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Lineage Cell Therapeutics (Lineage Cell Therapeutics) WACC % :13.47% (As of May. 12, 2024)


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What is Lineage Cell Therapeutics WACC %?

As of today (2024-05-12), Lineage Cell Therapeutics's weighted average cost of capital is 13.47%%. Lineage Cell Therapeutics's ROIC % is -29.75% (calculated using TTM income statement data). Lineage Cell Therapeutics earns returns that do not match up to its cost of capital. It will destroy value as it grows.

For a comprehensive WACC calculation, please access the WACC Calculator.


Lineage Cell Therapeutics WACC % Historical Data

The historical data trend for Lineage Cell Therapeutics's WACC % can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Lineage Cell Therapeutics WACC % Chart

Lineage Cell Therapeutics Annual Data
Trend Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21 Dec22 Dec23
WACC %
Get a 7-Day Free Trial Premium Member Only Premium Member Only 20.77 12.43 8.95 10.69 11.59

Lineage Cell Therapeutics Quarterly Data
Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22 Sep22 Dec22 Mar23 Jun23 Sep23 Dec23
WACC % Get a 7-Day Free Trial Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 10.69 11.03 12.65 14.38 11.59

Competitive Comparison of Lineage Cell Therapeutics's WACC %

For the Biotechnology subindustry, Lineage Cell Therapeutics's WACC %, along with its competitors' market caps and WACC % data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.


Lineage Cell Therapeutics's WACC % Distribution in the Biotechnology Industry

For the Biotechnology industry and Healthcare sector, Lineage Cell Therapeutics's WACC % distribution charts can be found below:

* The bar in red indicates where Lineage Cell Therapeutics's WACC % falls into.



Lineage Cell Therapeutics WACC % Calculation

The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. The WACC is commonly referred to as the firm's cost of capital. Generally speaking, a company's assets are financed by debt and equity. WACC is the average of the costs of these sources of financing, each of which is weighted by its respective use in the given situation. By taking a weighted average, we can see how much interest the company has to pay for every dollar it finances.

WACC=E/(E + D)*Cost of Equity+D/(E + D)*Cost of Debt*(1 - Tax Rate)

1. Weights:
Generally speaking, a company's assets are financed by debt and equity. We need to calculate the weight of equity and the weight of debt.
The market value of equity (E) is also called "Market Cap". As of today, Lineage Cell Therapeutics's market capitalization (E) is $220.894 Mil.
The market value of debt is typically difficult to calculate, therefore, GuruFocus uses book value of debt (D) to do the calculation. It is simplified by adding the latest one-year quarterly average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together. As of Dec. 2023, Lineage Cell Therapeutics's latest one-year quarterly average Book Value of Debt (D) is $3.394 Mil.
a) weight of equity = E / (E + D) = 220.894 / (220.894 + 3.394) = 0.9849
b) weight of debt = D / (E + D) = 3.394 / (220.894 + 3.394) = 0.0151

2. Cost of Equity:
GuruFocus uses Capital Asset Pricing Model (CAPM) to calculate the required rate of return. The formula is:
Cost of Equity = Risk-Free Rate of Return + Beta of Asset * (Expected Return of the Market - Risk-Free Rate of Return)
a) GuruFocus uses 10-Year Treasury Constant Maturity Rate as the risk-free rate. It is updated daily. The current risk-free rate is 4.5%. Please go to Economic Indicators page for more information. Please note that we use the 10-Year Treasury Constant Maturity Rate of the country/region where the company is headquartered. If the data for that country/region is not available, then we will use the 10-Year Treasury Constant Maturity Rate of the United States as default.
b) Beta is the sensitivity of the expected excess asset returns to the expected excess market returns. Lineage Cell Therapeutics's beta is 1.53.
c) (Expected Return of the Market - Risk-Free Rate of Return) is also called market premium. GuruFocus requires market premium to be 6%.
Cost of Equity = 4.5% + 1.53 * 6% = 13.68%

3. Cost of Debt:
GuruFocus uses latest TTM Interest Expense divided by the latest one-year quarterly average debt to get the simplified cost of debt.
As of Dec. 2023, Lineage Cell Therapeutics's interest expense (positive number) was $-0 Mil. Its total Book Value of Debt (D) is $3.394 Mil.
Cost of Debt = -0 / 3.394 = 0%.

4. Multiply by one minus TTM Tax Rate:
GuruFocus uses the most recent TTM Tax Expense divided by the most recent TTM Pre-Tax Income to calculate the tax rate. The calculated TTM tax rate is limited to between 0% and 100%. If the calculated tax rate is higher than 100%, it is set to 100%. If the calculated tax rate is less than 0%, it is set to 0%.
The latest calculated TTM Tax Rate = -1.803 / -23.282 = 7.74%.

