Investors looking for biotech stocks to buy will notice lots of buzz around Amgen (NASDAQ:AMGN) and Mirati Therapeutics (NASDAQ:MRTX) lately. Both companies are developing similar new cancer treatments that could go on to generate billions in annual sales, and there are plenty of arguments over which company has the best one.

Which one of these stocks is a better fit for your portfolio? Let's have a look at the case for each to weigh their chances to provide outsize returns.  

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The case for Mirati Therapeutics

Mirati Therapeutics recently reported impressive interim results from a clinical trial with advanced-stage cancer patients and its lead candidate, adagrasib. This is a potential first-in-class treatment for lung cancer patients with aggressive tumors driven by mutated KRAS proteins.

For decades, oncologists have been aware of an association between aggressive tumor growth and mutated KRAS, but this protein has been an impossible target to inhibit until recently. Shares of Mirati Therapeutics have been on the rise because it looks like adagrasib works as hoped for patients with non-small-cell lung cancer (NSCLC) and one of the most common KRAS mutations, G12c.  

Shares of Mirati popped after the company reported a 45% overall response rate to treatment with adagrasib as a monotherapy. This figure combines results from patients in a phase 1 trial and a phase 2 study. Half of the advanced NSCLC patients in the longer-running phase 1 trial are still on treatment without signs of disease worsening at least eight months after their first dose of adagrasib.

Mirati has already completed enrolling a group of NSCLC patients into a single-arm phase 2 study the company hopes will be sufficient to support a new drug application. If results seen in phase 1 can be reproduced in the larger trial setting, Mirati could submit an application for accelerated approval of adagrasib in the first half of 2021.

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The case for Amgen

Amgen's developing an experimental KRAS inhibitor of its own called sotorasib. It's hard to say which company has the best candidate at the moment, but we'll learn a lot more about Amgen's candidate. In June, Amgen began a phase 3 trial that will randomize patients with previously treated NSCLC to receive sotorasib or standard chemotherapy.

It's going to be years before sotorasib's phase 3 NSCLC study can prove whether it delays disease progression better than standard care. In the meantime, Amgen will apply for accelerated approval of sotorasib based on tumor response results from the phase 2 trial called CodeBreak 100.

Earlier this month, Amgen outlined phase 2 results from 126 patients with NSCLC tumors driven by mutant KRAS proteins without offering a great deal of detail. Amgen will present further sotorasib data in January, but results that might not be competitive with adagrasib from Mirati probably don't need to be a major concern. 

Amgen's already a biotech behemoth that can afford to run programs like sotorasib without risking catastrophe if the data doesn't work out. Despite pandemic-related challenges, sales of Amgen's products rose 8% year over year in the first half to $12.4 billion.

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Amgen runs a tight operation that allows lots of product revenue to flow to the bottom line, and into shareholders brokerage accounts. Shares of the biotech pioneer offer a 2.9% dividend yield at the moment, and the company isn't shy about increasing those quarterly payments. Amgen's payout has more than doubled over the past five years.

Amgen uses the massive cash flows its drugs produce for more than just dividend payments. Last summer, Amgen was able to pay Bristol-Myers Squibb (NYSE:BMY) $13.4 billion in cash for global rights to Otezla, an oral rheumatoid arthritis drug on pace to generate $2.4 billion in sales this year.

Understand the risks

Further success with adagrasib could send Mirati Therapeutics shares flying through the roof, but investors should understand that this is a clinical-stage company without any source of revenue yet. The company finished June with $646 million in cash after burning through $168 million in the first half of 2020.

Expanding clinical trials will accelerate losses, which means investors can probably expect another share offering to dilute the value of their investment long before adagrasib has a chance to generate any sales. Amgen might not be able to put up huge gains in the short term, but the steady cash flows investors can expect from the established biotech make it the better stock to buy now.