Zafgen (NASDAQ: ZFGN) and Tocagen (NASDAQ:TOCA) are both small-cap medical companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, profitability, dividends, valuation, analyst recommendations, risk and earnings.

Institutional and Insider Ownership

48.7% of Zafgen shares are held by institutional investors. Comparatively, 36.2% of Tocagen shares are held by institutional investors. 21.2% of Zafgen shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Zafgen and Tocagen’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Zafgen N/A -46.88% -43.31%
Tocagen -89,078.05% N/A -51.70%

Earnings & Valuation

This table compares Zafgen and Tocagen’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Zafgen N/A N/A -$57.87 million ($1.81) -2.17
Tocagen $40,000.00 5,338.80 -$33.47 million N/A N/A

Tocagen has higher revenue and earnings than Zafgen.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Zafgen and Tocagen, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Zafgen 0 1 1 0 2.50
Tocagen 0 0 2 0 3.00

Zafgen presently has a consensus price target of $9.00, suggesting a potential upside of 128.72%. Tocagen has a consensus price target of $23.67, suggesting a potential upside of 119.54%. Given Zafgen’s higher probable upside, equities analysts clearly believe Zafgen is more favorable than Tocagen.

About Zafgen

Zafgen, Inc. is a biopharmaceutical company. The Company is focused on improving the health and well-being of patients affected by obesity and complex metabolic disorders. The Company’s lead product candidate, Beloranib, is a twice-weekly subcutaneous injection being developed for the treatment of multiple indications, including severe obesity in rare diseases, such as Prader-Willi syndrome (PWS) and hypothalamic injury-associated obesity (HIAO), including craniopharyngioma-associated obesity. Beloranib is in Phase III stage of development for PWS. It is also developing ZGN-839, a liver-targeted methionine aminopeptidase 2 (MetAP2) inhibitor, for the treatment of nonalcoholic steatohepatitis (NASH) and abdominal obesity, as well as other second-generation MetAP2 inhibitors for the treatment of severe obesity. It is also evaluating additional MetAP2 inhibitors beyond Beloranib as a development candidate for the treatment of severe obesity in the general population.

About Tocagen

Tocagen Inc. (Tocagen) is a clinical-stage, cancer-selective gene therapy company. The Company is focused on developing product candidates designed to activate a patient’s immune system against their own cancer. Its cancer-selective gene therapy platform is built on retroviral replicating vectors (RRVs), which are designed to selectively deliver therapeutic genes into the deoxyribonucleic acid (DNA) of cancer cells. Its lead product candidates are vocimagene amiretrorepvec (Toca 511) and flucytosine extended release (Toca FC). Toca 511 is an investigational injectable retroviral replicating vector (RRV) that encodes a prodrug activator enzyme, cytosine deaminase (CD). Toca FC is an investigational extended-release version of 5-fluorocytosine (5-FC), a prodrug that is inactive as an anti-cancer drug. As of February, 2017, Tocagen has completed enrollment of the Phase II portion with 187 patients.

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