DURECT Corporation (NASDAQ: DRRX) and Calithera Biosciences (NASDAQ:CALA) are both small-cap medical companies, but which is the better investment? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, earnings, dividends, profitability, risk and valuation.

Risk and Volatility

DURECT Corporation has a beta of 1.79, meaning that its stock price is 79% more volatile than the S&P 500. Comparatively, Calithera Biosciences has a beta of 3.26, meaning that its stock price is 226% more volatile than the S&P 500.

Institutional & Insider Ownership

45.8% of DURECT Corporation shares are held by institutional investors. Comparatively, 71.9% of Calithera Biosciences shares are held by institutional investors. 10.3% of DURECT Corporation shares are held by company insiders. Comparatively, 16.3% of Calithera Biosciences shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current ratings and target prices for DURECT Corporation and Calithera Biosciences, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
DURECT Corporation 0 0 2 0 3.00
Calithera Biosciences 0 1 5 0 2.83

DURECT Corporation currently has a consensus price target of $3.00, indicating a potential upside of 44.23%. Calithera Biosciences has a consensus price target of $14.40, indicating a potential downside of 10.28%. Given DURECT Corporation’s stronger consensus rating and higher possible upside, equities research analysts plainly believe DURECT Corporation is more favorable than Calithera Biosciences.

Valuation & Earnings

This table compares DURECT Corporation and Calithera Biosciences’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
DURECT Corporation $16.15 million 18.93 -$33.04 million ($0.25) -8.32
Calithera Biosciences $11.45 million 49.73 -$29.12 million ($1.26) -12.74

Calithera Biosciences has higher revenue, but lower earnings than DURECT Corporation. Calithera Biosciences is trading at a lower price-to-earnings ratio than DURECT Corporation, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares DURECT Corporation and Calithera Biosciences’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
DURECT Corporation -221.01% -629.35% -85.43%
Calithera Biosciences N/A -26.72% -20.91%

Summary

Calithera Biosciences beats DURECT Corporation on 9 of the 13 factors compared between the two stocks.

DURECT Corporation Company Profile

Durect Corporation is a biopharmaceutical company with research and development programs. The Company’s products candidates include DUR-928, oral for metabolic/lipid disorders, and DUR-928, injectable for acute organ injuries. Its other product candidates include POSIMIR (controlled release injection of bupivacaine), REMOXY (oral controlled release oxycodone), ORADUR-ADHD, ELADUR (controlled release injection of bupivicane), Relday (risperidone), ORADUR-based opioid (hydromorphone) and SABER-based ophthalmic. The Company’s ALZET product line consists of miniature, implantable osmotic pumps and accessories used for experimental research in mice, rats and other laboratory animals. The Company also manufactures and sells osmotic pumps used in laboratory research and design; and develops and manufactures a range of standard and custom biodegradable polymers and excipients for pharmaceutical and medical device clients for use as raw materials in their products.

Calithera Biosciences Company Profile

Calithera Biosciences, Inc. is a clinical-stage pharmaceutical company. The Company focuses on discovering and developing small molecule drugs directed against tumor and immune cell targets that control key metabolic pathways in the tumor microenvironment. It is engaged in developing agents that take advantage of the metabolic requirements of tumor cells and cancer-fighting immune cells, such as cytotoxic T-cells. The Company’s lead product candidate, CB-839, is a critical enzyme in tumor cells. Its other product candidate, CB-1158, is being developed for hematology and oncology indications. CB-1158 is a potent and selective orally bioavailable inhibitor of the enzyme arginase. CB-839 is a selective, reversible and orally bioavailable inhibitor of human glutaminase. CB-1158 has single agent anti-tumor activity in syngeneic mouse tumor models that has been demonstrated to act through an immune mechanism. CB-1158 is being tested in a Phase I clinical trial in patients with solid tumors.

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