Intrinsic value of Novelion Therapeutics - NVLN

Previous Close

$0.94

  Intrinsic Value

$0.00

stock screener

  Rating & Target

str. sell

-100%

Previous close

$0.94

 
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, %
  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
  141
  144
  148
  152
  157
  162
  168
  174
  180
  187
  194
  202
  211
  219
  229
  239
  250
  261
  273
  285
  298
  312
  327
  343
  359
  376
  394
  413
  433
  454
Variable operating expenses, $m
  198
  202
  207
  212
  218
  224
  231
  238
  246
  255
  241
  251
  262
  273
  285
  297
  310
  324
  339
  355
  371
  388
  407
  426
  446
  467
  490
  514
  538
  565
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
  231
  235
  241
  247
  254
  260
  268
  276
  285
  295
  282
  293
  304
  316
  329
  342
  356
  371
  387
  404
  422
  440
  460
  480
  501
  523
  548
  573
  598
  626
Operating income, $m
  -90
  -91
  -93
  -94
  -96
  -98
  -101
  -103
  -105
  -108
  -88
  -91
  -94
  -97
  -100
  -103
  -107
  -111
  -115
  -119
  -123
  -128
  -132
  -137
  -142
  -148
  -153
  -159
  -166
  -172
EBITDA, $m
  -53
  -54
  -55
  -57
  -58
  -60
  -61
  -63
  -65
  -67
  -69
  -71
  -73
  -75
  -77
  -80
  -82
  -85
  -88
  -90
  -93
  -97
  -100
  -103
  -107
  -110
  -114
  -118
  -122
  -127
Interest expense (income), $m
  0
  42
  39
  41
  42
  44
  45
  47
  49
  52
  54
  57
  60
  63
  66
  70
  73
  77
  81
  86
  90
  95
  100
  106
  111
  117
  124
  130
  137
  145
  152
Earnings before tax, $m
  -131
  -130
  -133
  -136
  -140
  -144
  -148
  -152
  -157
  -162
  -145
  -151
  -157
  -163
  -170
  -177
  -184
  -192
  -200
  -209
  -218
  -228
  -238
  -249
  -260
  -271
  -284
  -297
  -310
  -324
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
  -131
  -130
  -133
  -136
  -140
  -144
  -148
  -152
  -157
  -162
  -145
  -151
  -157
  -163
  -170
  -177
  -184
  -192
  -200
  -209
  -218
  -228
  -238
  -249
  -260
  -271
  -284
  -297
  -310
  -324

