Intrinsic value of Strongbridge Biopharma plc - SBBP

Previous Close

$5.15

  Intrinsic Value

$0.35

stock screener

  Rating & Target

str. sell

-93%

Previous close

$5.15

 
Intrinsic value

$0.35

 
Up/down potential

-93%

 
Rating

str. sell

We calculate the intrinsic value of SBBP 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, %
  51.30
  46.67
  42.50
  38.75
  35.38
  32.34
  29.61
  27.15
  24.93
  22.94
  21.14
  19.53
  18.08
  16.77
  15.59
  14.53
  13.58
  12.72
  11.95
  11.25
  10.63
  10.07
  9.56
  9.10
  8.69
  8.32
  7.99
  7.69
  7.42
  7.18
Revenue, $m
  27
  40
  57
  79
  107
  141
  183
  233
  291
  358
  434
  519
  612
  715
  826
  947
  1,075
  1,212
  1,357
  1,509
  1,670
  1,838
  2,014
  2,197
  2,388
  2,587
  2,793
  3,008
  3,232
  3,464
Variable operating expenses, $m
  60
  86
  122
  167
  225
  297
  384
  487
  607
  746
  899
  1,075
  1,269
  1,482
  1,713
  1,962
  2,228
  2,512
  2,812
  3,128
  3,461
  3,809
  4,173
  4,553
  4,949
  5,361
  5,789
  6,234
  6,697
  7,178
Fixed operating expenses, $m
  67
  69
  70
  72
  74
  75
  77
  79
  80
  82
  84
  86
  88
  90
  91
  93
  96
  98
  100
  102
  104
  107
  109
  111
  114
  116
  119
  121
  124
  127
Total operating expenses, $m
  127
  155
  192
  239
  299
  372
  461
  566
  687
  828
  983
  1,161
  1,357
  1,572
  1,804
  2,055
  2,324
  2,610
  2,912
  3,230
  3,565
  3,916
  4,282
  4,664
  5,063
  5,477
  5,908
  6,355
  6,821
  7,305
Operating income, $m
  -100
  -115
  -135
  -160
  -192
  -231
  -277
  -332
  -396
  -470
  -549
  -642
  -744
  -856
  -978
  -1,109
  -1,249
  -1,397
  -1,555
  -1,721
  -1,895
  -2,078
  -2,268
  -2,467
  -2,675
  -2,890
  -3,115
  -3,348
  -3,590
  -3,841
EBITDA, $m
  -91
  -104
  -120
  -141
  -167
  -198
  -236
  -281
  -334
  -393
  -461
  -537
  -620
  -711
  -810
  -916
  -1,030
  -1,151
  -1,279
  -1,414
  -1,556
  -1,704
  -1,859
  -2,021
  -2,190
  -2,365
  -2,547
  -2,737
  -2,933
  -3,138
Interest expense (income), $m
  0
  0
  19
  46
  82
  128
  187
  260
  348
  453
  575
  716
  876
  1,054
  1,251
  1,467
  1,702
  1,955
  2,226
  2,514
  2,819
  3,140
  3,478
  3,832
  4,202
  4,588
  4,990
  5,408
  5,843
  6,296
  6,766
Earnings before tax, $m
  -100
  -135
  -181
  -242
  -320
  -418
  -537
  -680
  -849
  -1,045
  -1,265
  -1,517
  -1,798
  -2,108
  -2,445
  -2,811
  -3,204
  -3,623
  -4,068
  -4,539
  -5,035
  -5,555
  -6,100
  -6,669
  -7,262
  -7,880
  -8,523
  -9,191
  -9,886
  -10,607
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
  -100
  -135
  -181
  -242
  -320
  -418
  -537
  -680
  -849
  -1,045
  -1,265
  -1,517
  -1,798
  -2,108
  -2,445
  -2,811
  -3,204
  -3,623
  -4,068
  -4,539
  -5,035
  -5,555
  -6,100
  -6,669
  -7,262
  -7,880
  -8,523
  -9,191
  -9,886
  -10,607

