Critical Review: Journey Medical (NASDAQ:DERM) & Erasca (NASDAQ:ERAS)

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

Earnings and Valuation

This table compares Erasca and Journey Medical’s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Erasca	N/A	N/A	-$125.04 million	($0.84)	-2.35
Journey Medical	$79.18 million	0.87	-$3.85 million	($0.31)	-11.13

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

Insider & Institutional Ownership

67.8% of Erasca shares are owned by institutional investors. Comparatively, 7.3% of Journey Medical shares are owned by institutional investors. 29.8% of Erasca shares are owned by insiders. Comparatively, 19.4% of Journey Medical shares are owned by 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.

Volatility and Risk

Erasca has a beta of 1.06, indicating that its share price is 6% more volatile than the S&P 500. Comparatively, Journey Medical has a beta of 0.78, indicating that its share price is 22% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Erasca	N/A	-38.83%	-31.22%
Journey Medical	-5.20%	-32.83%	-5.96%

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Erasca and Journey Medical, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Erasca	0	1	4	0	2.80
Journey Medical	0	0	1	0	3.00

Erasca currently has a consensus target price of $7.83, indicating a potential upside of 297.63%. Journey Medical has a consensus target price of $8.50, indicating a potential upside of 146.38%. Given Erasca’s higher probable upside, analysts plainly believe Erasca is more favorable than Journey Medical.

Summary

Erasca beats Journey Medical on 7 of the 13 factors compared between the two stocks.

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.

About Journey Medical

Journey Medical Corporation focuses on the development and commercialization of pharmaceutical products for the treatment of dermatological conditions in the United States. The company's marketed products include Qbrexza, a medicated cloth towelette for the treatment of primary axillary hyperhidrosis; Accutane, an oral isotretinoin drug to treat severe recalcitrant nodular acne; and Amzeeq, a topical formulation of minocycline for the treatment of inflammatory lesions of non-nodular moderate to severe acne vulgaris. It also offers Zilxi, a topical minocycline treatment for inflammatory lesions of rosacea; Exelderm cream and solution an antifungal intended for topical use; Targadox, an oral doxycycline drug for adjunctive therapy for severe acne; and Luxamend, a water-based emulsion formulated to provide a moist healing environment for superficial wounds; minor cuts or scrapes; dermal ulcers; donor sites; first- and second-degree burns, including sunburns; and radiation dermatitis. In addition, the company sells sulconazole nitrate cream and solution indicated for the treatment of tinea cruris, tinea corporis, and tinea versicolor; and doxycycline hyclate tablets, as an adjunctive therapy for severe acne. The company was formerly known as Coronado Dermatology, Inc. and changed its name to Journey Medical Corporation. Journey Medical Corporation was incorporated in 2014 and is headquartered in Scottsdale, Arizona. Journey Medical Corporation is a subsidiary of Fortress Biotech, Inc.