ArQule (NASDAQ: ARQL) and NewLink Genetics (NASDAQ:NLNK) are both small-cap medical companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, analyst recommendations, earnings, institutional ownership, risk, profitability and valuation.

Volatility & Risk

ArQule has a beta of 1.38, indicating that its stock price is 38% more volatile than the S&P 500. Comparatively, NewLink Genetics has a beta of 1.1, indicating that its stock price is 10% more volatile than the S&P 500.

Profitability

This table compares ArQule and NewLink Genetics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
ArQule N/A -199.07% -86.38%
NewLink Genetics -229.19% -63.39% -47.83%

Earnings and Valuation

This table compares ArQule and NewLink Genetics’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
ArQule $4.71 million 29.96 -$22.71 million ($0.40) -4.05
NewLink Genetics $35.77 million 8.53 -$85.15 million ($2.44) -3.37

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

Institutional & Insider Ownership

52.1% of ArQule shares are owned by institutional investors. Comparatively, 52.6% of NewLink Genetics shares are owned by institutional investors. 9.0% of ArQule shares are owned by company insiders. Comparatively, 13.7% of NewLink Genetics shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current recommendations and price targets for ArQule and NewLink Genetics, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ArQule 0 0 1 0 3.00
NewLink Genetics 0 0 6 0 3.00

NewLink Genetics has a consensus target price of $25.67, indicating a potential upside of 211.87%. Given NewLink Genetics’ higher possible upside, analysts clearly believe NewLink Genetics is more favorable than ArQule.

Summary

NewLink Genetics beats ArQule on 8 of the 13 factors compared between the two stocks.

About ArQule

ArQule, Inc. is a biopharmaceutical company. The Company is engaged in the research and development of therapeutics to treat cancers and rare diseases. These drugs focuses on the biological pathways implicated in a range of cancers and certain non-oncology indications. Its clinical-stage pipeline consists of over four drug candidates, all of which are in targeted patient populations. The Company’s lead product candidate is tivantinib (ARQ 197), an orally administered, small molecule inhibitor of the c-Met receptor tyrosine kinase (MET) and its biological pathway. The Company’s product candidates include ARQ 092, designed to inhibit the AKT serine/threonine kinase; ARQ 087, a multi-kinase inhibitor designed to inhibit the fibroblast growth factor receptor (FGFR) family, and ARQ 761, a Beta lapachone analog being evaluated in investigator-sponsored testing as a promoter of NQO1-mediated programmed cancer cell necrosis.

About NewLink Genetics

NewLink Genetics Corporation is a clinical-stage immuno-oncology company focused on discovering, developing and commercializing immunotherapeutic products for the treatment of cancer. The Company’s portfolio includes biologic and small-molecule immunotherapy product candidates for a range of oncology indications. Its biologic product candidates are based on its HyperAcute Cellular Immunotherapy technology, which is designed to stimulate the human immune system to attack cancer cells. Its additional HyperAcute Cellular Immunotherapy product candidates in clinical development include tergenpumatucel-L and dorgenmeltucel-L for patients with advanced lung cancer and melanoma, respectively. Additionally, it has two small-molecule product candidates in clinical development: GDC-0919 and indoximod. These product candidates are indoleamine-2, 3-dioxygenase (IDO) pathway inhibitors and focus on breaking the immune system’s tolerance to cancer.

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