Gemphire Therapeutics (NASDAQ:GEMP) and Aduro BioTech (NASDAQ:ADRO) are both small-cap medical companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, institutional ownership, dividends, risk, valuation, profitability and analyst recommendations.

Institutional and Insider Ownership

29.2% of Gemphire Therapeutics shares are held by institutional investors. Comparatively, 48.3% of Aduro BioTech shares are held by institutional investors. 22.7% of Gemphire Therapeutics shares are held by insiders. Comparatively, 5.0% of Aduro BioTech shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Gemphire Therapeutics and Aduro BioTech’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Gemphire Therapeutics N/A -211.11% -99.44%
Aduro BioTech -591.66% -50.03% -23.51%

Valuation and Earnings

This table compares Gemphire Therapeutics and Aduro BioTech’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Gemphire Therapeutics N/A N/A -$33.41 million ($3.23) -0.27
Aduro BioTech $17.24 million 13.17 -$91.86 million ($1.42) -2.01

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

Risk & Volatility

Gemphire Therapeutics has a beta of 2.6, meaning that its stock price is 160% more volatile than the S&P 500. Comparatively, Aduro BioTech has a beta of 1.87, meaning that its stock price is 87% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Gemphire Therapeutics and Aduro BioTech, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Gemphire Therapeutics 0 3 2 0 2.40
Aduro BioTech 1 0 6 0 2.71

Gemphire Therapeutics presently has a consensus target price of $20.20, suggesting a potential upside of 2,248.84%. Aduro BioTech has a consensus target price of $9.86, suggesting a potential upside of 244.76%. Given Gemphire Therapeutics’ higher possible upside, equities analysts clearly believe Gemphire Therapeutics is more favorable than Aduro BioTech.

Summary

Aduro BioTech beats Gemphire Therapeutics on 7 of the 12 factors compared between the two stocks.

Gemphire Therapeutics Company Profile

Gemphire Therapeutics Inc., a clinical-stage biopharmaceutical company, focuses on developing and commercializing therapies for the treatment of dyslipidemia and non-alcoholic steatohepatitis (NASH). It is developing gemcabene, a novel, once-daily, oral therapy, for high risk cardiovascular patients who are unable to achieve normal levels of LDL-C or triglycerides with currently approved therapies, primarily statin therapy, and for those patients who present with NASH. The company was founded in 2008 and is headquartered in Livonia, Michigan.

Aduro BioTech Company Profile

Aduro BioTech, Inc., an immunotherapy company, focuses on the discovery, development, and commercialization of therapies that transform the treatment of challenging diseases. The company is developing ADU-S100, which is in Phase I monotherapy study, as well as in Phase 1b combination study with an anti-PD1 immune checkpoint inhibitor; ADU-214 that is in Phase I clinical trials for the treatment of lung cancer; and ADU-741 for the treatment of prostate cancer. Its products pipeline also comprises BION-1301, a B-select monoclonal antibody novel therapy for multiple myeloma; A PRoliferation-Inducing Ligand for the treatment of multiple myeloma, chronic lymphocytic leukemia, and colorectal carcinoma; CD27, a co-stimulatory receptor for the treatment of cancer; and CTLA-4 for the treatment of advanced melanoma and other cancers. The company's pLADD program is based on proprietary attenuated strains of Listeria that have been engineered to express tumor neo antigens that are specific to an individual patient's tumor. It has collaboration agreements with Novartis Pharmaceuticals Corporation, Janssen Biotech, Inc, and Merck. The company was formerly known as Oncologic, Inc. and changed its name to Aduro BioTech, Inc. in June 2008. Aduro BioTech, Inc. was founded in 2000 and is based in Berkeley, California.

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