Critical Comparison: Scilex (NASDAQ:SCLX) and Arcellx (NASDAQ:ACLX)

Scilex (NASDAQ:SCLX) and Arcellx (NASDAQ:ACLX) are both medical companies, but which is the better investment? We will compare the two companies based on the strength of their risk, earnings, institutional ownership, dividends, analyst recommendations, valuation and profitability.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Scilex and Arcellx, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Scilex	0	0	3	0	3.00
Arcellx	0	0	14	1	3.07

Scilex currently has a consensus price target of $8.00, indicating a potential upside of 627.27%. Arcellx has a consensus price target of $78.00, indicating a potential upside of 17.97%. Given Scilex’s higher probable upside, equities research analysts plainly believe Scilex is more favorable than Arcellx.

Insider and Institutional Ownership

69.7% of Scilex shares are held by institutional investors. Comparatively, 96.0% of Arcellx shares are held by institutional investors. 8.7% of Scilex shares are held by insiders. Comparatively, 6.2% of Arcellx shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Scilex	-233.88%	N/A	-111.82%
Arcellx	-37.23%	-12.42%	-7.30%

Volatility and Risk

Scilex has a beta of 1.18, indicating that its stock price is 18% more volatile than the S&P 500. Comparatively, Arcellx has a beta of 0.23, indicating that its stock price is 77% less volatile than the S&P 500.

Valuation and Earnings

This table compares Scilex and Arcellx’s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Scilex	$46.74 million	4.51	-$114.33 million	($1.31)	-0.84
Arcellx	$144.75 million	24.44	-$70.69 million	($1.03)	-64.19

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

Summary

Arcellx beats Scilex on 10 of the 15 factors compared between the two stocks.

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.

About Arcellx

Arcellx, Inc., together with its subsidiary, engages in the development of various immunotherapies for patients with cancer and other incurable diseases in the United States. The company's lead ddCAR product candidate is anitocabtagene autoleucel, which is in phase 2 clinical trial for the treatment of patients with relapsed or refractory multiple myeloma (rrMM). It also develops ACLX-001, a product candidate in Phase 1 clinical trials targeting BCMA to treat rrMM; and ACLX-002, which is in Phase 1 clinical trials that targets CD123 for treating relapsed or refractory acute myeloid leukemia (AML) and myelodysplastic syndrome (MDS). In addition, the company's preclinical product includes ACLX-003 for the treatment of AML and MDS. Further, it focuses on the development of product candidates for solid tumor programs. It has a strategic alliance with Kite Pharma, Inc. to co-develop and co-commercialize anitocabtagene autoleucel. The company was formerly known as Encarta Therapeutics, Inc. and changed its name to Arcellx, Inc. in January 2016. Arcellx, Inc. was incorporated in 2014 and is headquartered in Redwood City, California.