Arcutis Biotherapeutics, Inc. (NASDAQ:ARQT) is a biopharmaceutical company focused on developing treatments for dermatological diseases. The company is in the clinical stage, which means it is still testing its products for safety and effectiveness before they can be marketed. This stage often involves high costs and uncertain returns, which is reflected in the company’s financial metrics.

Arcutis has a Return on Invested Capital (ROIC) of -48.01% and a Weighted Average Cost of Capital (WACC) of 12.62%. This results in a ROIC to WACC ratio of -3.80, indicating that the company is currently generating returns that are significantly lower than its cost of capital. This is a common challenge for companies in the biopharmaceutical sector, where high research and development costs can lead to negative returns during the clinical stage.

When comparing Arcutis to its peers, Keros Therapeutics, Inc. (KROS) has a ROIC of -35.71% and a WACC of 10.40%, resulting in a ROIC to WACC ratio of -3.43. Crinetics Pharmaceuticals, Inc. (CRNX) has a ROIC of -24.56% and a WACC of 6.77%, with a ratio of -3.63. Revolution Medicines, Inc. (RVMD) stands out with the highest ratio of -2.64, despite a ROIC of -28.61% and a WACC of 10.83%.

Phathom Pharmaceuticals, Inc. (PHAT) and Black Diamond Therapeutics, Inc. (BDTX) have ROIC to WACC ratios of -2.88 and -5.33, respectively. PHAT’s ROIC is -94.72% with a WACC of 32.88%, while BDTX has a ROIC of -74.74% and a WACC of 14.01%. These figures highlight the varying degrees of efficiency in generating returns relative to the cost of capital among these companies.

Revolution Medicines, with the highest ROIC to WACC ratio, is the most efficient among its peers in generating returns relative to its cost of capital. This suggests that RVMD, while still operating at a loss, is closer to achieving a positive return on its invested capital compared to its peers. Arcutis, with a less favorable ratio, faces a larger gap between its cost of capital and the returns it is currently generating.