Contrasting Mereo BioPharma Group (NASDAQ:MREO) and Avidity Biosciences (NASDAQ:RNA)

Mereo BioPharma Group (NASDAQ:MREO) and Avidity Biosciences (NASDAQ:RNA) are both small-cap healthcare companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, profitability, dividends, risk, valuation, earnings and institutional ownership.

Profitability

This table compares Mereo BioPharma Group and Avidity Biosciences’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Mereo BioPharma Group	N/A	-74.82%	-64.28%
Avidity Biosciences	N/A	N/A	N/A

Analyst Ratings

This is a breakdown of current recommendations and price targets for Mereo BioPharma Group and Avidity Biosciences, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Mereo BioPharma Group	2	3	3	0	2.12
Avidity Biosciences	1	10	4	1	2.31

Mereo BioPharma Group presently has a consensus target price of $1.67, suggesting a potential upside of 476.70%. Avidity Biosciences has a consensus target price of $59.00, suggesting a potential upside of 623.04%. Given Avidity Biosciences’ stronger consensus rating and higher probable upside, analysts clearly believe Avidity Biosciences is more favorable than Mereo BioPharma Group.

Institutional & Insider Ownership

62.8% of Mereo BioPharma Group shares are held by institutional investors. 6.5% of Mereo BioPharma Group shares are held by company insiders. Comparatively, 3.8% of Avidity Biosciences shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Mereo BioPharma Group and Avidity Biosciences”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Mereo BioPharma Group	$500,000.00	92.30	-$41.88 million	($0.04)	-7.22
Avidity Biosciences	$35.84 million	3.89	-$36.78 million	($2.15)	-3.80

Avidity Biosciences has higher revenue and earnings than Mereo BioPharma Group. Mereo BioPharma Group is trading at a lower price-to-earnings ratio than Avidity Biosciences, indicating that it is currently the more affordable of the two stocks.

Summary

Avidity Biosciences beats Mereo BioPharma Group on 9 of the 13 factors compared between the two stocks.

About Mereo BioPharma Group

Mereo BioPharma Group plc, a biopharmaceutical company, develops and commercializes therapeutics for the treatment of oncology and rare diseases in the United Kingdom, the United States, and internationally. It develops Etigilimab (MPH-313), an antibody T-cell immunoreceptor with Ig and ITIM domains, which is in Phase 1b clinical trial for the treatment of tumors. The company is also developing Navicixizumab (OMP-305B83), which has completed Phase 1b clinical trials for the treatment of the late line ovarian cancer; Acumapimod (BCT-197), a p38 MAP kinase inhibitor that is in Phase II clinical trials to treat acute exacerbations of chronic obstructive pulmonary disease; and Leflutrozole (BGS-649), an oral aromatase inhibitor for the treatment of hypogonadotropic hypogonadism which is in Phase 2 trials. In addition, it develops rare disease product candidates, including Setrusumab (BPS-804), an antibody for the treatment of osteogenesis imperfecta; and Alvelestat (MPH-966), an oral small molecule that is in Phase II clinical trial to treat Alpha-1 anti-trypsin deficiency. The company has a license agreement with Feng Biosciences for the development and commercialization of navicixizumab; license agreement with ReproNovo for the development and commercialization of leflutrozole; licensing agreement with AstraZeneca; and license agreement with Ultragenyx Pharmaceutical Inc. to develop and commercialize setrusumab. Mereo BioPharma Group plc was incorporated in 2015 and is headquartered in London, the United Kingdom.

About Avidity Biosciences

Avidity Biosciences, Inc., a biopharmaceutical company, engages in the delivery of RNA therapeutics. It develops antibody oligonucleotide conjugates (AOC) that are designed to treat diseases previously untreatable with RNA therapeutics. The company's lead product candidate AOC 1001 for the treatment of myotonic dystrophy type 1, a rare monogenic muscle disease that is in phase 1/2 clinical trial. Its other products in pipeline include AOC 1044 for the treatment of duchenne muscular dystrophy, which is under phase 1/2 clinical development trial; and AOC 1020 to treat facioscapulohumeral muscular dystrophy that is in phase 1/2 clinical trial. The company is developing products for rare skeletal muscle and rare cardiac diseases. Avidity Biosciences, Inc. was incorporated in 2012 and is headquartered in San Diego, California.