Last year, Exelixis, Inc. (EXEL 1.84%) was one of the best-performing stocks in biotech, notching a 164% gain. With essentially one drug driving growth, though, it looks a bit risky. Conversely, shares of the diverse pharma giant Novartis (NVS 2.27%) sank about 15% last year. Yet a couple of recently launched drugs could turn the tide in 2017 for Novartis, and earlier-stage programs could allow its growth story to continue for years.

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As the two companies face different challenges on their paths to growth, investors are right to wonder which one is right for their portfolio. Let's see how they stack up to each other to find out which is a better stock to buy now.

The case for Exelixis, Inc.

Last year, this biotech stock soared when its lead drug, Cabometyx, earned approval to treat patients with a common form of kidney cancer, known as renal cell carcinoma (RCC), after patients' disease progressed following previous treatment. The company is up against Opdivo from Bristol-Myers Squibb, but sales figures so far suggest uptake among this group is progressing beyond expectations. Exelixis reported $62.2 million in third-quarter revenue, which was about $17 million higher than the average expected by Wall Street analysts.

Perhaps Cabometyx's proven ability to benefit patients as measured by rates of progression-free survival is responsible for the drug's surprising progress in light of the competition. Opdivo outperformed standard chemotherapy with respect to two of the three most common measurements of cancer drug efficacy, overall survival and response rate. Exelixis' drug, though, was the first to outperform standard chemo on all three measurements.

Looking ahead, Cabometyx might have a chance to expand its addressable patient population to include those diagnosed with RCC but not yet treated. Pfizer's Sutent enjoys this position now -- but might have to share it with Cabometyx before too long. In a mid-stage clinical trial, Cabometyx reduced patients' risk of disease progression or death by 31% compared with the standard therapy.

The case for Novartis

Unlike Exelixis, the Swiss pharma giant has dozens of products pushing and pulling at its top line. Unfortunately, sales of its former top-selling product, the blood cancer drug Gleevec, are contracting due to generic competition. As a result, the company's top line has been sliding, and so has its stock price over the past 18 months.

Luckily, a handful of recent launches are positioned to help offset those losses. In particular, psoriasis treatment Cosentyx earned approval in 2015, and it finished the third quarter on an annualized run rate of $1.32 billion. The drug outperformed Johnson & Johnson's popular Stelara in a clinical trial, and could generate annual sales of around $4 billion at its peak.

Heart failure drug Entresto could be Novartis' largest growth driver, but its launch has been somewhat disappointing. In a clinical outcome study, it reduced patient risk of heart failure hospitalizations and cardiovascular death by at least 20% compared with the standard ACE inhibitor, enalapril. With millions of heart failure patients eligible for treatment, peak annual sales estimates top out at around $10 billion. Unfortunately, end payers haven't been too thrilled about replacing cheap, generic ACE inhibitors with Entresto, which costs around $4,600 per year. However, more than a year following its launch, U.S. sales of Entresto appear to be accelerating, and Novartis expects the drug to contribute about $200 million to total 2016 revenue.

Further out, planned filings for three new entities, three biosimilars, and five label expansions for commercial-stage drugs this year alone give Novartis a solid chance of offsetting future losses to generic competition.

In the numbers

Although Exelixis is still losing money, rapid uptake of Cabometyx in the second-line RCC setting is largely expected to push the bottom line into positive territory this year. The company's recent market cap of around $5.3 billion, though, is around 16.5 times this year's average revenue estimate. An eventual expansion to frontline RCC treatment would probably lead to long-term gains from recent prices, but it's important to remember that nearly all of the company's chips are riding on one drug right now. So far Cabometyx's launch has exceeded expectations, but any signs of sputtering in the quarters ahead could make owning this stock a nerve-racking experience.

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In stark contrast, Novartis sports a dizzying array of moving pieces. Recent launches and new drugs advancing through clinical-stage development give it a chance to overcome losses to generic competition and finally return its bottom line to growth. At about 25.4 times trailing earnings, and 14.9 times forward estimates, this big-pharma stock isn't in deep-value territory, but investors don't need to fret over the trajectory of a single new-drug launch.

Novartis has treated its shareholders to annual dividend increases (in Swiss francs) since 1996, and another bump would offer a yield of 3.7% or more at recent prices and exchange rates. Exelixis might be more fun to watch this year, but I think the big pharma's sensible valuation, steady dividend, and diverse pipeline make it a slightly better buy right now.