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Crossject

CR
Bloomberg   ALCJ FP
Supergenerics  /  France  Web Site   |   Investors Relation
Things get moving
Target
Upside 114%
Price (€) 4.58
Market Cap (€M) 166
Benchmarks Current multiplesWeightValues (€)Upside 
DCF (Edit and simulate)  40%11.6153%
NAV/SOTP per share   40%12.3169%
P/E Peers -28.1 x 5%2.29-50%
EV/Ebitda Peers -42.4 x 5%0.00-100%
P/Book Peers -7.4 x 5%2.29-50%
Dividend Yield Peers 0.0% 5%0.00-100%
Target Price  100%9.79114% 
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 2025-26 revenues for all segments. On the one hand, these revenues will not be booked for three 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 2025 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).
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. 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 25.3 14.3 3.91 1.47
Crossject's ratios -28.1 -42.4 -7.40 0.00
Premium 0.00% 0.00% 0.00% 0.00%
Default comparison based valuation (€) 2.29 0.00 2.29 0.00
Sartorius 31,360 46.122.312.30.48
Coloplast 23,818 29.120.816.82.47
UCB 14,654 18.610.71.491.27
Carl Zeiss Meditec 11,869 37.020.15.510.93
bioMerieux 11,388 22.311.92.940.95
Ipsen 8,302 13.56.292.111.42
Hikma Pharmaceuticals 4,214 10.66.111.652.92
Faes Farma 1,073 10.67.521.535.23
AfghanistanInnate Pharma(Consensus) 260 -6.2939.76.8536.7
DCF Valuation Per Share Help View DCF history
WACC % 7.45
PV of cashflow FY1-FY11 €M 21.8
FY11CF €M 51.2
Normalised long-term growth"g" % 2.00
Sustainability "g" % 1.75
Terminal value €M 898
PV terminal value €M 438
PV terminal value in % of total... % 95.3
Total PV €M 460
Avg net debt (cash) at book v... €M 28.9
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 431
Number of shares Mio 37.2
Implied equity value per share 11.6
Sustainability impact on DCF % -4.46
Assessing The Cost Of Capital Help
Synthetic default risk free rate % 3.50
Target equity risk premium % 5.00
Tax advantage of debt financ... % 25.0
Average debt maturity Year 5
Sector asset beta x 0.81
Debt beta x 0.30
Market capitalisation €M 165
Net debt (cash) at book value €M 23.8
Net debt (cash) at market value €M 21.9
Company debt spread bp 150
Marginal Company cost of debt % 5.00
Company beta (leveraged) x 0.89
Company gearing at market v... % 14.4
Company market gearing % 12.6
Required return on geared eq... % 7.94
Cost of debt % 3.75
Cost of ungeared equity % 7.54
WACC % 7.45
DCF Calculation Help
  12/21A 12/22E 12/23E 12/24E 12/25E
Sales €M   6.77 3.01 3.01 49.0 92.9   
EBITDA €M   -7.33 -10.5 -14.4 26.7 67.1   
EBITDA Margin %   -108 -349 -480 54.5 72.2   
Change in WCR €M   -0.34 1.83 1.12 -49.0 -50.6   
Total operating cash flows (pre tax) €M   -9.49 -8.69 -13.3 -22.2 16.5   
Corporate tax €M   1.82 4.81 6.10 -7.48 -20.8   
Net tax shield €M   -0.20 -0.18 -0.18 -0.18 -0.18   
Capital expenditure €M   -6.73 -2.66 -2.27 -5.38 -2.50   
Capex/Sales %   -99.4 -88.3 -75.3 -11.0 -2.69   
Pre financing costs FCF (for DCF purposes) €M   -14.6 -6.72 -9.66 -35.3 -6.94   
Various add backs (incl. R&D, etc.) for DCF... €M     
Free cash flow adjusted €M   -14.6 -6.72 -9.66 -35.3 -6.94   
Discounted free cash flows €M   -14.6 -6.72 -8.99 -30.6 -5.59   
Invested capital   14.7 12.6 10.9 62.4 113   
NAV/SOTP Calculation
 % ownedValuation technique Multiple used Valuation at 100%
(€M)
Stake
valuation
(€M)
In currency per share
(€)
% of gross assets
Midazolam 100% EV/Sales 3 164 164 4.42 34.6%
Epinephrine 100% EV/Sales 3 90.0 90.0 2.42 18.9%
Methotrexate 100% EV/Sales 3 15.9 15.9 0.43 3.34%
Hydrocortisone 100% EV/Sales 3 15.6 15.6 0.42 3.28%
Terbutaline 100% EV/Sales 3 12.9 12.9 0.35 2.71%
Naloxone 100% EV/Sales 3 4.80 4.80 0.13 1.01%
Sumatriptan 100% EV/Sales 3 2.10 2.10 0.06 0.44%
Apomorphine 100% EV/Sales 3 0.00 0.00 0.00 0.00%
Other 170 4.57 35.7%
Total gross assets 476 12.8 100%
Net cash/(debt) by year end -16.5 -0.44 -3.47%
Commitments to pay -0.13 0.00 -0.03%
Commitments received
NAV/SOTP 459 12.3 96.5%
Number of shares net of treasury shares - year end (Mio) 37.2
NAV/SOTP per share (€) 12.3
Current discount to NAV/SOTP (%) 62.9 View history

Changes to Story : 12/12/2022, Changes to Forecasts : 12/12/2022.