Catabasis Pharmaceuticals (CATB) versus Epizyme (EPZM) Critical Analysis

Catabasis Pharmaceuticals (NASDAQ: CATB) and Epizyme (NASDAQ:EPZM) are both small-cap medical companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, dividends, profitability, analyst recommendations, valuation, earnings and institutional ownership.

Profitability

This table compares Catabasis Pharmaceuticals and Epizyme’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Catabasis Pharmaceuticals N/A -135.85% -95.96%
Epizyme N/A -67.04% -53.15%

Volatility and Risk

Catabasis Pharmaceuticals has a beta of 1.26, meaning that its share price is 26% more volatile than the S&P 500. Comparatively, Epizyme has a beta of 2.01, meaning that its share price is 101% more volatile than the S&P 500.

Valuation and Earnings

This table compares Catabasis Pharmaceuticals and Epizyme’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Catabasis Pharmaceuticals N/A N/A -$36.06 million ($1.51) -1.10
Epizyme $8.01 million 107.25 -$110.21 million ($2.27) -5.46

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

Institutional and Insider Ownership

32.3% of Catabasis Pharmaceuticals shares are held by institutional investors. Comparatively, 85.3% of Epizyme shares are held by institutional investors. 40.7% of Catabasis Pharmaceuticals shares are held by company insiders. Comparatively, 25.2% of Epizyme shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current recommendations for Catabasis Pharmaceuticals and Epizyme, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Catabasis Pharmaceuticals 0 1 5 0 2.83
Epizyme 0 1 9 0 2.90

Catabasis Pharmaceuticals presently has a consensus price target of $5.33, indicating a potential upside of 221.29%. Epizyme has a consensus price target of $23.00, indicating a potential upside of 85.48%. Given Catabasis Pharmaceuticals’ higher possible upside, research analysts clearly believe Catabasis Pharmaceuticals is more favorable than Epizyme.

Summary

Epizyme beats Catabasis Pharmaceuticals on 7 of the 12 factors compared between the two stocks.

Catabasis Pharmaceuticals Company Profile

Catabasis Pharmaceuticals, Inc. is a clinical-stage biopharmaceutical company. The Company is focused on the discovery, development and commercialization of therapeutics based on its Safely Metabolized And Rationally Targeted (SMART), a linker drug discovery platform. The SMART linker drug discovery platform enables to engineer product candidates that can modulate multiple targets in a disease. The Company’s primary focus is on treatments for rare diseases. The Company is also developing other product candidates for the treatment of lipid disorders. The Company’s CAT-1004 is a SMART linker conjugate of salicylate, a non-steroidal anti-inflammatory drug, and the omega-3 fatty acid docosahexaenoic acid (DHA), a naturally occurring unsaturated fatty acid with anti-inflammatory properties. Its CAT-2000 series product candidates inhibit the Sterol Regulatory Element Binding Protein (SREBP) pathway. The Company’s CAT-4001 is a SMART linker conjugate of monomethyl fumarate and DHA.

Epizyme Company Profile

Epizyme, Inc. is a clinical-stage biopharmaceutical company. The Company discovers, develops and plans to commercialize epigenetic therapies for cancer patients. The Company is engaged in the discovery and development of novel epigenetic therapies for cancer patients. The Company develops small molecule inhibitors of a class of enzymes known as histone methyltransferases (HMTs). The Company develops small molecule inhibitors of other chromatin modifying proteins (CMPs). The Company’s lead product candidate, tazemetostat, is a potent and selective inhibitor of the enhancer of zeste homolog 2 (EZH2) histone methyltransferases (HMT), an enzyme that plays an important role in various cancers. The Company is evaluating tazemetostat in a Phase II study in adults with relapsed or refractory non-Hodgkin lymphoma (NHL), and one Phase I study in children with molecularly defined solid tumors. The Company owns the global development and commercialization rights to tazemetostat outside of Japan.

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