Generally speaking, biotech stocks were one of the best places to put your money in 2019. The iShares Nasdaq Biotechnology ETF gained a stellar 25.2% last year, despite the political wrangling over prescription drug prices in the United States. Fortunately, this upward trend should continue unabated in 2020. The biotech industry, after all, has been generating game-changing breakthroughs across a number of areas in recent years, opening up a wide range of novel, high-value markets.

Where should cautious investors put their money in the diverse landscape that is biotech? Mid-cap biotechs -- or companies with market caps of between $2 billion to $10 billion -- tend to offer a compelling mix of upside potential and relative safety for individuals that like to avoid hefty doses of risk. The fundamental reason is that biotechs with modest market caps generally have at least one approved product on the market, stable and growing free cash flows, and assets that may attract a larger partner. 

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Which mid-cap biotechs are worth buying right now? Amarin (NASDAQ:AMRN) and Intercept Pharmaceuticals (NASDAQ:ICPT) are two names worth checking out during the early days of 2020. Here's why. 

Amarin: All systems are go

Late last year, the U.S. Food and Drug Administration (FDA) granted Amarin's supplemental New Drug Application to expand the label of its highly refined omega-3 treatment known as Vascepa. This broader label is widely expected to grow the drug's target market exponentially in the coming years. What this means is that Vascepa has a real shot at achieving blockbuster status (greater than $1 billion in annual sales) perhaps as soon as 2021, and maybe even megablockbuster status (greater than $5 billion in annual sales) in the latter half of the decade. Amarin's stock, in kind, should benefit tremendously from this sizable commercial opportunity. 

Not all Wall Street analysts are sold on Amarin's prospects, however. Even though AstraZeneca recently bowed out of the omega-3 treatment game and Acasti Pharma's rival therapy, CaPre, flamed out in late-stage testing, Amarin still has its fair share of skeptics on Wall Street. Oppenheimer's Leland Gershell, for example, has argued that the biotech's shares are grossly overvalued at current levels due to the enormous costs associated with launching a novel medication into a large market.

While Amarin's detractors may be proven correct in the final analysis, the facts on the ground clearly favor the bull thesis for Vascepa. The drug has no equal from an efficacy standpoint, it's relatively cheap for a branded prescription medication, and millions of Americans need an add-on to statin therapy to control their triglyceride levels. So even though it may take a while for Vascepa to truly benefit from this recent label expansion, there's no logical reason to believe that it won't ultimately become a smashing commercial success. As a result, this mid-cap biotech stock should appeal to most investors on the hunt for healthy growth opportunities.   

Intercept: A unique buying opportunity

Intercept is on the cusp of a truly staggering commercial opportunity. Last year, the biotech became the first ever to generate positive top-line data in a late-stage trial targeting non-alcoholic steatohepatitis (NASH). NASH is a severe form of non-alcoholic fatty liver disease that currently has no approved treatments. Intercept's NASH candidate is Ocaliva, a drug already approved for another serious liver disease known as primary biliary cholangitis. Last September, the biotech filed a regulatory application with the FDA for Ocaliva's NASH indication. The agency's regulatory decision is currently slated for mid-2020. If things go according to plan, Intercept plans to begin marketing Ocaliva as a ground-breaking NASH treatment by the middle of 2020.

What's the big deal? NASH may be the largest untapped commercial opportunity in all of biopharma. Due to the out-of-control obesity epidemic in many Western countries, industry insiders have suggested that NASH drug sales could one day exceed a jaw-dropping $60 billion per year. That's not quite on par with oncology, but it is a staggering figure nonetheless. Ocaliva, as the first approved NASH medication, should thus have no problem hitting at least $2 billion in annual sales. That's a hefty commercial opportunity for a company with a market cap of $3.3 billion right now.

What's the risk? Ocaliva does have some worrying side effects that could prove problematic during the current review cycle. That being said, Ocaliva has so far been the only NASH drug candidate to meet a key primary endpoint in a pivotal stage trial. Moreover, there is a well-documented need for some form of viable treatment option for this deadly liver ailment. So the odds are that regulators will indeed approve Ocaliva, but perhaps with a restrictive label. Regardless, an approval for NASH -- even one with a black-box warning label -- should be worth several billion in annual sales. That's arguably reason enough to have this mid-cap biotech on your radar right now.

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.