Biostage (OTCMKTS:BSTG) versus Arch Therapeutics (OTCMKTS:ARTH) Critical Analysis

Arch Therapeutics (OTCMKTS:ARTH) and Biostage (OTCMKTS:BSTG) are both small-cap medical companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, dividends, valuation, risk, profitability, institutional ownership and earnings.

Profitability

This table compares Arch Therapeutics and Biostage’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Arch Therapeutics	-8,257.70%	N/A	-730.22%
Biostage	N/A	N/A	-174.43%

Insider and Institutional Ownership

6.9% of Arch Therapeutics shares are owned by institutional investors. 4.5% of Arch Therapeutics shares are owned by company insiders. Comparatively, 15.3% of Biostage shares are owned by company 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.

Earnings and Valuation

This table compares Arch Therapeutics and Biostage”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Arch Therapeutics	$80,000.00	0.00	-$6.98 million	($2.34)	N/A
Biostage	N/A	N/A	-$6.07 million	($0.58)	-7.67

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

Volatility and Risk

Arch Therapeutics has a beta of 4.02, meaning that its share price is 302% more volatile than the S&P 500. Comparatively, Biostage has a beta of -1.02, meaning that its share price is 202% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings for Arch Therapeutics and Biostage, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arch Therapeutics	0	0	0	0	0.00
Biostage	0	0	1	0	3.00

Given Arch Therapeutics’ higher possible upside, research analysts clearly believe Arch Therapeutics is more favorable than Biostage.

Summary

Biostage beats Arch Therapeutics on 7 of the 11 factors compared between the two stocks.

About Arch Therapeutics

Arch Therapeutics, Inc., together with its subsidiaries, operates as a biotechnology company in the United States. It develops and markets products based on its AC5 self-assembling technology platform to stop bleeding and control leaking, as well as manages wounds during surgery, trauma, and interventional care or from disease. The company's flagship products include AC5 advanced wound system and AC5 topical hemostat, which are intended for skin applications, such as management of complicated chronic wounds or acute surgical wounds. It is also involved in the development of AC5-G for gastrointestinal endoscopic procedures, and AC5-V and AC5 surgical hemostat for hemostasis inside the body. The company was founded in 2006 and is based in Framingham, Massachusetts.

About Biostage

Biostage, Inc., a biotechnology company, offers products to cure patients of cancers, injuries, and birth defects of the gastro-intestinal tract and the airways. The company's pipeline includes organ-regeneration technology for the repair or replacement of diseased or damaged organs, as well as product candidates to treat cancer, injury, and birth defects of the bronchus. Its lead product candidate is Biostage Esophageal Implant for the treatment of severe esophageal disease. The company was formerly known as Harvard Apparatus Regenerative Technology, Inc. and changed its name to Biostage, Inc. in March 2016. Biostage, Inc. was founded in 2009 and is headquartered in Holliston, Massachusetts.