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
  378
  386
  396
  407
  420
  433
  448
  464
  481
  500
  519
  540
  563
  587
  612
  639
  667
  697
  729
  762
  798
  835
  874
  916
  959
  1,005
  1,054
  1,104
  1,158
  1,214
Adjusted assets (=assets-cash), $m
  378
  386
  396
  407
  420
  433
  448
  464
  481
  500
  519
  540
  563
  587
  612
  639
  667
  697
  729
  762
  798
  835
  874
  916
  959
  1,005
  1,054
  1,104
  1,158
  1,214
Revenue / Adjusted assets
  0.373
  0.373
  0.374
  0.373
  0.374
  0.374
  0.375
  0.375
  0.374
  0.374
  0.374
  0.374
  0.375
  0.373
  0.374
  0.374
  0.375
  0.374
  0.374
  0.374
  0.373
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
  0.374
Average production assets, $m
  125
  128
  131
  135
  139
  144
  149
  154
  160
  166
  172
  179
  187
  195
  203
  212
  221
  231
  242
  253
  265
  277
  290
  304
  318
  333
  350
  366
  384
  403
Working capital, $m
  -15
  -15
  -16
  -16
  -17
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -23
  -24
  -26
  -27
  -28
  -29
  -31
  -32
  -33
  -35
  -37
  -38
  -40
  -42
  -44
  -46
  -49
Total debt, $m
  244
  252
  261
  271
  282
  294
  307
  322
  337
  354
  372
  391
  411
  432
  455
  479
  505
  532
  560
  590
  622
  656
  691
  728
  768
  809
  852
  898
  946
  997
Total liabilities, $m
  340
  348
  357
  367
  378
  390
  403
  418
  433
  450
  467
  486
  507
  528
  551
  575
  601
  628
  656
  686
  718
  752
  787
  824
  863
  905
  948
  994
  1,042
  1,093
Total equity, $m
  38
  39
  40
  41
  42
  43
  45
  46
  48
  50
  52
  54
  56
  59
  61
  64
  67
  70
  73
  76
  80
  84
  87
  92
  96
  101
  105
  110
  116
  121
Total liabilities and equity, $m
  378
  387
  397
  408
  420
  433
  448
  464
  481
  500
  519
  540
  563
  587
  612
  639
  668
  698
  729
  762
  798
  836
  874
  916
  959
  1,006
  1,053
  1,104
  1,158
  1,214
Debt-to-equity ratio
  6.460
  6.520
  6.580
  6.650
  6.720
  6.790
  6.860
  6.930
  7.010
  7.080
  7.150
  7.230
  7.300
  7.370
  7.430
  7.500
  7.560
  7.630
  7.690
  7.740
  7.800
  7.850
  7.900
  7.950
  8.000
  8.050
  8.090
  8.130
  8.170
  8.210
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
  -131
  -130
  -133
  -136
  -140
  -144
  -148
  -152
  -157
  -162
  -145
  -151
  -157
  -163
  -170
  -177
  -184
  -192
  -200
  -209
  -218
  -228
  -238
  -249
  -260
  -271
  -284
  -297
  -310
  -324
Depreciation, amort., depletion, $m
  37
  37
  37
  38
  38
  39
  39
  40
  40
  41
  19
  20
  21
  22
  23
  24
  25
  26
  27
  28
  30
  31
  33
  34
  36
  37
  39
  41
  43
  45
Funds from operations, $m
  -95
  -93
  -96
  -99
  -102
  -105
  -109
  -112
  -117
  -121
  -126
  -130
  -136
  -141
  -147
  -153
  -159
  -166
  -173
  -181
  -188
  -197
  -205
  -214
  -224
  -234
  -244
  -255
  -267
  -279
Change in working capital, $m
  0
  0
  0
  0
  0
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -1
  -2
  -2
  -2
  -2
  -2
  -2
  -2
  -2
Cash from operations, $m
  -94
  -93
  -96
  -98
  -101
  -105
  -108
  -112
  -116
  -120
  -125
  -130
  -135
  -140
  -146
  -152
  -158
  -165
  -172
  -179
  -187
  -195
  -204
  -213
  -222
  -232
  -242
  -253
  -265
  -277
Maintenance CAPEX, $m
  -14
  -14
  -14
  -15
  -15
  -16
  -16
  -17
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -26
  -27
  -28
  -30
  -31
  -33
  -34
  -36
  -37
  -39
  -41
  -43
New CAPEX, $m
  -3
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -7
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -11
  -11
  -12
  -12
  -13
  -14
  -14
  -15
  -16
  -17
  -18
  -19
Cash from investing activities, $m
  -17
  -17
  -17
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -26
  -27
  -29
  -30
  -32
  -33
  -35
  -37
  -38
  -40
  -42
  -44
  -47
  -48
  -51
  -53
  -56
  -59
  -62
Free cash flow, $m
  -111
  -110
  -113
  -117
  -121
  -125
  -129
  -134
  -139
  -144
  -150
  -156
  -162
  -169
  -176
  -184
  -191
  -200
  -208
  -218
  -227
  -237
  -248
  -259
  -271
  -283
  -296
  -310
  -324
  -339
Issuance/(repayment) of debt, $m
  -15
  8
  9
  10
  11
  12
  13
  14
  15
  17
  18
  19
  20
  21
  23
  24
  26
  27
  29
  30
  32
  34
  35
  37
  39
  41
  43
  46
  48
  51
Issuance/(repurchase) of shares, $m
  154
  131
  134
  138
  141
  145
  149
  154
  159
  164
  147
  153
  159
  165
  172
  179
  187
  195
  203
  212
  222
  232
  242
  253
  264
  276
  289
  302
  315
  330
Cash from financing (excl. dividends), $m  
  139
  139
  143
  148
  152
  157
  162
  168
  174
  181
  165
  172
  179
  186
  195
  203
  213
  222
  232
  242
  254
  266
  277
  290
  303
  317
  332
  348
  363
  381
Total cash flow (excl. dividends), $m
  29
  29
  30
  31
  32
  33
  34
  34
  35
  36
  15
  16
  17
  18
  19
  20
  21
  22
  24
  25
  26
  28
  29
  31
  33
  34
  36
  38
  40
  42
Retained Cash Flow (-), $m
  -154
  -131
  -134
  -138
  -141
  -145
  -149
  -154
  -159
  -164
  -147
  -153
  -159
  -165
  -172
  -179
  -187
  -195
  -203
  -212
  -222
  -232
  -242
  -253
  -264
  -276
  -289
  -302
  -315
  -330
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
  -125
  -102
  -104
  -107
  -109
  -113
  -116
  -119
  -123
  -128
  -132
  -137
  -142
  -148
  -153
  -159
  -166
  -173
  -180
  -187
  -195
  -204
  -213
  -222
  -232
  -242
  -252
  -264
  -276
  -288
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
  -112
  -80
  -71
  -63
  -55
  -47
  -40
  -33
  -27
  -22
  -18
  -14
  -11
  -8
  -6
  -4
  -3
  -2
  -1
  -1
  -1
  0
  0
  0
  0
  0
  0
  0
  0
  0
Current shareholders' claim on cash, %
  10.3
  2.6
  0.7
  0.2
  0.0
  0.0
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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 (NVLN)

