Project Jaguar Download

Transcript
Confidential Draft
Project Jaguar
Presentation to the Board of Directors
May 10, 2014
Goldman Stanley
Table of Contents
Executive Summary
3
Jaguar Valuation
5
Potential Strategic Partners
25
Process Recommendations
38
Appendix
43
Goldman Stanley
2
Executive Summary
Goldman Stanley
3
Executive Summary
 As of May 9, 2014, Jaguar’s share price and valuation multiples have more than doubled over the last twelve months
 Even at its current levels, however, Jaguar is still undervalued relative to peer specialty pharmaceutical companies, and
on an intrinsic, cash-flow basis
 Given its prominence in the market, the record healthcare M&A activity in the first half of this year, and the soaring
interest in “tax inversion” deals, Jaguar could make for an attractive acquisition candidate
 Such a strategy would allow Jaguar to maximize shareholder value, expand its geographic reach and distribution
channels, and acquire more resources for future research & development efforts and/or M&A activity
 Given Jaguar’s unique attributes, we believe a purchase premium above 50%, implying a share price of ~$200+, is
possible with the proper positioning and process
 We recommend a highly targeted process focused on the most likely (“Tier 1”) potential partners, along with an
outreach to Tier 2 potential partners while discussions with Tier 1 partners are ongoing
Goldman Stanley
4
Jaguar Valuation
Goldman Stanley
5
Valuation Summary – Operating Scenarios
Base Case
Management Case
 $2.0 billion in FY 20
 $4.2 billion in FY 21
 $300 million / year
 $377 million / year
 FY 20
 FY 21
Annual Price Increases
Through Peak Revenue
 CAGR of 6%; max of ~$79,000
in FY 21
 CAGR of 11%; max of
~$122,000 in FY 21
Xyrem Market Penetration
 Increases from 7% in FY 13 to
19% in FY 23
 Increases from 7% in FY 13 to
24% in FY 23
EBITDA Margins
 Steady between 54-56% until
generics enter
 Steady between 55-57% until
generics enter
Peak Xyrem Revenue
Xyrem Revenue After Peak
Xyrem Generics Entrance Year
Goldman Stanley
6
Summary of Valuation Implications
#1
Implied Valuation
Jaguar appears to be undervalued by 50%+ in the Management Case and 1020% in the Base Case
#2
Comparable
Companies
Also point to the same result – Jaguar trades below the median EV / EBITDA
multiple of peer companies
#3
Discounted Cash Flow
(DCF) Analysis
Produces the highest implied valuation, primarily because Jaguar’s value is
heavily dependent on Xyrem pricing 5-10 years into the future
#4
Precedent Transactions
Similar M&A deals imply a much lower valuation, but we believe these
multiples are less relevant due to the lack of comparable deals
Goldman Stanley
7
Base Case Financial Projections
($ USD in Millions except for $ per Share Figures)
Income Statement:
Revenue:
Existing Products:
Xyrem Sales:
Erwinaze Sales:
Defitelio Sales:
Other Sales and Royalties:
Risk-Adjusted Pipeline Drug Sales:
JZP-110 Sales:
JZP-386 Sales:
Total Revenue:
Revenue Growth:
Units:
$M
$M
$M
$M
FY14
$
FY15
578.6 $
203.4
57.8
142.0
FY16
766.6 $
234.2
79.8
156.2
Projected
FY18
FY19
FY17
FY20
FY21
975.1 $ 1,205.9 $ 1,447.1 $ 1,709.4 $ 1,975.3 $
266.6
300.7
336.7
346.8
385.8
107.1
140.7
182.0
209.3
240.7
168.7
182.1
193.1
204.7
214.9
FY22
276.3 $
397.3
276.9
225.6
FY23
301.4 $
439.6
318.4
234.7
301.4
452.7
366.1
244.0
$M
$M
$M
%
981.8
12.5%
1,236.7
26.0%
1,517.4
22.7%
18.1
1,847.6
21.8%
43.4
2,202.3
19.2%
76.9
2,547.1
15.7%
88.9
2,905.6
14.1%
135.6
1,311.7
(54.9%)
152.3
1,446.4
10.3%
196.1
1,560.5
7.9%
Operating Income (EBIT):
Operating (EBIT) Margin:
$M
%
266.7
27.2%
563.2
45.5%
716.8
47.2%
895.2
48.5%
1,088.2
49.4%
1,286.5
50.5%
1,477.1
50.8%
549.9
41.9%
616.9
42.6%
674.2
43.2%
Net Income:
Effective Tax Rate:
$M
%
877.5
18.0%
$ 1,054.8
18.0%
$ 1,211.2
18.0%
Diluted Shares Outstanding:
Diluted Earnings Per Share (EPS):
EBITDA:
EBITDA Margin:
Goldman Stanley
$M
$ as Stated
$M
%
$
$
$
178.8
18.0%
$
430.6
18.0%
$
64.4
2.77 $
67.5
6.38 $
527.1 $
53.7%
695.5 $
56.2%
556.6
18.0%
$
70.6
7.88 $
719.2
18.0%
$
73.9
9.73 $
77.4
11.34 $
81.0
13.02 $
$
450.9
18.0%
$
505.8
18.0%
$
552.8
18.0%
84.8
14.29 $
88.8
5.08 $
92.9
5.44 $
97.2
5.68
847.8 $ 1,029.8 $ 1,224.0 $ 1,410.1 $ 1,606.8 $
55.9%
55.7%
55.6%
55.4%
55.3%
665.0 $
50.7%
734.9 $
50.8%
795.1
51.0%
8
Management Case Financial Projections
($ USD in Millions except for $ per Share Figures)
Income Statement:
Revenue:
Existing Products:
Xyrem Sales:
Erwinaze Sales:
Defitelio Sales:
Other Sales and Royalties:
Risk-Adjusted Pipeline Drug Sales:
JZP-110 Sales:
JZP-386 Sales:
Total Revenue:
Revenue Growth:
Units:
$M
$M
$M
$M
FY14
$
FY15
FY16
Projected
FY18
FY19
FY17
FY20
FY21
FY22
773.7 $ 1,083.1 $ 1,455.7 $ 1,902.2 $ 2,391.3 $ 2,959.2 $ 3,551.1 $ 4,218.7 $
203.4
234.2
266.6
300.7
336.7
346.8
385.8
397.3
57.8
79.8
107.1
140.7
182.0
209.3
240.7
276.9
142.0
156.2
168.7
182.1
193.1
204.7
214.9
225.6
FY23
376.8 $
439.6
318.4
234.7
376.8
452.7
366.1
244.0
$M
$M
$M
%
1,176.9
34.9%
1,553.3
32.0%
1,998.0
28.6%
28.5
2,554.3
27.8%
71.7
3,174.8
24.3%
133.2
3,853.2
21.4%
159.8
4,552.3
18.1%
253.1
5,371.6
18.0%
292.7
1,662.1
(69.1%)
387.8
1,827.6
10.0%
Operating Income (EBIT):
Operating (EBIT) Margin:
$M
%
380.8
32.4%
754.7
48.6%
1,003.9
50.2%
1,312.6
51.4%
1,657.1
52.2%
2,044.0
53.0%
2,424.9
53.3%
2,870.7
53.4%
739.4
44.5%
825.0
45.1%
Net Income:
Effective Tax Rate:
$M
%
792.0
18.0%
$ 1,061.5
18.0%
$ 1,344.0
18.0%
$ 1,675.9
18.0%
$ 1,988.4
18.0%
$ 2,353.9
18.0%
Diluted Shares Outstanding:
Diluted Earnings Per Share (EPS):
EBITDA:
EBITDA Margin:
Goldman Stanley
$M
$ as Stated
$M
%
$
$
$
272.4
18.0%
$
64.4
4.23 $
642.0 $
54.6%
587.6
18.0%
$
$
676.5
18.0%
88.8
26.52 $
92.9
6.53 $
97.2
6.96
888.6 $ 1,137.7 $ 1,452.2 $ 1,800.7 $ 2,179.4 $ 2,571.1 $ 3,030.4 $
57.2%
56.9%
56.9%
56.7%
56.6%
56.5%
56.4%
860.0 $
51.7%
949.4
52.0%
67.5
8.71 $
70.6
11.21 $
73.9
14.36 $
77.4
17.37 $
81.0
20.69 $
84.8
23.45 $
$
606.3
18.0%
9
Revenue and EBITDA: Management Case vs. Base Case
($ USD in Billions)
Revenue Projections
$6.0 B
$5.4 B
$4.6 B
$5.0 B
$3.9 B
$4.0 B
$3.2 B
Management
$2.6 B
$3.0 B
$2.0 B
$2.0 B
$1.2 B
$1.7 B
$1.6 B
$1.8 B
Base
$1.0 B
$0.0 B
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23
EBITDA Projections
$3.5 B
$3.0 B
$3.0 B
$2.6 B
$2.5 B
$2.2 B
$1.8 B
$2.0 B
$1.5 B
$1.0 B
Management
$1.5 B
$0.6 B
$0.9 B
$1.1 B
$0.9 B
$0.9 B
Base
$0.5 B
$0.0 B
FY14
FY15
Goldman Stanley
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23
10
Projected Xyrem Sales – Pricing vs. Patient Growth
($ USD in Millions)
Goldman Stanley
11
Valuation Summary – Base Case
($ USD in Dollars as Stated)
Jaguar Current Share Price(1):
Public Company Comparables:
LTM EV / Revenue:
2014-12-31 E EV / Revenue:
2015-12-31 E EV / Revenue:
LTM EV / EBITDA:
2014-12-31 E EV / EBITDA:
2015-12-31 E EV / EBITDA:
LTM Reported P / E:
2014-12-31 E Reported P / E:
25th to Median
2015-12-31 E Reported P / E:
Median to 75th
Precedent Transactions:
LTM EV / Revenue:
LTM EV / EBITDA:
Discounted Cash Flow Analysis:
7.0% - 9.0% Discount Rate, (1.0%) –
1.0% Terminal FCF Growth Rate:
$0.00
$50.00
$100.00
$150.00
$200.00
$250.00
$300.00
Implied Share Price
 All market data as of May 9, 2014
 Given that Jaguar’s revenue growth, EBITDA growth, and EBITDA margins exceed those of its peer
companies, we believe a valuation in the 75th percentile to maximum of the set is justified
Goldman Stanley
(1) Financial data as of May 9, 2014.
