Even though biotech has been sky-rocketing over the last five years, the industry's eye-popping growth spurt isn't showing any signs of slowing down. In fact, EvaluatePharma estimates that global prescription drug sales will rise at an astounding compound annual growth rate, or CAGR, of 6.5% until 2022.

However, not all biotechs are created equal from a growth standpoint. Celgene (CELG) and Alexion Pharmaceuticals (ALXN), for instance, are forecast to far outpace their large-cap biotech peers in terms of sales growth in the coming years. Armed with this insight, let's consider whether or not these top biotech growth stocks are worth buying right now. 


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Celgene's growth engine is firing on all cylinders

Celgene's sales are forecast to rise at a CAGR of 15% to 16% over the next five years, according to various analysts. If this line holds, Celgene should turn out to be the fastest growing large cap drugmaker in the world. 

Celgene's growth is expected to be fueled by rising sales of its psoriatic arthritis drug Otezla, the approval and subsequent launch of its multiple sclerosis medicine ozanimod, and its nascent immuno-oncology pipeline -- where the biotech sports multiple partnerships with the likes of AstraZeneca, bluebird bio, Jounce Therapeutics, and Juno Therapeutics.

Just as critical, Celgene's top-selling multiple myeloma drug and main growth driver Revlimid appears to be fairly safe from the threat of generic competitors, given that its core patent portfolio should provide a period of exclusivity lasting until 2024 in the EU and until 2027 in the United States.

Is Celgene a strong buy? Based on these revenue projections, Celgene appears to be presently trading right at 4 times its 2022 annual sales. That's not super cheap, but revenue-generating oncology companies also do generally trade close to a multiple of five times their annual sales. Celgene, after all, is already trading at a price to sales ratio of close to 9, although it's arguably an outlier even within this high-flying subset of pharma stocks.   

The bottom line: Celgene still has room to grow based on its immense clinical pipeline and robust commercial portfolio of high-value oncology and anti-inflammatory medicines. As such, this top biotech is arguably a great growth stock for any type of investor. 

Alexion is a rare disease titan, but its trajectory might be unsustainable

Alexion operates within the second-fastest growing niche pharma segment: orphan drugs (drugs that are indicated for rare diseases). This particular pharma niche is attractive because it offers drugmakers longer periods of exclusivity, typically lower levels of competition, tax benefits, shorter development timelines, and favorable pricing structures that are often immune to criticism from payers. Alexion, for its part, is forecast to ride this surge in the orphan drug space to produce top-line growth that averages about 15% over the next four years, according to Mizuho Securities.

However, Alexion's ultra-high growth projections are far from rock solid. The fundamental problem plaguing Alexion is its extreme reliance on its flagship medication Soliris, which is indicated for patients with either the life-threatening blood disorder paroxysmal nocturnal hemoglobinuria or atypical hemolytic uremic syndrome for growth. In 2017, for example, the company expects around 90% of its total sales to come from this single drug.

Scientist holding pills

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That's a serious problem. Alexion did attempt to diversify its revenue stream in 2015 by paying a sky-high premium to acquire Synageva. Unfortunately, Synageva's lead product, Kanuma, an enzyme replacement therapy for patients suffering with LAL-D, has dramatically under-performed since its launch -- it hauled in a mere $12 million in sales in the first-quarter of 2017.

When Alexion initially bought Synageva, however, Kanuma was expected by some industry insiders to be a potential blockbuster, illustrating just how poorly the drug has performed so far. Making matters worse, Alexion also decided to cut bait with one of Synageva's most promising clinical candidates, SBC-103, as a potential treatment for mucopolysaccharidosis IIIB earlier this year.

Another unfavorable factor is that Alexion lacks a robust drug discovery platform, meaning that it relies heavily on costly acquisitions such as the Synageva deal to flesh out its clinical pipeline. Alexion, for instance, spent less than $100 million in the past two years on discovery research, which is a pittance for a biotech of its size.

That's also a strategy that rarely works long-term in the pharma industry -- as shown, at least partly, by the anemic return on capital emanating from Alexion's Synageva acquisition. The most productive biotechs, after all, tend to have strong internal R&D engines that produce the bulk of their drug candidates, with mergers and acquisitions serving primarily to fill in the gaps. 

Summing up, Alexion's star may start to fade if it doesn't get Kanuma's commercial launch back on track, or if it has any missteps with Soliris' planned label expansions. That's not to say this growth stock is doomed to fail, or is even in any serious danger of dramatically under-performing the Street's expectations. But Alexion certainly doesn't offer anywhere near the number of value drivers of, say, a Celgene, thanks to its questionable acquisition of Synageva. This rapidly growing orphan drugmaker might not be a suitable pick for more conservative investors.