Amgen (NASDAQ:AMGN) is about to get a piece of Celgene (NASDAQ:CELG). Sort of. To ease the way for the pending acquisition of Celgene by Bristol-Myers Squibb (NYSE:BMY) to close, Celgene is selling its psoriasis and psoriatic drug Otezla to Amgen for a cool $13.4 billion. It's a win-win-win deal.

But with all of the shuffling going on, which of these two big biotechs -- Amgen or Celgene -- is the better pick for investors hoping to win? The answer: It's complicated.

A man in a lab coat smiling and holding test tube with a rack of test tubes in front of him.

Image source: Getty Images.

A clear choice in some ways

If we could put aside the acquisition of Celgene by Bristol-Myers, I think the decision between Amgen and Celgene would be an easy one. A quick summary of the company's products and pipelines will explain why.

Amgen is at best treading water, as evidenced by the company's mediocre second-quarter results announced in July. Sales are slipping for several of the big biotech's top drugs, including Sensipar, Neulasta, Epogen, and Aranesp. Amgen's lawyers managed to preserve patent protection for Enbrel, but the immunology market is crowded with plenty of strong competitors.

Sure, Amgen has some winners in its lineup. Osteoporosis drugs Prolia and Xgeva especially stand out. Migraine drug Aimovig and leukemia drug Blincyto have great prospects. Over time, Amgen's biosimilars could contribute significantly to its revenue. However, all of these -- plus other drugs like Kyprolis and Repatha -- aren't enough to enable Amgen to deliver strong growth because of the headwinds for its older drugs.

Amgen claims a big pipeline, but it's loaded with early stage programs. The company has only five late-stage programs, three of which are pursuing additional indications for already-approved drugs.

Meanwhile, Celgene has four blockbuster drugs generating strong growth: Revlimid, Pomalyst, Otezla, and Abraxane. The biotech recently won FDA approval for myelofibrosis drug fedratinib. Celgene thinks it will reach blockbuster status as well.

But the really attractive thing about Celgene is its pipeline. The company has a bevy of potential winners with blockbuster potential on the way.

Celgene hopes to win FDA approval of luspatercept in treating beta-thalassemia-associated anemia by Dec. 4, 2019, and in treating myelodysplastic syndromes (MDS) by April 4, 2020. It expects FDA approval for ozanimod in treating relapsed multiple sclerosis by March 25, 2020. It plans to file for approval of cancer therapy liso-cel later this year. The biotech should also submit bb2121 for approval in early 2020.

Celgene's current products and pipeline make it the clear winner over Amgen, in my view. But the decision is easy only if we exclude the impact of Bristol-Myers' buyout of Celgene.

Muddying the waters

Including that acquisition and the related sale of Otezla to Amgen muddies the waters. Assuming the transaction closes (which seems like a safe assumption to make), Celgene shareholders will receive $50 in cash plus one Bristol-Myers share for each share of Celgene owned. That translates to a premium of a little over 1% greater than Celgene's current share price based on the current share price for Bristol-Myers.

There is a sweetener to the Bristol-Myers acquisition, though. Celgene shareholders will also receive a contingent value right (CVR) share for each share of Celgene owned. This CVR will pay $9 if the FDA approves ozanimod, liso-cel, and bb2121 by specified dates. I think those approvals are likely to happen by the required deadlines.

Amgen's pickup of Otezla also makes its growth prospects look a little better. Otezla's sales soared 31% year over year in the second quarter. The drug could reach peak annual sales topping $3 billion, compared to $1.6 billion last year.

But the big wild card is Bristol-Myers Squibb's share price. If it falls, investors who buy Celgene now could be stuck with a loss -- at least over the short term.

Better buy

To decide whether Amgen or Celgene is the better stock to buy requires us to compare the prospects for Amgen with Otezla against Bristol-Myers with all of Celgene's products and its pipeline. That's not nearly as easy of a call, in my view, as choosing between Amgen and Celgene by themselves. But I still think that Celgene is the better pick.

While Amgen is trying to find ways to generate growth, Bristol-Myers is already growing at a solid pace thanks in large part to anticoagulant Eliquis and cancer immunotherapy Opdivo, both of which are likely to rank among the top five best-selling drugs in the world over the next few years. Adding Celgene's lineup and pipeline to the mix should boost Bristol-Myers' growth prospects significantly, even with Revlimid facing limited-volume generic competition beginning in 2023.

We can't leave out dividends in our evaluation. Bristol-Myers' dividend yield currently stands at 3.4% versus Amgen's yield of 2.8%. Over time, the higher yield that Bristol-Myers offers will make a big difference in total return.

Investing in biotech stocks can be tricky, though, because it's hard to know how pipeline candidates will fare in clinical studies. Amgen's early stage drugs could make it a huge winner down the road. For now, though, I think that Celgene's blockbuster drugs and its largely de-risked late-stage candidates give it an advantage when combined with Bristol-Myers Squibb's top drugs and its strong dividend.

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.