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Editas Medicine, Inc. (NASDAQ:EDIT) Financial Efficiency Analysis
Jun 22, 2025 11:00 AM - Alex Lavoie(Last modified: Jun 23, 2025 1:15 PM)
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- Editas Medicine's Return on Invested Capital (ROIC) of -90.41% is significantly lower than its peers, indicating challenges in generating sufficient returns.
- The company's ROIC to WACC ratio of -7.39 suggests it is not covering its cost of capital, raising concerns about its financial efficiency.
- Comparative analysis shows CRISPR Therapeutics has the best ROIC to WACC ratio among peers, indicating closer proximity to breaking even.
Editas Medicine, Inc. (NASDAQ:EDIT) is a biotechnology company focused on developing gene editing technologies. It aims to translate its CRISPR-based platform into transformative medicines for serious diseases. In the competitive landscape, Editas faces peers like Intellia Therapeutics, CRISPR Therapeutics, Beam Therapeutics, and Pacific Biosciences, all of which are also engaged in the gene editing and biotechnology sectors.
In evaluating Editas, the Return on Invested Capital (ROIC) is a critical metric. Editas has a ROIC of -90.41%, which is significantly lower than its Weighted Average Cost of Capital (WACC) of 12.24%. This results in a ROIC to WACC ratio of -7.39, indicating that Editas is not generating sufficient returns to cover its cost of capital, raising concerns about its financial efficiency.
Comparatively, Intellia Therapeutics has a ROIC of -59.31% and a WACC of 12.13%, resulting in a ROIC to WACC ratio of -4.89. While still negative, Intellia's ratio is better than Editas, suggesting it is slightly more efficient in using its capital. CRISPR Therapeutics, with a ROIC of -23.22% and a WACC of 11.72%, has the best ratio among the peers at -1.98, indicating it is closest to breaking even.
Beam Therapeutics and Pacific Biosciences also show negative ROIC to WACC ratios of -2.52 and -13.67, respectively. Beam's ratio is better than Editas, but Pacific Biosciences has the worst ratio, even lower than Editas. This comparison highlights the challenges these companies face in generating returns that exceed their cost of capital.
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