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
  98
  144
  205
  285
  386
  511
  662
  842
  1,052
  1,293
  1,566
  1,872
  2,211
  2,581
  2,984
  3,417
  3,881
  4,375
  4,898
  5,449
  6,028
  6,635
  7,269
  7,931
  8,621
  9,338
  10,084
  10,860
  11,666
  12,504
Adjusted assets (=assets-cash), $m
  98
  144
  205
  285
  386
  511
  662
  842
  1,052
  1,293
  1,566
  1,872
  2,211
  2,581
  2,984
  3,417
  3,881
  4,375
  4,898
  5,449
  6,028
  6,635
  7,269
  7,931
  8,621
  9,338
  10,084
  10,860
  11,666
  12,504
Revenue / Adjusted assets
  0.276
  0.278
  0.278
  0.277
  0.277
  0.276
  0.276
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
Average production assets, $m
  30
  45
  64
  88
  119
  158
  205
  260
  325
  400
  485
  579
  684
  799
  923
  1,057
  1,201
  1,354
  1,515
  1,686
  1,865
  2,053
  2,249
  2,454
  2,667
  2,889
  3,120
  3,360
  3,610
  3,869
Working capital, $m
  -11
  -16
  -24
  -33
  -44
  -58
  -76
  -96
  -120
  -148
  -179
  -214
  -253
  -295
  -341
  -391
  -444
  -501
  -560
  -623
  -690
  -759
  -832
  -907
  -986
  -1,068
  -1,154
  -1,242
  -1,335
  -1,430
Total debt, $m
  29
  70
  124
  194
  283
  393
  526
  684
  869
  1,082
  1,323
  1,592
  1,890
  2,217
  2,571
  2,953
  3,362
  3,797
  4,258
  4,743
  5,254
  5,788
  6,347
  6,930
  7,537
  8,170
  8,827
  9,510
  10,221
  10,959
Total liabilities, $m
  87
  127
  181
  251
  340
  450
  583
  742
  926
  1,139
  1,380
  1,649
  1,947
  2,274
  2,629
  3,011
  3,419
  3,854
  4,315
  4,801
  5,311
  5,845
  6,404
  6,987
  7,595
  8,227
  8,884
  9,568
  10,278
  11,016
Total equity, $m
  12
  17
  24
  34
  46
  61
  79
  100
  125
  154
  186
  223
  263
  307
  355
  407
  462
  521
  583
  648
  717
  790
  865
  944
  1,026
  1,111
  1,200
  1,292
  1,388
  1,488
Total liabilities and equity, $m
  99
  144
  205
  285
  386
  511
  662
  842
  1,051
  1,293
  1,566
  1,872
  2,210
  2,581
  2,984
  3,418
  3,881
  4,375
  4,898
  5,449
  6,028
  6,635
  7,269
  7,931
  8,621
  9,338
  10,084
  10,860
  11,666
  12,504
Debt-to-equity ratio
  2.500
  4.060
  5.060
  5.710
  6.160
  6.460
  6.680
  6.830
  6.950
  7.030
  7.100
  7.150
  7.190
  7.220
  7.240
  7.260
  7.280
  7.290
  7.300
  7.310
  7.320
  7.330
  7.340
  7.340
  7.350
  7.350
  7.360
  7.360
  7.360
  7.360
Adjusted equity ratio
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119
  0.119

