A staggering amount of money is flowing into new companies with promising new technologies, many of which will lead to innovative new drugs. There have been 32 biotech IPOs on the Nasdaq exchange in 2018, and dozens more have raised nine-figure sums privately. 

The recent surge in biotech investment is terrific for the pace of innovation, but that capital isn't heading toward the industry's bigger older players, a couple of which are looking mighty underappreciated right now. Perhaps the investment community's intense focus on start-ups has created interesting opportunities to snap up shares of these two overlooked biotechs at a very nice price.

Company (Symbol) Forward P/E Ratio Free Cash Flow, Past 12 Months Cash, Cash Equivalents, and Short-Term Investments as of March 31
AbbVie Inc. (NYSE:ABBV) 12.2 $10.0 billion $9.5 billion
Amgen, Inc. (NASDAQ:AMGN) 14.2 $10.9 billion $32.2 billion

Data source: Yahoo! Finance.

AbbVie and Amgen aren't risky start-ups that can double your money overnight, but their operations churn out enough cash to snap up tomorrow's blockbusters today. Best of all, there's usually plenty left over for their lucky shareholders. Read on to see how massive cash flows make these overlooked stocks look like solid buys right now.

1. AbbVie Inc.: Partnerships big and small

The world's top-selling drug, Humira, generates some tremendous cash flows for AbbVie, which it has deftly invested into new drug candidates at various stages of development. For example, the company shelled out a whopping $21 billion for rights to a blood cancer drug called Imbruvica in 2015. Since becoming the first chemo-free treatment option for the most commonly diagnosed form of leukemia, Imbruvica sales shot up, and it finished the first quarter on pace to contribute more than $3 billion to the company's top line this year.

AbbVie has also had a great deal of luck with smaller deals such as its $75 million upfront payment to Neurocrine Biosciences eight years ago. In return for the relatively tiny upfront payment, promises of royalties, and some milestone payments, AbbVie received rights to Elagolix, a potential new hormone therapy for women with endometriosis-associated pain.

Two lab workers inspecting a microscope slide.

Image source: Getty Images.

The FDA is expected to hand down an approval decision for Elagolix during the present quarter. If this much-needed treatment option earns a widely expected thumbs up, it could become a blockbuster drug for AbbVie, and it's not the only one emerging from the pipeline. Rapid sales growth that has resulted from deals big and small is expected to help drive the bottom line higher at a stunning 16.7% annual rate over the next five years, according to the average Wall Street analyst following the stock.

2. Amgen, Inc.: Saving for something big?

This big biotech's $9.7 billion acquisition of Onyx Pharmaceuticals in 2013 wasn't the best deal in the history of biotech, but it is working out for shareholders. The crown jewel of the acquisition, Kyprolis, won't become Amgen's top drug, but sales of the multiple myeloma therapy will probably reach $1 billion annually by 2020.

It's important to note that Amgen's been generating heaps of cash for years without a major acquisition, and now it has a whopping $32.2 billion worth of ammunition to fire at the next potential growth opportunity. The company could pull the trigger on a major acquisition, but it doesn't need mighty sums to generate big returns for its most patient investors. In 2007, the company handed Cytokinetics $75 million upfront for rights to omecamtiv mecarbil, a heart failure drug that could generate blockbuster sales if successful in an ongoing late-stage clinical trial.

They can also buy your affection

These drugmakers don't just use their cash flows to acquire tomorrow's growth drivers; they hand it back to their shareholders hand over fist. AbbVie's dividend raises have accelerated lately, and management recently announced a new $10 billion stock repurchase program.

ABBV Dividend Chart

ABBV Dividend data by YCharts.

At recent prices, AbbVie's new repurchase authorization is enough to retire around 6.6% of the company's outstanding shares, which is impressive, but hardly holds a candle to Amgen's recent track record. 

A lower share count makes it easier to distribute more to each remaining share, which partly explains how Amgen has more than doubled its quarterly dividend payout over the past five years. The stock offers a respectable 2.7% dividend yield at recent prices that could grow significantly in the years ahead because Amgen needed just 32% of free cash flow generated over the past year to make dividend payments.

AbbVie also has a lot of room to treat investors to bigger payouts. The company used just 42% of free cash flow over the past year to meet its dividend obligations.

With plenty of cash to distribute and invest in their pipelines, both of these biotechs look like screaming buys right now.