Head to Head Comparison: Denali Therapeutics (NASDAQ:DNLI) vs. Scilex (NASDAQ:SCLX)

Denali Therapeutics (NASDAQ:DNLI) and Scilex (NASDAQ:SCLX) are both medical companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, dividends, risk, institutional ownership, profitability, valuation and earnings.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Denali Therapeutics and Scilex, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Denali Therapeutics	0	1	8	0	2.89
Scilex	0	0	3	0	3.00

Denali Therapeutics currently has a consensus price target of $40.33, indicating a potential upside of 67.36%. Scilex has a consensus price target of $8.00, indicating a potential upside of 376.19%. Given Scilex’s stronger consensus rating and higher possible upside, analysts clearly believe Scilex is more favorable than Denali Therapeutics.

Risk and Volatility

Denali Therapeutics has a beta of 1.4, meaning that its share price is 40% more volatile than the S&P 500. Comparatively, Scilex has a beta of 1.22, meaning that its share price is 22% more volatile than the S&P 500.

Profitability

This table compares Denali Therapeutics and Scilex’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Denali Therapeutics	N/A	-11.46%	-10.40%
Scilex	-229.47%	N/A	-106.29%

Institutional and Insider Ownership

92.9% of Denali Therapeutics shares are owned by institutional investors. Comparatively, 69.7% of Scilex shares are owned by institutional investors. 7.9% of Denali Therapeutics shares are owned by insiders. Comparatively, 8.7% of Scilex shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Denali Therapeutics and Scilex’s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Denali Therapeutics	$330.53 million	10.40	-$145.22 million	($0.96)	-25.10
Scilex	$46.74 million	6.53	-$114.33 million	($1.31)	-1.28

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

Summary

Denali Therapeutics beats Scilex on 8 of the 14 factors compared between the two stocks.

About Denali Therapeutics

Denali Therapeutics Inc., a biopharmaceutical company, develops a portfolio of product candidates engineered to cross the blood-brain barrier for neurodegenerative diseases and lysosomal storage diseases in the United States. The company's transport vehicle (TV)-enabled programs include DNL310 ETV, an IDS enzyme replacement therapy program for MPS II; TAK-594/DNL593 which is in Phase 1/II for frontotemporal dementia-granulin; DNL126 program for MPS IIIA; and DNL622 for MPS I, as well as other preclinical programs that target amyloid beta and HER2. Its brain-penetrant small molecule programs comprise BIIB122/DNL151 LRRK2 inhibitor program for Parkinson's disease; SAR443820/DNL788 RIPK1 inhibitor program for CNS disease; DNL343 eIF2B Activator program for amyotrophic lateral sclerosis; and SAR443122/DNL758 RIPK1 inhibitor program for peripheral inflammatory diseases. It also provides early stage program include TAK-594/DNL593 program for FTD-GRN; DNL126 program for MPS IIIA, a Sanfilippo Syndrome A; DNL622 for MPS I which is Hurler syndrome; Antibody Transport Vehicle Amyloid beta program; Oligonucleotide Transport Vehicle platform, a novel class of biotherapeutics to address the root cause of diseases through modulation of gene expression; and other TV-enabled discovery programs. The company has collaboration agreements with Biogen MA Inc. and Biogen International GmbH; Genzyme Corporation; Takeda Pharmaceutical Company Limited; F-star Gamma Limited, F-star Biotechnologische Forschungs-und Entwicklungsges m.b.H, and F-star Biotechnology Limited; and Genentech, Inc. The company was formerly known as SPR Pharma Inc. and changed its name to Denali Therapeutics Inc. in March 2015. Denali Therapeutics Inc. was incorporated in 2013 and is headquartered in South San Francisco, California.

About Scilex

Scilex Holding Company focuses on acquiring, developing, and commercializing non-opioid pain management products for the treatment of acute and chronic pain. Its commercial products include ZTlido (lidocaine topical system) 1.8% (ZTlido), a prescription lidocaine topical product for the relief of neuropathic pain associated with postherpetic neuralgia (PHN), which is a form of post-shingles nerve pain; ELYXYB, a ready-to-use oral solution for the acute treatment of migraine with or without aura in adults; and GLOPERBA, a liquid oral version of the anti-gout medicine colchicine indicated for the prophylaxis of painful gout flares in adults. The company is also developing three product candidates, including SP-102 (10 mg dexamethasone sodium phosphate viscous gel) (SEMDEXA), a novel viscous gel formulation of a used corticosteroid for epidural injections, which has completed a Phase 3 study to treat lumbosacral radicular pain or sciatica; SP-103 (lidocaine topical system) 5.4% (SP-103), a formulation of ZTlido for the treatment of chronic neck pain and low back pain (LBP) that has completed a Phase 2 trial; and SP-104 (4.5 mg low-dose naltrexone hydrochloride delayed-release capsules) (SP-104), a novel low-dose delayed-release naltrexone hydrochloride, which has completed Phase 1 trials for the treatment of fibromyalgia. The company is headquartered in Palo Alto, California.