Better Buy: Amgen Inc. vs. Celgene

By Keith Speights Markets Fool.com

Amgen (NASDAQ: AMGN) and Celgene (NASDAQ: CELG) are without question two of the most successful biotechs in the world. So far in 2017, Amgen has enjoyed greater success. Shares of the big biotech jumped after the company announced great results for cholesterol drug Repatha in a cardiovascular outcomes study.Meanwhile, Celgene's stock hasn't budged much this year despite a strong fourth-quarter performance for the company.

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But which of these biotech stocks is the better choice for investors right now? It comes down to current products, pipeline prospects, and financial position. Here's how Amgen and Celgene compare on these key criteria.

Image source: Getty Images.

The case for Amgen

Amgen's product lineup includes seven blockbuster drugs, led by Enbrel. The bad news, though, is that sales for three of those drugs fell in 2016 compared with the prior year. Neulasta lost patent protection in late 2015, while Neupogen and Epogen face stiff competition in the U.S.

However, sales for bone-disease drugs Prolia and Xgeva, which are made from the same chemical components, are growing at a solid pace. The same is true for Enbrel, Aranesp, and Sensipar/Mimpara. Kyprolis hasn't reached the magic $1 billion mark in annual sales yet, but sales for the second-line multiple myeloma treatment are growing quickly.

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Amgen's biggest potential among its currently approved drugs, though, is with Repatha. So far, sales have been held back for the PCSK9 inhibitor because payers have placed hurdles in the way of reimbursement. Those hurdles should be removed now that Amgen has clinical study results to demonstrate that Repatha improves cardiovascular outcomes.

What about the biotech's pipeline? Amgen has 12 late-stage clinical studies and seven mid-stage studies in progress. Most of these are for additional indications for drugs already on the market. Amgen does, however, have a couple of promising new late-stage candidates with experimental osteoporosis drug romosozumab and erenumab, an experimental migraine drug in development in collaboration with Novartis.

No one can complain about Amgen's financial position. The company is one of only a handful of biotechs that pay a dividend. Amgen's dividend yield currently stands at 2.75%. The company reported over $38 billion in cash, cash equivalents, and marketable securities at the end of 2016.

The case for Celgene

Celgene's current product lineup appears to be exceptionally strong. The company's top-selling drug, Revlimid, saw sales increase more than 20% year over year in 2016. Perhaps the only downside to that performance is that Celgene continues to depend heavily on the blood-cancer drug: Revlimid generated more than three-fifths of the company's total revenue last year.

Pomalyst has helped build Celgene's blood-cancer franchise further. The second-line treatment for multiple myeloma pulled in $1.3 billion in sales in 2016 -- up 33% from the prior-year period. Sales for Abraxane barely grew last year, but the cancer drug still generated over $973 million in revenue.

Celgene's biggest star right now, though, is Otezla. Sales for the autoimmune-disease drug soared nearly 116% year over year in 2016 to just over $1 billion. The drug's convenience as a pill taken twice each day has allowed it to take away market share from other plaque psoriasis treatments.

The biotech's pipeline includes 15 late-stage clinical programs plus a couple of drugs awaiting regulatory approval. Another 16 mid-stage clinical trials are in progress. While Celgene's late-stage studies include several for additional indications for existing drugs, the company also claims some new late-stage candidates with huge potential.

Ozanimod stands out as one of Celgene's promising pipeline prospects. The experimental drug is being evaluated in one late-stage study for treating multiple sclerosis and another for treating ulcerative colitis. GED-0301 is another autoimmune-disease candidate with significant potential. The pipeline candidate is in a late-stage study targeting Crohn's disease.

Celgene also looks solid financially. The biotech reportedcash and marketable securities totaling just under $8 billion at the end of 2016.

Better buy

Amgen has some good things going for it, especially with the recent good news for Repatha. The big company's cash position should allow it to scoop up smaller biotechs to fuel additional growth as well as continue to increase its dividend.

My pick as the better buy, though, is Celgene. The company thinks it will grow earnings by an average annual rate of 22% through 2020. Wall Street analysts agree with that outlook. So do I.

There really aren't many weak spots for Celgene, except perhaps its reliance on Revlimid. But Revlimid doesn't appear to be in any danger, and growth from other drugs should reduce the company's dependence on Revlimid over time. I expect Celgene will be a big winner over the next several years.

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Keith Speights owns shares of Celgene. The Motley Fool owns shares of and recommends Celgene. The Motley Fool has a disclosure policy.