Critical Analysis: Avadel Pharmaceuticals (NASDAQ:AVDL) versus Bright Minds Biosciences (NASDAQ:DRUG)

Avadel Pharmaceuticals (NASDAQ:AVDL) and Bright Minds Biosciences (NASDAQ:DRUG) are both small-cap medical companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, earnings, analyst recommendations, valuation, institutional ownership, dividends and risk.

Insider & Institutional Ownership

69.2% of Avadel Pharmaceuticals shares are owned by institutional investors. Comparatively, 40.5% of Bright Minds Biosciences shares are owned by institutional investors. 4.8% of Avadel Pharmaceuticals shares are owned by insiders. Comparatively, 42.7% of Bright Minds Biosciences shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Volatility & Risk

Avadel Pharmaceuticals has a beta of 1.53, indicating that its stock price is 53% more volatile than the S&P 500. Comparatively, Bright Minds Biosciences has a beta of 1.55, indicating that its stock price is 55% more volatile than the S&P 500.

Earnings and Valuation

This table compares Avadel Pharmaceuticals and Bright Minds Biosciences’ revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Avadel Pharmaceuticals	$95.15 million	16.10	-$160.28 million	($1.86)	-8.57
Bright Minds Biosciences	N/A	N/A	-$5.47 million	($1.01)	-1.06

Bright Minds Biosciences has lower revenue, but higher earnings than Avadel Pharmaceuticals. Avadel Pharmaceuticals is trading at a lower price-to-earnings ratio than Bright Minds Biosciences, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Avadel Pharmaceuticals and Bright Minds Biosciences’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Avadel Pharmaceuticals	-284.42%	-139.72%	-79.53%
Bright Minds Biosciences	N/A	-80.64%	-73.04%

Analyst Recommendations

This is a breakdown of recent recommendations for Avadel Pharmaceuticals and Bright Minds Biosciences, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Avadel Pharmaceuticals	0	0	7	0	3.00
Bright Minds Biosciences	0	0	0	0	N/A

Avadel Pharmaceuticals currently has a consensus target price of $24.57, indicating a potential upside of 54.15%. Given Avadel Pharmaceuticals’ higher possible upside, equities research analysts plainly believe Avadel Pharmaceuticals is more favorable than Bright Minds Biosciences.

Summary

Bright Minds Biosciences beats Avadel Pharmaceuticals on 8 of the 12 factors compared between the two stocks.

About Avadel Pharmaceuticals

Avadel Pharmaceuticals plc operates as a biopharmaceutical company in the United States. Its lead product candidate is LUMRYZ, a formulation of sodium oxybate, which is in a Phase 3 clinical trial for the treatment of excessive daytime sleepiness or cataplexy in adults with narcolepsy. The company was formerly known as Flamel Technologies SA and changed its name to Avadel Pharmaceuticals plc in January 2017. Avadel Pharmaceuticals plc was incorporated in 2015 and is headquartered in Dublin, Ireland.

About Bright Minds Biosciences

Bright Minds Biosciences Inc., a biotechnology company, develops therapeutics to improve the lives of patients with severe and life-altering diseases in the United States. Its portfolio of selective 5-HT receptor agonists includes 5-HT2C, 5-HT2A, and 5-HT2C/A for the treatment of epilepsy, pain, and neuropsychiatry; and BMB-101 which completes phase 1 trial for undisclosed seizure disorder. The company also developing BMB-202 for the treatment of depression, anxiety, and PTSD; and BMB-201 for the treatment of anxiety. It has collaboration with National Institutes of Health for the treatment of epilepsy; University of Texas Medical Branch to treat impulse control disorders, such as binge eating; and Medical College of Wisconsin. Bright Minds Biosciences Inc. was founded in 2017 and is headquartered in New York, New York.