Valuation Ratios
P/E Ratio -0.3
Price to Sales 1.2
Price to Book 0.1
Price to Tangible Book
Price to Cash Flow -0.5
Price to Free Cash Flow -0.5
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 $138.438 million for the last fiscal year's total revenue generated by Novelion Therapeutics. The default revenue input number comes from 0001 income statement of Novelion Therapeutics. 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 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 12.3%, whose default value for NVLN is calculated based on our internal credit rating of Novelion Therapeutics, 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.
    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.

Corporate tax rate of 27% is the nominal tax rate for Novelion Therapeutics. 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 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 - 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 18.853 million for Novelion Therapeutics 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 at the current share price and the inputted number of shares is $0.0 billion.

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COMPANY NEWS

▶ Novelion Therapeutics: 2Q Earnings Snapshot   [Aug-07-18 08:43AM  Associated Press]
▶ Novelion Therapeutics: 1Q Earnings Snapshot   [May-10-18 08:47AM  Associated Press]
▶ Novelion Therapeutics Supports World Lipodystrophy Day   [Mar-31-18 06:01AM  GlobeNewswire]
▶ Novelion Therapeutics reports 4Q loss   [Mar-15-18 07:33PM  Associated Press]
▶ Doctor pleads guilty as part of Aegerion drug misbranding probe   [Mar-01-18 10:30AM  American City Business Journals]
▶ Aegerion says judges rejection of $40M plea clouds future   [Dec-22-17 12:45PM  American City Business Journals]
▶ Should You Buy Novelion Therapeutics Inc (NVLN)?   [Nov-10-17 05:35PM  Simply Wall St.]
▶ Novelion Therapeutics reports 3Q loss   [Nov-09-17 08:45AM  Associated Press]
▶ Novelion Therapeutics reports 2Q loss   [Aug-08-17 09:32PM  Associated Press]
▶ Novelion Therapeutics reports 4Q loss   [Mar-15-17 07:28AM  Associated Press]
▶ Novelion Therapeutics Observes Rare Disease Day   [Feb-28-17 08:05AM  GlobeNewswire]
▶ 5 Expensive Drugs That Could End Up in Trump's Crosshairs   [Jan-18-17 04:41PM  at Motley Fool]

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