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  -100
  -135
  -181
  -242
  -320
  -418
  -537
  -680
  -849
  -1,045
  -1,265
  -1,517
  -1,798
  -2,108
  -2,445
  -2,811
  -3,204
  -3,623
  -4,068
  -4,539
  -5,035
  -5,555
  -6,100
  -6,669
  -7,262
  -7,880
  -8,523
  -9,191
  -9,886
  -10,607
Depreciation, amort., depletion, $m
  9
  12
  15
  20
  25
  32
  41
  51
  63
  76
  88
  105
  124
  145
  168
  192
  218
  246
  276
  307
  339
  373
  409
  446
  485
  525
  567
  611
  656
  703
Funds from operations, $m
  -91
  -123
  -166
  -223
  -295
  -385
  -496
  -629
  -787
  -969
  -1,177
  -1,412
  -1,674
  -1,962
  -2,277
  -2,619
  -2,985
  -3,377
  -3,793
  -4,233
  -4,696
  -5,182
  -5,691
  -6,223
  -6,777
  -7,355
  -7,955
  -8,580
  -9,229
  -9,904
Change in working capital, $m
  -4
  -5
  -7
  -9
  -12
  -14
  -17
  -21
  -24
  -28
  -31
  -35
  -39
  -42
  -46
  -50
  -53
  -56
  -60
  -63
  -66
  -69
  -73
  -76
  -79
  -82
  -85
  -89
  -92
  -96
Cash from operations, $m
  -87
  -118
  -159
  -213
  -283
  -371
  -479
  -609
  -763
  -941
  -1,146
  -1,377
  -1,635
  -1,920
  -2,231
  -2,569
  -2,932
  -3,320
  -3,733
  -4,170
  -4,630
  -5,113
  -5,619
  -6,147
  -6,698
  -7,273
  -7,870
  -8,491
  -9,137
  -9,808
Maintenance CAPEX, $m
  -4
  -6
  -8
  -12
  -16
  -22
  -29
  -37
  -47
  -59
  -73
  -88
  -105
  -124
  -145
  -168
  -192
  -218
  -246
  -276
  -307
  -339
  -373
  -409
  -446
  -485
  -525
  -567
  -611
  -656
New CAPEX, $m
  -10
  -14
  -19
  -25
  -31
  -39
  -47
  -56
  -65
  -75
  -85
  -95
  -105
  -115
  -125
  -134
  -144
  -153
  -162
  -171
  -179
  -188
  -196
  -205
  -213
  -222
  -231
  -240
  -249
  -259
Cash from investing activities, $m
  -14
  -20
  -27
  -37
  -47
  -61
  -76
  -93
  -112
  -134
  -158
  -183
  -210
  -239
  -270
  -302
  -336
  -371
  -408
  -447
  -486
  -527
  -569
  -614
  -659
  -707
  -756
  -807
  -860
  -915
Free cash flow, $m
  -101
  -138
  -186
  -250
  -331
  -431
  -554
  -702
  -875
  -1,075
  -1,303
  -1,560
  -1,845
  -2,159
  -2,501
  -2,871
  -3,268
  -3,692
  -4,141
  -4,616
  -5,115
  -5,640
  -6,188
  -6,761
  -7,358
  -7,980
  -8,626
  -9,299
  -9,997
  -10,724
Issuance/(repayment) of debt, $m
  29
  40
  54
  70
  89
  110
  133
  158
  185
  213
  241
  269
  298
  327
  355
  382
  409
  435
  461
  486
  510
  535
  559
  583
  607
  632
  657
  683
  710
  738
Issuance/(repurchase) of shares, $m
  104
  140
  189
  252
  332
  433
  555
  702
  874
  1,074
  1,298
  1,554
  1,838
  2,152
  2,493
  2,862
  3,259
  3,682
  4,131
  4,605
  5,104
  5,628
  6,176
  6,748
  7,344
  7,965
  8,612
  9,283
  9,982
  10,707
Cash from financing (excl. dividends), $m  
  133
  180
  243
  322
  421
  543
  688
  860
  1,059
  1,287
  1,539
  1,823
  2,136
  2,479
  2,848
  3,244
  3,668
  4,117
  4,592
  5,091
  5,614
  6,163
  6,735
  7,331
  7,951
  8,597
  9,269
  9,966
  10,692
  11,445
Total cash flow (excl. dividends), $m
  33
  43
  56
  72
  91
  111
  134
  158
  184
  211
  235
  263
  291
  319
  347
  373
  400
  425
  450
  475
  499
  523
  546
  570
  594
  618
  643
  668
  694
  721
Retained Cash Flow (-), $m
  -104
  -140
  -189
  -252
  -332
  -433
  -555
  -702
  -874
  -1,074
  -1,298
  -1,554
  -1,838
  -2,152
  -2,493
  -2,862
  -3,259
  -3,682
  -4,131
  -4,605
  -5,104
  -5,628
  -6,176
  -6,748
  -7,344
  -7,965
  -8,612
  -9,283
  -9,982
  -10,707
Prev. year cash balance distribution, $m
  105
  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
  33
  -97
  -132
  -179
  -242
  -321
  -421
  -543
  -690
  -862
  -1,062
  -1,290
  -1,547
  -1,832
  -2,147
  -2,489
  -2,859
  -3,257
  -3,680
  -4,130
  -4,605
  -5,105
  -5,629
  -6,178
  -6,750
  -7,347
  -7,969
  -8,615
  -9,287
  -9,986
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
  32
  -89
  -115
  -148
  -187
  -233
  -285
  -340
  -396
  -452
  -504
  -551
  -588
  -615
  -630
  -632
  -622
  -600
  -567
  -525
  -476
  -424
  -369
  -315
  -263
  -214
  -171
  -133
  -101
  -75
Current shareholders' claim on cash, %
  15.4
  2.6
  0.5
  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
  0.0

