Investing in the right biotech stocks can result in large fortunes over time. Biotech companies that use cutting-edge techniques to address difficult-to-treat diseases will always be in demand no matter the condition of the economy. These companies can thrive and become market leaders with just a few successful drugs.

I have two such companies in mind, both of which have very promising short- and long-term prospects. Let's delve a little deeper.

A person buying medicines from a pharmacy.

Image source: Getty Images.

1. CRISPR Therapeutics

CRISPR Therapeutics (CRSP -7.09%) has yet to commercialize a major product. However, the company is attracting lots of investor attention these days on the expectation that it will soon have one on the market. This has driven the stock up 59% so far this year, far outperforming the S&P 500's 10% increase. 

Biotech company Vertex Pharmaceuticals has signed an exclusive licensing agreement with CRISPR to use its advanced gene-editing technology (CRISPR-Cas9) for its type 1 diabetes program. Vertex has already paid CRISPR $100 million in advance for this agreement. It could pay up to $230 million in research and development, product, and royalty revenue if it launches a product using CRISPR technology.

Vertex has another agreement with CRIPSR to use exa-cel, a gene therapy designed to treat both beta-thalassemia and sickle cell disease. In the first quarter, both companies completed regulatory submissions for it.

If and when these deals with Vertex are successful, they will likely encourage other biotech companies to collaborate with CRISPR. Although the company does not yet generate product revenue, it did earn $100 million in collaboration revenue in its most recent first quarter.

CRISPR also has a few other candidates in the works. For the time being, the company's financial position is solid, with $1.8 billion in cash, cash equivalents, and marketable securities on the books to fund future pipeline development.

Once CRISPR-approved products are available on the market, it has the potential to thrive in the coming years. Its revenue could rise dramatically, leading its stock to skyrocket. But that could take a while, so it is a good investment for long-term investors who can bear the short-term risks.

2. Eli Lilly

Eli Lilly (LLY 1.69%) is a major drugmaker with a diverse portfolio of products that treat life-threatening diseases such as cancer, obesity, autoimmune diseases, diabetes, skin disease, and Alzheimer's.

The company's results were a little sluggish at the outset of the year, but the near-term outlook is bright, with continued growth from existing drugs and many new products showing promising results. Eli Lilly has a broader range of excellent potential candidates in late-stage clinical trials as well.

Revenue for the first quarter fell 11% year on year to $7 billion. Management attributed the decline to lower COVID-19 antibody volumes and revenue. However, new products helped boost overall revenue in the first quarter. 

Despite a drop in COVID-19 antibodies, the company saw growth in other products, resulting in a 10% increase in total revenue. Its drugs Mounjaro and Trulicity (used to treat type 2 diabetes), and Verzenio (for treating advanced or metastatic breast cancers) drove the Q1 revenue increase, particularly in the U.S. market. The company launched Mounjaro in the U.S. in June 2022.

Though earnings fell in the first quarter, management is positive it will deliver earnings growth in 2023. Lilly also raised its total revenue forecast for the year to a range of $31.2 billion to $31.7 billion.

Lilly has a large pipeline of potential candidates, and it should thrive in the coming years if it can commercialize at least a few of them. The company had $3.7 billion in cash at the end of the quarter, more than enough to fund pipeline development as well as some potential acquisitions if it plans to.

Besides being a growth stock, Lilly is also an income stock. It has a yield of 1.02%, which is modest compared to the S&P 500's average of 1.5%. However, the company has been paying dividends for the past 34 years. 

Lilly does have $19 billion in long-term debt, which is a red flag. The company continues to pay off that debt, helped by a strong current cash position. It is not unusual for biotech companies to have huge debts until they start generating consistent profits. 

Investors should keep watching to see if the company continues paying off its debt at a steady pace without having an impact on its dividend.