Intrinsic value of Novelion Therapeutics Inc. - NVLN

Previous Close

$1.21

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$1.21

 
Intrinsic value

$0.00

 
Up/down potential

-100%

 
Rating

str. sell

We calculate the intrinsic value of NVLN 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 0.0

 

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, %
  5.80
  5.72
  5.65
  5.58
  5.52
  5.47
  5.43
  5.38
  5.34
  5.31
  5.28
  5.25
  5.23
  5.20
  5.18
  5.16
  5.15
  5.13
  5.12
  5.11
  5.10
  5.09
  5.08
  5.07
  5.06
  5.06
  5.05
  5.05
  5.04
  5.04
Revenue, $m
  146
  154
  163
  172
  182
  192
  202
  213
  224
  236
  249
  262
  275
  290
  305
  320
  337
  354
  372
  391
  411
  432
  454
  477
  501
  527
  553
  581
  611
  641
Variable operating expenses, $m
  204
  214
  225
  237
  248
  261
  274
  287
  301
  316
  309
  325
  342
  360
  379
  398
  419
  440
  463
  487
  511
  537
  565
  593
  623
  655
  688
  723
  759
  797
Fixed operating expenses, $m
  33
  33
  34
  35
  36
  36
  37
  38
  39
  40
  41
  42
  42
  43
  44
  45
  46
  47
  48
  49
  51
  52
  53
  54
  55
  56
  58
  59
  60
  61
Total operating expenses, $m
  237
  247
  259
  272
  284
  297
  311
  325
  340
  356
  350
  367
  384
  403
  423
  443
  465
  487
  511
  536
  562
  589
  618
  647
  678
  711
  746
  782
  819
  858
Operating income, $m
  -91
  -93
  -96
  -99
  -102
  -106
  -109
  -112
  -116
  -120
  -101
  -105
  -109
  -114
  -118
  -123
  -128
  -133
  -139
  -145
  -150
  -157
  -163
  -170
  -177
  -184
  -192
  -200
  -209
  -217
EBITDA, $m
  -54
  -56
  -58
  -60
  -62
  -64
  -66
  -69
  -71
  -74
  -76
  -79
  -82
  -85
  -88
  -91
  -95
  -98
  -102
  -106
  -109
  -114
  -118
  -122
  -127
  -132
  -137
  -142
  -148
  -153
Interest expense (income), $m
  0
  42
  41
  44
  48
  51
  55
  59
  63
  67
  71
  76
  81
  86
  91
  97
  103
  109
  115
  122
  129
  136
  144
  152
  161
  169
  179
  189
  199
  210
  221
Earnings before tax, $m
  -132
  -135
  -141
  -147
  -154
  -160
  -168
  -175
  -183
  -191
  -177
  -186
  -195
  -205
  -215
  -226
  -237
  -249
  -261
  -273
  -287
  -301
  -315
  -330
  -346
  -363
  -381
  -399
  -418
  -438
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
  -132
  -135
  -141
  -147
  -154
  -160
  -168
  -175
  -183
  -191
  -177
  -186
  -195
  -205
  -215
  -226
  -237
  -249
  -261
  -273
  -287
  -301
  -315
  -330
  -346
  -363
  -381
  -399
  -418
  -438

