Egalet (NASDAQ: EGLT) and Xenon Pharmaceuticals (NASDAQ:XENE) are both small-cap healthcare companies, but which is the better investment? We will compare the two companies based on the strength of their valuation, institutional ownership, profitability, earnings, dividends, risk and analyst recommendations.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Egalet and Xenon Pharmaceuticals, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Egalet 0 2 3 0 2.60
Xenon Pharmaceuticals 0 0 2 0 3.00

Egalet currently has a consensus target price of $6.20, indicating a potential upside of 490.48%. Xenon Pharmaceuticals has a consensus target price of $5.00, indicating a potential upside of 72.41%. Given Egalet’s higher probable upside, analysts clearly believe Egalet is more favorable than Xenon Pharmaceuticals.

Valuation & Earnings

This table compares Egalet and Xenon Pharmaceuticals’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Egalet $16.96 million 2.66 -$90.63 million ($3.39) -0.31
Xenon Pharmaceuticals $1.80 million 29.00 -$22.99 million ($1.59) -1.82

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

Profitability

This table compares Egalet and Xenon Pharmaceuticals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Egalet -376.62% N/A -73.83%
Xenon Pharmaceuticals -4,268.70% -53.33% -50.07%

Institutional & Insider Ownership

54.1% of Egalet shares are held by institutional investors. Comparatively, 54.6% of Xenon Pharmaceuticals shares are held by institutional investors. 3.8% of Egalet shares are held by insiders. Comparatively, 9.4% of Xenon Pharmaceuticals shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Volatility & Risk

Egalet has a beta of 0.44, indicating that its share price is 56% less volatile than the S&P 500. Comparatively, Xenon Pharmaceuticals has a beta of 1.32, indicating that its share price is 32% more volatile than the S&P 500.

Summary

Xenon Pharmaceuticals beats Egalet on 8 of the 14 factors compared between the two stocks.

Egalet Company Profile

Egalet Corporation is a specialty pharmaceutical company. The Company is engaged in developing, manufacturing and commercializing treatments for pain and other conditions. The Company’s products include OXAYDO and SPRIX Nasal Spray. The Company is developing two late-stage product candidates, ARYMO ER and Egalet-002 using Guardian Technology. The Company’s product SPRIX Nasal Spray, which contains ketorolac tromethamine is a non-steroidal anti-inflammatory drug (NSAID) indicated in adult patients for the short-term management of moderate to moderately severe pain that requires analgesia at the opioid level. The Company’s product OXAYDO is an approved immediate-release (IR) oxycodone product formulated to deter abuse through snorting. The Company’s product candidate, ARYMO ER is an abuse-deterrent (AD), extended-release (ER), oral morphine formulation. The Company’s product candidate, Egalet-002, is an abuse-deterrent, extended-release, oral oxycodone formulation.

Xenon Pharmaceuticals Company Profile

Xenon Pharmaceuticals Inc is a Canada-based clinical-stage biopharmaceutical company. It is engaged in discovering and developing a pipeline of differentiated therapeutics for orphan indications. Its product pipeline includes: Glybera, TV-45070, GDC-0310, XEN901 (Nav1.6 inhibitor) and XEN1101. Glybera is used for the treatment of lipoprotein lipase deficiency (LPLD). Specifically, it is intended to treat LPLD in patients with severe or multiple pancreatitis attacks, despite dietary fat restrictions. TV-45070 is a small-molecule inhibitor of the sodium channel Nav1.7 and other sodium channels, including those that are expressed in the pain-sensing peripheral nervous system. XEN901 is developed for the treatment of rare infantile epileptic encephalopathy and other forms of epilepsy. XEN1101, is a potassium channel modulator for the treatment of epilepsy. Its Extreme Genetics discovery platform enables the Company to identify drug targets that are more biologically relevant in humans.

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