
  -1,486
Prev. year cash balance distribution, $m
  48
  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
  -53
  -26
  9
  51
  100
  156
  218
  285
  354
  425
  496
  566
  634
  698
  757
  812
  861
  905
  943
  977
  1,006
  1,031
  1,052
  1,071
  1,086
  1,100
  1,112
  1,123
  1,134
Discount rate, %
  7.60
  7.98
  8.38
  8.80
  9.24
  9.70
  10.18
  10.69
  11.23
  11.79
  12.38
  13.00
  13.65
  14.33
  15.05
  15.80
  16.59
  17.42
  18.29
  19.20
  20.17
  21.17
  22.23
  23.34
  24.51
  25.74
  27.02
  28.37
  29.79
  31.28
PV of cash for distribution, $m
  -97
  -46
  -20
  6
  33
  58
  79
  97
  109
  116
  118
  115
  107
  97
  85
  72
  60
  48
  37
  28
  21
  15
  10
  7
  4
  3
  2
  1
  1
  0
Current shareholders' claim on cash, %
  50.0
  5.5
  0.8
  0.2
  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

Keryx Biopharmaceuticals, Inc. is a biopharmaceutical company focused on the development of medicines for people with renal disease. The Company is engaged in the manufacture, development and commercialization of products for use in treating human diseases. Its marketed product, Auryxia (ferric citrate), which is an orally available, absorbable, iron-based medicine is approved in the United States for the control of serum phosphorus levels in patients with chronic kidney disease (CKD) on dialysis. Auryxia is marketed in Japan under the brand name Riona. It is investigating the use of ferric citrate for the treatment of iron deficiency anemia (IDA) in adults with non-dialysis dependent (NDD), CKD and NDD-CKD. It focuses on Keryx Patient Plus program to assist with patient accessibility to Auryxia. It has completed a Phase II clinical trial and a Phase III clinical trial of ferric citrate to gain Food and Drug Administration approval to use ferric citrate in patients with NDD-CKD.

FINANCIAL RATIOS  of  Keryx Biopharmaceuticals (KERX)

Valuation Ratios
P/E Ratio -1.9
Price to Sales 9.7
Price to Book -38.9
Price to Tangible Book
Price to Cash Flow -3.6
Price to Free Cash Flow -3.5
Growth Rates
Sales Growth Rate 128.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -33.3%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio 0.1
LT Debt to Equity -1587.5%
Total Debt to Equity -1587.5%
Interest Coverage 0
Management Effectiveness
Return On Assets -80.5%
Ret/ On Assets - 3 Yr. Avg. -94.7%
Return On Total Capital -107.7%
Ret/ On T. Cap. - 3 Yr. Avg. -131.6%
Return On Equity -407.6%
Return On Equity - 3 Yr. Avg. -250.4%
Asset Turnover 0.2
Profitability Ratios
Gross Margin -28.1%
Gross Margin - 3 Yr. Avg. 37.6%
EBITDA Margin -500%
EBITDA Margin - 3 Yr. Avg. -793.5%
Operating Margin -384.4%
Oper. Margin - 3 Yr. Avg. -728.8%
Pre-Tax Margin -503.1%
Pre-Tax Margin - 3 Yr. Avg. -796.9%
Net Profit Margin -503.1%
Net Profit Margin - 3 Yr. Avg. -800%
Effective Tax Rate 0%
Eff/ Tax Rate - 3 Yr. Avg. -0.3%
Payout Ratio 0%

KERX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the KERX stock intrinsic value calculation we used $60.641 million for the last fiscal year's total revenue generated by Keryx Biopharmaceuticals. The default revenue input number comes from 0001 income statement of Keryx Biopharmaceuticals. 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 KERX 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 7.6%, whose default value for KERX is calculated based on our internal credit rating of Keryx Biopharmaceuticals, 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 Keryx Biopharmaceuticals.
    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 KERX stock the variable cost ratio is equal to 96.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $127 million in the base year in the intrinsic value calculation for KERX 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 Keryx Biopharmaceuticals.

Corporate tax rate of 27% is the nominal tax rate for Keryx Biopharmaceuticals. 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 KERX 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 KERX are equal to 9.8%.

Life of production assets of 8.1 years is the average useful life of capital assets used in Keryx Biopharmaceuticals 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 KERX 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 - $-14.095 million for Keryx Biopharmaceuticals - 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 105.821 million for Keryx Biopharmaceuticals 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 Keryx Biopharmaceuticals at the current share price and the inputted number of shares is $0.3 billion.

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COMPANY NEWS

▶ Keryx Biopharma: 3Q Earnings Snapshot   [05:05AM  Associated Press]
▶ 7 Health Care Stocks to Buy for Robust Returns   [Jul-30-18 02:00PM  Kiplinger]
▶ WeissLaw LLP Investigates Keryx Biopharmaceuticals Inc.   [Jun-29-18 07:12PM  PR Newswire]
▶ Keryx Biopharma: 1Q Earnings Snapshot   [08:06AM  Associated Press]
▶ Keryx Biopharma reports 4Q loss   [Feb-07-18 10:35AM  Associated Press]
▶ Keryx Biopharma Down 17% Despite Drug Approval   [Nov-14-17 02:36PM  Motley Fool]
▶ Keryx Biopharma reports 3Q loss   [07:35AM  Associated Press]

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