Kadmon (NYSE: KDMN) and Novus Therapeutics (NASDAQ:NVUS) are both small-cap healthcare companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, valuation, profitability, analyst recommendations, dividends, earnings and institutional ownership.

Insider and Institutional Ownership

51.9% of Kadmon shares are owned by institutional investors. Comparatively, 40.8% of Novus Therapeutics shares are owned by institutional investors. 8.4% of Kadmon shares are owned by insiders. Comparatively, 5.2% of Novus Therapeutics shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Kadmon and Novus Therapeutics’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Kadmon $26.06 million 10.50 -$208.75 million ($1.75) -1.99
Novus Therapeutics N/A N/A -$37.95 million ($3.94) -0.97

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

Profitability

This table compares Kadmon and Novus Therapeutics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Kadmon -555.91% N/A -124.91%
Novus Therapeutics N/A -156.99% -140.33%

Analyst Recommendations

This is a summary of current ratings and price targets for Kadmon and Novus Therapeutics, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Kadmon 1 1 2 0 2.25
Novus Therapeutics 0 0 0 0 N/A

Kadmon presently has a consensus price target of $9.75, indicating a potential upside of 180.17%. Given Kadmon’s higher probable upside, research analysts clearly believe Kadmon is more favorable than Novus Therapeutics.

Summary

Kadmon beats Novus Therapeutics on 8 of the 11 factors compared between the two stocks.

Kadmon Company Profile

Kadmon Holdings, Inc. is an integrated biopharmaceutical company engaged in the discovery, development and commercialization of small molecules and biologics to address disease areas of various unmet medical needs. The Company is developing product candidates in a number of indications within autoimmune and fibrotic disease, oncology and genetic diseases. Its product pipeline consists of KD025, Tesevatinib and KD034. The Company’s other products include Ribasphere RibaPak, Ribasphere, Qsymia, Tetrabenazine and Valganciclovir. KD025 is an orally available, selective small molecule inhibitor of Rho-associated coiled-coil kinase 2 (ROCK2), a molecular target in multiple autoimmune, fibrotic and neurodegenerative diseases. Tesevatinib is an oral tyrosine kinase inhibitor (TKI) designed to block key molecular drivers of tumor growth, metastases and drug resistance. KD034 is the Company’s portfolio of enhanced formulations of trientine hydrochloride for the treatment of Wilson’s disease.

Novus Therapeutics Company Profile

Novus Therapeutics, Inc., formerly Tokai Pharmaceuticals, Inc., is a pharmaceutical company. The Company is focused on the acquisition, development, and commercialization of ear, nose, and throat products. It has two platforms: OP-01 Foam Platform and OP-02 Surfactant Program. OP-01 is developed with the intent to be used as a delivery vehicle for drugs treating ears, as well as the nasal and sinus cavities. OP-01 is currently being developed as an improved treatment option for acute otitis externa. OP-02 is a daily nasal spray that is designed to improve and maintain a healthy middle ear. OP-02 is being developed as a potential treatment option for patients with otitis media and Eustachian tube dysfunction. OP-02 is a combination drug product, which comprises two components: surfactant dipalmitoylphosphatidylcholine and a spreading agent cholesteryl palmitate. The product is sprayed through the nostrils toward the opening of the Eustachian tube at the back of the nasal cavity.

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