Financial Survey: Verastem (VSTM) and Zymeworks (ZYME)

Verastem (NASDAQ: VSTM) and Zymeworks (NYSE:ZYME) are both small-cap healthcare companies, but which is the better business? We will contrast the two businesses based on the strength of their earnings, profitability, risk, institutional ownership, valuation, dividends and analyst recommendations.

Analyst Ratings

This is a breakdown of recent ratings for Verastem and Zymeworks, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Verastem 0 1 7 0 2.88
Zymeworks 2 0 4 0 2.33

Verastem presently has a consensus price target of $10.64, suggesting a potential upside of 253.58%. Zymeworks has a consensus price target of $16.00, suggesting a potential upside of 68.60%. Given Verastem’s stronger consensus rating and higher probable upside, equities analysts plainly believe Verastem is more favorable than Zymeworks.

Profitability

This table compares Verastem and Zymeworks’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Verastem N/A -110.32% -85.98%
Zymeworks -1,387.89% -117.85% -54.48%

Earnings & Valuation

This table compares Verastem and Zymeworks’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Verastem N/A N/A -$36.44 million ($1.64) -1.84
Zymeworks $11.00 million 21.90 -$33.80 million ($2.27) -4.18

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

Insider and Institutional Ownership

28.7% of Verastem shares are held by institutional investors. Comparatively, 7.2% of Zymeworks shares are held by institutional investors. 6.5% of Verastem shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

Verastem beats Zymeworks on 9 of the 12 factors compared between the two stocks.

About Verastem

Verastem, Inc. is a biopharmaceutical company. The Company is focused on discovering and developing drugs to improve outcomes for patients with cancer. The Company operates in the segment of developing drugs for the treatment of cancer. The Company’s advanced product candidates are VS 6063, VS 4718 and VS 5584. The Company’s programs target the Focal Adhesion Kinase (FAK) and the PI3K/mTOR signaling pathways. FAK is a non-receptor tyrosine kinase encoded by the PTK-2 gene that is involved in cellular adhesion and, in cancer, metastatic capability. The Company’s VS-6063 (defactinib) and VS 4718 are orally available small molecule compounds designed to inhibit FAK signaling. The Company’s VS-5584 is an orally available small molecule that inhibits both mTORC1/2 and PI3K signaling. The Company is engaged in running clinical trials in cancers where there are limited treatment options, including lung, ovarian, lymphoma, pancreatic and other advanced cancers.

About Zymeworks

Zymeworks Inc is a Canada-based clinical-stage biopharmaceutical company. The Company focuses on the discovery, development and commercialization of multifunctional biotherapeutics. The Company’s ZymeCAD platform is for protein modeling and structure-guided protein engineering. The Company’s platforms include Azymetric Platform, AlbuCORE Platform, EFECT Platform and Zymelink Conjugation Platform + Cytotoxins. The Company’s lead product candidate, ZW25, is a bispecific antibody, which is being evaluated in an adaptive Phase I clinical trial. Its ZW33 is a bi-specific antibody that delivers a cytotoxic payload to cancers cells by binding to different epitopes (bi-paratopic targeting) of the overexpressed HER2 protein. It focuses on developing a pipeline of preclinical product candidates and discovery-stage programs in immuno-oncology and other therapeutic areas. It analyzes protein characteristics to develop the scope of protein engineering to tackle biological systems.

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