AlphaValue Corporate Services Fundamental Analysis FR
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AlphaValue Corporate Services
This research has been commissioned and paid for by the company and is deemed to constitute an acceptable minor non-monetary benefit as defined in MiFID II

Crossject

CR
Bloomberg   ALCJ FP
Supergenerics  /  France  Web Site   |   Investors Relation
Some patience still required
Target
Upside 302%
Price (€) 2.58
Market Cap (€M) 65.4
Benchmarks Current multiplesWeightValues (€)Upside 
DCF (Edit and simulate)  40%14.8475%
NAV/SOTP per share   40%9.66274%
P/E Peers 4.9 x 5%5.16100%
EV/Ebitda Peers 4.8 x 5%5.16100%
P/Book Peers 7.2 x 5%1.29-50%
Dividend Yield Peers 0.0% 5%0.00-100%
Target Price  100%10.4302% 
Valuation matters

All peer-based valuations have no meaning since Crossject currently has no revenues and negative results. Our NAV valuation is based on a 3x multiple of 2021-23 revenues for all segments, which compares to a ratio of 3.3x for our sample. On the one hand, these revenues will not be booked for two years, which should lead us to a discount, however, they only correspond to the ramp-up in sales, meaning that growth rates will be high after 2022 and that these figures are very conservative ones indeed, which explains why we chose not to discount them. The multiple used is rather common for biotech and pharma companies, particularly for those that have a significant R&D pipeline and, thus, high growth prospects. A transaction value would certainly end up at a higher level (5-10x sales, depending on the pharma segment). As an indication of this, Emergent Biosolutions announced in FY18 that it would buy Adapt Pharma (the developer of Narcan, an FDA-approved naloxone nasal spray for US$635m (+US$100m in sales milestones), while we estimate sales of c.US$150m for FY18, implying a c.4.9x sales multiple.
Our DCF is based on our forecasts for each of the seven NTEs currently under development, considering that all of them will be sold through partnerships. We have also factored in a risk associated with the development of each specialty (50% or 70% probability of success as discussed in the Money Making section, depending on the status of clinical trials and the need to find a partner). We have also used a long-term top-line growth of 10% and an out-year EBITDA growth of 16%.
It is worth noting that our target price is derived from a weighted average of all methods used, NAV and DCF both showing huge potential upsides (which together account for 55% of our total valuation), while all comparison-based methods lead to weak numbers in the absence of results for the time being. In other words, the valuation of the stock is penalized and should go up quickly when the first products reach the market and enable Crossject to post profits. This also suggests it will take some time for the market to reflect the group’s potential fully and explains our title. Patience will indeed be needed but the reward could be huge.

Comparison Based Valuation
Computed on 18 month forecastsMcap (€M]P/E (x)Ev/Ebitda (x)P/Book (x)Yield(%)
Peers ratios 16.6 9.47 2.25 1.28
Crossject's ratios 4.93 4.79 7.18 0.00
Premium 0.00% 0.00% 0.00% 0.00%
Default comparison based valuation (€) 5.16 5.16 1.29 0.00
UCB 19,209 21.012.12.140.95
Ipsen 7,459 12.26.262.401.12
Hikma Pharmaceuticals 6,394 14.48.912.591.89
Faes Farma 979 14.08.811.754.64
DCF Valuation Per Share Help View DCF history
WACC % 6.95
PV of cashflow FY1-FY11 €M 19.8
FY11CF €M 39.9
Normalised long-term growth"g" % 2.00
Sustainability "g" % 1.75
Terminal value €M 768
PV terminal value €M 393
PV terminal value in % of total... % 95.2
Total PV €M 413
Avg net debt (cash) at book v... €M 37.7
Provisions €M 0.13
Unrecognised actuarial losses... €M 0.00
Financial assets at market price €M 0.00
Minorities interests (fair value) €M 0.00
Equity value €M 375
Number of shares Mio 25.3
Implied equity value per share 14.8
Sustainability impact on DCF % -5.03
Assessing The Cost Of Capital Help
Synthetic default risk free rate % 3.50
Target equity risk premium % 5.00
Tax advantage of debt financ... % 30.0
Average debt maturity Year 5
Sector asset beta x 0.74
Debt beta x 0.30
Market capitalisation €M 65.4
Net debt (cash) at book value €M 20.3
Net debt (cash) at market value €M 19.3
Company debt spread bp 150
Marginal Company cost of debt % 5.00
Company beta (leveraged) x 0.89
Company gearing at market v... % 31.1
Company market gearing % 23.7
Required return on geared eq... % 7.96
Cost of debt % 3.50
Cost of ungeared equity % 7.20
WACC % 6.95
DCF Calculation Help
  12/20A 12/21E 12/22E 12/23E Growth 12/24E
Sales €M   5.73 5.86 51.9 94.6 10.0% 104   
EBITDA €M   -6.69 -5.81 27.8 57.1 16.0% 66.2   
EBITDA Margin %   -117 -99.2 53.6 60.3 63.6   
Change in WCR €M   0.96 1.39 -51.4 -43.0 12.0% -48.2   
Total operating cash flows (pre tax) €M   -5.74 -4.42 -23.5 14.0 18.0   
Corporate tax €M   1.65 3.25 -7.85 -17.5 10.0% -19.2   
Net tax shield €M   -0.16 -0.21 -0.21 -0.21 0.00% -0.21   
Capital expenditure €M   -6.10 -1.72 -2.66 -2.27 6.00% -2.40   
Capex/Sales %   -106 -29.3 -5.12 -2.40 -2.31   
Pre financing costs FCF (for DCF purposes) €M   -10.3 -3.10 -34.2 -5.96 -3.88   
Various add backs (incl. R&D, etc.) for DCF... €M     
Free cash flow adjusted €M   -10.3 -3.10 -34.2 -5.96 -3.88   
Discounted free cash flows €M   -10.3 -3.10 -32.0 -5.21 -3.18   
Invested capital   12.4 9.84 61.0 103 110   
NAV/SOTP Calculation
 % ownedValuation technique Multiple used Valuation at 100%
(€M)
Stake
valuation
(€M)
In currency per share
(€)
% of gross assets
Epinephrine 100% EV/Sales 3 47.3 47.3 1.87 18.1%
Midazolam 100% EV/Sales 3 33.6 33.6 1.33 12.9%
Methotrexate 100% EV/Sales 3 28.8 28.8 1.14 11.0%
Naloxone 100% EV/Sales 3 17.4 17.4 0.69 6.67%
Terbutaline 100% EV/Sales 3 12.9 12.9 0.51 4.94%
Hydrocortisone 100% EV/Sales 3 8.40 8.40 0.33 3.22%
Sumatriptan 100% EV/Sales 3 7.50 7.50 0.30 2.87%
Apomorphine 100% EV/Sales 3 0.00 0.00 0.00 0.00%
Other 105 4.15 40.2%
Total gross assets 261 10.3 100%
Net cash/(debt) by year end -16.7 -0.66 -6.41%
Commitments to pay -0.13 0.00 -0.05%
Commitments received
NAV/SOTP 244 9.66 93.5%
Number of shares net of treasury shares - year end (Mio) 25.3
NAV/SOTP per share (€) 9.66
Current discount to NAV/SOTP (%) 73.3 View history

Changes to Story : 02/09/2021, Changes to Forecasts : 02/09/2021.