Head-To-Head Review: Erasca (NASDAQ:ERAS) versus Allakos (NASDAQ:ALLK)

Allakos (NASDAQ:ALLK) and Erasca (NASDAQ:ERAS) are both small-cap medical companies, but which is the superior stock? We will contrast the two companies based on the strength of their dividends, profitability, valuation, institutional ownership, risk, earnings and analyst recommendations.

Analyst Recommendations

This is a breakdown of current recommendations for Allakos and Erasca, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Allakos	0	4	1	0	2.20
Erasca	0	0	5	0	3.00

Allakos currently has a consensus target price of $2.00, suggesting a potential upside of 692.71%. Erasca has a consensus target price of $5.70, suggesting a potential upside of 220.22%. Given Allakos’ higher probable upside, research analysts clearly believe Allakos is more favorable than Erasca.

Insider and Institutional Ownership

84.6% of Allakos shares are owned by institutional investors. Comparatively, 67.8% of Erasca shares are owned by institutional investors. 16.1% of Allakos shares are owned by company insiders. Comparatively, 21.5% of Erasca shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Volatility and Risk

Allakos has a beta of 0.78, indicating that its stock price is 22% less volatile than the S&P 500. Comparatively, Erasca has a beta of 1.17, indicating that its stock price is 17% more volatile than the S&P 500.

Earnings and Valuation

This table compares Allakos and Erasca”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Allakos	N/A	N/A	-$185.70 million	($2.03)	-0.12
Erasca	N/A	N/A	-$125.04 million	($0.83)	-2.14

Erasca is trading at a lower price-to-earnings ratio than Allakos, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Allakos and Erasca’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Allakos	N/A	-140.87%	-86.22%
Erasca	N/A	-42.26%	-34.97%

Summary

Erasca beats Allakos on 8 of the 11 factors compared between the two stocks.

About Allakos

Allakos Inc., a clinical stage biotechnology company, develops therapeutics that target immunomodulatory receptors present on immune effector cells in allergy, inflammatory, and proliferative diseases in the United States. The company’s lead product candidate is AK006, which in a Phase I clinical trial for the treatment of chronic spontaneous urticaria (CSU) and other indications. The company was incorporated in 2012 and is headquartered in San Carlos, California.

About Erasca

Erasca, Inc., a clinical-stage precision oncology company, focuses on discovering, developing, and commercializing therapies for patients with RAS/MAPK pathway-driven cancers. The company’s lead product is naporafenib which is in phase 1b trial for patients with RAS Q16X solid tumors and plans to initiate a pivotal Phase 3 trial for patients with NRASm melanoma. It also develops ERAS-007, an oral inhibitor of ERK1/2 for the treatment of non-small cell lung and colorectal cancer, and advanced gastrointestinal malignancies; and ERAS-601, an oral SHP2 inhibitor for patients with advanced or metastatic solid tumors. In addition, it is developing ERAS-801, a central nervous system-penetrant EGFR inhibitor which is in phase 1 clinical trials for the treatment of patients with recurrent glioblastoma multiforme. The company entered into license agreement with Novartis to develop, manufacture, use, and commercialize naporafenib; Katmai Pharmaceuticals, Inc. to develop, manufacture, use, and commercialize ERAS-801 and certain other related compounds; and NiKang Therapeutics, Inc. to develop and commercialize ERAS-601 and certain other related compounds. Erasca, Inc. was incorporated in 2018 and is headquartered in San Diego, California.