Avadel Pharmaceuticals (NASDAQ:AVDL) and KALA BIO (NASDAQ:KALA) Critical Review

Avadel Pharmaceuticals (NASDAQ:AVDL) and KALA BIO (NASDAQ:KALA) are both small-cap medical companies, but which is the better stock? We will compare the two companies based on the strength of their profitability, valuation, analyst recommendations, earnings, institutional ownership, risk and dividends.

Analyst Ratings

This is a summary of current ratings and target prices for Avadel Pharmaceuticals and KALA BIO, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Avadel Pharmaceuticals	0	0	7	0	3.00
KALA BIO	0	0	2	0	3.00

Avadel Pharmaceuticals currently has a consensus price target of $24.57, indicating a potential upside of 81.14%. KALA BIO has a consensus price target of $16.50, indicating a potential upside of 217.31%. Given KALA BIO’s higher probable upside, analysts plainly believe KALA BIO is more favorable than Avadel Pharmaceuticals.

Risk and Volatility

Avadel Pharmaceuticals has a beta of 1.5, meaning that its share price is 50% more volatile than the S&P 500. Comparatively, KALA BIO has a beta of -2.12, meaning that its share price is 312% less volatile than the S&P 500.

Institutional and Insider Ownership

69.2% of Avadel Pharmaceuticals shares are held by institutional investors. Comparatively, 24.6% of KALA BIO shares are held by institutional investors. 4.8% of Avadel Pharmaceuticals shares are held by insiders. Comparatively, 13.4% of KALA BIO shares are held 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.

Profitability

This table compares Avadel Pharmaceuticals and KALA BIO’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Avadel Pharmaceuticals	-111.64%	-122.64%	-61.29%
KALA BIO	N/A	-396.03%	-66.84%

Valuation and Earnings

This table compares Avadel Pharmaceuticals and KALA BIO”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Avadel Pharmaceuticals	$95.15 million	13.70	-$160.28 million	($1.86)	-7.29
KALA BIO	$3.89 million	3.76	-$42.20 million	($15.15)	-0.34

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

Summary

Avadel Pharmaceuticals beats KALA BIO on 8 of the 13 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 KALA BIO

KALA BIO, Inc., a clinical-stage biopharmaceutical company, engages in the research, development, and commercialization of innovative therapies for rare and severe eye diseases in the United States. The company's product candidates include KPI-012, which is in Phase 2b clinical trial for the treatment of persistent corneal epithelial defects. Its preclinical development product, including KPI-014 for the treatment of rare inherited retinal diseases. The company was formerly known as Kala Pharmaceuticals, Inc. and changed its name to KALA BIO, Inc. in August 2023. KALA BIO, Inc. was incorporated in 2009 and is headquartered in Arlington, Massachusetts.