The Piotroski F-Score calculation for RARX / Ra Pharmaceuticals, Inc. is shown here. In 2000, Joseph Piotroski published a paper titled "Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers." This paper described a method of using data from a company's financial reports to help predict future performance.
The Piotroski F-Score, as it is known, is a 9-point discrete score, where 9 is the best, that ranks companies based on a number of financial factors. To calculate the score, we compare nine factors from the two most recent annual reports. If the change in the factor is "good", then we add one to the score. If the change in the factor is "not good", then we add zero. The following explanations are quoted from the paper.
RARX / Ra Pharmaceuticals, Inc. Piotroski F-Score
ROA : Net Income before Extraordinary Items, scaled by Total Assets at beginning of year
CFO: Cash Flow from Operations, scaled by Total Assets at beginning of year
ΔROA: Current Year's ROA less Prior Year's ROA. If this negative, ROA (and therefore profitability) has decreased.
ACCRUAL: Current Year's Net Income before Extraordinary Items less Cash Flow from Operations, scaled by Total Assets at beginning of year. In short, one if CFO > ROA. The relationship between earnings and cash flow levels is also considered. Earnings driven by positive accrual adjustments (i.e., profits are greater than cash flow from operations) is a bad signal about future profitability and returns. This relationship may be particularly important among value firms, where the incentive to manage earnings through positive accruals (e.g., to prevent covenant violations) is strong.
Financial Leverage, Liquidity, and Source of Funds
ΔLEVER: The historical change in the ratio of long-term debt to average total assets. By raising external capital, a financially distressed firm is signaling its inability to generate sufficient internal funds. In addition, an increase in long-term debt is likely to place additional constraints on the firm’s financial flexibility. An increase in financial leverage is a negative.
ΔLIQUID: The historical change in the firm’s current ratio between the current and prior year, where we define the current ratio as the ratio of current assets to current liabilities at fiscal year-end. An improvement in liquidity is a good signal.
EQ_OFFER: One if the firm did not issue common equity in the year, zero otherwise. Similar to an increase in long-term debt, financially distressed firms that raise external capital could be signaling their inability to generate sufficient internal funds to service future obligations. Moreover, the fact that these firms are willing to issue equity when their stock prices are likely to be depressed (i.e., high cost of capital) highlights the poor financial condition facing these firms.
ΔMARGIN: The firm’s current gross margin ratio (gross margin scaled by total sales) less the prior year’s gross margin ratio. An improvement in margins signifies a potential improvement in factor costs, a reduction in inventory costs, or a rise in the price of the firm’s product.
ΔTURN: The firm’s current year asset turnover ratio (total sales scaled by beginning of the year total assets) less the prior year’s asset turnover ratio. An improvement in asset turnover signifies greater productivity from the asset base. Such an improvement can arise from more efficient operations (fewer assets generating the same levels of sales) or an increase in sales (which could also signify improved market conditions for the firm’s products).
2018-09-18 - Asif
Overview Rigel Pharmaceuticals is a biotechnology company dedicated to discovering, developing and providing novel small molecule drugs that significantly improve the lives of patients with immune and hematologic disorders, cancer and rare diseases. The company's pioneering research focuses on signaling pathways that are critical to disease mechanisms. The company's first FDA-approved product is TAVALISSE™ (fostamatinib disodium hexahydrate), an oral spleen tyrosine kinase (SYK) inhibitor, for the treatment of adult patients with chronic immune thrombocytopenia who have had an insufficient response to a previous treatment. The company's current clinical programs include Phase 2 studies of fostamatinib in autoimmune hemolytic anemia and IgA nephropathy, and a Phase 1 study for its IRAK program. In addition, Rigel Pharmaceuticals has product candidates in development with partners BerGenBio AS, Daiichi Sankyo, and Aclaris Therapeutics. Since inception, Rigel Pharmaceuticals h...
2018-09-18 - Asif
Overview The company design, develop and sell exoskeleton technology to augment human strength, endurance and mobility. The company's exoskeleton technology serves multiple markets and can be used both by able-bodied users as well as by persons with physical disabilities. Ekso Bionics has sold, rented or leased devices that (a) enable individuals with neurological conditions affecting gait (stroke and spinal cord injury) to rehabilitate and to walk again and (b) allow industrial workers to perform heavy duty work for extended periods. Today, its medical exoskeleton, Ekso GT, is used as a rehabilitation tool to allow physicians and therapists to rehabilitate patients who have suffered a stroke or spinal cord injury. With its unique features designed specifically for hospitals and its proprietary SmartAssist software, Ekso GT allows for the early mobilization of patients, with high step count and high dosage treatments. The intent is to allow the patient’s central nervous syst...
2018-09-18 - Asif
Overview Agile Therapeutics is a forward-thinking women’s healthcare company dedicated to fulfilling the unmet health needs of today’s women. Twirla® and its other current potential product candidates are designed to provide women with contraceptive options that offer greater convenience and facilitate compliance. The company's lead product candidate, Twirla, also known as AG200-15, is a once-weekly prescription contraceptive patch that is at the end of Phase 3 clinical development. Since its inception in 1997, Agile Therapeutics has devoted substantial resources to developing Twirla, building its intellectual property portfolio, business planning, raising capital and providing general and administrative support for these operations. The company incurred research and development expenses of $14.4 million, $20.9 million and $25.6 million during the years ended December 31, 2017, 2016 and 2015, respectively. The company incurred research and development expenses of $2.4 milli...
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