Strongbridge Biopharma plc is a global commercial-stage biopharmaceutical company. The Company is focused on the development and commercialization of therapies for a range of diseases. The Company's commercial product, KEVEYIS (dichlorphenamide), is indicated for the treatment of hyperkalemic, hypokalemic and related variants of primary periodic paralysis. The United States Food and Drug Administration (FDA) has granted orphan drug designation for KEVEYIS. The Company has a clinical-stage pipeline of therapies for endocrine diseases. The Company's lead compounds include COR-003 (levoketoconazole), a cortisol synthesis inhibitor, and COR-005 (veldoreotide), a somatostatin analog (SSA). The Company is studying COR-003 for the treatment of endogenous Cushing's syndrome. It is investigating COR-005 for the treatment of acromegaly. Both COR-003 and COR-005 have received orphan designation from the FDA and the European Medicines Agency (EMA).

FINANCIAL RATIOS  of  Strongbridge Biopharma plc (SBBP)

Valuation Ratios
P/E Ratio -3.7
Price to Sales 0
Price to Book 2.7
Price to Tangible Book
Price to Cash Flow -5.7
Price to Free Cash Flow -5.7
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 26.9%
Total Debt to Equity 26.9%
Interest Coverage 0
Management Effectiveness
Return On Assets -41.7%
Ret/ On Assets - 3 Yr. Avg. -52.3%
Return On Total Capital -56%
Ret/ On T. Cap. - 3 Yr. Avg. -63.6%
Return On Equity -62.4%
Return On Equity - 3 Yr. Avg. -65.7%
Asset Turnover 0
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 0%
EBITDA Margin - 3 Yr. Avg. 0%
Operating Margin 0%
Oper. Margin - 3 Yr. Avg. 0%
Pre-Tax Margin 0%
Pre-Tax Margin - 3 Yr. Avg. 0%
Net Profit Margin 0%
Net Profit Margin - 3 Yr. Avg. 0%
Effective Tax Rate 3.9%
Eff/ Tax Rate - 3 Yr. Avg. 1.3%
Payout Ratio 0%

SBBP stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the SBBP stock intrinsic value calculation we used $18 million for the last fiscal year's total revenue generated by Strongbridge Biopharma plc. The default revenue input number comes from 0001 income statement of Strongbridge Biopharma 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 SBBP stock valuation model: a) initial revenue growth rate of 51.3% 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 SBBP is calculated based on our internal credit rating of Strongbridge Biopharma 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 Strongbridge Biopharma 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 SBBP stock the variable cost ratio is equal to 227.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $66 million in the base year in the intrinsic value calculation for SBBP 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 66.2% for Strongbridge Biopharma plc.

Corporate tax rate of 27% is the nominal tax rate for Strongbridge Biopharma 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 SBBP 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 SBBP are equal to 111.7%.

Life of production assets of 5.5 years is the average useful life of capital assets used in Strongbridge Biopharma 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 SBBP is equal to -41.3%. 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 - $112.955 million for Strongbridge Biopharma 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 54.160 million for Strongbridge Biopharma 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 Strongbridge Biopharma plc at the current share price and the inputted number of shares is $0.3 billion.

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