Financial Comparison: Arena Pharmaceuticals (NASDAQ:ARNA) vs. Palatin Technologies (PTN)

Arena Pharmaceuticals (NASDAQ: ARNA) and Palatin Technologies (NYSE:PTN) are both small-cap biotechnology & medical research – nec companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, profitability, dividends, analyst recommendations, earnings, institutional ownership and valuation.

Profitability

This table compares Arena Pharmaceuticals and Palatin Technologies’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Arena Pharmaceuticals -36.78% -34.12% -14.83%
Palatin Technologies 39.28% N/A 90.43%

Insider & Institutional Ownership

49.7% of Arena Pharmaceuticals shares are held by institutional investors. 1.9% of Arena Pharmaceuticals shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and target prices for Arena Pharmaceuticals and Palatin Technologies, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Arena Pharmaceuticals 0 2 5 0 2.71
Palatin Technologies 0 0 2 0 3.00

Arena Pharmaceuticals presently has a consensus price target of $38.83, indicating a potential upside of 47.21%. Palatin Technologies has a consensus price target of $4.00, indicating a potential upside of 433.33%. Given Palatin Technologies’ stronger consensus rating and higher probable upside, analysts plainly believe Palatin Technologies is more favorable than Arena Pharmaceuticals.

Earnings & Valuation

This table compares Arena Pharmaceuticals and Palatin Technologies’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Arena Pharmaceuticals $123.97 million 8.35 -$22.51 million ($0.94) -28.06
Palatin Technologies N/A N/A N/A ($0.09) -8.33

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

Risk and Volatility

Arena Pharmaceuticals has a beta of 1.44, suggesting that its stock price is 44% more volatile than the S&P 500. Comparatively, Palatin Technologies has a beta of 1.62, suggesting that its stock price is 62% more volatile than the S&P 500.

Summary

Palatin Technologies beats Arena Pharmaceuticals on 7 of the 11 factors compared between the two stocks.

About Arena Pharmaceuticals

Arena Pharmaceuticals, Inc. is a biopharmaceutical company. The Company is focused on developing small molecule drugs across a range of therapeutic areas. The Company has three primary investigational clinical programs: etrasimod (APD334) in Phase II evaluation for ulcerative colitis, APD371 entering Phase II evaluation for the treatment of pain associated with Crohn’s disease, and ralinepag (APD811) in Phase II evaluation for pulmonary arterial hypertension (PAH). The Company’s drug, Lorcaserin, is approved for marketing in the United States and South Korea for the indication of weight management. The Company’s drug candidates in clinical development include APD334 for autoimmune diseases, ralinepag for vascular diseases and APD371 for pain. The Company’s programs under collaboration include nelotanserin for dementia-associated psychosis, temanogrel for thrombotic diseases, and an undisclosed orphan GPCR for central nervous system (CNS) indication(s).

About Palatin Technologies

Palatin Technologies, Inc. is a biopharmaceutical company. The Company is engaged in developing targeted, receptor-specific peptide therapeutics for the treatment of diseases with significant unmet medical need and commercial potential. Its programs are based on molecules that modulate the activity of the melanocortin and natriuretic peptide receptor systems. The Company’s primary product in clinical development is bremelanotide for the treatment of premenopausal women with hypoactive sexual desire disorder (HSDD), which is a type of female sexual dysfunction (FSD) defined as low desire with associated distress. Its other drug development programs include Melanocortin receptor-4 (MC4r), PL-3994 and Melanocortin receptor-1 (MC1r). MC4r is a compound used for treatment of obesity and diabetes. PL-3994 is a subcutaneously injected guanylate-cyclase type A (GC-A) receptor agonist. MC1r agonist peptides are used for treatment of inflammatory and dermatologic disease indications.

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