Equities have been southbound for most of the year. And after a solid performance in the early days of the pandemic, the biotech industry is lagging the struggling overall stock market.

But some biotechs are doing great. The list includes Regeneron Pharmaceuticals (REGN -0.34%) and Biogen (BIIB 0.51%). These two drugmakers are comfortably in the green year to date and could carry this momentum into 2023. But will they repeat this performance next year?

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1. Regeneron 

Regeneron was having an unimpressive year on the stock market until its shares soared by double-digit percentages in one day in September. As is often the case with biotechs, Regeneron owes this move to positive clinical developments.

Eylea, which it developed with Bayer to treat a rare eye disorder, proved effective in a phase 3 clinical trial, justifying a higher dosage of the medicine. Why is this important? 

Along with atopic dermatitis treatment Dupixent, Eylea is one of Regeneron's most important products. The medicine's composition-of-matter patent is set to expire in the U.S. next year. If Eylea earns approval at a higher dosage, it could help extend its patent exclusivity, which is obviously good news for Regeneron and its shareholders. But there are other reasons the drugmaker is looking good heading into next year.

Revenue dropped in recent quarters as health regulators in the U.S. restricted the use of its coronavirus treatment REGEN-COV. The company faced difficult year-over-year comparisons in that area, but that won't be the case in 2023. Revenue growth should increase meaningfully as a result. Its top line dropped by 15% year over year in the third quarter to $2.94 billion.

Excluding sales from REGEN-COV, revenue increased by a respectable 11% year over year. With both Eylea and Dupixent still performing well, the company will be able to deliver solid financial results. And it has many other pipeline candidates. It is currently running about 40 clinical trials, a quarter of which are phase 3 studies.

Regeneron can extend its lineup with brand-new products and label extensions to existing ones. The biotech plans on submitting an application for higher-dose Eylea by year-end. With this and other potential regulatory decisions next year, not to mention stronger top-line increases, the biotech looks likely to deliver solid returns in 2023 again. Even if it doesn't, Regeneron has the tools a drugmaker needs to succeed in the long run.

That's why investors should stick with this market-beating biotech stock

2. Biogen 

Biogen's year in the stock market resembles that of Regeneron: unimpressive at first until significant news on the clinical front jolted the biotech's shares. Biogen and its partner Esai reported positive top-line results from an ongoing phase 3 clinical trial for lecanemab, a potential therapy for Alzheimer's disease (AD). Positive AD-related clinical news doesn't come every day.

Biogen itself has had serious difficulties in this area. The biotech's approved AD treatment, Aduhelm, has been seriously underwhelming on the market, partly because physicians aren't confident that it is actually effective. Lecanemab represents one more shot at making serious waves in this therapeutic area, which includes about 6.5 million patients in the U.S. alone.

Biogen badly needs this project to go smoothly because it isn't getting much help from the rest of its lineup. Some of the company's best-selling products are seeing their sales decline due to patent cliffs or stiff competition on the market.

What are the next steps for lecanemab? Biogen and Esai have already applied for accelerated approval, and they should hear back from the Food and Drug Administration by Jan. 6.

Medicines that earn the green light through the accelerated-approval pathway must undergo a confirmatory study. Lecanemab's ongoing late-stage trial would serve that purpose. The two partners plan on going after regular approval by submitting the appropriate paperwork to regulatory bodies in the U.S. by March 31. Biogen and Esai will also seek to apply for marketing authorization in Europe and Japan by the same date.

Developments related to lecanemab will likely be the primary driving force behind Biogen's performance next year. Good news on the regulatory front -- in the form of accelerated approval in the U.S. and the appropriate submissions in various countries for regulatory approval without delay and hiccups -- should work wonders for the stock. But a major obstacle with this program could sink Biogen's shares.

In my view, investors shouldn't rush to purchase shares just yet. Biogen's prospects will look very promising if lecanemab earns regular approval. But until then, a lot can go wrong for the company.