Biogen Inc. (NASDAQ:BIIB) and Amgen Inc. (NASDAQ:AMGN) are two of the biotech industry's oldest players, with long, successful track records. While they have a lot in common, the opportunities and challenges they face aren't the same.

Which of these large-cap biotech stocks is better positioned to deliver big gains? Here's how Amgen and Biogen stack up against each other.

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The case for Biogen

Biogen has a couple of important features in its favor: strong cash flows from its multiple sclerosis (MS) franchise and Spinraza, a new blockbuster drug the company launched in 2017. Spinraza treats a rare inherited disorder called spinal muscular atrophy; treatment requires several injections through the spine each year at around $125,000 per injection.

Compared with a year ago, Spinraza sales jumped 108% to $423 million in the second quarter, but continued growth could be a lot more difficult. There are several treatments in development and a limited number of patients. A once-and-done experimental gene therapy that Novartis (NYSE:NVS) has in late-stage testing could begin hammering sales of Spinraza as soon as next year. 

Biogen's lead drug, the oral MS therapy Tecfidera, generated an impressive $1.1 billion in sales during the three months ending in June, but total sales for the company's own MS products fell 6.5% to $2.8 billion. Competition from Ocrevus, a new therapy that Biogen out-licensed to Roche (OTC:RHHBY) years ago, is partly to blame for Biogen's MS franchise losses. Roche pays Biogen a royalty percentage that will offset some, but probably not all, of the losses.

Biogen's late-stage drug development pipeline has just one notable candidate in a pivotal study for the treatment of early stage Alzheimer's disease. We really won't know until 2020 if aducanumab actually slows the disease, and attempts with similar candidates haven't provided evidence of any real benefit. 

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When it comes to returning cash to shareholders, Biogen outperforms many of its biotech peers. The company doesn't offer a dividend, but it does generate enough cash to repurchase millions of its own shares. Biogen spent $2.8 billion on buybacks in the second quarter, and has reduced its outstanding share count 14.7% over the past five years.

The case for Amgen

While Novartis is acting as a thorn in Biogen's side, Amgen is marketing a new migraine prevention drug in partnership with Novartis. Aimovig was the first in a new class of treatments that prevent the vicious headaches from occurring, and millions of potential patients could make it a mega-blockbuster down the road. Amgen investors will want to look for the number of Aimovig prescriptions written in the months ahead instead of net sales. The partners are offering heavy discounts to earn market share now that similar treatments from Teva Pharmaceuticals and Eli Lilly have earned Food and Drug Administration (FDA) approvals.

Amgen also has a bone density drug, denosumab, with strong sales that keep on climbing. Marketed as Prolia and Xgeva, the franchise generated $1.1 billion in sales during the second quarter, an 18% gain compared with the previous-year period.

Biogen isn't the only company with older products losing ground. Amgen's anti-inflammatory injection Enbrel earned its first FDA approval 20 years ago. The $1.3 billion in sales it generated during the second quarter made up 29% of Amgen's total product sales during the period. Enbrel revenue fell 11% year on year during the second quarter, and overcoming the losses will keep Amgen awfully busy for the next several years.

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Amgen's pipeline contains several bispecific antibodies, which are drugs that can act on two targets at the same time. The first such antibody to earn approval, Blincyto, is also the first cancer treatment used to keep leukemia in complete remission when doctors find residual traces of the disease still floating around. By extending the time patients stay in remission from several months to a couple of years, this $173,000-per-year therapy could generate more than $1 billion annually.  

Over the past five years, Amgen has spent enough on buybacks to lower its outstanding share count 14.2%, which is nearly as much as Biogen over the same time frame. Unlike Biogen, Amgen also pays a dividend, which offers a 2.6% yield at the moment.

Amgen has hiked its payout a stunning 181% over the past five years, and investors can expect more raises in the years ahead. The company used just 30% of free cash flow over the past year to meet its dividend obligation, which leaves a long runway for further increases. 

The better buy

Biogen stock has been trading at around 12.7 times this year's earnings estimates, which is way below the S&P 500 average. At around 14.4 times earnings expectations, Amgen is a bit more expensive, but with a strong product lineup that should allow the company to keep raising its dividend payout, it's the better stock to buy right now.

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.