Innoviva (NASDAQ: INVA) and Tetraphase Pharmaceuticals (NASDAQ:TTPH) are both small-cap medical companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, earnings, risk, profitability, analyst recommendations, institutional ownership and valuation.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Innoviva and Tetraphase Pharmaceuticals, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Innoviva 1 3 1 0 2.00
Tetraphase Pharmaceuticals 0 1 4 0 2.80

Innoviva presently has a consensus price target of $13.00, suggesting a potential downside of 10.59%. Tetraphase Pharmaceuticals has a consensus price target of $17.00, suggesting a potential upside of 161.14%. Given Tetraphase Pharmaceuticals’ stronger consensus rating and higher possible upside, analysts plainly believe Tetraphase Pharmaceuticals is more favorable than Innoviva.

Institutional & Insider Ownership

74.4% of Innoviva shares are owned by institutional investors. Comparatively, 58.2% of Tetraphase Pharmaceuticals shares are owned by institutional investors. 1.6% of Innoviva shares are owned by company insiders. Comparatively, 5.5% of Tetraphase Pharmaceuticals shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Volatility and Risk

Innoviva has a beta of 2.52, suggesting that its share price is 152% more volatile than the S&P 500. Comparatively, Tetraphase Pharmaceuticals has a beta of 2.51, suggesting that its share price is 151% more volatile than the S&P 500.

Profitability

This table compares Innoviva and Tetraphase Pharmaceuticals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Innoviva 52.91% -33.55% 26.40%
Tetraphase Pharmaceuticals -1,382.33% -88.27% -77.53%

Valuation & Earnings

This table compares Innoviva and Tetraphase Pharmaceuticals’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Innoviva $133.57 million 11.76 $59.53 million $0.87 16.71
Tetraphase Pharmaceuticals $5.14 million 65.13 -$77.48 million ($2.86) -2.28

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

Summary

Innoviva beats Tetraphase Pharmaceuticals on 9 of the 14 factors compared between the two stocks.

Innoviva Company Profile

Innoviva, Inc., formerly Theravance, Inc., is engaged in the development, commercialization and financial management of bio-pharmaceuticals. It focuses on the respiratory assets partnered with Glaxo Group Limited (GSK), including RELVAR/BREO ELLIPTA (fluticasone furoate (FF)/vilanterol (VI)) and ANORO ELLIPTA (umeclidinium bromide/vilanterol (UMEC/VI)). Under the Long-Acting Beta2 Agonist (LABA) Collaboration Agreement and the Strategic Alliance Agreement with GSK, the Company is eligible to receive the annual royalties from GSK on sales of RELVAR/BREO ELLIPTA. For other products combined with a LABA from the LABA collaboration, such as ANORO ELLIPTA, royalties are upward tiering and range from 6.5% to 10%. RELVAR/BREO is a once-a-day combination inhaled respiratory medicine consisting of a LABA (VI) and an inhaled corticosteroid (ICS), FF. ANORO ELLIPTA a once-daily medicine combining a long-acting muscarinic antagonist (LAMA), umeclidinium bromide (UMEC), with a LABA.

Tetraphase Pharmaceuticals Company Profile

Tetraphase Pharmaceuticals, Inc. is a clinical-stage biopharmaceutical company. The Company uses its chemistry technology to create antibiotics for multidrug-resistant infections. The Company is developing its lead product candidate, eravacycline, a fully synthetic tetracycline derivative, as a spectrum intravenous (IV) and oral antibiotic for use as a first-line empiric monotherapy for the treatment of multidrug-resistant infections, including multidrug-resistant gram-negative infections. The Company also develops TP-6076 for multidrug-resistant gram-negative infections. Eravacycline is a fluorocycline antibiotic. The Company is conducting a global Phase III clinical program for eravacycline called Investigating Gram-Negative Infections Treated with Eravacycline (IGNITE). TP-271 is a fully synthetic fluorocycline being developed for respiratory disease caused by bacterial biothreat pathogens in healthy volunteers.

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