12
Valuation Summary – Management Case
($ USD in Dollars as Stated)
Jaguar Current Share Price(1):
Public Company Comparables:
LTM EV / Revenue:
2014-12-31 E EV / Revenue:
2015-12-31 E EV / Revenue:
LTM EV / EBITDA:
2014-12-31 E EV / EBITDA:
2015-12-31 E EV / EBITDA:
LTM Reported P / E:
2014-12-31 E Reported P / E:
25th to Median
2015-12-31 E Reported P / E:
Median to 75th
Precedent Transactions:
LTM EV / Revenue:
LTM EV / EBITDA:
Discounted Cash Flow Analysis:
7.0% - 9.0% Discount Rate, (1.0%) –
1.0% Terminal FCF Growth Rate:
$0.00
$50.00
$100.00
$150.00
$200.00
$250.00
$300.00
Implied Share Price
 All market data as of May 9, 2014
 The rest of this discussion will utilize the Management Case projections; these figures imply a
valuation closer to $200 per share
Goldman Stanley
(1) Financial data as of May 9, 2014.
13
Jaguar Comparable Public Companies
Specialty Pharmaceutical Companies That Sell Primarily Branded Drugs, with LTM Revenue Between $500 Million and $2 Billion
($ USD in Billions)
Comparable Public Companies – Revenue and EBITDA, CY 2014E – CY 2015E(1)
$3.0 B
$2.5 B
$2.0 B
CY 2014E
$1.5 B
CY 2015E
$1.0 B
$0.5 B
$0.0 B
$1.4 B
$1.2 B
$1.0 B
$0.8 B
$0.6 B
CY 2014E
$0.4 B
CY 2015E
$0.2 B
$0.0 B
($0.2 B)
($0.4 B)
($0.6 B)
Goldman Stanley
(1) Financial data as of May 9, 2014.
14
Jaguar Comparable Public Companies
Specialty Pharmaceutical Companies That Sell Primarily Branded Drugs, with LTM Revenue Between $500 Million and $2 Billion
Comparable Public Companies – Growth and Valuation Multiples, CY 2014E – CY 2015E(1)
Revenue Growth, CY 2014E - CY
2015E
120%
111%
EBITDA Growth, CY 2014E - CY
2015E
160%
137%
140%
100%
120%
80%
100%
60%
80%
38%
40%
60%
32%
23%
20%
11%
6%
21% 18%
20%
0%
11.6 x
11.6 x
9.7 x
8.0 x
5.9 x
6.0 x
4.1 x
4.0 x
2.0 x
NM
22%
CY 2015E EBITDA Multiples
14.0 x
10.0 x
NM
14% 10%
0%
CY 2015E Revenue Multiples
12.0 x
41%
38%
40%
4.8 x
3.4 x
1.9 x
0.0 x
Goldman Stanley
(1) Financial data as of May 9, 2014.
100.0 x
90.0 x 85.8 x
80.0 x
70.0 x
60.0 x
50.0 x
40.0 x
30.0 x
22.7 x
20.5 x
20.0 x
9.2 x 10.2 x
6.8 x 10.0 x
10.0 x
NM
0.0 x
15
Jaguar Precedent Transactions
North American Pharmaceutical Sellers with Between $200 Million and $2 Billion In LTM Revenue, Jan. 1, 2009 – May 9, 2014
($ USD in Millions)
Jaguar - Comparable M&A Transactions
Acquirer Name
Mallinckrodt plc
Forest Laboratories Inc.
Shire Pharmaceutical Holdings Ireland Limited
Salix Pharmaceuticals, Inc.
Endo Health Solutions Inc.
Akorn, Inc.
Valeant Pharmaceuticals International, Inc.
TPG Capital, L.P.
Novartis AG
Takeda Pharmaceuticals U.S.A., Inc.
Genomma Lab Internacional SAB de CV
Nestlé Health Science S.A.
Pfizer Inc.
Endo Pharmaceuticals Holdings Inc.
Celgene Corporation
Astellas US Holding, Inc.
Dainippon Sumitomo Pharma America Holdings, Inc.
GlaxoSmithKline plc
Target Name
Questcor Pharmaceuticals, Inc.
Aptalis Holdings Inc.
ViroPharma Inc.
Santarus, Inc.
Paladin Labs Inc.
Hi-Tech Pharmacal Co., Inc.
Medicis Pharmaceutical Corporation
Par Pharmaceutical Companies Inc.
Fougera Pharmaceuticals Inc.
URL Pharma, Inc.
Prestige Brands Holdings, Inc.
Prometheus Laboratories Inc.
King Pharmaceuticals LLC
Qualitest Pharmaceuticals
Abraxis BioScience, Inc.
OSI Pharmaceuticals Inc.
Sepracor, Inc.
Stiefel Laboratories, Inc.
Maximum
75th Percentile
Median
25th Percentile
Minimum
Goldman Stanley
Date
2014-04-07
2014-01-08
2013-11-11
2013-11-07
2013-11-05
2013-08-27
2012-09-03
2012-07-16
2012-05-02
2012-04-11
2012-02-21
2011-05-24
2010-10-12
2010-09-28
2010-06-30
2010-05-16
2009-09-03
2009-04-20
Operating Metrics
Transaction Transaction
Equity
Enterprise
LTM
LTM
Value
Value
Revenue
EBITDA
$
5,291 $ 4,802 $
891 $
517
2,900
2,900
688
315
4,200
4,097
430
59
2,600
1,980
338
82
1,600
1,348
264
93
640
536
231
48
2,600
2,329
764
191
1,900
1,976
1,035
237
1,525
1,525
429
173
800
800
600
76
834
1,263
403
119
745
659
519
139
3,600
3,225
1,565
349
1,200
1,176
309
58
2,923
2,789
397
(23)
4,000
3,414
441
176
2,600
2,347
1,334
306
3,050
3,450
900
288
$
$
4,802
3,144
2,154
1,284
536
$
$
1,565
859
480
399
231
$
$
517
275
156
78
(23)
Valuation Multiples
EV /
EV /
LTM
LTM
Revenue
EBITDA
5.4 x
9.3 x
4.2 x
9.2 x
9.5 x
69.0 x
5.9 x
24.3 x
5.1 x
14.5 x
2.3 x
11.3 x
3.1 x
12.2 x
1.9 x
8.3 x
3.6 x
8.8 x
1.3 x
10.5 x
3.1 x
10.6 x
1.3 x
4.7 x
2.1 x
9.2 x
3.8 x
20.2 x
7.0 x
NM
7.7 x
19.4 x
1.8 x
7.7 x
3.8 x
12.0 x
9.5 x
5.3 x
3.7 x
2.1 x
1.3 x
69.0 x
14.5 x
10.6 x
9.2 x
4.7 x
16
Jaguar DCF Analysis – Free Cash Flow Projections
($ USD in Millions)
FY14
FY15
FY16
FY17
Projected
FY19
FY18
FY20
Unlevered Free Cash Flow Projections:
Units:
Revenue:
Annual Revenue Growth Rate:
Operating Income (EBIT):
Annual Operating Margin:
$M
%
$M
%
Less: Taxes, Excluding Effect of Interest:
$M
(68.5)
(135.8)
(180.7)
Net Operating Profit After Tax (NOPAT):
$M
312.3
618.8
823.2
1,076.4
1,358.8
1,676.1
1,988.4
Total Adjustments for Non-Cash Charges:
$M
265.3
138.0
137.9
143.7
147.7
139.4
Total Changes in Operating Assets & Liabilities:
% Change in Revenue:
$M
%
(32.4)
(10.6%)
(57.4)
(15.2%)
(53.3)
(12.0%)
(67.1)
(12.1%)
(75.8)
(12.2%)
Less: Capital Expenditures:
% Revenue:
$M
%
(14.1)
1.2%
(20.2)
1.3%
(28.0)
1.4%
(38.3)
1.5%
(50.8)
1.6%
Annual Unlevered Free Cash Flow:
Unlevered Free Cash Flow for Remaining Quarters:
Present Value of Free Cash Flow:
$M
$M
$M
531.1
464.7
453.2
679.3
679.3
621.5
879.8
879.8
744.8
Normal Discount Period:
Mid-Year Discount Period:
Annual Free Cash Flow Growth Rate:
Annual EBITDA:
Annual EBITDA Growth Rate:
Goldman Stanley
FY21
FY22
FY23
Normalized
FY24
$ 1,176.9 $ 1,553.3 $ 1,998.0 $ 2,554.3 $ 3,174.8 $ 3,853.2 $ 4,552.3 $ 5,371.6 $ 1,662.1 $ 1,827.6 $ 1,919.0
5.0%
10.0%
(69.1%)
18.0%
18.1%
21.4%
24.3%
27.8%
28.6%
32.0%
34.9%
964.2
825.0
739.4
2,870.7
2,424.9
2,044.0
1,657.1
1,312.6
1,003.9
754.7
380.8
45.0%
45.1%
44.5%
53.4%
53.3%
53.0%
52.2%
51.4%
50.2%
48.6%
32.4%
(236.3)
1,114.6
1,114.6
873.2
(298.3)
1,379.9
1,379.9
1,000.3
(133.1)
(148.5)
(173.6)
2,353.9
606.3
676.5
790.6
150.3
163.9
124.7
128.5
29.0
(84.7)
(12.5%)
(87.2)
(12.5%)
(103.0)
(12.6%)
453.0
(12.2%)
(21.5)
(13.0%)
(11.0)
(12.0%)
(65.5)
1.7%
(81.9)
1.8%
(102.1)
1.9%
(33.2)
2.0%
(38.4)
2.1%
(38.4)
2.0%
(367.9)
1,665.3
1,665.3
1,117.0
(436.5)
1,969.5
1,969.5
1,222.4
(516.7)
2,312.7
2,312.7
1,328.2
1,150.8
1,150.8
611.6
770.3
770.3
350.5
745.1
745.1
366.4
Year Frac.
