- Rhythm Pharmaceuticals, Inc. (NASDAQ:RYTM) has a Return on Invested Capital (ROIC) of -72.78% and a Weighted Average Cost of Capital (WACC) of 15.44%, indicating inefficient capital utilization.
- Comparatively, Deciphera Pharmaceuticals and other peers also struggle with negative ROIC to WACC ratios, highlighting a common industry challenge.
- Krystal Biotech stands out with a positive ROIC to WACC ratio, showcasing its financial health and operational efficiency.
Rhythm Pharmaceuticals, Inc. (NASDAQ:RYTM) is a biopharmaceutical company focused on developing and commercializing therapies for rare genetic disorders of obesity. The company’s primary product, IMCIVREE, is designed to treat obesity caused by certain genetic deficiencies. Rhythm competes with other biopharmaceutical companies like Deciphera Pharmaceuticals, Krystal Biotech, AnaptysBio, Akero Therapeutics, and Apellis Pharmaceuticals.
In analyzing Rhythm Pharmaceuticals’ financial performance, the company’s Return on Invested Capital (ROIC) is -72.78%, while its Weighted Average Cost of Capital (WACC) is 15.44%. This results in a ROIC to WACC ratio of -4.71, indicating that the company is not generating sufficient returns on its invested capital compared to its cost of capital. This negative ratio suggests that Rhythm is facing challenges in efficiently using its capital to generate returns.
Comparatively, Deciphera Pharmaceuticals has a ROIC of -56.11% and a WACC of 5.15%, resulting in a ROIC to WACC ratio of -10.89. Although Deciphera’s ratio is lower than Rhythm’s, both companies are struggling to generate returns above their cost of capital. This indicates a common challenge among biopharmaceutical companies in managing capital effectively.
Krystal Biotech stands out with a positive ROIC of 12.82% and a WACC of 7.14%, leading to a ROIC to WACC ratio of 1.80. This positive ratio indicates that Krystal Biotech is generating returns above its cost of capital, showcasing financial health and operational efficiency. This sets Krystal apart from its peers, including Rhythm Pharmaceuticals, which is currently facing difficulties in capital utilization.
AnaptysBio, Akero Therapeutics, and Apellis Pharmaceuticals also exhibit negative ROIC to WACC ratios, with AnaptysBio at -2.17, Akero Therapeutics at -6.19, and Apellis Pharmaceuticals at -4.01. These figures highlight the broader challenge within the industry of generating returns that exceed the cost of capital, a challenge that Rhythm Pharmaceuticals is also experiencing.
