Flexion Therapeutics (NASDAQ: FLXN) and Sucampo Pharmaceuticals (NASDAQ:SCMP) are both small-cap healthcare companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, risk, analyst recommendations, valuation, institutional ownership, profitability and earnings.

Volatility and Risk

Flexion Therapeutics has a beta of 1.15, meaning that its stock price is 15% more volatile than the S&P 500. Comparatively, Sucampo Pharmaceuticals has a beta of 1.47, meaning that its stock price is 47% more volatile than the S&P 500.

Profitability

This table compares Flexion Therapeutics and Sucampo Pharmaceuticals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Flexion Therapeutics N/A -60.29% -38.08%
Sucampo Pharmaceuticals -60.24% 74.58% 16.85%

Institutional & Insider Ownership

72.8% of Flexion Therapeutics shares are owned by institutional investors. Comparatively, 65.3% of Sucampo Pharmaceuticals shares are owned by institutional investors. 16.0% of Flexion Therapeutics shares are owned by insiders. Comparatively, 4.1% of Sucampo Pharmaceuticals shares are owned 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.

Earnings and Valuation

This table compares Flexion Therapeutics and Sucampo Pharmaceuticals’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Flexion Therapeutics N/A N/A -$71.89 million ($3.52) -7.11
Sucampo Pharmaceuticals $230.06 million 3.64 $18.48 million ($3.29) -5.46

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

Analyst Recommendations

This is a breakdown of recent ratings for Flexion Therapeutics and Sucampo Pharmaceuticals, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Flexion Therapeutics 0 1 7 0 2.88
Sucampo Pharmaceuticals 0 4 5 0 2.56

Flexion Therapeutics presently has a consensus price target of $106.25, suggesting a potential upside of 324.32%. Sucampo Pharmaceuticals has a consensus price target of $23.56, suggesting a potential upside of 31.23%. Given Flexion Therapeutics’ stronger consensus rating and higher probable upside, research analysts clearly believe Flexion Therapeutics is more favorable than Sucampo Pharmaceuticals.

Summary

Sucampo Pharmaceuticals beats Flexion Therapeutics on 7 of the 13 factors compared between the two stocks.

About Flexion Therapeutics

Flexion Therapeutics, Inc. is a United States-based specialty pharmaceutical company. The Company is focused on the development and commercialization of local therapies for the treatment of patients with musculoskeletal conditions, beginning with osteoarthritis (OA), a type of degenerative arthritis. The Company’s lead product candidate, Zilretta, is a late-stage, injectable, extended-release, intra-articular (IA) investigational steroid. The Company is developing Zilretta as a treatment for patients with moderate to severe OA knee pain. The Company has specifically designed Zilretta to combine a steroid, triamcinolone acetonide (TCA) with poly lactic-co-glycolic acid (PLGA), for providing sustained therapeutic concentrations in the joint and persistent analgesic effect. The Company’s other product candidates include FX007 for post-operative pain and FX005 for the treatment of end-stage OA patients. The Company is engaged in conducting a Phase IIb clinical trial of Zilretta.

About Sucampo Pharmaceuticals

Sucampo Pharmaceuticals, Inc. is a biopharmaceutical company. The Company is focused on the development and commercialization of pharmaceutical products. Its primary focus areas are gastroenterology, ophthalmology and oncology-related disorders. Its product candidates include VTS-270, Lubiprostone (AMITIZA), Unoprostone is opropyl (RESCULA) and CPP-1X/sulindac combination product. VTS-270 is an investigational drug under clinical study for the treatment of Niemann-Pick Disease Type C-1, an ultra-orphan, progressive and fatal disease. AMITIZA is a ClC-2 chloride channel activator, which has been approved for three indications that cover distinct patient types: chronic idiopathic constipation, irritable bowel syndrome with constipation, and opioid-induced constipation. RESCULA is a Big Potassium channel activator used to lower intraocular pressure. CPP-1X/sulindac combination product is meant for the treatment of familial adenomatous polyposis (FAP).

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