Year Frac.
0.647
0.323
1.647
1.147
2.647
2.147
3.647
3.147
4.647
4.147
5.647
5.147
6.647
6.147
7.647
7.147
8.647
8.147
9.647
9.147
10.647
10.147
%
79.5%
27.9%
29.5%
26.7%
23.8%
20.7%
18.3%
17.4%
(50.2%)
(35.2%)
3.4%
$M
%
642.0
50.6%
888.6
38.4%
1,137.7
28.0%
1,452.2
27.6%
1,800.7
24.0%
2,179.4
21.0%
2,571.1
18.0%
3,030.4
17.9%
860.0
(71.6%)
949.4
10.4%
989.1
15.0%
17
Jaguar DCF Analysis – Implied Share Price Calculations
($ USD in Millions except for $ per Share Figures)
Terminal Value - Multiples Method:
Terminal Value - Perpetuity Growth Method:
Baseline Terminal EBITDA Multiple:
Baseline Terminal Value:
Implied Terminal FCF Growth Rate:
12.0 x
$ 11,393.4
1.0%
Baseline Terminal FCF Growth Rate:
Baseline Terminal Value:
Implied Terminal EBITDA Multiple:
1.0%
$ 11,393.4
12.0 x
PV of Terminal Value:
Sum of PV of Free Cash Flows:
Implied Enterprise Value:
5,389.6
8,338.5
$ 13,728.1
PV of Terminal Value:
Sum of PV of Free Cash Flows:
Implied Enterprise Value:
5,389.6
8,338.5
$ 13,728.1
% of Implied EV from Terminal Value:
Plus: Cash & Cash-Equivalents(1):
$
(1)
Plus: Equity Investments :
(1)
Plus: Other Non-Core Assets, Net :
(1)
Plus: Net Operating Losses :
Less: Total Debt(1):
251.4
Plus: Cash & Cash-Equivalents(1):
Less: Noncontrolling Interests :
Less: Unfunded Pensions(1):
Less: Capital Leases(1):
-
Plus: Other Non-Core Assets, Net :
(1)
Less: Restructuring & Other Liab. :
Implied Equity Value:
12,834.6
Diluted Shares Outstanding:
Implied Share Price from DCF:
Premium / (Discount) to Current(1):
Exercise
Number:
Price:
0.604 $
7.37
0.948
4.00
1.590
26.09
1.164
4.306
$
$
Plus: Equity Investments :
(17.6)
-
(1)
Less: Noncontrolling Interests :
Less: Unfunded Pensions(1):
(17.6)
-
Less: Capital Leases(1):
-
Less: Restructuring & Other Liab. (1):
Implied Equity Value:
Implied Share Price from DCF:
(1) Financial data as of May 9, 2014.
71.4
(1,198.6)
Less: Preferred Stock(1):
202.27
Dilution:
0.582
0.929
1.385
1.164
4.060
-
(1)
Plus: Net Operating Losses :
Less: Total Debt(1):
Diluted Shares Outstanding:
Premium / (Discount) to Current(1):
Type:
Options A:
Options B:
Options C:
RSUs:
Total:
251.4
-
(1)
63.452
56.3%
39.3%
(1)
-
(1)
Goldman Stanley
% of Implied EV from Terminal Value:
71.4
(1,198.6)
Less: Preferred Stock(1):
Type:
Options A:
Options B:
Options C:
RSUs:
Total:
39.3%
Exercise
Number:
Price:
0.604 $
7.37
0.948
4.00
1.590
26.09
1.164
4.306
12,834.6
63.452
$
202.27
56.3%
Dilution:
0.582
0.929
1.385
1.164
4.060
18
Jaguar DCF Analysis – Sensitivities
($ USD in Dollars as Stated)
Sensitivity - Terminal FCF Growth Rate vs. Discount Rate and Implied Share Price from DCF Analysis:
Discount Rate
(WACC):
Terminal FCF Growth Rate:
20227.2%
(2.0%)
(1.5%)
(1.0%)
(0.5%)
0.5%
1.0%
1.5%
2.0%
6.5%
$ 207.35 $ 212.35 $ 218.01 $ 224.49 $ 231.96 $ 240.68 $ 250.98 $ 263.34 $ 278.44
7.0%
196.54
200.79
205.58
211.01
217.21
224.37
232.72
242.59
254.43
7.5%
186.76
190.41
194.49
199.08
204.28
210.23
217.09
225.09
234.54
8.0%
177.89
181.03
184.53
188.44
192.84
197.83
203.52
210.10
217.77
8.5%
169.78
172.51
175.53
178.88
182.63
186.84
191.62
197.09
203.39
9.0%
162.34
164.72
167.34
170.23
173.45
177.04
181.08
185.66
190.90
9.5%
155.48
157.57
159.85
162.36
165.14
168.22
171.67
175.54
179.94
10.0%
149.14
150.98
152.98
155.17
157.57
160.24
163.19
166.50
170.22
10.5%
143.26
144.88
146.64
148.55
150.65
152.97
155.52
158.36
161.53
Sensitivity - Terminal EBITDA Multiple vs. Discount Rate and Implied Share Price from DCF Analysis:
Discount Rate
(WACC):
Terminal EBITDA Multiple:
20227.2%
8.0 x
9.0 x
10.0 x
11.0 x
12.0 x
13.0 x
14.0 x
15.0 x
16.0 x
6.5%
$ 192.32 $ 200.44 $ 208.56 $ 216.68 $ 224.80 $ 232.92 $ 241.04 $ 249.16 $ 257.28
7.0%
186.25
194.01
201.77
209.53
217.29
225.05
232.81
240.57
248.34
7.5%
180.42
187.84
195.26
202.68
210.10
217.52
224.94
232.36
239.77
8.0%
174.82
181.92
189.01
196.11
203.20
210.30
217.39
224.48
231.58
8.5%
169.45
176.23
183.02
189.80
196.59
203.37
210.16
216.94
223.73
9.0%
164.28
170.77
177.26
183.75
190.24
196.74
203.23
209.72
216.21
9.5%
159.32
165.53
171.74
177.95
184.16
190.37
196.58
202.79
209.00
10.0%
154.54
160.49
166.43
172.38
178.32
184.26
190.21
196.15
202.09
10.5%
149.96
155.65
161.33
167.02
172.71
178.40
184.09
189.78
195.47
Goldman Stanley
19
Other Valuation Considerations
Corporate Headquarters in
Ireland and Lower Effective
Tax Rate
Alternative Valuation
Methodologies May Provide
Additional Insight Into
Jaguar’s Intrinsic Value
Goldman Stanley
Results
Implications and Examples
 Jaguar’s corporate status in Ireland
makes it an attractive candidate for a
“tax inversion” deal
 Salix Pharmaceuticals: Reduced tax
rate would increase CY2015E Net
Income from ~$450 million to ~$567
million, and would add $2 billion to
company’s Equity Value and
Enterprise Value
 Effective tax rate of 18% vs. statutory
US rate of 35-40% could effectively
add billions in value for the right
acquirer
 Premiums Paid analysis for
comparable transactions indicates
per-share premium of 30-40% in
recent deals
 Implied valuation is significantly
higher than multiples analysis from
comparable public companies and
precedent transactions
 $2 billion represents $31.52 per share
for Jaguar
 Actavis / Forest Labs: 31% premium
paid over average 10-day price prior
to deal
 Mallinckrodt / Cadence: 32%
premium paid over average 30-day
price
 Salix / Santarus: 39% premium paid
over average 30-day price
20
Jaguar’s Corporate Structure Provides Advantages to Partners
Ireland
Italy
U.S.A.
Jaguar Public Limited
Company
Bermuda
Switzerland
Jaguar Italy S.p.A.
Jaguar, Inc.
Jaguar Financing I, Ltd.
Jaguar Investments I
Limited
Gentium S.p.A.
Jaguar (EUSA Pharma
USA) Inc.
Jaguar International III
Limited
JPI Commercial, LLC
Pharmelle LLC
Gentium Gmbh
AxCell Biosciences
Corporation
Goldman Stanley
Prostagen, Inc.
