Flexion Therapeutics (NASDAQ: FLXN) and Aradigm Corporation (NASDAQ:ARDM) are both small-cap medical companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, dividends, risk, analyst recommendations, institutional ownership, valuation and earnings.

Profitability

This table compares Flexion Therapeutics and Aradigm Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Flexion Therapeutics N/A -53.94% -38.24%
Aradigm Corporation -196.65% -665.03% -83.01%

Analyst Ratings

This is a breakdown of current recommendations and price targets for Flexion Therapeutics and Aradigm Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Flexion Therapeutics 0 1 7 1 3.00
Aradigm Corporation 0 0 1 0 3.00

Flexion Therapeutics currently has a consensus price target of $88.50, suggesting a potential upside of 302.10%. Aradigm Corporation has a consensus price target of $10.00, suggesting a potential upside of 139.81%. Given Flexion Therapeutics’ higher probable upside, analysts clearly believe Flexion Therapeutics is more favorable than Aradigm Corporation.

Insider and Institutional Ownership

72.3% of Flexion Therapeutics shares are owned by institutional investors. Comparatively, 33.6% of Aradigm Corporation shares are owned by institutional investors. 16.0% of Flexion Therapeutics shares are owned by insiders. Comparatively, 7.3% of Aradigm Corporation 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.

Valuation & Earnings

This table compares Flexion Therapeutics and Aradigm Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Flexion Therapeutics N/A N/A -$87.64 million ($3.09) -7.12
Aradigm Corporation $9.54 million 6.31 -$14.99 million ($1.27) -3.28

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

Risk & Volatility

Flexion Therapeutics has a beta of 1.07, suggesting that its stock price is 7% more volatile than the S&P 500. Comparatively, Aradigm Corporation has a beta of 1.61, suggesting that its stock price is 61% more volatile than the S&P 500.

Summary

Flexion Therapeutics beats Aradigm Corporation on 8 of the 12 factors compared between the two stocks.

Flexion Therapeutics Company Profile

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.

Aradigm Corporation Company Profile

Aradigm Corporation is a pharmaceutical company focused on the development and commercialization of products for the treatment and prevention of severe respiratory diseases. The Company’s lead product candidate is Pulmaquin inhaled ciprofloxacin, which is in Phase III clinical trials. It offers AERx pulmonary drug delivery platform and other technologies. Its partnered programs under development include Inhaled Ciprofloxacin. It is also engaged in developing Smoking Cessation Therapy (ARD-1600 Inhaled Nicotine). Its lead development candidates are its formulations of the potent antibiotic ciprofloxacin (Pulmaquin (ARD-3150) and Lipoquin (ARD-3100)) that are delivered by inhalation for the management of infections associated with the severe respiratory diseases, such as cystic fibrosis (CF) and non-cystic fibrosis bronchiectasis (BE). Pulmaquin uses slow release liposomal formulation (Lipoquin) mixed with a small amount of ciprofloxacin dissolved in an aqueous medium.

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