Catalyst Pharmaceuticals (NASDAQ: CPRX) and Aduro Biotech (NASDAQ:ADRO) are both small-cap medical companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, earnings, analyst recommendations, institutional ownership, risk, profitability and dividends.

Analyst Recommendations

This is a summary of current recommendations and price targets for Catalyst Pharmaceuticals and Aduro Biotech, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Catalyst Pharmaceuticals 0 0 4 0 3.00
Aduro Biotech 0 0 7 0 3.00

Catalyst Pharmaceuticals presently has a consensus target price of $5.50, suggesting a potential upside of 128.22%. Aduro Biotech has a consensus target price of $20.00, suggesting a potential upside of 78.57%. Given Catalyst Pharmaceuticals’ higher possible upside, analysts clearly believe Catalyst Pharmaceuticals is more favorable than Aduro Biotech.

Volatility & Risk

Catalyst Pharmaceuticals has a beta of 1.6, suggesting that its stock price is 60% more volatile than the S&P 500. Comparatively, Aduro Biotech has a beta of 3.66, suggesting that its stock price is 266% more volatile than the S&P 500.

Profitability

This table compares Catalyst Pharmaceuticals and Aduro Biotech’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Catalyst Pharmaceuticals N/A -44.65% -42.03%
Aduro Biotech -609.58% -43.92% -23.46%

Valuation and Earnings

This table compares Catalyst Pharmaceuticals and Aduro Biotech’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Catalyst Pharmaceuticals N/A N/A -$16.44 million ($0.21) -11.48
Aduro Biotech $17.36 million 48.14 -$94.74 million ($1.57) -7.13

Catalyst Pharmaceuticals has higher revenue, but lower earnings than Aduro Biotech. Catalyst Pharmaceuticals is trading at a lower price-to-earnings ratio than Aduro Biotech, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

40.2% of Catalyst Pharmaceuticals shares are held by institutional investors. Comparatively, 35.1% of Aduro Biotech shares are held by institutional investors. 8.8% of Catalyst Pharmaceuticals shares are held by insiders. Comparatively, 6.6% of Aduro Biotech shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Summary

Catalyst Pharmaceuticals beats Aduro Biotech on 6 of the 11 factors compared between the two stocks.

Catalyst Pharmaceuticals Company Profile

Catalyst Pharmaceuticals, Inc., formerly Catalyst Pharmaceutical Partners, Inc., is a development-stage biopharmaceutical company. The Company is focused on developing and commercializing therapies for people with rare debilitating diseases. The Company has three drugs in development: Firdapse, CPP-109 and CPP-115. The Company’s Firdapse is indicated for the treatments of lambert-eaton myasthenic syndrome (LEMS) and congenital myasthenic syndromes (CMS). Firdapse consists of the phosphate salt of amifampridine. The Company has completed the Phase III trial of Firdapse. The Company’s CPP-109 (vigabatrin) is a gamma-aminobutyric acid (GABA) aminotransferase inhibitor. CPP-109 is indicated for the treatment of Tourette’s Disorder. The Company’s CPP-115 is a GABA aminotransferase inhibitor. CPP-115 is indicated for the treatment of selected neurological indications, such as complex partial seizures and Tourette’s Disorder, and epilepsy.

Aduro Biotech Company Profile

Aduro Biotech, Inc. is an immunotherapy company, which focuses on the discovery, development and commercialization of therapies that manage the treatment of various diseases, including cancer. The Company’s product candidates from its Live, Attenuated, Double-Deleted (LADD) Listeria monocytogenes, Stimulator of Interferon Genes Pathway Activator, and B-select monoclonal antibody platforms are designed to stimulate and/or regulate innate and adaptive immune responses, either as single agents or in combination with conventional therapies, as well as other immunotherapies. Its LADD technology platform is being developed as a treatment for multiple indications, including mesothelioma, ovarian, gastric, lung and prostate cancers. Its LADD product candidate is CRS-207, which is being developed as a treatment for multiple indications, including mesothelioma, ovarian and gastric cancers. ADU-214 and ADU-741 are product candidates in development for lung and prostate cancers, respectively.

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