21
Other Valuation Considerations
 Jaguar is also trading at a discount to recent stock price highs:
One-Year Price History, May 9, 2013 - May 9, 2014
6M
$200.00
5M
$160.00
Share Price
$140.00
4M
$120.00
3M
$100.00
$80.00
2M
$60.00
$40.00
1M
Shares Traded (in Millions)
$180.00
$20.00
0M
$0.00
Volume Traded
Share Price
 Given the stock price run-up over the past year, it may or may not be realistic to aim for the all-time high; however, the
valuation methodologies imply that a per-share price in that range is plausible
Goldman Stanley
22
Summary Profile of Equity Shareholders
Commentary:
 Gross Common Share Count: 55,751,243(1)
 Major institutional investors represent
approximately 40% of share ownership
 Largest institutional shareholders include:
 Putnam: 6,102,213 (10.5%)
 Fidelity: 5,333,862 (9.2%)
 Vanguard: 3,162,658 (5.5%)
 Janus Capital: 2,709,782 (4.7%)
Banks / Investment
Banks:
4%
Individuals /
Insiders:
4%
Hedge Funds:
9%
 Insider ownership represents approximately 4%
of shares outstanding:
 Seamus Mulligan (Director): 1,453,305 (2.5%)
 Bruce Cozadd (CEO): 471,310 (0.8%)
 Kathryn Falberg (ex-CFO): 95,137 (0.2%)
 Given the lack of activist investors and the high
percentage of shares held by traditional
investment managers, the chances of a
challenge to a potential deal are low
Goldman Stanley
Other:
2%
Source: Company proxy statements, investor filings, and Capital IQ.
(1) As of March 31, 2014 10-Q filing.
Investment
Managers:
81%
23
Valuation Conclusions
#1
“75th Percentile”
Valuation is Justified
The company’s margins and growth rates exceed those of its peer companies,
indicating that it should be valued in-line with the 75th percentile of the
comparable company set
#2
Goal: $200 / Share
This price represents a 50%+ premium to Jaguar’s current share price; greater
upside might be possible with a highly complementary partner
#3
Discounted Cash Flow
(DCF) Analysis
Implied value is between $170 and $240 / share, based on a conservative
Discount Rate and Terminal Value and Management’s financial projections
#4
Premiums Paid
Analysis
Premiums Paid indicate a median 30-day average price premium of ~40%,
implying a per-share value of $190 for Jaguar
Goldman Stanley
24
Potential Strategic Partners
Goldman Stanley
25
Potential Strategic Partners
 Size, ability to pay, tax/corporate headquarters status, product/pipeline, and strategic fit should all be considered
 US-headquartered partners are ideal since tax rates are highest there; several Canadian and Israeli companies could
also qualify since tax rates are also higher than those in the UK and Ireland
 Both branded and generics companies should be considered, in light of recent M&A activity
Tier 1 Potential Partners
Tier 2 Potential Partners
Market Cap:
 Significantly larger than Jaguar
 Closer to Jaguar’s size
Headquarters and Tax
Status:
 US-based with US corporate tax
rates
 US-based with US corporate tax
rates
Strategic Fit:
 Solid product and pipeline fit
 Solid product and pipeline fit
Goldman Stanley
26
Potential Strategic Partners
Tier 1 Potential Partners
Tier 2 Potential Partners
Goldman Stanley
27
Overview of Tier 1 Potential Partners
($ USD in Billions)
Potential
Partner:
Market
Cap(1):
Debt &
NCI(1):
$36.3
$8.7
$0.3
$44.7
3.6 x
 Primarily < $1B acquisitions
in the past; rumors of
Actavis and Forest Labs
$84.6
$32.0
$19.8
$96.8
4.3 x
 Primarily < $100 million
acquisitions, except for $10
billion Onyx deal
$81.7
$7.7
$7.1
$82.4
1.7 x
 Last deals over $1 billion
took place 2-3 years ago;
smaller recent acquisitions
$121.0
$10.1
$6.5
$124.6
1.4 x
 Last major deal was
Pharmasset ($11 billion) two
years ago
$281.0
$17.3
$29.4
$268.9
0.7 x
$62.9
$5.3
$5.2
$63.0
0.8 x
 Has completed primarily
smaller, “tuck-in” M&A deals
over the past 2-3 years
$160.2
$30.8
$20.5
$170.5
1.9 x
 Last major deals were 5
years ago; rumors of interest
in Cubist Pharmaceuticals
$44.0
$17.5
$0.6
$60.9
5.6 x
 Mostly minor deals except
for $8.7 billion acquisition of
Bausch & Lomb last year
$186.1
$37.5
$33.9
$189.6
1.7 x
 No major recent deals;
announced $10 billion buyback plan last year
Goldman Stanley
Cash(1):
Enterprise
Value(1):
Leverage
Ratio(1):
(1) Financial data as of May 9, 2014.
Strategic
Fit:
Ability to
Pay:
Comments:
 Typically does only very
small “tuck-in” deals
28
Company Profile: Allergan
($ USD in Billions)
Business Description
Allergan plc develops, manufactures, and distributes generic,
branded, biosimilar, and over-the-counter (OTC) pharmaceutical
products. It operates in three segments: North American Brands,
North American Generics and International, and Anda Distribution.
Allergan
Headquarters:
Employees:
Founded:
Parsippany, NJ
21,600
1983
Financial Information(1)
Market Cap:
Cash:
Debt, Preferred & NCI:
LTM Revenue:
LTM EBITDA:
CY 2014E Revenue:
CY 2014E EBITDA:
CY 2015E Revenue:
CY 2015E EBITDA:
Business Segments and Product Lines
$36.3
$0.3
$8.7
$9.4
$2.4
$12.9
$3.8
$13.5
$4.2
One-Year Price History(1)
$250.00
16 M
Share Price
12 M
10 M
8M
$100.00
6M
4M
Shares Traded (in Millions)
$200.00
Paul Bisaro
Executive Chairman
Brenton Saunders
CEO
Maria Hilado
CFO
James D’Arecca
CAO
A. Robert Bailey
CLO
Jonathon Kellerman
EVP
John Kelly
EVP
Sigurd Kirk
EVP, Bus. Dev.
Key Partners
 North American Brands – Provides patented and off-patent
 Amgen – Biosimilar versions of
trademarked pharmaceutical products primarily under the
Dalvance, Bystolic, Canasa, Carafate, Daliresp, Fetzima,
Linzess, Namenda, Namenda XR, Saphris, Teflaro, Viibryd,
Actonel, Asacol HD, Atelvia, Delzicol, Doryx, Estrace Cream,
Enablex, Lo Loestrin Fe, and Minastrin 24 Fe brands.
Herceptin, Avastin, Rituxan/Mab
Thera, and Erbitux
 North American Generics and International – Develops,
manufactures, and sells generic, branded generic, and OTC
pharmaceutical products.
 Anda Distribution – Distributes generic and brand
14 M
$150.00
The company also develops and out-licenses generic
pharmaceutical products primarily in Europe through its third-party
business, and it sells its generic and brand pharmaceutical products
primarily to drug wholesalers, retailers, and distributors.
Management Team
 Ironwood Pharmaceuticals –
Commercial development of
Linzessfor
 Sanofi-Aventis
 Trevena – Development of
TRV027
pharmaceutical products primarily to independent pharmacies,
pharmacy chains and buying groups, and physician’s offices.
$50.00
2M
$0.00
Goldman Stanley
0M
(1) Financial data as of May 9, 2014.
29
Company Profile: Amgen
($ USD in Billions)
Business Description
Amgen Inc., a biotechnology company, discovers, develops,
manufactures, and delivers human therapeutics worldwide. It
focuses on the treatment of illness in the areas of oncology,
hematology, inflammation, bone health, nephrology, cardiovascular,
and general medicine.
Amgen
Headquarters:
Employees:
Founded:
California
17,900
1980
Financial Information(1)
Market Cap:
Cash:
Debt, Preferred & NCI:
LTM Revenue:
LTM EBITDA:
CY 2014E Revenue:
CY 2014E EBITDA:
CY 2015E Revenue:
CY 2015E EBITDA:
$140.00
14 M
$120.00
12 M
$100.00
10 M
$80.00
8M
$60.00
6M
$40.00
4M
$20.00
2M
$0.00
0M
Goldman Stanley
Chairman & CEO
CFO
EVP, Operations
CAO
CIO
CCO
 Neulasta – A pegylated protein to decrease the incidence of
infection associated with chemotherapy-induced febrile
neutropenia in cancer patients
 NEUPOGEN – A recombinant-methionyl human granulocyte
colony-stimulating factor for reducing the incidence of infection
as manifested by febrile neutropenia for patients with nonmyeloid malignancies
Key Partners
 Xencor – Strategic collaboration
 AstraZeneca, Takeda
Pharmaceutical, UCB, Novartis,
Bayer Healthcare
Pharmaceuticals – Collaborative
agreements
 Enbrel – Treatment for rheumatoid arthritis, plaque psoriasis,
and psoriatic arthritis in adult patients
 Other Products – EPOGEN (Dialysis), Aranesp (anemia),
Shares Traded (in Millions)
Share Price
One-Year Price History(1)
Robert Bradway
David Meline
M. Balachandran
Anetta L. Such
Diana McKenzie
Cynthia Patton
The company serves pharmaceutical wholesale distributors; and
physicians or their clinics, dialysis centers, hospitals, and
pharmacies, as well as consumers. It also develops various
products that are in various stages of clinical trials.
Business Segments and Product Lines
$84.6
$19.8
$32.0
$19.0
$7.6
$20.2
$9.1
$21.4
$11.2
Management Team
XGEVA (prevention of skeletal problems), Prolia (osteoporosis),
Sensipar/Mimpara (chronic kidney disease), Kyprolis (lung
cancer), Nplate (thrombopoietic compound),Vectibix (human
monoclonal antibody), and BLINCYTO (leukemia)
(1) Financial data as of May 9, 2014.
30
Company Profile: Bristol-Myers Squibb
($ USD in Billions)
Business Description
Bristol-Myers Squibb Company discovers, develops, licenses,
manufactures, markets, distributes, and sells biopharmaceutical
products worldwide.