Lineage Cell Therapeutics's Weighted Average Cost Of Capital (WACC) for Today is calculated as:

WACC=E / (E + D)*Cost of Equity+D / (E + D)*Cost of Debt*(1 - Tax Rate)
=0.9849*13.68%+0.0151*0%*(1 - 7.74%)
=13.47%

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Lineage Cell Therapeutics  (AMEX:LCTX) WACC % Explanation

Because it costs money to raise capital. A firm that generates higher ROIC % than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, Lineage Cell Therapeutics's weighted average cost of capital is 13.47%%. Lineage Cell Therapeutics's ROIC % is -29.75% (calculated using TTM income statement data). Lineage Cell Therapeutics earns returns that do not match up to its cost of capital. It will destroy value as it grows.


Be Aware

1. GuruFocus uses book value of debt (D) to do the calculation. It is simplified by adding latest one-year quarterly average Short-Term Debt & Capital Lease Obligation and Long-Term Debt & Capital Lease Obligation together.
For companies that report quarterly, GuruFocus combines all of the most recent year's quarterly debt data from the beginning of the year to the year-end and calculates the average.
For companies that report semi-annually, GuruFocus combines all of the most recent year's semi-annual debt data from the start of the year to the year-end and calculates the average.
For companies that report annually, GuruFocus combines the beginning and ending annual debt data from the most recent year and then calculates the average.

2. The WACC formula discussed above does not include Preferred Stock. Please adjust if preferred stock is considered.

3. (Expected Return of the Market - Risk-Free Rate of Return) is also called market premium. GuruFocus requires market premium to be 6%.

4. GuruFocus uses the latest TTM Interest Expense divided by the latest one-year quarterly average debt to get the simplified cost of debt.


Related Terms

Lineage Cell Therapeutics (Lineage Cell Therapeutics) Business Description

Traded in Other Exchanges
Address
2173 Salk Avenue, Suite 200, Carlsbad, CA, USA, 92008
Lineage Cell Therapeutics Inc is a clinical-stage biotechnology company focused on the development and commercialization of novel therapies for the treatment of degenerative diseases. The company's pipeline is based on two platform technologies including cell replacement and cell/drug delivery. Lineage Cell's product candidate is OpRegen, a retinal pigment epithelium transplant therapy for the treatment of dry age-related macular degeneration, OPC1, an oligodendrocyte progenitor cell therapy for acute spinal cord injuries, and VAC2, allogeneic cancer immunotherapy of antigen-presenting dendritic cells for non-small cell lung cancer, ANP1, an allogeneic auditory neuron progenitor cell transplant for hearing loss, and PNC1, an allogeneic photoreceptor cell transplant for vision loss.
Executives
Anula Jayasuriya director 5150 EL CAMINO REAL, SUITE #A-32, LOS ALTOS CA 94022
Jill Ann Howe officer: Chief Financial Officer C/O DTX PHARMA, INC., 10655 SORRENTO VALLEY ROAD, SUITE 100, SAN DIEGO CA 92121
Dipti Amin director C/O LINEAGE CELL THERAPEUTICS, INC., 2173 SALK AVENUE, SUITE 200, CARLSBAD CA 92008
Brian M Culley director, officer: President and CEO 6725 MESA RIDGE ROAD, SUITE 100, SAN DIEGO CA 92121
Broadwood Partners Lp 10 percent owner BROADWOOD CAPITAL INC., 142 WEST 57TH STREET, 11TH FLOOR, NEW YORK NY 10019
Michael H. Mulroy director 1300 N. KELLOGG DRIVE, SUITE D, ANAHEIM CA 92807
Gary S. Hogge officer: SVP,Clinical & Medical Affairs 1010 ATLANTIC AVENUE, SUITE 102, ALAMEDA CA 94501
Samuel George A. Iii officer: General Counsel/Secretary C/O LINEAGE CELL THERAPEUTICS, INC., 2173 SALK AVENUE, SUITE 200, CARLSBAD CA 92008
Angus C. Russell director C/O INTERMUNE, INC., 3280 BAYSHORE BOULEVARD, BRISBANE CA 94005
Kevin Leon Cook officer: Chief Financial Officer C/O LINEAGE CELL THERAPEUTICS, INC., 2173 SALK AVENUE, SUITE 200, CARLSBAD CA 92008
Alexandra Hernandez officer: Sr Director Finance/Controller C/O LINEAGE CELL THERAPEUTICS, INC., 2173 SALK AVENUE, SUITE 200, CARLSBAD CA 92008
Brandi Roberts officer: CFO & SVP, Finance 12390 EL CAMINO REAL #150, SAN DIEGO CA 92130
Chase C. Leavitt officer: General Counsel/Secretary 1010 ATLANTIC AVENUE, SUITE 102, ALAMEDA CA 94501
Edward Wirth officer: Chief Medical Officer C/O INVIVO THERAPEUTICS HOLDING CORP., ONE BROADWAY, 14TH FLOOR, CAMBRIDGE MA 02142
Don M Bailey director 1300 N. KELLOGG DRIVE, SUITE D, ANAHEIM CA 92607

Lineage Cell Therapeutics (Lineage Cell Therapeutics) Headlines

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