Geron Corporation (NASDAQ:GERN) has a ROIC of -34.35%, indicating it is not generating returns above its cost of capital.
Comparatively, Stem, Inc. (STEM) and Agenus Inc. (AGEN) also show negative ROIC, with Agenus displaying significant capital utilization inefficiencies.
Exelixis, Inc. (EXEL) demonstrates positive financial performance with a ROIC of 18.19%, suggesting efficient capital utilization and growth potential.
Geron Corporation (NASDAQ:GERN) is a clinical-stage biopharmaceutical company focused on developing innovative therapeutics for cancer treatment. The company invests heavily in research and development, which is typical for firms in this sector. This often results in a negative Return on Invested Capital (ROIC) of -34.35% as they work towards bringing their products to market.
Geron’s ROIC is significantly lower than its Weighted Average Cost of Capital (WACC) of 8.21%. This indicates that Geron is not currently generating returns that exceed its cost of capital. This is a common scenario for companies in the clinical-stage biopharmaceutical sector, where significant investments are made in research and development before achieving profitability.
In comparison, Stem, Inc. (STEM) has a ROIC of -0.09% and a WACC of 4.75%, resulting in a ROIC to WACC ratio of -0.02. While still negative, Stem’s ratio is closer to breakeven compared to Geron, suggesting slightly better capital efficiency. This indicates that Stem is managing its capital more effectively, despite not yet achieving positive returns.
Agenus Inc. (AGEN) presents a more challenging scenario with a ROIC of -813.12% and a WACC of 90.68%, leading to a ROIC to WACC ratio of -8.97. This highlights significant inefficiencies in capital utilization, which is a concern for investors. Agenus, like Geron, is in the early stages of drug development, which often involves high costs and uncertain returns.
Exelixis, Inc. (EXEL) stands out with a positive ROIC of 18.19% and a WACC of 6.72%, resulting in a ROIC to WACC ratio of 2.71. This indicates that Exelixis is generating returns well above its cost of capital, suggesting efficient capital utilization and potential for growth. Exelixis’s strong financial performance makes it a standout among its peers.