Bristol-Myers-Squibb
Headquarters:
Employees:
Founded:
New York
25,000
1887
Financial Information(1)
Market Cap:
Cash:
Debt, Preferred & NCI:
LTM Revenue:
LTM EBITDA:
CY 2014E Revenue:
CY 2014E EBITDA:
CY 2015E Revenue:
CY 2015E EBITDA:
Business Segments and Product Lines
$81.7
$7.1
$7.7
$16.4
$4.3
$15.9
$4.0
$16.0
$3.8
 Currently Available Products – Baraclude (Chronic hepatitis
B); Daklinza (hepatitis C); Reyataz and Sustiva (HIV); Erbitux
(IgG1 monoclonal antibody); Sprycel (multi-targeted tyrosine
kinase inhibitor); Yervoy (metastatic melanoma); Abilify
(schizophrenia, bipolar mania disorder, and depressive disorder);
Orencia (rheumatoid arthritis); Eliquis (stroke prevention in atrial
fibrillation)
 Development-Stage Products – Opdivo (human monoclonal
antibody for lung cancer, renal cell cancer, and melanoma –
Phase III trials); Beclabuvir (HCV – Phase III trials); Elotuzumab
(multiple myeloma – Phase III trials); BMS-663068 (HIV-1)
One-Year Price History(1)
$60.00
It provides chemically-synthesized drugs or small molecules, and
biologics in various therapeutic areas, including virology comprising
human immunodeficiency virus infection (HIV); oncology;
neuroscience; immunoscience; and cardiovascular.
40 M
Share Price
25 M
$30.00
20 M
15 M
$20.00
10 M
Shares Traded (in Millions)
$50.00
$40.00
Giovanni Caforio
Charles Bancroft
Francis Cuss
Paul Von Autenried
Anne Nielsen
Emmanuel Blin
Joseph Caldarella
CEO
CFO
CSO
CIO
CCO
SVP
SVP/Controller
Key Partners
 Gilead – Licensing agreements
and co-development/co-promotion
agreements
 Allergan – Development and
commercialization
 AstraZeneca, Pfizer – Codevelopment and co-promotion
agreement
 FivePrime, Ambrx, Adaptive,
The Medicines Company,
Tibotec – Co-development
agreements
35 M
30 M
Management Team
$10.00
5M
$0.00
Goldman Stanley
0M
(1) Financial data as of May 9, 2014.
31
Company Profile: Gilead Sciences
($ USD in Billions)
Gilead Sciences
Headquarters:
Employees:
Founded:
California
7,000
1987
Financial Information(1)
Market Cap:
Cash:
Debt, Preferred & NCI:
LTM Revenue:
LTM EBITDA:
CY 2014E Revenue:
CY 2014E EBITDA:
CY 2015E Revenue:
CY 2015E EBITDA:
One-Year Price History(1)
$90.00
50 M
$80.00
45 M
35 M
30 M
$50.00
25 M
$40.00
20 M
$30.00
15 M
$20.00
10 M
$10.00
5M
$0.00
0M
Goldman Stanley
Gilead Sciences, Inc., a biopharmaceutical company, discovers,
develops, and commercializes medicines in areas of unmet medical
need in North America, South America, Europe, and the AsiaPacific. It focuses on HIV treatment, liver disease, certain cancers,
and other conditions such as cystic fibrosis.
John Martin
Chairman & CEO
John Milligan
President & COO
Robin Washington
CFO
Norbert Bischofberger
CSO
Brett Pletcher
EVP
Muzammmil Mansuri
EVP
The company markets its products through its commercial teams
and/or in conjunction with third-party distributors and corporate
partners.
 HIV-Related – Stribild, Complera/Eviplera, Atripla, Truvada,
Viread, Emtriva, Tybost, and Vitekta for treatment in adults
 Liver Disease – Harvoni, Sovaldi, Viread, and Hepsera
 Other Products – Zydelig (certain blood cancers); Letairis
Key Partners
 Bristol-Myers Squibb Company,
Janssen R&D Ireland, and Japan
Tobacco Inc. – Agreements to
develop and commercialize
various products
(pulmonary arterial hypertension); Ranexa (chronic angina);
Lexiscan/Rapiscan (pharmacologic stress agent); Cayston
(cystic fibrosis); Tamiflu (influenza A and B); AmBisome (fungal
infections); Macugen (neovascular age-related macular
degeneration)
 Development-Stage Products – Pipeline drugs include ones
40 M
Shares Traded (in Millions)
Share Price
$60.00
Management Team
Business Segments and Product Lines
$121.0
$6.5
$10.1
$13.7
$7.1
$24.7
$16.5
$31.2
$23.3
$70.00
Business Description
targeted at HIV/AIDS, hepatitis B and hepatitis C,
inflammation/oncology, and serious cardiovascular and
respiratory conditions
(1) Financial data as of May 9, 2014.
32
Company Profile: Johnson & Johnson
($ USD in Billions)
Business Description
Johnson & Johnson, together with its subsidiaries, researches and
develops, manufactures, and sells various products in the health
care field worldwide. It operates in three segments: Consumer,
Pharmaceutical, and Medical Devices.
Johnson & Johnson
Headquarters:
Employees:
Founded:
New Jersey
126,500
1885
Financial Information(1)
Market Cap:
Cash:
Debt, Preferred & NCI:
LTM Revenue:
LTM EBITDA:
CY 2014E Revenue:
CY 2014E EBITDA:
CY 2015E Revenue:
CY 2015E EBITDA:
$100.00
25 M
$80.00
20 M
$60.00
15 M
$40.00
10 M
$20.00
5M
$0.00
0M
Goldman Stanley
Shares Traded (in Millions)
Share Price
30 M
 Consumer – Baby care and oral care products; skin care
products such as Aveeno, Clean & Clear, Dabao, Le Petite
Marseillais, Lubriderm, Neutrogena; women’s health products
such as Stayfree and Carefree; Tylenol, Sudafed, Benadryl, and
Zyrtec
 Pharmaceutical – Various products in immunology, infectious
diseases, neuroscience, oncology, and cardiovascular and
metabolic diseases
Key Partners
 AstraZeneca, Bristol-Myers
Squibb, and GalaxoSmithKline –
Various development and
distribution agreements for
pipeline drugs
 Takeda Pharmaceutical –
Development partnership for
small-molecule drugs
 Medical Devices – Orthopaedic, trauma, and neurological
One-Year Price History(1)
$120.00
Alex Gorsky
Chairman & CEO
Dominic Caruso
CFO
Stephen Cosgrove
CAO
Paulus Stoffels
CSO
Joaquin Duato
Pharma. Chair
The company distributes its products to general public, retail outlets
and distributors, wholesalers, hospitals, and health care
professionals for prescription use in the professional fields by
physicians, nurses, hospitals, and clinics.
Business Segments and Product Lines
$281.0
$29.4
$17.3
$71.9
$23.7
$74.2
$24.8
$70.2
$23.2
Management Team
products; general surgery, and biosurgical and energy products;
products to treat cardiovascular disease; infection prevention
products; diagnostics products; blood glucose monitoring and
insulin delivery products; and disposable contact lenses
(1) Financial data as of May 9, 2014.
33
Company Profile: Eli Lilly
($ USD in Billions)
Business Description
Eli Lilly and Company discovers, develops, manufactures, and sells
pharmaceutical products worldwide. It operates through two
segments, Human Pharmaceutical Products and Animal Health
Products.
Eli Lilly
Headquarters:
Employees:
Founded:
Indiana
39,135
1876
Financial Information(1)
Market Cap:
Cash:
Debt, Preferred & NCI:
LTM Revenue:
LTM EBITDA:
CY 2014E Revenue:
CY 2014E EBITDA:
CY 2015E Revenue:
CY 2015E EBITDA:
Business Segments and Product Lines
$62.9
$5.2
$5.3
$22.2
$6.4
$19.4
$4.6
$19.9
$5.3
One-Year Price History(1)
30 M
$60.00
25 M
$50.00
Share Price
20 M
$40.00
15 M
$30.00
10 M
$20.00
$0.00
Goldman Stanley
5M
0M
 Pharmaceutical – Endocrinology products to treat diabetes;
osteoporosis; human growth hormone deficiency and pediatric
growth conditions; testosterone deficiency; neuroscience
products; and positron emission tomography imaging of betaamyloid neurotic plaques in adult brains; products for the
treatment of non-small cell lung, colorectal, head and neck,
pancreatic, metastatic breast, ovarian, bladder, and metastatic
gastric cancers, as well as malignant pleural mesothelioma; and
cardiovascular products for the treatment of erectile dysfunction
and benign prostatic hyperplasia, thrombotic cardiovascular
events, and cardiac ischemic complications
 Animal Health – Cattle feed additives; protein supplements for
Shares Traded (in Millions)
$70.00
$10.00
Within the Pharmaceutical segment, it provides products for
endocrinology, neuroscience, cancer, and other conditions. Within
the Animal Health segment, it provides protein supplements, feed
additives, and antibiotics for the treatment of various animal
infections.
Management Team
John Lechleiter
Derica Rice
Donald Zakrowski
Jan Lundberg
Stephen Fry
Melissa Barnes
Darren Carroll
Chairman & CEO
CFO
CAO
EVP
SVP
SVP
SVP
Key Partners
 Zymeworks – Licensing and
collaboration agreement for bispecific cancer immunotherapies
 AstraZeneca – Co-development
and co-commercialization
agreement for Alzheimer’s disease
treatment
 Hanmi Pharmaceutical –
Licensing and collaboration
agreement for autoimmune
diseases
cows; leanness and performance enhancers for swine, cattle,
and poultry; antibiotics to treat respiratory and other diseases in
cattle, swine, and poultry; anticoccidial agents for poultry; and
chewable tablets that kill fleas and prevent diseases; products to
treat chronic manifestations of atopic dermatitis and congestive
heart failure in dogs, and chronic allergic dermatitis and kidney
diseases in cats
(1) Financial data as of May 9, 2014.
