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If you're looking for hot biotech stocks, neither Gilead Sciences (NASDAQ: GILD) nor Biogen (NASDAQ: BIIB) is likely to appeal to you right now. Gilead is up by a single-digit percentage so far in 2019, but its performance is far behind that of the S&P 500 index. Shares of Biogen are down close to 20% following the company's major disappointment with experimental Alzheimer's disease drug aducanumab.
There are reasons, though, for investors to consider each of these biotech stocks. Which is the better pick over the long run? Here are the top arguments for Gilead and Biogen.
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The case for Gilead Sciences
Let's first address the elephant in the room. Gilead's hepatitis C virus (HCV) franchise continues to struggle with falling sales. The good news, though, is that the company expects HCV sales to largely stabilize, with much smaller sales declines than in the past.
With its HCV franchise becoming less of a drag on overall revenue, Gilead's HIV successes should shine brighter. Biktarvy is on track to be the biggest HIV drug ever. Although Gilead's older HIV drugs face generic competition now, the strength of its newer Descovy-based HIV drugs should propel solid overall growth for years to come.
Another area of increasing importance to Gilead is oncology. Sales are expected to continue to climb for cell therapy Yescarta, which Gilead picked up with its 2017 acquisition of Kite Pharma. The drug generated $264 million in revenue last year, but analyst project peak annual sales for Yescarta of more than $2.5 billion.
But the most compelling argument for buying Gilead Sciences stock is the biotech's pipeline. The company should extend its dominance in HIV, especially if long-acting therapy GS-6207 is successful. Even though the drug is only in early stage clinical studies, RBC Capital Markets analyst Brian Abrahams thinks it could be a transformative catalyst for Gilead in the future.
Gilead and its partner, Galapagos, have also reported positive results from multiple phase 3 studies for filgotinib in treating rheumatoid arthritis. The drug is also being evaluated in other late-stage studies targeting the treatment of Crohn's disease and ulcerative colitis. Analysts peg peak annual sales for the drug between $4 billion and $6 billion.
Despite announcing disappointing results for selonsertib in treating non-alcoholic steatohepatitis (NASH) patients with compensated cirrhosis (stage F4) earlier this year, Gilead still could see success with its NASH pipeline. The company is also evaluating selonsertib in treating NASH patients with stage F3 bridging fibrosis as well as a combination of the drug with cilofexor (GS-9674) and firsocostat (GS-0976) in treating NASH patients with advanced fibrosis.