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At first glance, the choice between Inovio Pharmaceuticals (NASDAQ:INO) and Incyte (NASDAQ:INCY) seems like a no-brainer for biotech investors. Incyte has the bigger market cap, more revenue, and that nice little thing called profits. But could the smaller up-and-coming biotech stock actually be the better buy? Let's take a look.

The case for Inovio

You're not going to buy Inovio's stock based on its financial results. What revenue the company makes stems largely from grants and collaborations. Inovio lost over $18.7 million in the second quarter. 

The biotech's pipeline, however, should (and does) interest many investors. Inovio's lead candidate is cervical dysplasia immunotherapy VGX-3100. Phase 2 testing of VGX-3100 found that just under half of the 167 patients in the study experienced regression from high grade to low grade cervical dysplasia or no disease. Over 40% of patients experienced regression to low grade or no disease, plus human papillomavirus (HPV) clearance.

These positive results seem to position Inovio well for the next stage of testing. The company has worked with the FDA and European Medicines Agency to clear the path to begin pivotal late-stage testing in the fourth quarter of this year. Assuming all goes well, VGX-3100 could reach peak annual sales of around $500 million.

And if VGX-3100 proves to be successful, that should be good news for another Inovio candidate: INO-3112. Inovio is partnering with AstraZeneca's (NYSE: AZN) MedImmune division on developing the vaccine targeting cervical cancer and head and neck cancer. INO-3112 combines VGX-3100 with a DNA-based immune activator encoded for interleukin 12 (IL-12).

Inovio boasts an extraordinarily deep pipeline for a biotech its size. The company has three other cancer vaccines in early-stage testing, plus nine vaccines for infectious diseases, including Ebola and hepatitis B. But the pipeline candidate attracting the most attention is Inovio's experimental Zika vaccine.

The company announced in May that its Zika vaccine had produced robust immune responses in monkeys. That major step paved the way for Inovio to begin phase 1 testing in humans in July. Interim results from this study are expected later this year.

The case for Incyte

While Inovio's stock has soared over 30% so far this year, Incyte shares are down more than 20%. A double whammy of bad news caused the drop. First, in January Incyte discontinued a phase 2 study of Jakafi in treating colorectal cancer. Second, the company stopped another phase 3 study of the drug in treating pancreatic cancer.

On a positive note, Jakafi's sales continue to soar for its already-approved hematological indications. Incyte reported that revenue for the chemotherapy increased 52% year over year in the first half of 2016. Despite the setbacks earlier this year, the company still expects Jakafi to reach peak annual sales of $1.5 billion.

Incyte has two other potential blockbuster drugs waiting in the wings. Phase 3 results for rheumatoid arthritis drug baricitinib were great, with patients reporting better quality of life metrics compared to industry-leading Humira. Analysts think baricitinib could hit peak annual sales of $3 billion. Incyte's partner Eli Lilly (NYSE: LLY) stands to keep much of the revenue, but Incyte should receive royalty payments of around $1 billion if all goes well. The company expects to obtain regulatory approval for baricitinib in early 2017.

Another candidate, epacadostat, could eventually become an even bigger winner for Incyte than baricitinib or Jakafi. A phase 3 study of epacadostat and Merck's Keytruda for treating advanced or metastatic melanoma is currently in progress. Four other clinical trials are also underway for epacadostat in treating various other cancers. Analysts project the drug could reach peak annual sales of over $3 billion.

Better buy

Both of these biotechs have a lot going for them. Which is the better buy?

Inovio currently has no products on the market. The company's lead product, VGX-3100, has yet to begin late-stage testing. There's still some risk that the immunotherapy won't win regulatory approval. Other Inovio candidates, while promising, are still at best several years away from commercialization.

Incyte, on the other hand, already has a big winner with Jakafi. It seems likely that baricitinib will win approval based on its phase 3 results. Although there's more risk with epacadostat since the drug is still in late-stage testing, I think the odds for approval are pretty good. Even with some uncertainties, there's no question in my mind that Incyte's pipeline has less risk overall than Inovio's does.

I like Inovio, but my pick as the better buy in this case is Incyte. Better financials. Less pipeline risk. Those are two good reasons to invest in Incyte.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.