NOVAN INC (NASDAQ: NOVN) and Aimmune Therapeutics (NASDAQ:AIMT) are both small-cap medical companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, profitability, valuation, analyst recommendations, risk, institutional ownership and dividends.

Profitability

This table compares NOVAN INC and Aimmune Therapeutics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NOVAN INC N/A -194.61% -99.61%
Aimmune Therapeutics N/A -44.53% -42.00%

Analyst Ratings

This is a breakdown of recent ratings for NOVAN INC and Aimmune Therapeutics, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NOVAN INC 0 1 3 0 2.75
Aimmune Therapeutics 0 0 3 0 3.00

NOVAN INC currently has a consensus price target of $17.24, suggesting a potential upside of 332.14%. Aimmune Therapeutics has a consensus price target of $36.25, suggesting a potential upside of 90.09%. Given NOVAN INC’s higher possible upside, equities research analysts plainly believe NOVAN INC is more favorable than Aimmune Therapeutics.

Earnings & Valuation

This table compares NOVAN INC and Aimmune Therapeutics’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
NOVAN INC $768,999.00 82.86 -$49.04 million ($7.93) -0.50
Aimmune Therapeutics N/A N/A -$106.22 million ($2.25) -8.48

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

Institutional and Insider Ownership

8.7% of NOVAN INC shares are owned by institutional investors. Comparatively, 69.7% of Aimmune Therapeutics shares are owned by institutional investors. 10.7% of NOVAN INC shares are owned by insiders. Comparatively, 24.6% of Aimmune Therapeutics shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

Aimmune Therapeutics beats NOVAN INC on 6 of the 9 factors compared between the two stocks.

About NOVAN INC

Novan, Inc. is a late-stage pharmaceutical company. The Company is engaged in the development and commercialization of therapies using its nitric oxide platform. The Company develops product candidates using its Nitricil technology, which enables the Company to engineer tunable new chemical entities (NCEs). The Company’s formulation science enables it to further tune the release of nitric oxide when applied to the skin by using the combinations of inactive ingredients. It is developing SB204 for the treatment of acne vulgaris in Phase III. The Company is developing its product candidate, SB206, for the treatment of external genital and perianal warts in Phase II. It is developing SB208, an investigational topical anti-fungal for the treatment of fungal infections of the skin and nails. It is developing SB204 for the treatment of inflammatory skin diseases. Its pipeline also includes SB414, a topical cream product candidate.

About Aimmune Therapeutics

Aimmune Therapeutics, Inc. is a clinical-stage biopharmaceutical company developing a therapeutic approach, including the development of product candidates, for the treatment of peanut and other food allergies. The Company’s therapeutic approach, which it refers to as Characterized Oral Desensitization Immunotherapy (CODIT), is a system designed to desensitize patients to food allergens using characterized biologic products, defined treatment protocols and support services. The Company’s lead CODIT product candidate, AR101, is an investigational biologic for the treatment of patients with peanut allergy. The Company has initiated Peanut Allergy Oral Immunotherapy Study of AR101 for Desensitization in Children and Adults (PALISADE), its Phase III registration trial of AR101. The Company is in the process of evaluating additional delivery forms for AR101 for the maintenance phase.

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