FMP
Geron Corporation's Capital Efficiency in the Biopharmaceutical Industry
May 19, 2025 11:00 AM - Andrew Wynn
Image credit: psdgangcreatives
- Geron Corporation (NASDAQ:GERN) has a negative ROIC, indicating inefficient capital use compared to its WACC.
- Stem, Inc. shows even lower capital efficiency than Geron, with a significantly negative ROIC to WACC ratio.
- Agenus Inc. and Exelixis, Inc. demonstrate high capital efficiency, with Agenus showcasing an exceptionally high ROIC.
Geron Corporation (NASDAQ:GERN) is a biopharmaceutical company focused on developing and commercializing innovative therapeutics for cancer treatment. The company is known for its work on telomerase inhibitors, which are designed to target cancer cells. In the competitive landscape, Geron faces peers like Stem, Inc., Agenus Inc., and Exelixis, Inc., each with varying degrees of capital efficiency.
Geron Corporation's ROIC of -26.79% compared to its WACC of 8.63% indicates that the company is not currently generating sufficient returns on its invested capital. This negative ROIC suggests that Geron is spending more on its capital than it is earning back, which can be a concern for investors looking for efficient capital use.
In comparison, Stem, Inc. has an even more negative ROIC of -85.39% with a WACC of 4.92%. This results in a ROIC to WACC ratio of -17.34, which is significantly lower than Geron's ratio of -3.10. This suggests that Stem is using its capital even less efficiently than Geron, highlighting challenges in generating returns.
On the other hand, Agenus Inc. presents a stark contrast with a ROIC of 1245.27% and a WACC of 73.29%, resulting in a ROIC to WACC ratio of 16.99. This indicates that Agenus is generating substantial returns on its invested capital, making it a standout among its peers in terms of capital efficiency and growth potential.
Exelixis, Inc. also demonstrates efficient capital utilization with a ROIC of 24.02% and a WACC of 5.20%, leading to a ROIC to WACC ratio of 4.62. This positive ratio suggests that Exelixis is effectively using its capital to generate returns, positioning it favorably in the competitive landscape.
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