34
Company Profile: Merck & Co.
($ USD in Billions)
Business Description
Merck & Co., Inc. provides health care solutions worldwide. The
company offer therapeutic and preventive agents, neuromuscular
blocking agents for use in surgery, anti-bacterial products for skin
and skin structure infections, and a variety of cancer drugs and
vaccines.
Merck & Co.
Headquarters:
Employees:
Founded:
New Jersey
68,805
1891
Financial Information(1)
Market Cap:
Cash:
Debt, Preferred & NCI:
LTM Revenue:
LTM EBITDA:
CY 2014E Revenue:
CY 2014E EBITDA:
CY 2015E Revenue:
CY 2015E EBITDA:
Business Segments and Product Lines
$160.2
$20.5
$30.8
$43.6
$15.8
$41.8
$14.7
$39.8
$20.9
60 M
$60.00
50 M
$50.00
Share Price
40 M
$40.00
30 M
$30.00
20 M
$20.00
$0.00
Goldman Stanley
10 M
0M
Shares Traded (in Millions)
$70.00
 Pharmaceutical – Therapeutic and preventive agents to treat
cardiovascular, type 2 diabetes, asthma, nasal allergy
symptoms, allergic rhinitis, chronic hepatitis C virus, HIV-1
infection, fungal infections, intra-abdominal infections,
hypertension, arthritis and pain, inflammatory, osteoporosis,
male pattern hair loss, and fertility diseases; neuromuscular
blocking agents for use in surgery; anti-bacterial products for
skin and skin structure infections; antidepressants; drugs for
cancer patients and vaccines for various diseases
 Animal Health – Drugs for pneumonia in cattle, horses, and
One-Year Price History(1)
$10.00
It also offers animal health products and vaccines, antibiotics,
ointments, and other drugs to prevent disease. The company serves
drug wholesalers and retailers, hospitals, government entities and
agencies, physicians, physician distributors, veterinarians,
distributors, and animal producers.
Management Team
Kenneth Frazier
Robert Davis
Rita Karachun
Clark Golestani
Michael Holston
Willie Deese
Richard DeLuca
Roger Perlmutter
Chairman & CEO
CFO
SVP
EVP & CIO
EVP
EVP
EVP
EVP
Key Partners
 AstraZeneca – Partnership to
conduct joint phase 1 clinical trials
for treating solid cancer tumors
 Celera – Co-development
partnership for new osteoporosis
treatment
 Zymeworks – Co-development
partnership for novel bi-specific
therapeutic antibodies
swine; vaccines for poultry; parasiticide for sea lice in salmon;
and antibiotics for, and vaccines against bacterial and viral
disease in fish; companion animal products, such as diabetes
mellitus treatment drugs and vaccines for dogs and cats;
ointments for acute and chronic otitis; anthelmintic products;
chewable tablets to kill fleas and ticks in dogs; and products for
protection against bites from fleas, ticks, mosquitoes, and
sandflies
(1) Financial data as of May 9, 2014.
35
Company Profile: Valeant
($ USD in Billions)
Valeant
Headquarters:
Employees:
Founded:
Quebec
16,800
1983
Financial Information(1)
Market Cap:
Cash:
Debt, Preferred & NCI:
LTM Revenue:
LTM EBITDA:
CY 2014E Revenue:
CY 2014E EBITDA:
CY 2015E Revenue:
CY 2015E EBITDA:
12 M
10 M
8M
6M
$40.00
Shares Traded (in Millions)
Share Price
14 M
$60.00
The Company focuses on eye health, dermatology and neurology
therapeutic classes, primarily on branded generics, OTC products
and medical devices. The Company operates through two
segments: developed markets and emerging markets.
It has a direct or indirect sales and marketing presence in over 100
countries.
 Pharmaceuticals – Solodyn (oral antibiotic), Wellbutrin XL,
Jublia, Xenazine (Huntington’s disease), Arestin, Zovirax,
Syprine, Elidel, Prolensa, and Duromine
 Over the Counter – PreserVision (supplement), CeraVe (skin
conditions), ReNu Multiplus (contact lenses), Biotrue, Ocuvite,
Boston solution, and Artelac (eye drops)
 Medical Devices – SofLens (disposable contact lenses),
Key Partners
 GlaxoSmithKline – Worldwide
collaboration agreement for
ezogabine / retigabine (epilepsy)
 Biovail – Supplier for Xenazine
tablets (Huntington’s disease)
 Kadmon Pharmaceuticals –
Development and
commercialization agreement for
taribavirin and ribavirin
18 M
16 M
$80.00
Michael Pearson
Chairman & CEO
Robert Rosiello
CFO
Robert Butz
VP, Medical Affairs
Robert Chai-Onn
EVP
Deborah Jorn
EVP
Ari Kellen
EVP
Anne Whitaker
EVP
Pavel Mirovsky
President (Europe)
Calvin Roberts
CMO
20 M
$120.00
$100.00
Valeant Pharmaceuticals International, Inc. develops, manufactures,
and markets pharmaceuticals, over-the-counter products, and
medical devices worldwide.
PureVision, Akreos and Crystalens, and surgical equipment
products, such as the VICTUS femtosecond laser and the
Stellaris PC, a vitreoretinal and cataract surgery system
One-Year Price History(1)
$140.00
Management Team
Business Segments and Product Lines
$44.0
$0.6
$17.5
$6.6
$3.2
$8.4
$4.0
$10.6
$5.4
$160.00
Business Description
 Generics – Tobramycin, Cardizem CD (hypertension and
angina), Retin-A Micro (acne), and Latanoprost (glaucoma and
ocular hypertension)
4M
$20.00
$0.00
Goldman Stanley
2M
0M
(1) Financial data as of May 9, 2014.
36
Company Profile: Pfizer
($ USD in Billions)
Business Description
Pfizer Inc. discovers, develops, manufactures, and sells healthcare
products worldwide. The company operates through the Global
Innovative Pharmaceutical (GIP); Global Vaccines, Oncology and
Consumer Healthcare (VOC); and Global Established
Pharmaceutical (GEP) segments.
Pfizer
Headquarters:
Employees:
Founded:
New York
78,300
1849
Financial Information(1)
Market Cap:
Cash:
Debt, Preferred & NCI:
LTM Revenue:
LTM EBITDA:
CY 2014E Revenue:
CY 2014E EBITDA:
CY 2015E Revenue:
CY 2015E EBITDA:
One-Year Price History(1)
$35.00
250 M
Share Price
$20.00
$15.00
150 M
100 M
$10.00
Shares Traded (in Millions)
200 M
$25.00
 Global Innovative Pharmaceutical – Develops, registers, and
commercializes medicines for therapeutic areas, including
inflammation, cardiovascular/metabolic, neuroscience and pain,
rare diseases, and women’s/men’s health
 Bristol-Myers Squibb –
Development and
commercialization agreement for
Eliquis (thromboembolic events)
 Merck – Collaboration agreement
for novel anti-cancer combination
regimen
products that have lost marketing exclusivity in various markets,
generic pharmaceuticals, and sterile injectable and biosimilar
development products
 Saniona – Drug discovery
development and collaboration
agreement for neurological
disorders
 Philogen – Development and
commercialization agreement for
antibody and small molecule
targeted therapies
50 M
Goldman Stanley
Key Partners
Develops and commercializes vaccines, oncology products,
over-the-counter dietary supplements, pain management
products, gastrointestinal products, respiratory products, and
personal care products
$5.00
$0.00
Chairman & CEO
CFO & EVP
CSO
EVP
Group SVP
CSO
 Global Vaccines, Oncology, and Consumer Healthcare –
 Global Established Pharmaceutical – Offers patent-protected
$30.00
Ian Read
Frank D’Amelio
Michael Ehlers
Rady Johnson
Robert Abraham
Morris Birnbaum
Its key biopharmaceuticals include Lyrica, Prevnar, Enbrel,
Celebrex, Lipitor, Viagra, Zyvox, Sutent, EpiPen, Toviaz, Tygacil,
Rapamune, Xalkori, Inlyta, Norvasc, the Premarin family of
products, Eliquis, and Xeljanz. Its biotechnology products include
BeneFIX, Genotropin, ReFacto, Xyntha, and Enbrel.
Business Segments and Product Lines
$186.1
$33.9
$37.5
$50.5
$22.4
$49.4
$20.7
$48.3
$20.4
Management Team
0M
(1) Financial data as of May 9, 2014.
