Sutro Biopharma, Inc. (NASDAQ:STRO) is a biotechnology company focused on developing cancer therapies. It uses a proprietary platform to create antibody-drug conjugates and other biologics. In the competitive landscape, Sutro faces peers like Scholar Rock Holding Corporation, Replimune Group, Y-mAbs Therapeutics, Crinetics Pharmaceuticals, and Kezar Life Sciences, all of which are also engaged in innovative therapeutic developments.
In evaluating Sutro's financial performance, the Return on Invested Capital (ROIC) is a critical metric. Sutro's ROIC stands at -105.71%, which is significantly lower than its Weighted Average Cost of Capital (WACC) of 43.22%. This results in a ROIC to WACC ratio of -2.45, indicating that the company is not generating returns sufficient to cover its cost of capital.
Comparatively, Scholar Rock Holding Corporation (SRRK) has an even more negative ROIC of -109.48% against a WACC of 5.32%, leading to a ROIC to WACC ratio of -20.57. This suggests that Scholar Rock is further from covering its cost of capital than Sutro. Replimune Group (REPL) and Kezar Life Sciences (KZR) also show significant negative spreads with ROIC to WACC ratios of -10.70 and -10.94, respectively.
Y-mAbs Therapeutics (YMAB) presents a relatively better scenario with a ROIC of -27.64% and a WACC of 6.11%, resulting in a ROIC to WACC ratio of -4.53. This indicates that Y-mAbs is closer to breaking even compared to its peers, despite still being below its cost of capital. Crinetics Pharmaceuticals (CRNX) also shows a negative spread, but with a ROIC to WACC ratio of -6.99, it is in a better position than some of its peers.
Overall, while all these companies are currently generating returns below their cost of capital, the comparison highlights the varying degrees of financial performance among them. Sutro Biopharma, despite its challenges, has a less negative ROIC to WACC ratio compared to some peers, indicating a relatively better position in terms of capital efficiency.
