Critical Contrast: Achillion Pharmaceuticals (ACHN) and Kadmon (KDMN)

Achillion Pharmaceuticals (NASDAQ:ACHN) and Kadmon (NYSE:KDMN) are both small-cap medical companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, earnings, risk, valuation, profitability and analyst recommendations.

Insider & Institutional Ownership

79.3% of Achillion Pharmaceuticals shares are owned by institutional investors. Comparatively, 75.5% of Kadmon shares are owned by institutional investors. 4.6% of Achillion Pharmaceuticals shares are owned by company insiders. Comparatively, 2.9% of Kadmon shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Achillion Pharmaceuticals and Kadmon’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Achillion Pharmaceuticals N/A -25.19% -24.25%
Kadmon -2,509.88% -91.12% -39.97%

Valuation and Earnings

This table compares Achillion Pharmaceuticals and Kadmon’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Achillion Pharmaceuticals $15.00 million 26.45 -$70.27 million ($0.51) -5.61
Kadmon $1.40 million 207.17 -$54.25 million ($1.03) -2.17

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

Analyst Recommendations

This is a breakdown of current ratings for Achillion Pharmaceuticals and Kadmon, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Achillion Pharmaceuticals 1 0 1 0 2.00
Kadmon 0 1 2 0 2.67

Achillion Pharmaceuticals currently has a consensus target price of $2.50, indicating a potential downside of 12.59%. Kadmon has a consensus target price of $10.22, indicating a potential upside of 356.40%. Given Kadmon’s stronger consensus rating and higher possible upside, analysts clearly believe Kadmon is more favorable than Achillion Pharmaceuticals.

Risk & Volatility

Achillion Pharmaceuticals has a beta of 2.41, suggesting that its stock price is 141% more volatile than the S&P 500. Comparatively, Kadmon has a beta of 2.63, suggesting that its stock price is 163% more volatile than the S&P 500.

Achillion Pharmaceuticals Company Profile

Achillion Pharmaceuticals, Inc., a clinical-stage biopharmaceutical company, discovers, develops, and commercializes small molecule drug therapies for immune system disorders. Its lead drug candidate is ACH-4471, an inhibitor of factor D that is Phase II clinical trials for patients with paroxysmal nocturnal hemoglobinuria (PNH) and C3 glomerulopathy/immune complex membranoproliferative glomerulonephritis. The company is also developing ACH-5228, a factor D inhibitor that is in Phase I clinical trials; and ACH-5548, a factor D inhibitor, which is in Phase I clinical trials for the treatment of PNH and other complement mediated diseases. It has license agreements with Ora, Inc. for the development and commercialization of ACH-702; and GCA Therapeutics, Ltd for elvucitabine, a nucleoside reverse transcriptase inhibitor for the treatment of hepatitis B infection and human immunodeficiency virus infection. The company was founded in 1998 and is based in New Haven, Connecticut.

Kadmon Company Profile

Kadmon Holdings, Inc., a biopharmaceutical company, discovers, develops, and commercializes small molecules and biologics primarily for the treatment of inflammatory and fibrotic diseases. The company markets and distributes products in various therapeutic areas, including ribavirin products for chronic hepatitis C virus infection; and distributes products in various therapeutic areas, including tetrabenazine for the treatment of chorea associated with Huntington's disease. Its lead product candidates include KD025, an inhibitor of the rho-associated coiled-coil kinase 2, which is in Phase II clinical studies for the treatment of chronic graft-versus-host, fibrotic, and psoriasis diseases; KD045, an ROCK inhibitor for the treatment of fibrotic diseases; KD033, an anti-PD-L1/IL-15 fusion protein for the treatment of cancer; and KD034, a generic formulation of trientine hydrochloride for the treatment of Wilson's disease, a genetic liver disease. The company also engages in developing Tesevatinib to treat autosomal dominant polycystic kidney disease (PKD) and autosomal recessive PKD. Kadmon Holdings, Inc. has strategic collaborations and license agreements with Symphony Evolution, Inc.; Nano Terra, Inc.; Dyax Corp.; Zydus Pharmaceuticals USA, Inc.; and Jinghua Pharmaceutical Group Co., Ltd. The company is headquartered in New York, New York.

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