37
Process Recommendations
Goldman Stanley
38
Key Recommendations
 We recommend engaging in targeted discussions with the Tier 1 candidates and assessing their receptiveness to M&A
discussions
 At the same time, Goldman Stanley will reach out to Tier 2 candidates and introduce Jaguar as a potential partner
 M&A process with Tier 1 candidates will take significantly longer due to the scale of the companies, so we recommend
conducting both processes simultaneously
 Depending on responses from Tier 1 and Tier 2 candidates, Goldman Stanley and Jaguar may do additional research to
determine other potential partners and then approach them
Targeted Sell-Side M&A
Broad Sell-Side M&A
< 5 potential partners
10 – 100 potential partners
6 – 12 months
Time required is highly variable
Close-ended
Iterative process
Higher success probability
Lower success probability
Goldman Stanley
39
Process Recommendations
Specialized
Negotiations With
One Party
Highly Targeted
Process
Targeted
Discussions +
Broader Search
Broad M&A
Process Broad
Marketing
RECOMMENDED
 Combination of targeted discussions plus
broader search conducted in background
maximizes success probability and
minimizes disruption to Jaguar
 Additional parties contacted depend on
responsiveness of Tier 1 and Tier 2
partners
 Interested parties would sign NDAs and
then proceed into due diligence and
valuation discussions with Jaguar
Goldman Stanley
40
Targeted Discussions – Roles and Responsibilities
Goldman Stanley
 Determine potential
partners
Phase I:
Organization
Phase II:
Contact and
Marketing
Phase III:
Business Due
Diligence, Synergy
Discussions, and
Initial Bids
Phase IV:
Final Negotiations,
Confirmatory
Diligence, and
Signings
 Finalize projections, CIM,
and mgm’t presentation
Legal
 Review draft DA
 Identify legal
issues/concerns
Management
Board
 Determine potential
partners
 Determine process and
objectives
 Finalize projections, CIM,
and mgm’t presentation
 Approve Tier 1 and Tier
2 partners to approach
 Receive process updates
 Contact partners and
negotiate NDAs
 Assist in NDA
negotiations
 Prepare for management
meetings
 Schedule management
meetings
 Assist in compiling legal
diligence items
 Contact potential
partners (if appropriate)
 Conduct management
meetings and solicit bids
 Assist in reviewing initial
bids and follow-up
diligence lists for legal
items
 Formulate synergies
 Receive process updates
 Attend management
meetings
 Provide input/direction if
required
 Discuss synergies and
facilitate diligence
 Provide input/direction if
required
 Answer diligence
requests
 Review bids from
potential partners
 Negotiate terms of DA
with top partners
Goldman Stanley
 Review bids, negotiate
terms of DA, and assist
with confirmatory
diligence
 Review bids and assist
with diligence
 Review bids and approve
agreement, if appropriate
 Discuss contracts
41
Process Timeline
 Depending on the responsiveness of Tier 1 and Tier 2 partners, the process may take between 6 and 9 months to
complete:
Six-Month Timeline:
Phase I:
Organization
Phase II:
Contact and Marketing
Phase III:
Business Due Diligence, Synergy
Discussions, and Initial Bids
Phase IV:
Final Negotiations, Confirmatory
Diligence, and Signings
Goldman Stanley
JUN
JUL
AUG
SEP
OCT
NOV
Phase I
Phase II
Phase III
Phase IV
42
Appendix
Goldman Stanley
43
Xyrem and Erwinaze Projections – Management
($ USD in Millions except for $ per Patient Figures)
Revenue Assumptions:
Units:
Xyrem Assumptions:
Total Market Size (# Potential Patients) - Xyrem:
# Patients On Medication at End of Year:
Average # of Patients Throughout the Year:
Growth Rate in # of Patients:
# People
# People
# People
%
% of Market on Xyrem Medication:
Post-Toggle % of Market on Xyrem Medication:
%
%
Annual Price Per Patient - Xyrem:
Growth Rate in Price per Patient:
Post-Toggle Growth Rate in Price per Patient:
$ as Stated
%
%
$
$M
%
$
Xyrem - Revenue:
Annual Growth Rate:
% of Market on Erwinaze Medication:
Annual Price Per Patient - Erwinaze:
Growth Rate in Price per Patient:
Erwinaze - Revenue:
Annual Growth Rate:
Goldman Stanley
FY15
FY16
FY17
Projected
FY18
FY19
FY20
FY21
FY22
FY23
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22
FY23
157,000
157,000
157,000
157,000
157,000
157,000
157,000
157,000
157,000
157,000
12,560
18.2%
15,700
25.0%
18,840
20.0%
21,980
16.7%
25,120
14.3%
28,260
12.5%
31,400
11.1%
34,540
10.0%
37,680
9.1%
37,680
–
8.0%
8.0%
Erwinaze Assumptions:
Total Market Size (# Potential Patients) - Erwinaze:
Average # of Patients on Erwinaze:
Growth Rate in # of Patients:
FY14
$ as Stated
%
$M
%
14.0%
14.0%
16.0%
16.0%
18.0%
18.0%
20.0%
20.0%
22.0%
22.0%
24.0%
24.0%
24.0%
24.0%
773.7 $ 1,083.1 $ 1,455.7 $ 1,902.2 $ 2,391.3 $ 2,959.2 $ 3,551.1 $ 4,218.7 $
376.8 $
35.9%
40.0%
34.4%
30.7%
25.7%
23.8%
20.0%
18.8%
(91.1%)
3,600
612
13.3%
%
12.0%
12.0%
61,598 $ 68,990 $ 77,269 $ 86,541 $ 95,195 $ 104,715 $ 113,092 $ 122,139 $ 10,000 $ 10,000
15.0%
12.0%
12.0%
12.0%
10.0%
10.0%
8.0%
8.0%
6.0%
6.0%
15.0%
12.0%
12.0%
12.0%
10.0%
10.0%
8.0%
8.0%
6.0%
6.0%
FY14
# People
# People
%
10.0%
10.0%
17.0%
FY15
3,600
684
11.8%
19.0%
FY16
3,600
756
10.5%
21.0%
FY17
3,600
828
9.5%
23.0%
FY18
3,600
900
8.7%
25.0%
FY19
3,600
900
–
25.0%
FY20
3,600
972
8.0%
27.0%
FY21
3,600
972
–
27.0%
376.8
–
FY22
FY23
3,600
1,044
7.4%
3,600
1,044
–
29.0%
29.0%
$ 332,368 $ 342,339 $ 352,609 $ 363,187 $ 374,083 $ 385,305 $ 396,864 $ 408,770 $ 421,033 $ 433,664
3.0%
3.0%
3.0%
3.0%
3.0%
3.0%
3.0%
3.0%
3.0%
3.0%
$
203.4 $
16.7%
234.2 $
15.1%
266.6 $
13.8%
300.7 $
12.8%
336.7 $
12.0%
346.8 $
3.0%
385.8 $
11.2%
397.3 $
3.0%
439.6 $
10.6%
44
452.7
3.0%
Jaguar Income Statement – Management Case
($ USD in Millions except for $ per Share Figures)
Income Statement:
Revenue:
Existing Products:
Xyrem Sales:
Erwinaze Sales:
Defitelio Sales:
Other Sales and Royalties:
Risk-Adjusted Pipeline Drug Sales:
JZP-110 Sales:
JZP-386 Sales:
Total Revenue:
Revenue Growth:
Units:
$M
$M
$M
$M
FY14
$
FY15
FY16
Projected
FY18
FY19
FY17
FY20
FY21
FY22
773.7 $ 1,083.1 $ 1,455.7 $ 1,902.2 $ 2,391.3 $ 2,959.2 $ 3,551.1 $ 4,218.7 $
203.4
234.2
266.6
300.7
336.7
346.8
385.8
397.3
57.8
79.8
107.1
140.7
182.0
209.3
240.7
276.9
142.0
156.2
168.7
182.1
193.1
204.7
214.9
225.6
FY23
376.8 $
439.6
318.4
234.7
376.8
452.7
366.1
244.0
$M
$M
$M
%
1,176.9
34.9%
1,553.3
32.0%
1,998.0
28.6%
28.5
2,554.3
27.8%
71.7
3,174.8
24.3%
133.2
3,853.2
21.4%
159.8
4,552.3
18.1%
253.1
5,371.6
18.0%
292.7
1,662.1
(69.1%)
387.8
1,827.6
10.0%
Total Cost of Product Sales:
Gross Profit:
Gross Margin:
$M
$M
%
111.8
1,065.0
90.5%
147.6
1,405.6
90.5%
189.9
1,808.1
90.5%
242.8
2,311.5
90.5%
301.7
2,873.1
90.5%
366.2
3,487.0
90.5%
432.6
4,119.6
90.5%
510.5
4,861.1
90.5%
158.0
1,504.2
90.5%
173.7
1,653.9
90.5%
Operating Expenses:
Selling, General, and Administrative:
Research and Development:
Acquired In-Process Research & Development:
Intangible Asset Amortization:
Total Operating Expenses:
$M
$M
$M
$M
$M
376.6
51.1
127.0
129.5
684.2
466.0
58.8
126.2
651.0
614.8
67.6
121.8
804.2
802.8
74.4
121.7
998.9
1,015.9
81.8
118.2
1,216.0
1,252.3
90.0
100.7
1,443.0
1,499.6
94.5
100.7
1,694.8
1,790.5
99.3
100.7
1,990.5
559.9
104.2
100.7
764.7
621.4
106.8
100.7
828.9
Operating Income (EBIT):
Operating (EBIT) Margin:
$M
%
380.8
32.4%
754.7
48.6%
1,003.9
50.2%
1,312.6
51.4%
1,657.1
52.2%
2,044.0
53.0%
2,424.9
53.3%
2,870.7
53.4%
739.4
44.5%
825.0
45.1%
Other Income / (Expense):
Interest Expense, Net:
Losses and Other Items:
Goodwill Impairment:
Total Other Income / (Expense):
$M
$M
$M
$M
(48.6)
(48.6)
(38.1)
(38.1)
(38.1)
(38.1)
(18.1)
(18.1)
(18.1)
(18.1)
(0.2)
(0.2)
Income From Continuing Operations (Before Taxes):
Tax Provision / (Benefit):
Income From Continuing Operations:
$M
$M
$M
332.2
59.8
272.4
716.6
129.0
587.6
965.8
173.8
792.0
1,294.5
233.0
1,061.5
1,639.0
295.0
1,344.0
2,043.8
367.9
1,675.9
Income from Discontinued Operations:
$M
Net Income:
Effective Tax Rate:
$M
%
Diluted Shares Outstanding:
Diluted Earnings Per Share (EPS):
EBITDA:
EBITDA Margin:
Goldman Stanley
$M
$ as Stated
$M
%
$
$
$
272.4
18.0%
$
64.4
4.23 $
642.0 $
54.6%
587.6
18.0%
$
$ 1,061.5
18.0%
-
2,424.9
436.5
1,988.4
-
2,870.7
516.7
2,353.9
-
739.4
133.1
606.3
-
-
888.6 $ 1,137.7 $ 1,452.2 $ 1,800.7 $ 2,179.4 $ 2,571.1 $ 3,030.4 $
57.2%
56.9%
56.9%
56.7%
56.6%
56.5%
56.4%
860.0 $
51.7%
949.4
52.0%
(1) Financial data as of May 9, 2014.
