Source: Food and Drug Administration via Facebook.

The biotech sector has been practically unstoppable for the last couple of years. Over the trailing five-year period, the SPDR S&P Biotech ETF, which is comprised of nearly 100 biotech stocks, has trounced the S&P 500, with a gain of nearly 330% to the S&P 500's 87%.

There are a number of factors that have made biotech stocks so attractive, but a return to growth in the U.S. economy and a decisively bullish stock market are the two that have provided the biggest lures for investors chasing high-growth-potential stocks in the biotech sector.

As you might imagine, the biotech sector's outperformance has some on Wall Street asking if it's time to keep your distance from these stocks. With nearly 90% of the sector still losing money, the case can easily be made that biotech stocks would be clobbered greater than the overall market if a recession were to strike, or even if the stock market indexes turned lower.

Stocks to buy now in biotech
Despite this, however, reasonably valued biotech stocks do still exist. Today, we'll take a closer look at two stocks to buy now in biotech and why I believe you can still trust these names. As always, keep in mind that I'll be just scratching the surface on the catalysts for these companies, so you'll certainly want to do more digging on your own. Additionally, while I wish I had a crystal ball, the value of these stocks could still fall, so you'll want to assess your risk tolerance prior to investing in either of these.

Source: Pixabay.

I've previously described Celgene as the most complete biotech stock you can buy, so it should come as no surprise that it's my first choice.

Celgene's success lies in the balance of its three-tiered approach to growth: organic, collaboration, and acquisition.

First and foremost, what separates Celgene from most of its competition is its ability to grow organically. We're seeing a lot of consolidation and mergers within the healthcare space right now, but Celgene is cranking out revenue growth of 20% or more year in and year out with just its existing product portfolio and the approval of new therapies.

Instrumental to Celgene's organic growth prospects is its focus on expanding existing labels. Revlimid, Celgene's blockbuster blood cancer drug and the drug responsible for about two-thirds of its current revenue, is being studied in eight additional label indications. Otezla, the company's recently-approved anti-inflammatory medicine for psoriatic arthritis and moderate-to-severe plaque psoriasis, could be approved for another half-dozen indications.

Celgene also has around 30 collaborations that it can rely on for new product development. Not every collaboration or licensing deal will pan out for Celgene (and it's certainly been aggressive with its drive to find partners), but even just a few success stories could mean big victories for Celgene.

For example, last week's announcement from partner Agios Pharmaceuticals (NASDAQ:AGIO) showed that leukemia drugs AG-221, an IDH2-mutant inhibitor, and AG-120, an IDH1-mutant inhibitor, demonstrated overall response rates of 40% and 31%, respectively, in phase 1 studies. The market may not have loved the news, but AG-221's response rate puts it on target to become a possible standard of care treatment for untreated acute myeloid leukemia patients if it continues to succeed in later-stage studies. AG-221 could carry peak annual sales of $1 billion, meaning Celgene may have landed a blockbuster drug for a very reasonable price ($130 million upfront and $120 million in possible milestone fees).

Source: Celgene.

Lastly, Celgene can utilize acquisitions from time to time to boost its bottom-line, although this is by no means its primary source of growth. In 2010, Celgene bought Abraxis BioScience for $2.9 billion, gaining access to cancer drug Abraxane in the process. Since this buyout, Celgene has expanded Abraxane into pancreatic cancer and made it a first-line therapy in non-small cell lung cancer, and it's taken the drug from a little more than $300 million in revenue in 2009 into what could be $1.5 billion to $2 billion in projected sales by 2017.

With a PEG ratio still below one, I suspect Celgene's run higher is far from done.

Exelixis (NASDAQ:EXEL)
My other selection is something of a "homer" pick, since I already own it, and it's a vast departure from selecting the highly profitable Celgene, a company with a deep product portfolio and development pipeline. Still, for highly risk-tolerant investors, I'd suggest taking a closer look at Exelixis.

Source: Roche.

Last year was an utter disaster for Exelixis shareholders, with the stock turning in just about the worst performance in the biotech sector, exclusive of micro-cap stocks. The catalyst was the release of its phase 3 COMET-1 data showing that Cometriq (its only approved drug) didn't meet its primary endpoint, a statistically significant improvement in median overall survival. This study was critical for Exelixis as it was geared at treating metastatic castration-resistant prostate cancer, and prostate cancer is the second most-diagnosed type of cancer. With this lucrative opportunity off the table, Exelixis was forced to cut a majority of its staff and regroup.

However, 2015 (and beyond) is looking a whole lot better.

To begin with, Exelixis could be just weeks away from reporting the highly-anticipated phase 3 results from its METEOR study involving Cometriq as a treatment for advanced renal cell carcinoma (a common type of kidney cancer). What makes METEOR so different from COMET-1 (aside from the different cancer types) is that the primary endpoint is progression-free survival (PFS) in METEOR, with overall survival a secondary endpoint.

This difference is important because in the trial that led to Cometriq's metastatic medullary thyroid cancer (MTC) approval, and even in COMET-1, Cometriq trounced the placebo in terms of PFS. Specifically, it posted PFS numbers beating the control group 11.2 months to 4.0 months in the MTC trial, and 5.5 months to 2.8 months in COMET-1. On top of these past PFS successes, Exelixis has delayed reporting its METEOR results because PFS events have been slow to come in thus far in the trial, which could be the result of better-than-expected efficacy. All together, we could have a recipe for Cometriq meeting its primary endpoint.

Source: Roche.

Next up, we have a PDUFA decision date of Aug. 11, 2015 for the combination of cobimetinib and Roche's (OTC:RHHBY) Zelboraf as a treatment for BRAF V600 mutation-positive metastatic melanoma. In the coBRIM study this combo therapy reduced the risks of disease progression and death by nearly half, with a PFS of 9.9 months compared to a PFS of 6.2 months in the Zelboraf monotherapy arm. Additional data released at the American Society of Clinical Oncology's annual meeting, which occurred just a few weeks ago, showed an updated median PFS of 12.3 months for the combo therapy, compared to 7.2 months for the Zelboraf arm. The response rate for the combo therapy was also an improved 70% compared to just 50% for the monotherapy arm. Given this data, an approval seems likely.

On top of these two primary catalysts, Roche has been testing cobimetinib in combination with its in-house immunotherapies, which are designed to enhance the body's own ability to fight cancer. If one of these combinations outperforms, cobimetinib could quickly have an expanded revenue stream.

Exelixis is by no means going to be an overnight moneymaker, but with so many catalysts on the horizon, it does present intriguing value in the eyes of this investor.