Critical Review: Insmed (NASDAQ:INSM) & Ra Pharmaceuticals (NASDAQ:RARX)

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Insmed (NASDAQ:INSM) and Ra Pharmaceuticals (NASDAQ:RARX) are both small-cap medical companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, institutional ownership, risk, earnings, profitability, valuation and analyst recommendations.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Insmed and Ra Pharmaceuticals, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Insmed 0 1 6 0 2.86
Ra Pharmaceuticals 0 1 9 0 2.90

Insmed currently has a consensus price target of $38.29, indicating a potential upside of 134.31%. Ra Pharmaceuticals has a consensus price target of $40.26, indicating a potential upside of 43.67%. Given Insmed’s higher possible upside, research analysts clearly believe Insmed is more favorable than Ra Pharmaceuticals.

Profitability

This table compares Insmed and Ra Pharmaceuticals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Insmed N/A -126.95% -47.66%
Ra Pharmaceuticals N/A -45.14% -41.83%

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Insmed $9.84 million 148.14 -$324.28 million ($4.17) -3.92
Ra Pharmaceuticals $2.50 million 526.94 -$64.94 million ($2.06) -13.60

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

Risk and Volatility

Insmed has a beta of 2.78, suggesting that its share price is 178% more volatile than the S&P 500. Comparatively, Ra Pharmaceuticals has a beta of 1.23, suggesting that its share price is 23% more volatile than the S&P 500.

Insider & Institutional Ownership

95.7% of Insmed shares are owned by institutional investors. Comparatively, 91.0% of Ra Pharmaceuticals shares are owned by institutional investors. 5.0% of Insmed shares are owned by company insiders. Comparatively, 4.3% of Ra Pharmaceuticals shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Summary

Ra Pharmaceuticals beats Insmed on 7 of the 13 factors compared between the two stocks.

Insmed Company Profile

Insmed Incorporated is a global biopharmaceutical company on a mission to transform the lives of patients with serious and rare diseases. Insmed’s first commercial product is ARIKAYCE┬« (amikacin liposome inhalation suspension), which is approved in the United States for the treatment of Mycobacterium avium complex (MAC) lung disease as part of a combination antibacterial drug regimen for adult patients with limited or no alternative treatment options. MAC lung disease is a rare and often chronic infection that can cause irreversible lung damage and can be fatal. Insmed’s earlier-stage clinical pipeline includes INS1007, a novel oral reversible inhibitor of dipeptidyl peptidase 1 with therapeutic potential in non-cystic fibrosis bronchiectasis and other inflammatory diseases, and INS1009, an inhaled formulation of a treprostinil prodrug that may offer a differentiated product profile for rare pulmonary disorders, including pulmonary arterial hypertension.

Ra Pharmaceuticals Company Profile

Ra Pharmaceuticals, Inc., a clinical-stage biopharmaceutical company, develops therapeutics for the treatment of diseases caused by excessive or uncontrolled activation of the complement system. The company's peptide chemistry platform enables the production of synthetic macrocyclic peptides that combine the diversity and specificity of antibodies with the pharmacological properties of small molecules. Its lead product candidate is Zilucoplan, an injection into the tissue under the skin that has completed Phase II clinical trial for the treatment of generalized myasthenia gravis (gMG); has completed Phase II clinical trial for treating paroxysmal nocturnal hemoglobinuria (PNH); and has completed Phase Ib clinical trial to treat patients with renal impairment. The company's pre-clinical programs include Factor D inhibition for treating C3 glomerulonephritis and dense deposit disease; and inhibitors of other complement factors for renal, autoimmune, and central nervous system diseases. It has collaboration and license agreement with Merck & Co., Inc. to identify orally available cyclic peptides for non-complement program targets, and provide research and development services. Ra Pharmaceuticals, Inc. was founded in 2008 and is headquartered in Cambridge, Massachusetts.

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