84.8
23.45 $
$
606.3
18.0%
-
97.2
6.96
81.0
20.69 $
$ 2,353.9
18.0%
825.0
148.5
676.5
92.9
6.53 $
77.4
17.37 $
$ 1,988.4
18.0%
-
88.8
26.52 $
73.9
14.36 $
$ 1,675.9
18.0%
-
676.5
18.0%
70.6
11.21 $
$ 1,344.0
18.0%
-
$
67.5
8.71 $
792.0
18.0%
-
-
45
Jaguar Comparable Public Companies
Specialty Pharmaceutical Companies That Sell Primarily Branded Drugs, with LTM Revenue Between $500 Million and $2 Billion
($ USD in Millions)
Operating Statistics
Company Name
Alexion Pharmaceuticals, Inc.
Vertex Pharmaceuticals Inc.
BioMarin Pharmaceutical Inc.
Salix Pharmaceuticals, Ltd.
Cubist Pharmaceuticals, Inc.
United Therapeutics Corporation
The Medicines Company
Capitalization
Equity
Enterprise
Value(1)
Value(1)
$ 31,143 $ 29,697
15,689
14,079
9,103
8,769
7,988
9,538
5,866
6,038
5,803
4,723
1,699
1,533
Maximum
75th Percentile
Median
25th Percentile
Minimum
$ 31,143
12,396
$ 7,988
5,834
1,699
Jaguar
$
Valuation Statistics
Company Name
Alexion Pharmaceuticals, Inc.
Vertex Pharmaceuticals Inc.
BioMarin Pharmaceutical Inc.
Salix Pharmaceuticals, Ltd.
Cubist Pharmaceuticals, Inc.
United Therapeutics Corporation
The Medicines Company
Capitalization
Equity
Enterprise
Value(1)
Value(1)
$ 31,143 $ 29,697
15,689
14,079
9,103
8,769
7,988
9,538
5,866
6,038
5,803
4,723
1,699
1,533
Maximum
75th Percentile
Median
25th Percentile
Minimum
$ 31,143
12,396
$ 7,988
5,834
1,699
$ 29,697
11,809
$ 8,769
5,381
1,533
Jaguar
$
$
8,196
8,196
LTM
$ 1,779
1,002
572
1,116
1,086
1,161
709
Revenue
EBITDA
Reported Net Income
2014-12-31 2015-12-31
LTM
2014-12-31 2015-12-31
LTM
2014-12-31 2015-12-31
$
2,171 $
2,569 $
697 $
1,074 $
1,306 $
330 $
472 $
1,123
574
1,211
(331)
(478)
164
(369)
(538)
119
655
905
(108)
(80)
65
(175)
(142)
47
1,649
1,995
281
680
957
77
361
444
1,206
1,483
195
259
295
(0)
26
48
1,255
1,387
445
629
690
250
400
441
775
823
85
70
166
22
(0)
106
$ 29,697
11,809
$ 8,769
5,381
1,533
$
$
$
1,779
1,138
1,086
856
572
$
$
923
9,089
9,089
Goldman Stanley
$
$
2,171
1,452
1,206
715
574
$
$
2,569
1,739
1,387
1,058
823
$
697 $
363
195 $
(11)
(331)
$
1,177
$
1,553
$
423
$
1,074 $
655
259 $
(5)
(478)
642
$
1,306
823
295
165
65
$
889
$
Enterprise Value /
Enterprise Value /
Revenue (1)
EBITDA(1)
LTM
2014-12-31 2015-12-31
LTM
2014-12-31 2015-12-31
16.7 x
13.7 x
11.6 x
42.6 x
27.7 x
22.7 x
14.1 x
24.5 x
11.6 x NM
NM
85.8 x
15.3 x
13.4 x
9.7 x NM
NM
NM
8.5 x
5.8 x
4.8 x
34.0 x
14.0 x
10.0 x
5.6 x
5.0 x
4.1 x
31.0 x
23.3 x
20.5 x
4.1 x
3.8 x
3.4 x
10.6 x
7.5 x
6.8 x
2.2 x
2.0 x
1.9 x
18.0 x
21.8 x
9.2 x
$
80
$
472 $
380
26 $
(71)
(538)
272
$
EBITDA Margin
LTM
2014-12-31 2015-12-31
39.2%
49.5%
50.8%
(33.0%)
(83.3%)
13.5%
(18.9%)
(12.2%)
7.2%
25.2%
41.3%
48.0%
17.9%
21.5%
19.9%
38.3%
50.1%
49.7%
12.0%
9.1%
20.2%
1,123
443
119
77
47
111.0%
30.6%
21.0%
14.4%
6.1%
136.6%
31.1%
13.7%
(62.3%)
(181.3%)
39.2%
31.7%
17.9%
(3.4%)
(33.0%)
50.1%
45.4%
21.5%
(1.6%)
(83.3%)
50.8%
48.9%
20.2%
16.7%
7.2%
588
32.0%
38.4%
45.8%
54.6%
57.2%
P / E Multiple (1)
LTM
2014-12-31 2015-12-31
94.4 x
66.0 x
27.7 x
NM
NM
NM
NM
NM
NM
NM
22.1 x
18.0 x
NM
NM
NM
23.2 x
14.5 x
13.2 x
76.9 x NM
16.1 x
16.7 x
14.7 x
8.5 x
4.8 x
2.2 x
24.5 x
13.5 x
5.8 x
4.4 x
2.0 x
11.6 x
10.6 x
4.8 x
3.7 x
1.9 x
42.6 x
34.0 x
31.0 x
18.0 x
10.6 x
27.7 x
23.3 x
21.8 x
14.0 x
7.5 x
85.8 x
22.2 x
15.2 x
9.4 x
6.8 x
9.8 x
7.7 x
5.9 x
21.5 x
14.2 x
10.2 x NM
(1) Financial data as of May 9, 2014.
330 $
163
22 $
(88)
(369)
Projected Projected
Revenue
EBITDA
Growth
Growth
18.3%
21.6%
111.0%
(134.3%)
38.2%
(181.3%)
21.0%
40.6%
22.9%
13.7%
10.5%
9.7%
6.1%
136.6%
94.4 x
85.6 x
76.9 x
50.1 x
23.2 x
66.0 x
44.1 x
22.1 x
18.3 x
14.5 x
27.7 x
20.4 x
17.0 x
15.4 x
13.2 x
30.1 x
13.9 x
46
Jaguar DCF Analysis – WACC Calculation
($ USD in Millions)
(1)
Discount Rate Calculations - Assumptions :
Risk-Free Rate:
Equity Risk Premium:
Pre-Tax Cost of Debt:
Cost of Preferred Stock:
2.62%
7.00%
3.42%
–
Comparable Companies - Unlevered Beta Calculation:
Levered
Beta
0.64
0.35
0.92
1.18
0.65
1.44
0.79
(1)
Debt
$
93.5
473.4
828.4
1,944.4
945.2
70.3
263.0
Median:
0.79
$ 473.4
Jaguar
1.05
Name
Alexion Pharmaceuticals, Inc.
Vertex Pharmaceuticals Inc.
BioMarin Pharmaceutical Inc.
Salix Pharmaceuticals, Ltd.
Cubist Pharmaceuticals, Inc.
United Therapeutics Corporation
The Medicines Company
(1)
Preferred
8.3%
Jaguar - Levered Beta & WACC Calculation:
Unlevered
Current Capital Structure:
"Optimal" Capital Structure:
Beta
0.72
0.72
$
-
Preferred
(1)
Debt
$ 1,198.6
783.6
Equity
(1)
Unlevered
(1)
% Debt
Stock % Preferred Value
% Equity
0.3% $
–
$ 31,142.6
99.7%
2.9%
–
15,689.4
97.1%
8.3%
–
9,102.5
91.7%
19.6%
–
7,987.9
80.4%
13.9%
–
5,865.8
86.1%
1.2%
–
5,802.8
98.8%
13.4%
–
1,699.3
86.6%
(1)
–
$ 7,987.9
Tax Rate
17.0%
20.0%
27.0%
35.0%
27.0%
35.0%
36.0%
Beta
0.64
0.34
0.86
1.02
0.58
1.43
0.72
27.0%
0.72
91.7%
Equity
(1)
% Debt
Stock % Preferred Value
% Equity
12.8% $
–
$ 8,196.0
87.2%
8.3%
–
8,611.0
91.7%
Levered
Tax Rate
18.0%
18.0%
Cost of Equity Based on Comparables, Current Capital Structure:
Cost of Equity Based on Comparables, "Optimal" Capital Structure:
Cost of Equity Based on Historical Beta:
Beta
0.81
0.77
8.26%
8.03%
9.97%
WACC = Cost of Equity * % Equity + Cost of Debt * % Debt * (1 - Tax Rate) + Cost of Preferred Stock * % Preferred Stock
WACC, Current Capital Structure:
WACC, Current Capital Structure and Historical Cost of Equity:
WACC, "Optimal" Capital Structure:
7.56%
9.06%
7.59%
Average WACC Produced by All Methods:
8.07%
Goldman Stanley
(1) Financial data as of May 9, 2014.
47
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