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
  390
  413
  436
  460
  486
  512
  540
  569
  600
  632
  665
  700
  736
  775
  815
  857
  901
  947
  996
  1,047
  1,100
  1,156
  1,215
  1,276
  1,341
  1,409
  1,480
  1,555
  1,633
  1,715
Adjusted assets (=assets-cash), $m
  390
  413
  436
  460
  486
  512
  540
  569
  600
  632
  665
  700
  736
  775
  815
  857
  901
  947
  996
  1,047
  1,100
  1,156
  1,215
  1,276
  1,341
  1,409
  1,480
  1,555
  1,633
  1,715
Revenue / Adjusted assets
  0.374
  0.373
  0.374
  0.374
  0.374
  0.375
  0.374
  0.374
  0.373
  0.373
  0.374
  0.374
  0.374
  0.374
  0.374
  0.373
  0.374
  0.374
  0.373
  0.373
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
Average production assets, $m
  130
  137
  145
  153
  161
  170
  179
  189
  199
  210
  221
  232
  244
  257
  270
  284
  299
  314
  330
  347
  365
  383
  403
  423
  445
  467
  491
  516
  542
  569
Working capital, $m
  -16
  -17
  -17
  -18
  -19
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -29
  -31
  -33
  -34
  -36
  -38
  -40
  -42
  -44
  -46
  -49
  -51
  -54
  -56
  -59
  -62
  -65
  -69
Total debt, $m
  256
  276
  297
  318
  341
  365
  390
  416
  444
  473
  503
  534
  567
  601
  637
  675
  715
  757
  800
  846
  894
  945
  997
  1,053
  1,111
  1,172
  1,236
  1,303
  1,374
  1,448
Total liabilities, $m
  351
  371
  392
  414
  437
  461
  486
  512
  540
  568
  598
  630
  663
  697
  733
  771
  811
  853
  896
  942
  990
  1,040
  1,093
  1,149
  1,207
  1,268
  1,332
  1,399
  1,470
  1,544
Total equity, $m
  39
  41
  44
  46
  49
  51
  54
  57
  60
  63
  66
  70
  74
  77
  81
  86
  90
  95
  100
  105
  110
  116
  121
  128
  134
  141
  148
  155
  163
  172
Total liabilities and equity, $m
  390
  412
  436
  460
  486
  512
  540
  569
  600
  631
  664
  700
  737
  774
  814
  857
  901
  948
  996
  1,047
  1,100
  1,156
  1,214
  1,277
  1,341
  1,409
  1,480
  1,554
  1,633
  1,716
Debt-to-equity ratio
  6.540
  6.680
  6.800
  6.920
  7.030
  7.130
  7.230
  7.320
  7.400
  7.480
  7.560
  7.630
  7.700
  7.760
  7.820
  7.880
  7.940
  7.990
  8.040
  8.080
  8.130
  8.170
  8.210
  8.250
  8.290
  8.320
  8.350
  8.380
  8.410
  8.440
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
  -132
  -135
  -141
  -147
  -154
  -160
  -168
  -175
  -183
  -191
  -177
  -186
  -195
  -205
  -215
  -226
  -237
  -249
  -261
  -273
  -287
  -301
  -315
  -330
  -346
  -363
  -381
  -399
  -418
  -438
Depreciation, amort., depletion, $m
  37
  38
  39
  40
  41
  42
  43
  44
  45
  46
  25
  26
  27
  29
  30
  32
  34
  35
  37
  39
  41
  43
  45
  48
  50
  53
  55
  58
  61
  64
Funds from operations, $m
  -95
  -97
  -102
  -107
  -113
  -119
  -125
  -131
  -138
  -145
  -152
  -160
  -168
  -176
  -185
  -194
  -203
  -213
  -224
  -234
  -246
  -258
  -270
  -283
  -296
  -311
  -326
  -341
  -357
  -375
Change in working capital, $m
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -3
  -3
  -3
  -3
  -3
  -3
Cash from operations, $m
  -94
  -96
  -101
  -106
  -112
  -118
  -124
  -130
  -137
  -144
  -151
  -159
  -166
  -175
  -183
  -192
  -202
  -211
  -222
  -232
  -244
  -255
  -268
  -280
  -294
  -308
  -323
  -338
  -354
  -371
Maintenance CAPEX, $m
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -20
  -21
  -22
  -24
  -25
  -26
  -27
  -29
  -30
  -32
  -34
  -35
  -37
  -39
  -41
  -43
  -45
  -48
  -50
  -53
  -55
  -58
  -61
New CAPEX, $m
  -7
  -7
  -8
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -24
  -25
  -26
  -27
Cash from investing activities, $m
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -30
  -31
  -33
  -35
  -37
  -38
  -40
  -42
  -44
  -47
  -49
  -51
  -54
  -57
  -60
  -62
  -65
  -69
  -72
  -77
  -80
  -84
  -88
Free cash flow, $m
  -115
  -118
  -124
  -131
  -138
  -145
  -152
  -160
  -168
  -177
  -186
  -195
  -205
  -215
  -225
  -237
  -248
  -260
  -273
  -286
  -300
  -315
  -330
  -346
  -363
  -380
  -399
  -418
  -438
  -459
Issuance/(repayment) of debt, $m
  -3
  20
  21
  22
  23
  24
  25
  26
  27
  29
  30
  31
  33
  34
  36
  38
  40
  42
  44
  46
  48
  50
  53
  55
  58
  61
  64
  67
  71
  74
Issuance/(repurchase) of shares, $m
  156
  137
  143
  149
  156
  163
  170
  178
  186
  194
  180
  190
  199
  209
  219
  230
  241
  253
  266
  278
  292
  306
  321
  337
  353
  370
  388
  407
  426
  447
Cash from financing (excl. dividends), $m  
  153
  157
  164
  171
  179
  187
  195
  204
  213
  223
  210
  221
  232
  243
  255
  268
  281
  295
  310
  324
  340
  356
  374
  392
  411
  431
  452
  474
  497
  521
Total cash flow (excl. dividends), $m
  38
  39
  40
  41
  41
  42
  43
  44
  45
  46
  25
  26
  27
  29
  30
  31
  33
  34
  36
  38
  40
  42
  44
  46
  48
  51
  53
  56
  58
  61
Retained Cash Flow (-), $m
  -156
  -137
  -143
  -149
  -156
  -163
  -170
  -178
  -186
  -194
  -180
  -190
  -199
  -209
  -219
  -230
  -241
  -253
  -266
  -278
  -292
  -306
  -321
  -337
  -353
  -370
  -388
  -407
  -426
  -447
Prev. year cash balance distribution, $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 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
  -118
  -98
  -103
  -109
  -115
  -121
  -127
  -134
  -141
  -148
  -156
  -164
  -172
  -180
  -189
  -199
  -208
  -219
  -229
  -241
  -252
  -265
  -277
  -291
  -305
  -319
  -335
  -351
  -368
  -385
Discount rate, %
  12.30
  12.92
  13.56
  14.24
  14.95
  15.70
  16.48
  17.31
  18.17
  19.08
  20.04
  21.04
  22.09
  23.19
  24.35
  25.57
  26.85
  28.19
  29.60
  31.08
  32.64
  34.27
  35.98
  37.78
  39.67
  41.65
  43.73
  45.92
  48.22
  50.63
PV of cash for distribution, $m
  -105
  -77
  -70
  -64
  -57
  -50
  -44
  -37
  -31
  -26
  -21
  -17
  -13
  -10
  -7
  -5
  -4
  -3
  -2
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  12.8
  3.9
  1.2
  0.4
  0.1
  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

