Financial Review: RXi Pharmaceuticals (RXII) vs. NewLink Genetics (NLNK)

RXi Pharmaceuticals (NASDAQ: RXII) and NewLink Genetics (NASDAQ:NLNK) are both small-cap medical companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, risk, analyst recommendations, earnings, institutional ownership, valuation and dividends.

Profitability

This table compares RXi Pharmaceuticals and NewLink Genetics’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
RXi Pharmaceuticals N/A -157.22% -102.29%
NewLink Genetics -229.19% -63.39% -47.83%

Volatility and Risk

RXi Pharmaceuticals has a beta of 1.11, indicating that its share price is 11% more volatile than the S&P 500. Comparatively, NewLink Genetics has a beta of 1.15, indicating that its share price is 15% more volatile than the S&P 500.

Earnings & Valuation

This table compares RXi Pharmaceuticals and NewLink Genetics’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
RXi Pharmaceuticals $20,000.00 381.57 -$8.99 million ($10.90) -0.30
NewLink Genetics $35.77 million 7.37 -$85.15 million ($2.44) -2.91

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

Analyst Recommendations

This is a summary of current ratings and price targets for RXi Pharmaceuticals and NewLink Genetics, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
RXi Pharmaceuticals 0 0 0 0 N/A
NewLink Genetics 0 0 6 0 3.00

NewLink Genetics has a consensus price target of $25.67, suggesting a potential upside of 260.99%. Given NewLink Genetics’ higher probable upside, analysts clearly believe NewLink Genetics is more favorable than RXi Pharmaceuticals.

Institutional & Insider Ownership

11.7% of RXi Pharmaceuticals shares are owned by institutional investors. Comparatively, 51.7% of NewLink Genetics shares are owned by institutional investors. 5.7% of RXi Pharmaceuticals shares are owned by insiders. Comparatively, 13.7% of NewLink Genetics shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

NewLink Genetics beats RXi Pharmaceuticals on 9 of the 12 factors compared between the two stocks.

RXi Pharmaceuticals Company Profile

RXi Pharmaceuticals Corporation is a clinical-stage ribonucleic acid (RNA) interference (RNAi) company developing therapeutics in dermatology and ophthalmology that address unmet medical needs. The Company’s development programs are based on its self-delivering RNAi (sd-rxRNA) platform and Samcyprone, a topical immunomodulator. Its clinical development programs include RXI-109, an sd-rxRNA, for the treatment of dermal and ocular scarring, and Samcyprone for the treatment of such disorders as warts, alopecia areata, non-malignant skin tumors and cutaneous metastases of melanoma. Its pipeline is focused on approximately three areas, including dermatology, ophthalmology and cosmetic product development. Its RNAi therapies are designed to silence, or down-regulate, the expression of a specific gene that may be over-expressed in a disease condition and its immunotherapy agent treats diseases by inducing, enhancing or suppressing an immune response.

NewLink Genetics Company Profile

NewLink Genetics Corporation is a clinical-stage immuno-oncology company focused on discovering, developing and commercializing immunotherapeutic products for the treatment of cancer. The Company’s portfolio includes biologic and small-molecule immunotherapy product candidates for a range of oncology indications. Its biologic product candidates are based on its HyperAcute Cellular Immunotherapy technology, which is designed to stimulate the human immune system to attack cancer cells. Its additional HyperAcute Cellular Immunotherapy product candidates in clinical development include tergenpumatucel-L and dorgenmeltucel-L for patients with advanced lung cancer and melanoma, respectively. Additionally, it has two small-molecule product candidates in clinical development: GDC-0919 and indoximod. These product candidates are indoleamine-2, 3-dioxygenase (IDO) pathway inhibitors and focus on breaking the immune system’s tolerance to cancer.

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