Critical Analysis: MEI Pharma (NASDAQ:MEIP) and Zymeworks (ZYME)

Zymeworks (NYSE:ZYME) and MEI Pharma (NASDAQ:MEIP) are both small-cap medical companies, but which is the superior stock? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, institutional ownership, risk, valuation, earnings and dividends.

Volatility & Risk

Zymeworks has a beta of 1.48, meaning that its stock price is 48% more volatile than the S&P 500. Comparatively, MEI Pharma has a beta of 1.98, meaning that its stock price is 98% more volatile than the S&P 500.

Earnings & Valuation

This table compares Zymeworks and MEI Pharma’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Zymeworks $53.02 million 10.34 -$36.56 million ($1.26) -13.58
MEI Pharma $1.62 million 140.32 -$40.06 million ($0.74) -4.32

Zymeworks has higher revenue and earnings than MEI Pharma. Zymeworks is trading at a lower price-to-earnings ratio than MEI Pharma, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

28.3% of Zymeworks shares are held by institutional investors. Comparatively, 56.5% of MEI Pharma shares are held by institutional investors. 4.8% of Zymeworks shares are held by company insiders. Comparatively, 5.0% of MEI Pharma shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Zymeworks and MEI Pharma’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Zymeworks -68.95% -23.17% -19.16%
MEI Pharma -1,454.51% -77.29% -40.97%

Analyst Recommendations

This is a summary of current ratings and price targets for Zymeworks and MEI Pharma, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Zymeworks 0 1 5 0 2.83
MEI Pharma 0 0 6 0 3.00

Zymeworks currently has a consensus price target of $26.33, indicating a potential upside of 53.91%. MEI Pharma has a consensus price target of $9.67, indicating a potential upside of 202.56%. Given MEI Pharma’s stronger consensus rating and higher possible upside, analysts clearly believe MEI Pharma is more favorable than Zymeworks.

Summary

MEI Pharma beats Zymeworks on 9 of the 14 factors compared between the two stocks.

About Zymeworks

Zymeworks Inc., a clinical-stage biopharmaceutical company, engages in the discovery, development, and commercialization of bio-therapeutics for the treatment of cancer in Canada. The company's lead product candidates include ZW25, a bispecific antibody that is in Phase I clinical trial for the treatment of breast and gastric cancer; ZW49, a bispecific antibody-drug conjugate that is in preclinical stage for treating breast and gastric cancers, and solid tumors. The company has strategic partnerships with Merck Sharp & Dohme Research Ltd.; Eli Lilly and Company; Celgene Corporation and Celgene Alpine Investment Co. LLC; GlaxoSmithKline Intellectual Property Development Limited; Daiichi Sankyo Co., Ltd.; and Janssen Biotech, Inc., as well as a collaboration agreement with BeiGene, Ltd. It also has licensing and research collaboration with LEO Pharma A/S to discover and develop bispecific antibodies targeting cytokine-receptor pathways. Zymeworks Inc. was founded in 2003 and is headquartered in Vancouver, Canada.

About MEI Pharma

MEI Pharma, Inc., a pharmaceutical company, focuses on the clinical development of novel therapies for the treatment of cancer. The company's clinical drug candidate includes Pracinostat, an oral available histone deacetylase inhibitor for the treatment of patients with acute myeloid leukemia and myelodysplastic syndrome. Its clinical development portfolio also includes ME-401, an oral inhibitor of phosphatidylinositide 3-kinase delta for the treatment of patients with relapsed/refractory chronic lymphocytic leukemia or follicular lymphoma; ME-344, an isoflavone-derived mitochondrial inhibitor for the treatment of HER2-negative breast cancer; and Voruciclib, an oral cyclin-dependent kinase inhibitor. The company has a license, development, and commercialization agreement with Helsinn Healthcare SA for the development, manufacture, and commercialization of Pracinostat; and license agreement with Presage Biosciences, Inc. to develop, manufacture, and commercialize Voruciclib, a clinical-stage, oral, and selective cyclin-dependent kinase inhibitor; and related compounds. It also has a clinical collaboration agreement with BeiGene, Ltd. to evaluate the safety and efficacy of ME-401 in combination with BeiGene's zanubrutinib, an investigational BTK inhibitor for the treatment of patients with B-cell malignancies. The company was formerly known as Marshall Edwards, Inc. and changed its name to MEI Pharma, Inc. in July 2012. MEI Pharma, Inc. was founded in 2000 and is based in San Diego, California.

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