Chiasma (NASDAQ: CHMA) and VIVUS (NASDAQ:VVUS) are both small-cap medical companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, institutional ownership, analyst recommendations, valuation, profitability, earnings and risk.

Risk and Volatility

Chiasma has a beta of 1.38, suggesting that its stock price is 38% more volatile than the S&P 500. Comparatively, VIVUS has a beta of 0.96, suggesting that its stock price is 4% less volatile than the S&P 500.

Institutional and Insider Ownership

50.4% of Chiasma shares are held by institutional investors. Comparatively, 36.8% of VIVUS shares are held by institutional investors. 3.8% of Chiasma shares are held by company insiders. Comparatively, 4.4% of VIVUS shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and price targets for Chiasma and VIVUS, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Chiasma 1 0 0 0 1.00
VIVUS 0 0 0 0 N/A

Valuation and Earnings

This table compares Chiasma and VIVUS’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Chiasma N/A N/A -$29.42 million ($1.27) -1.73
VIVUS $133.40 million 0.61 $67.14 million $0.31 2.47

VIVUS has higher revenue and earnings than Chiasma. Chiasma is trading at a lower price-to-earnings ratio than VIVUS, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Chiasma and VIVUS’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Chiasma N/A -35.96% -31.97%
VIVUS 24.72% 3,746.48% 11.02%

Summary

VIVUS beats Chiasma on 7 of the 9 factors compared between the two stocks.

Chiasma Company Profile

Chiasma, Inc. is a biopharmaceutical company. The Company is engaged in developing and commercializing oral forms of therapies that are available only by injection. Using its Transient Permeability Enhancer (TPE) technology platform, the Company is developing oral therapies. The Company has completed a Phase III clinical trial of its TPE platform-based product candidate, oral octreotide capsules (trade named as MYCAPSSA) for the treatment of acromegaly, a condition that results in the body’s production of excess growth hormone. Octreotide is an analog of somatostatin, a natural inhibitor of growth hormone secretion. The Company is developing octreotide capsules as a liquid-filled solid gelatin capsule formulation, which is intended to be taken over twice a day. The Company’s TPE technology enhances the absorption through the intestinal wall of drugs. The Company also focuses on developing CH2 for Orphan indication.

VIVUS Company Profile

VIVUS, Inc. is a biopharmaceutical company. The Company operates in the development and commercialization of therapeutic products segment. It provides over two therapies approved by the Food and Drug Association (FDA), which include Qsymia (phentermine and topiramate extended-release) for chronic weight management and STENDRA (avanafil) for erectile dysfunction (ED). The Company has completed the Phase II studies of Qsymia for the indication of Obstructive Sleep Apnea (OSA) and diabetes. Its Qsymia is available in over 40,000 certified retail pharmacies across the country. Its STENDRA is also approved by the European Commission (EC), under the name, SPEDRA, for the treatment of ED in the Europe. The United States Food and Drug Association approved a Supplemental New Drug Application (sNDA) for STENDRA. STENDRA is indicated to be taken approximately 15 minutes before sexual activity.

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