Ardelyx, Inc. (NASDAQ:ARDX) has a Return on Invested Capital (ROIC) of -24.68%, indicating inefficiencies in capital utilization.
Akebia Therapeutics (AKBA) showcases a remarkable ROIC of 346.81% against a Weighted Average Cost of Capital (WACC) of 7.35%, highlighting its efficient capital use.
Peers like Kala Pharmaceuticals (KALA) and Aldeyra Therapeutics (ALDX) also exhibit negative ROICs, indicating widespread capital utilization challenges in the sector.
Ardelyx, Inc. (NASDAQ:ARDX) is a biopharmaceutical company focused on developing innovative therapies for unmet medical needs, particularly in gastrointestinal and cardiorenal diseases. In the competitive landscape, Ardelyx faces peers like Akebia Therapeutics, Kala Pharmaceuticals, Aldeyra Therapeutics, CytomX Therapeutics, and Cidara Therapeutics, each with varying degrees of capital efficiency.
Ardelyx’s ROIC of -24.68% is significantly lower than its WACC of 9.12%. This negative ROIC indicates that Ardelyx is not generating enough returns to cover its cost of capital, suggesting inefficiencies in how it utilizes its capital. This is a red flag for investors who prioritize efficient capital use.
In contrast, Akebia Therapeutics (AKBA) showcases a remarkable ROIC of 346.81% against a WACC of 7.35%. This indicates that Akebia is generating returns far exceeding its cost of capital, making it the most efficient among its peers. Such a high ROIC to WACC ratio of 47.17 suggests that Akebia is effectively utilizing its capital to generate substantial returns.
Kala Pharmaceuticals (KALA) and Aldeyra Therapeutics (ALDX) both exhibit negative ROICs of -82.67% and -46.04%, respectively. Their ROICs are well below their WACCs, indicating significant inefficiencies in capital utilization. This is similar to Ardelyx, where the cost of capital is not being met by the returns generated.
CytomX Therapeutics (CTMX) and Cidara Therapeutics (CDTX) also face challenges with negative ROICs of -26.27% and -37.65%, respectively. However, CytomX’s ROIC to WACC ratio of -3.09 is slightly better than Ardelyx’s -2.71, indicating a marginally more efficient use of capital. Despite these challenges, Akebia remains the standout performer in terms of capital efficiency.