Financial Analysis: Novan (NASDAQ:NOVN) & Q BioMed (NASDAQ:QBIO)

Novan (NASDAQ:NOVN) and Q BioMed (OTCMKTS:QBIO) are both small-cap medical companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, analyst recommendations, earnings, risk, institutional ownership, profitability and dividends.

Analyst Ratings

This is a summary of current ratings and recommmendations for Novan and Q BioMed, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Novan 0 1 1 0 2.50
Q BioMed 0 1 1 0 2.50

Novan presently has a consensus target price of $6.00, suggesting a potential upside of 118.98%. Q BioMed has a consensus target price of $1.85, suggesting a potential upside of 114.17%. Given Novan’s higher possible upside, equities research analysts clearly believe Novan is more favorable than Q BioMed.

Earnings and Valuation

This table compares Novan and Q BioMed’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Novan $5.99 million 11.93 -$12.67 million ($1.13) -2.42
Q BioMed N/A N/A -$9.27 million ($0.67) -1.29

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

Volatility & Risk

Novan has a beta of 1.92, meaning that its share price is 92% more volatile than the S&P 500. Comparatively, Q BioMed has a beta of 3.97, meaning that its share price is 297% more volatile than the S&P 500.

Profitability

This table compares Novan and Q BioMed’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Novan -363.12% -2,067.72% -83.07%
Q BioMed N/A N/A -639.00%

Institutional and Insider Ownership

4.8% of Novan shares are held by institutional investors. Comparatively, 0.0% of Q BioMed shares are held by institutional investors. 5.4% of Novan shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

Q BioMed beats Novan on 6 of the 11 factors compared between the two stocks.

About Novan

Novan, Inc., a clinical-stage biotechnology company, focuses on the development and commercialization of nitric oxide-based therapies to treat dermatological and oncovirus-mediated diseases. Its clinical stage product candidates include SB204, a topical monotherapy that is in Phase III pivotal clinical trials for the treatment of acne vulgaris; and SB206, a topical antiviral gel, which is in Phase III pivotal trials for the treatment of patients with external genital warts, and Phase II clinical trial for the treatment of molluscum contagiosum. The company's clinical stage product candidates comprise SB208, a topical antifungal gel that is in Phase II proof-of-concept trial for the treatment of athlete's foot and fungal nail infections; and SB414, a topical cream, which is in Phase Ib trial for the treatment of inflammatory skin diseases, such as psoriasis and atopic dermatitis. It has a license agreement with Sato Pharmaceutical Co., Ltd. Novan, Inc. has a strategic alliance with Orion Corporation to manufacture topical nitric oxide-releasing product candidates. Novan, Inc. was founded in 2006 and is headquartered in Morrisville, North Carolina.

About Q BioMed

Q BioMed Inc., a biomedical acceleration and development company, focuses on licensing, acquiring, and providing resources to life sciences and healthcare companies. The company offers Strontium Chloride SR89, a radiopharmaceutical therapeutic for the treatment of bone cancer pain therapies. It is also developing Man-01, a pre-clinical lead candidate for the treatment of primary open angle glaucoma; BM-001 for the treatment of rare pediatric nonverbal autism spectrum disorder; and Uttroside-B for liver cancer. The company was formerly known as ISMO Tech Solutions, Inc. and changed its name to Q BioMed Inc. in July 2015. Q BioMed Inc. was founded in 2013 and is based in New York, New York.

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