ADL Amdl,

ADL Bionatur Solutions (ADL-BS) was formed through the reverse takeover in April 2018 of contract manufacturing (CMO) and active pharmaceutical ingredient (API) producing firm ADL Biopharma (ADL) and Bionaturis (BNT), a developer of differentiated veterinary biotech products. We estimate the ADL unit’s solid pipeline of existing CMO contracts will contribute to the unit’s generation of at least €55m in 2019 revenue (vs €12m in 2017). We determine an EV valuation of €138.8m, which translates to an equity valuation of €93.4m, or €2.37 per share, after removing €45.4m in Q418e net debt (including a €7.0m loan from its majority shareholder).

ADL-BS reported H118 net debt of €41.2m (€44.3m gross debt offset by €3.1m in cash and short- and long-term financial investments). The firm has raised €5m in debt and €12m in equity since mid-2018, and we estimate year-end 2018 net debt of approximately €45.4m (including a €7.0m loan from its majority shareholder). Further capital raises may not be absolutely required for the firm to attain consistent profitability, but ADL-BS may seek modest funding to further modernise some of its facilities. Our model assumes the company will raise an additional €5m in debt in 2019. We apply a net present value (NPV) approach and, using a 10.0% cost of capital, obtain an enterprise value (EV) of €138.8m. After removing €45.4m in Q418e net debt, we determine an equity valuation of €93.4m, or €2.37 per share. Click here to view the full report.

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