Recro Pharma (NASDAQ: REPH) and Pain Therapeutics (NASDAQ:PTIE) are both small-cap medical companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, risk, profitability, earnings, institutional ownership and dividends.

Volatility and Risk

Recro Pharma has a beta of -0.54, suggesting that its share price is 154% less volatile than the S&P 500. Comparatively, Pain Therapeutics has a beta of 2.13, suggesting that its share price is 113% more volatile than the S&P 500.

Insider & Institutional Ownership

65.1% of Recro Pharma shares are owned by institutional investors. Comparatively, 36.7% of Pain Therapeutics shares are owned by institutional investors. 21.6% of Recro Pharma shares are owned by insiders. Comparatively, 32.7% of Pain Therapeutics shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and price targets for Recro Pharma and Pain Therapeutics, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Recro Pharma 0 1 4 0 2.80
Pain Therapeutics 1 0 0 0 1.00

Recro Pharma currently has a consensus price target of $13.50, indicating a potential upside of 57.34%. Given Recro Pharma’s stronger consensus rating and higher probable upside, research analysts clearly believe Recro Pharma is more favorable than Pain Therapeutics.

Profitability

This table compares Recro Pharma and Pain Therapeutics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Recro Pharma -46.75% -56.04% -19.40%
Pain Therapeutics N/A -75.11% -70.30%

Valuation and Earnings

This table compares Recro Pharma and Pain Therapeutics’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Recro Pharma $69.99 million 2.34 -$13.04 million ($2.21) -3.88
Pain Therapeutics N/A N/A -$12.95 million ($2.04) -2.25

Pain Therapeutics has higher revenue, but lower earnings than Recro Pharma. Recro Pharma is trading at a lower price-to-earnings ratio than Pain Therapeutics, indicating that it is currently the more affordable of the two stocks.

Summary

Recro Pharma beats Pain Therapeutics on 7 of the 12 factors compared between the two stocks.

Recro Pharma Company Profile

Recro Pharma, Inc. is a clinical-stage specialty pharmaceutical company. The Company is engaged in developing products for hospitals and ambulatory care settings that is developing non-opioid products for treatment of serious acute pain. The Company’s lead product candidate is an injectable form of meloxicam. Its product candidates for pain indications include injectable meloxicam, a product candidate in development for the treatment of acute post-operative pain; Dex-IN, a product candidate under development for the treatment of post-operative pain; Dex-SL, a product candidate for the treatment of chronic pain, and Fadolmidine (Fado), a product candidate used by injection into the spine for pain associated with surgery or certain types of chronic pain and which the Company pursues as a topical product for local application to treat serious pain associated with nerve damage to local tissues (neuropathies), especially of the lower extremities, which can occur in diabetic patients.

Pain Therapeutics Company Profile

Pain Therapeutics, Inc. is a biopharmaceutical company. The Company is focused on drug development efforts on disorders of the nervous system, such as chronic pain. The Company’s lead drug candidate, REMOXY, is an abuse-deterrent, oral formulation of oxycodone (CII). The Company’s other products is FENROCK. REMOXY is a painkiller with a formulation designed to reduce potential risks of unintended use. The Company has developed REMOXY to make oxycodone difficult to abuse yet provide approximately 12 hours of steady pain relief when used by patients. REMOXY is intended to meet the needs of healthcare prescribing opioid drugs and seeking to minimize the risks of drug diversion, abuse or accidental patient misuse. The Company’s drug candidate FENROCK is an abuse-deterrent transdermal pain patch in the pre-Investigational new drug-stage of development. FENROCK is designed to provide pain relief over 72 hours.

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