While biotech stocks have largely underperformed expectations in 2018 due to several geopolitical headwinds, they're primed to bounce back in a big way next year. The industry, after all, is in the midst of a long-tailed upswing, fueled by an aging global population, rapidly expanding access to heath insurance domestically and abroad, as well as a number of technological innovations that have started to bring game-changing new treatments to market for a diversity of ailments.

Which biotech stocks are in the best position to benefit from this rising tide? Wall Street thinks that Amarin (NASDAQ:AMRN) and Novavax (NASDAQ:NVAX) could both be big winners in 2019. Here's why.  

Empty highway with 2019 written across it, set against a beautiful sunset.

Image source: Getty Images.

The stage is set

Amarin's shares may have shot up by a staggering 348% so far this year, but this mid-cap biopharma appears set for even more healthy gains in 2019. In fact, some analysts think Amarin's stock could nearly double from current levels over the next 12 months. 

Why is Wall Street so keen on this stock? Earlier this year, Amarin presented unprecedented results for its prescription fish oil pill Vascepa in a large cardiovascular outcomes trial. In effect, Vascepa produced a 25% relative risk reduction in terms of major adverse cardiovascular events like heart attack and stroke when taken alongside a statin in patients with persistently high triglyceride levels. No other omega 3 supplement has shown such a profound benefit in a large, double-blind, placebo-controlled study. 

Although Vascepa is unlikely to garner a label expansion for this high-value target market until the back end of 2019, the company still plans on rolling out educational materials on the drug's latest clinical results to doctors well before a regulatory application is even filed. Vascepa's sales, therefore, could start to see a nice uptick from off-label prescriptions in the next few quarters. The key issue is whether or not payers will readily cover Vascepa as an add-on to statin therapy prior to a formal approval from U.S. regulators.

Regardless, Amarin's management is anticipating that Vascepa's sales will eventually top $2 billion per year. That's an enormous sum for a drug presently on track to generate about $221 million for the whole of 2018. 

A year of catalysts

Novavax, a small-cap clinical-stage vaccine developer, is set to unveil key trial results for its respiratory syncytial virus (RSV) vaccine candidate, ResVax, in the first quarter of 2019. The company is also slated to release midstage trial data for its experimental flu vaccine, NanoFlu, in the first half of next year as well. Both of these experimental vaccines are projected by industry insiders to generate well over $1 billion in annual sales at peak -- if approved. 

So, with two major clinical catalysts incoming, it's no surprise that Wall Street thinks Novavax's shares could more double in value in 2019. The burning question for investors, though, is whether Wall Street's optimistic outlook is justified. Novavax, after all, has been painfully close to transitioning into a commercial-stage operation before, only to disappoint investors with exceedingly poor late-stage results

Will this time be different? The good news is that Novavax did perform an informational analysis on ResVax's late-stage trial in pregnant women in early 2018. While this analysis didn't reveal a definitively positive result at the time, it did convince the study's handlers that the vaccine was showing enough of a benefit to keep going.

NanoFlu, on the other hand, has already produced some rather compelling early-stage data in older adults. Specifically, the company reported that NanoFlu significantly improved patients' immune responses against the H3N2 strain when pitted against the current standard of care.

The bottom line here is that Novavax only needs one of these high-value vaccines to pan out for its stock to shoot higher. That's far from a sure thing, given the extreme difficulty of developing a vaccine in general. But this tiny biotech does at least offer investors multiple shots on goal. 

Are either of these stocks worth buying?

Because of Vascepa's strong showing in its cardiovascular outcomes trial, Amarin's risk profile has dropped dramatically in the past few months. The company still needs to convince regulators to approve Vascepa's label expansion, and then convince doctors to prescribe it. But Amarin's biggest risk factor is clearly behind it at this point. So while this stock clearly isn't well-suited for conservative investors, growth-oriented individuals that are comfortable with moderate levels of risk may want to grab some shares in the coming months.

Novavax, on the other hand, is barreling toward two key clinical catalysts that could literally make or break the company. If the company's pipeline hits pay dirt in either flu or RSV, its shares should turn out to be among the best performers in biotech next year. However, Novavax may not survive if both of these promising vaccines flop. This clinical-stage biotech, therefore, is arguably only suited for the most aggressive of investors.

George Budwell has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.