Reviewing Scholar Rock (NASDAQ:SRRK) and Passage Bio (NASDAQ:PASG)

Passage Bio (NASDAQ:PASG) and Scholar Rock (NASDAQ:SRRK) are both small-cap medical companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, risk, profitability, institutional ownership, earnings and dividends.

Risk & Volatility

Passage Bio has a beta of 1.3, meaning that its stock price is 30% more volatile than the S&P 500. Comparatively, Scholar Rock has a beta of 0.9, meaning that its stock price is 10% less volatile than the S&P 500.

Valuation and Earnings

This table compares Passage Bio and Scholar Rock’s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Passage Bio	N/A	N/A	-$102.06 million	($1.86)	-0.66
Scholar Rock	$33.19 million	32.75	-$165.79 million	($1.99)	-7.02

Passage Bio has higher earnings, but lower revenue than Scholar Rock. Scholar Rock is trading at a lower price-to-earnings ratio than Passage Bio, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

53.5% of Passage Bio shares are owned by institutional investors. Comparatively, 91.1% of Scholar Rock shares are owned by institutional investors. 12.4% of Passage Bio shares are owned by company insiders. Comparatively, 26.2% of Scholar Rock 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.

Profitability

This table compares Passage Bio and Scholar Rock’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Passage Bio	N/A	-73.12%	-56.17%
Scholar Rock	N/A	-80.48%	-57.10%

Analyst Recommendations

This is a summary of recent recommendations for Passage Bio and Scholar Rock, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Passage Bio	0	0	3	0	3.00
Scholar Rock	0	0	5	1	3.17

Passage Bio currently has a consensus price target of $9.33, indicating a potential upside of 665.03%. Scholar Rock has a consensus price target of $25.17, indicating a potential upside of 80.28%. Given Passage Bio’s higher probable upside, equities analysts clearly believe Passage Bio is more favorable than Scholar Rock.

Summary

Passage Bio beats Scholar Rock on 7 of the 13 factors compared between the two stocks.

About Passage Bio

Passage Bio, Inc., a genetic medicines company, develops gene therapies for central nervous system diseases. It develops PBGM01, a functional GLB1 gene encoding ß-galactosidase for infantile GM1; PBFT02, a functional granulin (GRN) and gene encoding progranulin (PGRN) for the treatment of FTD caused by progranulin deficiency; and PBKR03, a functional GALC gene encoding the hydrolytic enzyme galactosylceramidase for infantile Krabbe disease. The company develops PBML04 for the treatment of metachromatic leukodystrophy; PBAL05 for the treatment of amyotrophic lateral sclerosis; and other program for huntington's disease. It has a strategic research collaboration with the Trustees of the University of Pennsylvania's Gene Therapy Program; and collaboration agreement, and a development services and clinical supply agreement with Catalent Maryland, Inc. Passage Bio, Inc. was incorporated in 2017 and is headquartered in Philadelphia, Pennsylvania.

About Scholar Rock

Scholar Rock Holding Corporation, a biopharmaceutical company, focuses on the discovery, development, and delivery of medicines for the treatment of serious diseases in which signaling by protein growth factors plays a fundamental role. The company develops Apitegromab, an inhibitor of the activation of myostatin that is in Phase 3 clinical trial for the treatment of spinal muscular atrophy; and SRK-181, which has completed Phase 1 clinical trials for the treatment of cancers that are resistant to checkpoint inhibitor therapies, such as anti-PD-1 or anti-PD-L1 antibody therapies. It is developing a pipeline of product candidates to deliver novel therapies to treat a range of serious diseases, including neuromuscular disorders, cardiometabolic disorders, cancer, fibrosis, and iron-restricted anemia. Scholar Rock Holding Corporation was founded in 2012 and is headquartered in Cambridge, Massachusetts.