Source: "11g poker chips" by Logan Ingalls from South Boston, MA, USA. Licensed under CC BY 2.0 via Wikimedia Commons

Give up now if you're looking for a totally safe biotech stock. They don't exist. 

But if you're looking for a biotech stock that is relatively safe compared to most others, that's a different story. And there's one biotech that is arguably the safest biotech bet on the market: Gilead Sciences (NASDAQ:GILD). Here's why.

Clearing the deck
When many investors think of biotech stocks, they think of extreme volatility and high risks. The reality is that this perspective is often right on target. But what are the root causes of this volatility and risk? Two big ones stand out.

First, many biotechs only have products at the clinical stage. They're burning through cash hoping to complete testing as quickly as possible. These companies' shares can swing wildly up or down based on reports (and sometimes mere rumors) of their experimental drugs' clinical results.

Source: AbbVie

Second, the fates of these biotechs hinge on regulatory approval. A drug that appeared to be quite successful overall can be turned down by the FDA or European regulatory agencies because of safety concerns.

These two factors alone clear the decks of most biotechs when it comes to any discussion about which one is potentially the safest. A handful of biotechs, though, can claim enough revenue and earnings from already-approved products that they're more (but not totally) insulated from drastic stock gyrations. Gilead belongs in that latter group -- and has for years.   

The big boys
But can a convincing argument be made that Gilead is the safest of the consistently profitable biotechs? I think so.

If we find safety in numbers, Gilead wins hands down. It has the biggest market cap of any biotech at $150 billion. That's comfortably ahead of Amgen's (NASDAQ:AMGN) $122 billion market cap. Gilead also beats the market caps of AbbVie (NYSE:ABBV)Biogen (NASDAQ:BIIB), and Celgene (NASDAQ:CELG) by 50% or more.

In a comparison of revenue and earnings, Gilead wins again. Last year, the biotech generated earnings of $12.1 billion on revenue of $24.9 billion. Amgen again came in second, with 2014 earnings of $5.1 billion on revenue of a little over $20 billion. AbbVie reported revenue of nearly $20 billion, but had lower earnings than Gilead or Amgen. Biogen and Celgene boasted great numbers also -- but far behind those of the others.

Source: Gilead Sciences

Being big doesn't mean you're necessarily safe, though. Revenue and earnings could be at risk due to competition.

Amgen, for example, made almost 30% of its revenue last year from its Neulasta/Neupogen franchise. But that revenue is declining and could decline even more with the recent approval of Zarxio, a copycat biosimilar to Neupogen. That makes Amgen a riskier biotech stock than Gilead in my view. The same verdict applies to AbbVie, which obtains over 60% of its revenue from Humira, a drug that loses patent protection in December 2016.

Gilead does receive more than half of its total revenue from hepatitis C drugs Harvoni and Sovaldi. And those drugs do have competitors, particularly AbbVie's Viekira Pak. But Gilead has already been entangled in a price battle against AbbVie, and seems to have won; more major payers have selected Harvoni and Sovaldi for their formularies than have picked Viekira Pak. 

Trump card
If any biotech has a trump card to play in the battle for safest biotech stock, I'd say it's Gilead. What's that trump card? Valuation.

Gilead looks more attractively valued than any of the other big biotechs mentioned. Its trailing 12-month price-to-earnings multiple is below 14. Amgen claims the second-lowest trailing earnings multiple at a far-distant 24.

On a forward basis, Gilead also comes out smelling like a rose. Its earnings multiple based on future estimates is less than 10. AbbVie takes the consolation prize in this category with a forward P/E under 12.

Valuation is important in the safety question for a simple reason. The stock of a solid company will only decline in value to a point. When investors see shares reach such a low point that buying the stock is practically a steal, that stock is highly likely to rebound. Gilead's relatively low valuation should give the stock somewhat more protection from catastrophic drops than the other biotechs can claim.

The caveat you knew was coming
When all factors are considered, Gilead Sciences has a pretty good claim to the moniker of safest biotech bet in the market. But remember what I said at the very beginning: safest doesn't mean safe.

Gilead's shares will decline significantly at times. In December, the stock dropped over 20%. It could happen again at some point in the future. However, much of the December loss was quickly regained. And that decline contributed to Gilead's current attractive valuation.

You won't find a totally safe biotech stock. But you can find some biotech stocks that let you sleep soundly, knowing that they have a very good shot at performing well over the long run. In my view, Gilead Sciences is one of the best of them.