If you're looking to invest in successful big biotechs, two of the biggest are Amgen (AMGN -0.21%) and Celgene (CELG). Over the past 10 years, both stocks have more than tripled.
The two companies are at very different stages right now, though. Amgen is looking to roll out new products to bolster revenue from its older drugs, while Bristol-Myers Squibb could soon acquire Celgene. But which of these two biotech stocks is the better buy right now?
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The case for Amgen
Let's first address the negatives for Amgen. The company's overall revenue growth has been weak because of headwinds for several of its top-selling products. You can start with Amgen's current No. 1 drug, Enbrel. The drug's sales continue to slide in the face of intense competition in the immunology market. Sales are also declining for blockbuster drugs Neulasta, Aranesp, and Epogen.
However, Amgen's product lineup includes several drugs that have solid momentum. Osteoporosis drugs Prolia and Xgeva achieved double-digit percentage sales growth last year. Amgen reported in its Q4 results that the launch of new migraine drug Aimovig, which the biotech co-markets with Novartis, is going even better than expected. The biotech also has several other drugs that continue to pick up traction, including cancer therapy Blincyto, multiple myeloma drug Kyprolis, and cholesterol drug Repatha.
Amgen has made a big bet on biosimilars, a bet that is only beginning to pay off. The company's biosimilar to Humira launched in Europe in the fourth quarter of 2018. Amgen also has biosimilars to blockbuster drugs Remicade, Rituxan, and Soliris in development.
In addition to these biosimilars, Amgen's pipeline features seven late-stage programs. One especially promising candidate is tezepelumab, which Amgen is developing with partner AstraZeneca. The drug is in a phase 3 study targeting the treatment of asthma and a phase 2 study for treating atopic dermatitis.
Amgen claims a huge cash stockpile of $29.3 billion, including cash, cash equivalents, and marketable securities. The company uses its solid financial position to reward investors with a dividend that currently yields 3.1%.
The case for Celgene
Are there any negatives for Celgene? Yep. The biotech is highly dependent on blood cancer drug Revlimid, which generates around 63% of Celgene's total revenue. Celgene is also in litigation defending key patents for Revlimid. Even if it succeeds in court, Revlimid will face limited-volume generic competition beginning in 2023.
But there are also a lot of positives for Celgene. You can start with the fact that sales for Revlimid continue to grow. Market research company EvaluatePharma projects that it will still rank as one of the world's top five best-selling blockbusters in 2024.
Celgene's lineup includes several other blockbuster drugs as well. Sales for multiple myeloma drug Pomalyst and immunology drug Otezla continue to soar. Cancer drug Abraxane also is delivering solid single-digit percentage sales growth.
Probably the best thing going for Celgene, though, is its pipeline. The biotech expects to have five new drugs approved by 2020 that all have blockbuster potential -- multiple sclerosis drug ozanimod, myelofibrosis drug fedratinib, cell therapies bb2121 and liso-cel, and blood disorder drug luspatercept.
Then there's Bristol-Myers' pending acquisition of Celgene. The proposed offer represents a nice premium over Celgene's current share price. Celgene shareholders would also receive a contingent value right that gives them even more cash if ozanimod, bb2121, and liso-cel receive FDA approval by specified dates.
Better buy
My view is that Celgene is the better buy. Amgen's dividend is nice, but the company faces some challenges in delivering strong growth with sales declining for several of its top drugs. On the other hand, buying Celgene now would give investors a quick profit if the Bristol-Myers deal goes through.
Check out the latest Celgene earnings call transcript.
But what if the acquisition doesn't happen? I still think Celgene would be a winner over the long run. The biotech seems likely to reach a settlement in the Revlimid litigation, something it's already done in the past. Celgene's current products and its promising pipeline candidates should enable the company to grow sales and earnings well into the next decade.
