Syndax Pharmaceuticals, Inc. (NASDAQ:SNDX) is a biopharmaceutical company focused on developing cancer therapies. The company aims to innovate in the oncology sector, but its financial metrics reveal challenges. A key metric, Return on Invested Capital (ROIC), is crucial for assessing how well a company uses its capital to generate profits. Comparing ROIC with the Weighted Average Cost of Capital (WACC) provides insight into capital efficiency.
Syndax's ROIC is -70.12%, while its WACC is 6.45%. This results in a ROIC to WACC ratio of -10.87, indicating that the company is not generating sufficient returns to cover its cost of capital. This negative ratio suggests inefficiency in capital utilization, which could be a concern for investors looking for profitable growth.
In comparison, Kura Oncology, Inc. (KURA) has a ROIC of -38.31% and a WACC of 5.68%, leading to a ROIC to WACC ratio of -6.74. Although Kura's ratio is negative, it is less severe than Syndax's, indicating slightly better capital efficiency. However, both companies face challenges in generating returns above their capital costs.
Protagonist Therapeutics, Inc. (PTGX) presents a different scenario with a positive ROIC of 3.39% against a WACC of 14.66%, resulting in a ROIC to WACC ratio of 0.23. CytomX Therapeutics, Inc. (CTMX) stands out with a ROIC of 30.37% and a WACC of 13.18%, yielding a ROIC to WACC ratio of 2.30. This positive ratio highlights CytomX's ability to generate returns well above its cost of capital, making it the most efficient among the peers. This efficiency suggests potential for growth and better capital utilization, setting a benchmark for Syndax and others in the industry.
