In one section of the stock market, investors are partying like its 1999 all over again. Billions are flowing into gene-editing biotechs even though everyone knows there's a good chance none of these companies will ever earn a dime.

Crispr Therapeutics AG (NASDAQ:CRSP)Editas Medicine Inc. (NASDAQ:EDIT), and Intellia Therapeutics Inc. (NASDAQ:NTLA) have added a combined $2.9 billion to their market caps in the year to date even though none have given one of their drugs to people yet. Even though it looks like we've been swept up in another mania, these stocks could continue rising into the long run. Here's why.

Child riding a rocket through the clouds.

Image source: Getty Images.

1. There's never been a better time to try something new

When Dr. Scott Gottlieb took the reins as FDA commissioner a year ago, he made the usual speeches about greasing the gears of government to speed new drugs to patients that need them. So far, he's delivering results. The Agency's Center for Drug Evaluation and Research (CDER) approved 46 new drugs in 2017, up from just 22 a year earlier.

Most importantly, the FDA's already signaled a willingness to approve drugs with bizarre delivery routes. Last year, the agency approved its first directly administered gene therapy to target a single gene. Luxturna uses a reengineered version of viruses that transmit the common cold to insert a gene into retinal cells.

Luxturna's approval bodes well for Crispr Therapeutics, Editas, and Intellia. All three are working on drug candidates that edit faulty genes inside living tissues, and so far, adenoviruses are their preferred carrier service.

All three companies are also working on therapies that will involve using CRISPR-Cas9 to edit genes in a lab setting before introducing the reengineered cells to patients. If successful, the process will probably resemble two new CAR-T therapies that the FDA greenlighted last year as well.

Drugs on top of hundred dollar bills.

Image source: Getty Images.

2. Big biopharma's flush with cash

Recent tax reforms mean there are plenty of deep-pocketed drugmakers ready to pull the trigger on anything that looks promising. If any of these companies produce encouraging clinical trial data, collaboration deals and associated milestone revenues could start rolling in.

Let's look at Sangamo Therapeutics (NASDAQ:SGMO) as an example. This biotech uses an older gene-editing technique and adenovirus vectors for delivery. Clinical data from previous candidates encouraged Pfizer (NYSE:PFE) to offer Sangamo $70 million upfront, plus $650 million in potential milestone payments, to license a hemophilia candidate last summer. Following impressive results from the first few patients dosed with SP-525, Gilead Sciences (NASDAQ:GILD) came knocking as well. Gilead gave Sangamo $150 million upfront for an option to license up to 10 new drug candidates, each of which could lead to $300 million in milestone revenue.

Intellia, Editas, and Crispr Therapeutics all have at least one big biopharma partner that's promised to help develop their candidates, but none have received offers that include millions upfront and specified milestones. Once that clinical data starts rolling in, though, Sangamo-esque collaboration deals could lift the stocks.

3. They're new drug candidate factories

At the moment, Editas, Crispr Therapeutics, and Intellia are all trying to get their first new drug candidate into human trials. In another year or two, though, their pipelines could be chock-full of collaboration bait.

Stanford University scientists recently showed they could protect nerve cells derived from patients with amyotrophic lateral sclerosis (ALS) by silencing a single faulty gene. What makes this run-of-the-mill accomplishment so exciting is the ease with which the researchers were able to isolate their gene target. It usually takes months to find candidate genes contained within non-human genomes. Using CRISPR-Cas9 techniques, the researchers isolated their target after searching an entire human genome in about two weeks.

Time for patience

If academic researchers can find a new ALS target in a matter of weeks, companies worth a combined $5.7 billion ought to be able to churn out new drug candidates left and right. That said, I'm going to wait for a pullback before I even consider buying one of these stocks.

Although there's a solid chance we'll see more deal-making activity around the end of the year, the slightest hint of a safety issue from any one of these three companies could lead to swift and heavy losses from recent levels.

Cory Renauer owns shares of Gilead Sciences. The Motley Fool owns shares of and recommends Gilead Sciences. The Motley Fool has the following options: short May 2018 $85 calls on Gilead Sciences. The Motley Fool recommends Editas Medicine. The Motley Fool has a disclosure policy.