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When it comes to biotech stocks, Celgene (NASDAQ:CELG) and Gilead Sciences (NASDAQ:GILD) are easily two of the brightest stars. After all, these two top dogs have generated enormous returns for investors since the start of the biotech bull market back in 2010:

CELG Chart

However, these two blue-chip stocks have seemingly lost their way in 2016, pulling back in a big way from their former highs. With this trend in mind, let's consider which stock is a better bargain right now.

Balance sheet
At last count, these two biotechs were both reportedly carrying a substantial amount of leverage on their balance sheets, shown by their respective debt-to-equity ratios in the table below. 

CompanyDebt-to-Equity RatioCurrent RatioCash on Hand
Celgene 240% 4.78 $6.58 billion
Gilead 119% 3.44 $26.2 billion

Data source: S&P Global Market Intelligence.

Celgene's balance sheet, though, does looks like the riskier of the two at this stage, which isn't too terribly surprising given the biotech's aggressive approach to deal making in the past year.

Specifically, Celgene spent $7.2 billion to acquire Receptos for its experimental ulcerative colitis and multiple sclerosis drug candidate ozanimod, and struck a research partnership deal with Juno Therapeutics worth up to $1 billion to develop adoptive T cell therapies for a host of blood-based malignancies. 

Gilead, for its part, did take out $10 billion in new debt at the end of last year and inked a $725 million development deal with Galapagos NV to add the experimental anti-inflammatory medicine filgotinib to its clinical portfolio, putting the long-term health of its balance sheet at risk as well. 

On the bright side, neither company appears to be any danger of failing to meet their short-term financial obligations, evinced by their respective current ratios and sizable cash positions.  

When it comes to top-line growth, Celgene is easily the winner. Because of the strong commercial launch of its psoriatic arthritis drug Otezla and the recent label expansion for its flagship cancer drug Revlimid in newly diagnosed multiple myeloma, analysts polled by S&P Global Market Intelligence have the biotech's top line growing by almost 18% in 2017.  

Gilead, on the other hand, is expected to see a noteworthy deceleration in its top-line growth moving forward. Although the biotech's total annual revenue jumped 31% last year, for instance, the Street thinks that unfavorable dynamics in the hepatitis C market will drive the biotech's revenues down by 3% in 2016 and another 2% in 2017. 

From a simple forward price-to-earnings ratio perspective, Gilead appears to offer more value for shareholders than Celgene right now. After all, Gilead's shares are currently trading at a forward P/E ratio of 7.2 -- highly compressed compared to most of its closest large-cap biotech peers. Celgene, for example, sports a forward P/E of around 18.4. 

When valuing any biotech, though, it's always important to consider a company's economic moat -- or its ability to maintain its profitability over the long-term. And from an economic moat point of view, Celgene comes across as the winner.

The basic issue is that Celgene, at its core, is a blood cancer specialist -- a market that is already valued at over $24 billion a year and is still growing at a healthy clip. Gilead's business model, on the other hand, is highly skewed toward the infectious disease space -- with the biotech being the current market share leader, by a wide margin, in both the HIV and hepatitis C drug markets.  

The big picture is that cancer rates -- especially blood-based malignancies -- are only expected to increase for the foreseeable future for myriad reasons. The incidence rates of infectious diseases such as HIV and hepatitis C, by contrast, are declining in most Western nations due to better screening procedures and the introduction of functional cures like Gilead's Harvoni. 

Therefore, Celgene's revenue is likely to be more sustainable than Gilead's over the long haul as a result of these functional differences in their core drug markets. 

Which company is the better buy?
Celgene is probably the better long-term buy at this point because of its dominant position in the rapidly growing blood cancer market and the fact that Gilead's top line is heading in the wrong direction. Celgene, in my view, has also created more deep value for shareholders through its research partnerships with Juno Therapeutics and recent buyout of Receptos. After all, each of these deals could generate megablockbuster products for Celgene within the next few years.

Gilead's partnership with Galapagos, on the other hand, doesn't appear to have the juice needed to move the needle in terms of long-term revenue growth. In fact, filgotinib, if approved, is likely to face stiff competition from similar experimental drugs right off the bat. So, Gilead's probably going to have do more on the M&A front to shore up its top line in the not-so-distant future -- perhaps even buying a revenue-generating biotech, and that could entail taking on even more debt. 

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.