The WACC of Relmada Therapeutics Inc (RLMD) is 7.3%.
Range | Selected | |
Cost of equity | 9.4% - 12.4% | 10.9% |
Tax rate | 26.2% - 27.0% | 26.6% |
Cost of debt | 5.0% - 5.0% | 5% |
WACC | 6.5% - 8.0% | 7.3% |
Category | Low | High |
Long-term bond rate | 3.9% | 4.4% |
Equity market risk premium | 4.6% | 5.6% |
Adjusted beta | 1.2 | 1.35 |
Additional risk adjustments | 0.0% | 0.5% |
Cost of equity | 9.4% | 12.4% |
Tax rate | 26.2% | 27.0% |
Debt/Equity ratio | 1 | 1 |
Cost of debt | 5.0% | 5.0% |
After-tax WACC | 6.5% | 8.0% |
Selected WACC | 7.3% | |
Debt/Equity | Unlevered | |||
Peers | Company Name | ratio | Beta | beta |
RLMD | Relmada Therapeutics Inc | 1.15 | 2.36 | 1.28 |
CBAY | Cymabay Therapeutics Inc | 0.03 | 0.93 | 0.92 |
ELAN | Elanco Animal Health Inc | 0.61 | 1.04 | 0.72 |
EOLS | Evolus Inc | 0.21 | 1.02 | 0.89 |
ITRM | Iterum Therapeutics PLC | 1.13 | 1.61 | 0.88 |
LLY | Eli Lilly and Co | 0.05 | 0.79 | 0.76 |
PRTK | Paratek Pharmaceuticals Inc | 2.01 | 1.65 | 0.67 |
RDHL | Redhill Biopharma Ltd | 0.08 | 1.24 | 1.16 |
SEEL | Seelos Therapeutics Inc | 142.13 | 1.63 | 0.02 |
TARS | Tarsus Pharmaceuticals, Inc. | 0.04 | 0.18 | 0.18 |
XERS | Xeris Pharmaceuticals Inc | 0.31 | 1.16 | 0.95 |
Low | High | |
Unlevered beta | 0.76 | 0.89 |
Relevered beta | 1.3 | 1.52 |
Adjusted relevered beta | 1.2 | 1.35 |
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for RLMD:
cost_of_equity (10.90%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (1.2) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.