In This Article:
Amgen (NASDAQ: AMGN) and Gilead Sciences (NASDAQ: GILD) rank among the elite in the world of biotech. Both companies have long track records of success. Both generate huge cash flow, but both also face headwinds.
So far in 2018, Amgen claims a better stock performance than Gilead. Which of these big biotech stocks is the better pick for investors now? Here's how Amgen and Gilead stack up against each other.
Image source: Getty Images.
The case for Amgen
It's probably best to first address Amgen's challenges. Sales are slipping for several of the company's top products, including No. 1 seller Enbrel. Amgen's No. 2 best-selling product, Neulasta, is headed for fierce competition from Mylan's biosimilar, which won FDA approval in June.
The good news, though, is that all of these drugs continue to generate a lot of money for Amgen. They've helped the company build up a cash position of $29 billion, including cash, cash equivalents, and marketable securities. Although sales from these drugs will decline, they will continue to contribute significantly to Amgen's cash flow.
Amgen also has several drugs that should be able to offset the falling sales for its older products. Prolia and Xgeva, both of which treat bone disorders, are blockbusters that continue to enjoy strong sales growth. Other products in Amgen's lineup, especially multiple myeloma drug Kyprolis and cholesterol drug Repatha, should become bigger winners over time. Newly approved migraine drug Aimovig, which Amgen co-markets with Novartis, is expected to be another blockbuster.
The company's pipeline includes nine late-stage programs. Several of these programs target additional indications for already-approved drugs such as Aranesp and Kyprolis. The most notable new candidate in the mix is asthma drug tezepelumab, which Amgen is developing with AstraZeneca. In addition, Amgen has a solid bench of biosimilars in development.
Amgen seems likely to use its cash stockpile and strong cash flow to make acquisitions to build up its pipeline even more. In the meantime, the company is using its financial strength to reward investors. Amgen's dividend currently yields 2.69%. The company also repurchased nearly $14 billion of its stock in the first half of 2018.
The case for Gilead Sciences
Gilead Sciences has largely been a victim of its own success. Its hepatitis C virus (HCV) drugs, beginning with Sovaldi, have been so effective at curing patients that Gilead's HCV sales have fallen dramatically over the last two years. It didn't help that the biotech also faced increasing competition along the way.