First, let's get one thing out of the way. Investing in small-cap stocks can be very risky. These companies aren't worth much for a reason; most investors don't see them as attractive options. And while the majority isn't always right, it is still worth it to at least consider widespread opinions.

On the other hand, many established corporations were once small-cap stocks. So clearly, some companies in this category are worth investing in. Let's consider two small-cap stocks that carry above-average risk but that could soar as early as next year if things work out: Bluebird Bio (BLUE -6.53%) and Krystal Biotech (KRYS -1.16%).

1. Bluebird Bio

Bluebird Bio is a biotech that seeks to develop gene-editing treatments for rare illnesses. Some of the company's efforts came to fruition this year as it finally earned U.S. approval for two therapies. The first is Zynteglo, a treatment for a blood-related disorder called transfusion-dependent beta-thalassemia.

The second is Skysona, which targets cerebral adrenoleukodystrophy (CALD), a progressive pediatric neurological disease. These approvals were important for Bluebird, and if all goes well, it could start generating revenue from these therapies next year (it currently has no other products on the market). But there are some problems to consider as well. 

First, getting Zynteglo and Skysona available to patients won't be simple. Consider how the former works. Physicians have to collect a patient's blood cells, send them to a lab where they are "edited" to rectify the gene that causes transfusion-dependent beta-thalassemia, and then the blood cells have to be administered back into the patient via intravenous infusion.

The whole process is long, expensive, and complex. That's why Zynteglo can only be administered in qualified treatment centers, which could limit the number of patients who can benefit from it. That's also why it costs a whopping $2.8 million, a sum few people can afford up front.

It is true that Zynteglo is a one-time curative treatment for an illness that otherwise condemns patients to receive regular blood transfusions indefinitely. Zynteglo might well be worth the cost. Still, third-party payers may be a bit reluctant to pick up the tab, considering how complex it is.

With a price tag of $3 million and many of the same limitations, Skysona is in the same boat. Can Bluebird Bio overcome these obstacles? Maybe, but it will take a while before it knows for sure. Observing how the biotech is handling the rollout of Zynteglo and Skysona next year will be very instructive. 

And if the company can get third-party payers on board while managing to treat some patients, investors will respond well. After all, Bluebird's current market cap is about $704 million. The company estimates it could eventually target more than 850 transfusion-dependent beta-thalassemia patients in the U.S., which rounds up to a total revenue of at least $2.38 billion, and that's before you look at Skysona's potential.

There is no doubt that Bluebird could reward patient investors eventually, but the risks are a bit too pronounced for most investors. Those who can stomach heightened volatility should initiate a small position in the company. Other investors should consider more promising biotech stocks

2. Krystal Biotech

Krystal Biotech could earn a significant approval next year. The genome editing company focused on skin diseases submitted its leading candidate, B-VEC, to regulatory authorities in the U.S. back in June. B-VEC is an investigational treatment for dystrophic epidermolysis bullosa (DEB), a rare disease that renders patients' skin extremely fragile and susceptible to blisters even for otherwise ordinary things such as scratching an itch. 

The U.S. Food and Drug Administration (FDA) set a PDUFA action goal date -- the latest date by which it should complete the review of B-VEC -- of Feb. 17, 2023. If approved, this gene-editing therapy would fill an unmet need. Patients with DEB constantly have to deal with severe wounds. The standards of care for DEB focus on treating those wounds. B-VEC would help address the disease at a deeper level. 

DEB patients have injury-prone skin because they lack a particular protein, which B-VEC seeks to rectify at the molecular level, thereby helping wounds heal and even preventing them. Krystal Biotech estimates that there are roughly 9,000 DEB patients in the markets it will target, including 3,000 in the U.S. The biotech sees a greater than $500 million opportunity, which is not bad for a company worth about $1.9 billion as of this writing.

However, Krystal Biotech currently has no products on the market, it does not generate any revenue and it consistently shows red ink on the bottom line. The company does have about a dozen candidates other than B-VEC, but most of them haven't even reached phase 2 studies yet. That means Krystal Biotech's hopes lie with B-VEC, at least in the near term.

Krystal Biotech's shares could soar if its leading candidate gets approved, but they will likely implode otherwise. Biotech investors should consider that before even thinking about pulling the trigger.