Verastem (NASDAQ:VSTM) versus Prime Medicine (NASDAQ:PRME) Head to Head Review

Prime Medicine (NASDAQ:PRME) and Verastem (NASDAQ:VSTM) are both small-cap healthcare companies, but which is the better business? We will contrast the two companies based on the strength of their risk, analyst recommendations, institutional ownership, valuation, profitability, earnings and dividends.

Analyst Ratings

This is a summary of current recommendations for Prime Medicine and Verastem, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Prime Medicine	1	0	8	1	2.90
Verastem	1	1	11	0	2.77

Prime Medicine currently has a consensus target price of $7.47, suggesting a potential upside of 96.12%. Verastem has a consensus target price of $16.67, suggesting a potential upside of 80.96%. Given Prime Medicine’s stronger consensus rating and higher probable upside, analysts plainly believe Prime Medicine is more favorable than Verastem.

Profitability

This table compares Prime Medicine and Verastem’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Prime Medicine	-4,613.11%	-188.27%	-59.11%
Verastem	-231.59%	-467.49%	-94.54%

Valuation & Earnings

This table compares Prime Medicine and Verastem”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Prime Medicine	$4.07 million	169.67	-$201.14 million	($1.06)	-3.59
Verastem	$87.53 million	9.53	-$209.47 million	($2.66)	-3.46

Prime Medicine has higher earnings, but lower revenue than Verastem. Prime Medicine is trading at a lower price-to-earnings ratio than Verastem, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

70.4% of Prime Medicine shares are held by institutional investors. Comparatively, 88.4% of Verastem shares are held by institutional investors. 16.0% of Prime Medicine shares are held by insiders. Comparatively, 1.9% of Verastem shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Risk and Volatility

Prime Medicine has a beta of 2.37, indicating that its share price is 137% more volatile than the S&P 500. Comparatively, Verastem has a beta of 0.39, indicating that its share price is 61% less volatile than the S&P 500.

Summary

Prime Medicine beats Verastem on 10 of the 15 factors compared between the two stocks.

About Prime Medicine

We are a biotechnology company committed to delivering a new class of differentiated one-time curative genetic therapies, Prime Editors, to address the widest spectrum of diseases by deploying our Prime Editing technology, which we believe is a versatile, precise, efficient and broad gene editing technology. Genetic mutations implicated in disease are diverse and can range from errors of a single base, known as point mutations, to errors that extend beyond a single base, such as insertions, deletions, duplications, or combinations thereof. We believe the ability to alter the human genome at the foundational level may confer the greatest therapeutic impact on human disease. Gene editing, including platforms such as Prime Editing, is a novel technology that is not yet clinically validated for human therapeutic use. Over the last decade, the field of genetic medicine has evolved tremendously, with groundbreaking advances in gene therapy, cell therapy, RNA therapy, and, more recently, gene editing. These technologies represent dramatic advancements for genetic therapies, but lack the versatility to precisely and efficiently correct the diverse range of mutations or DNA alterations implicated in disease. Prime Medicine was co-founded by a world-renowned leader in the field of gene editing, David Liu, Ph.D. Dr. Liu was joined as co-founder by Andrew Anzalone, M.D., Ph.D., who conceived of and developed Prime Editing technology. Drawn by the promise of Prime Editing’s ability to transform the field of gene editing, we have assembled a diverse team that has grown to more than 150 people as of September 30, 2022. There are no current plans for Dr. Liu to be an officer or director of our company following this offering. He is expected to continue to provide consulting services to us pursuant to a consulting agreement, which has a current term that runs through September 2025 and accommodates a previous commitment with respect to Beam Therapeutics Inc., which could result in or may create the appearance of a conflict of interest. He is also expected to retain his position and affiliation with the Broad Institute, Inc., Howard Hughes Medical Institute and Harvard University. On September 20, 2022, we achieved a major milestone as the United States Patent and Trademark Office, or the USPTO, issued U.S. Patent 11,447,770, or the ‘770 Patent, covering methods of using Prime Editors. The Broad Institute, Inc., or Broad Institute, prepared, filed and prosecuted the ‘770 Patent. While Broad Institute is the owner of the ‘770 Patent, it is exclusively licensed to us under the terms of the license agreement with Broad Institute. The ‘770 Patent is the first issued Prime Editing patent in our licensed patent portfolio and we believe it will be instrumental in protecting our Prime Editing platform and pipeline of gene editing programs. We believe our in-licensed and company-owned Prime Editing technology has transformative potential that could change the course of how disease is treated and overcome the challenges associated with current genetic therapies. We in-license our Prime Editing technology pursuant to a license agreement with Broad Institute. In addition, the license agreement grants us certain rights and licenses under certain patent rights Broad Institute owns or controls, including a license to the ‘770 Patent, which covers Prime Editing technology and expires in 2040. The licenses are limited to the field of prevention or treatment of human disease, and most licenses granted to us under the license agreement are further limited to the prevention or treatment of human disease by editing (including modifying or converting) or targeting DNA ex vivo, in vivo, or through xeno transplantation methods, which we refer to as the Prime Broad Field. We were incorporated under the laws of the State of Delaware in September 2019 under the name Prime Medicine, Inc. Our principal executive offices are located at 21 Erie Street, Cambridge, MA.

About Verastem

Verastem, Inc., a development-stage biopharmaceutical company, focuses on developing and commercializing drugs for the treatment of cancer in the United States. Its product candidates are Avutometinib, an orally available small molecule RAF/MEK clamp that inhibits the ras sarcoma RAF/MEK, ERK mitogen activated pathway kinase pathway which is involved in cell proliferation, migration, transformation, and survival of tumor cells; and Defactinib, an oral small molecule inhibitor of FAK and proline-rich tyrosine kinase for various solid tumors. The company is involved in clinical studies, including RAMP 301, a randomized global confirmatory trial to evaluate the combination of Avutometinib and Defactinib for the treatment of patients with recurrent low-grade serous ovarian cancer; RAMP 201, an adaptive two-part multicenter, parallel cohort, randomized open label trial to evaluate the efficacy and safety of Avutometinib and in combination with Defactinib; and FRAME, an investigation of Avutometinib and Defactinib in patients with KRAS mutant cancers and subsequent analyses; and RAMP 204 and 205. It has license agreements with Chugai Pharmaceutical Co., Ltd. for the development, commercialization, and manufacture of products containing Avutometinib; and Pfizer Inc. to research, develop, manufacture, and commercialize products containing Pfizer's inhibitors of FAK for therapeutic, diagnostic, and prophylactic uses in humans. In addition, it has a clinical collaboration agreement with Amgen, Inc. to evaluate the combination of Avutometinib with Amgen's KRAS-G12C inhibitor LUMAKRAS which in Phase 1/2 trial entitled RAMP 203; and a discovery and development collaboration with GenFleet Therapeutics to advance new programs targeting RAS pathway-driven cancers. Verastem, Inc. was incorporated in 2010 and is headquartered in Needham, Massachusetts.