Novelion Therapeutics Inc, formerly QLT Inc., is a Canada-based biopharmaceutical company. The Company is engaged in development of new standards of care for individuals living with rare diseases. The Company is focused on advancing its portfolio of rare disease therapies by investing in science and clinical development. The Company holds a portfolio of products through its subsidiary, Aegerion Pharmaceuticals, Inc., a biopharmaceutical company dedicated to the development and commercialization of innovative therapies for patients with debilitating rare diseases. The Company's portfolio of products include MYALEPT and JUXTAPID. The Company is also developing zuretinol acetate for the treatment of inherited retinal disease caused by underlying mutations in RPE65 or LRAT genes.

FINANCIAL RATIOS  of  Novelion Therapeutics Inc. (NVLN)

Valuation Ratios
P/E Ratio -0.4
Price to Sales 1.6
Price to Book 0.2
Price to Tangible Book
Price to Cash Flow -0.7
Price to Free Cash Flow -0.7
Growth Rates
Sales Growth Rate -100%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate NaN%
Cap. Spend. - 3 Yr. Gr. Rate NaN%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 166.2%
Total Debt to Equity 166.2%
Interest Coverage 0
Management Effectiveness
Return On Assets -16.9%
Ret/ On Assets - 3 Yr. Avg. -11.5%
Return On Total Capital -21.1%
Ret/ On T. Cap. - 3 Yr. Avg. -13%
Return On Equity -38.3%
Return On Equity - 3 Yr. Avg. -18.7%
Asset Turnover 0
Profitability Ratios
Gross Margin 57.1%
Gross Margin - 3 Yr. Avg. 19%
EBITDA Margin -357.1%
EBITDA Margin - 3 Yr. Avg. -119%
Operating Margin -257.1%
Oper. Margin - 3 Yr. Avg. -85.7%
Pre-Tax Margin -371.4%
Pre-Tax Margin - 3 Yr. Avg. -123.8%
Net Profit Margin -378.6%
Net Profit Margin - 3 Yr. Avg. -126.2%
Effective Tax Rate -1.9%
Eff/ Tax Rate - 3 Yr. Avg. -0.6%
Payout Ratio -28.3%

NVLN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the NVLN stock intrinsic value calculation we used $138 million for the last fiscal year's total revenue generated by Novelion Therapeutics Inc.. The default revenue input number comes from 0001 income statement of Novelion Therapeutics Inc.. 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 NVLN stock valuation model: a) initial revenue growth rate of 5.8% 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 12.3%, whose default value for NVLN is calculated based on our internal credit rating of Novelion Therapeutics Inc., 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 Novelion Therapeutics Inc..
    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 NVLN stock the variable cost ratio is equal to 140.6%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $32 million in the base year in the intrinsic value calculation for NVLN 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 16.1% for Novelion Therapeutics Inc..

Corporate tax rate of 27% is the nominal tax rate for Novelion Therapeutics Inc.. 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 NVLN 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 NVLN are equal to 88.7%.

Life of production assets of 8.9 years is the average useful life of capital assets used in Novelion Therapeutics Inc. 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 NVLN is equal to -10.7%. 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 - $14.938 million for Novelion Therapeutics Inc. - 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 18.929 million for Novelion Therapeutics Inc. 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 Novelion Therapeutics Inc. at the current share price and the inputted number of shares is $0.0 billion.

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