Critical Contrast: Verastem (NASDAQ:VSTM) & FibroGen (NASDAQ:FGEN)

Verastem (NASDAQ:VSTM) and FibroGen (NASDAQ:FGEN) are both small-cap medical companies, but which is the better stock? We will compare the two companies based on the strength of their risk, valuation, dividends, analyst recommendations, profitability, institutional ownership and earnings.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Verastem and FibroGen, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Verastem	0	0	8	0	3.00
FibroGen	0	1	0	0	2.00

Verastem presently has a consensus price target of $14.57, indicating a potential upside of 276.52%. Given Verastem’s stronger consensus rating and higher possible upside, research analysts clearly believe Verastem is more favorable than FibroGen.

Valuation and Earnings

This table compares Verastem and FibroGen”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Verastem	$2.60 million	59.90	-$87.37 million	($3.34)	-1.16
FibroGen	$173.82 million	0.18	-$284.23 million	($1.71)	-0.18

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

Insider & Institutional Ownership

88.4% of Verastem shares are owned by institutional investors. Comparatively, 72.7% of FibroGen shares are owned by institutional investors. 2.2% of Verastem shares are owned by company insiders. Comparatively, 2.0% of FibroGen shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Verastem	N/A	-194.05%	-64.48%
FibroGen	-96.84%	N/A	-40.37%

Volatility and Risk

Verastem has a beta of 0.14, suggesting that its share price is 86% less volatile than the S&P 500. Comparatively, FibroGen has a beta of 0.72, suggesting that its share price is 28% less volatile than the S&P 500.

Summary

Verastem beats FibroGen on 8 of the 14 factors compared between the two stocks.

About Verastem

Verastem, Inc., a development-stage biopharmaceutical company, focuses on developing and commercializing drugs for the treatment of cancer in the United States. Its product candidates are Avutometinib, an orally available small molecule RAF/MEK clamp that inhibits the ras sarcoma RAF/MEK, ERK mitogen activated pathway kinase pathway which is involved in cell proliferation, migration, transformation, and survival of tumor cells; and Defactinib, an oral small molecule inhibitor of FAK and proline-rich tyrosine kinase for various solid tumors. The company is involved in clinical studies, including RAMP 301, a randomized global confirmatory trial to evaluate the combination of Avutometinib and Defactinib for the treatment of patients with recurrent low-grade serous ovarian cancer; RAMP 201, an adaptive two-part multicenter, parallel cohort, randomized open label trial to evaluate the efficacy and safety of Avutometinib and in combination with Defactinib; and FRAME, an investigation of Avutometinib and Defactinib in patients with KRAS mutant cancers and subsequent analyses; and RAMP 204 and 205. It has license agreements with Chugai Pharmaceutical Co., Ltd. for the development, commercialization, and manufacture of products containing Avutometinib; and Pfizer Inc. to research, develop, manufacture, and commercialize products containing Pfizer's inhibitors of FAK for therapeutic, diagnostic, and prophylactic uses in humans. In addition, it has a clinical collaboration agreement with Amgen, Inc. to evaluate the combination of Avutometinib with Amgen's KRAS-G12C inhibitor LUMAKRAS which in Phase 1/2 trial entitled RAMP 203; and a discovery and development collaboration with GenFleet Therapeutics to advance new programs targeting RAS pathway-driven cancers. Verastem, Inc. was incorporated in 2010 and is headquartered in Needham, Massachusetts.

About FibroGen

FibroGen, Inc., a biopharmaceutical company, discovers, develops, and commercializes therapeutics to treat serious unmet medical needs. Its lead product candidates are Pamrevlumab, a human monoclonal antibody targeting connective tissue growth factor that is in Phase III clinical development for the treatment of locally advanced pancreatic cancer; and Roxadustat, an oral small molecule inhibitor of hypoxia-inducible factor prolyl hydroxylase activity, which has completed Phase III clinical development for the treatment of anemia in chronic kidney disease in China, Europe, Japan, and other countries, as well as in Phase III clinical development for anemia related with myelodysplastic syndromes. The company has collaboration agreements with Astellas Pharma Inc. and AstraZeneca AB. FibroGen, Inc. was incorporated in 1993 and is headquartered in San Francisco, California.