Over the past few years, raising money to test out ideas that could lead to new drugs had never been easier. Enthusiasm for new drugs that could treat common forms of cancer and rare inherited disorders has driven market caps for these three companies to substantial sums at a very early stage in their life cycle.

The biotechs in this list swelled in value even though they haven't presented much evidence that their new drug candidates actually work as intended for real people.

Company (Symbol) Market Cap IPO Date New Drug Candidate
Cue Biopharma (NASDAQ:CUE) $350 million Jan. 2, 2018 CUE-101
Rubius Therapeutics (NASDAQ: RUBY) $642 million July 17, 2018 RTX-134
CRISPR Therapeutics (NASDAQ:CRSP) $3.1 billion Oct. 18, 2016 CTX001

Data source: Yahoo! Finance. IPO = Initial public offering.

Before 2020's finished, these biotech start-ups will lift the curtain and let investors know if their early enthusiasm was well placed. Here's what to look for.

Beaker with a one hundred dollar bill in it.

Image source: Getty Images.

1. Cue Biopharma: Getting recognized

This company is exploring ways to help immune systems recognize solid tumor cells and continue attacking them until the job's done. We should know if Cue Biopharma's experimental therapy works as advertised before the end of the first quarter.

Cue Biopharma's first clinical-stage candidate, CUE-101, is trying to lengthen and strengthen immune responses to solid tumors. The company made its public debut last January and began treating patients in a phase 1 trial with CUE-101 just nine months later.

Cue's candidate is aimed at patients with head and neck cancer driven by human papillomavirus (HPV) and tumors that started growing again after previous treatment. In the first quarter, Cue is expected to release top-line results from its first phase 1 trial. Since this is the company's first new drug candidate to make it this far along the development pathway, there's a lot riding on the outcome.

Cancers associated with HPV claim around 20,000 lives annually, and oncologists have been clamoring for new treatment options. Before getting too enthusiastic about Cue's chance to provide one, though, it's important to remember just a tiny sliver of potential new cancer drugs make it all the way from phase 1 clinical trials to pharmacy shelves.

Laboratory workers in hazmat suits looking through microscopes.

Image source: Getty Images.

2. Rubius Therapeutics: Powered by red blood cells

This biotechnology company is trying to harness the power of red blood cells (RBCs) to treat enzyme deficiencies, cancer, and autoimmune diseases. Rubius Therapeutics' market cap briefly exceeded $2 billion shortly after its initial public offering in 2018, but uncertainty surrounding its RBC-based treatment strategy has pressured the stock 67% lower since shares of Rubius began trading.

By the end of the first quarter, we should know if Rubius has a chance of returning to its former valuation in the foreseeable future. In November, the company told investors to look out for interim data from a trial testing RTX-134, the company's first and only new drug candidate to enter clinical-stage testing.

In November, Rubius delayed releasing the first drops of clinical trial data from phenylketonuria (PKU) patients treated with its lead candidate, but the company promised to reveal results in the first quarter of 2020. PKU is a metabolic disorder that affects around 22,000 Americans, who already have a treatment option from BioMarin called Palynziq.

While good news from the delayed readout could send the stock soaring, it's probably best to stay on the sidelines until Rubius sends out some signals that RTX-134 can outperform Palynziq.

Ben Franklin's eyes on the hundred dollar bill peeking out from under medicine tablets.

Image source: Getty Images.

3. CRISPR Therapeutics: So far, so good

In November, CRISPR Therapeutics and its collaboration partner Vertex Pharmaceuticals (NASDAQ:VRTX) reported positive early data from the first two patients treated with a CRISPR-based drug called CTX001. Signs of success from the first patients treated with a CRISPR-based new drug candidate sent the stock soaring late last year, and more data drops in 2020 could push the shares even higher.

Drawing conclusions from just one or two patients can be extremely dangerous for investors, but it sure looks like CRISPR Therapeutics and Vertex are on to something. A sickle-cell disease patient who had suffered 14 excruciating vaso-occlusive crises in the two years before receiving a single administration of CTX001 was still crisis-free four months after beginning the study.

Looking ahead

CRISPR Therapeutics, Cue Biopharma, and Rubius Therapeutics are going to be exciting stocks to watch in 2020, but now probably isn't the right time to start a new position in any of them. We still don't have any human proof-of-concept results for programs under development from Rubius or Cue, but some success has already been baked into their market values.

CRISPR Therapeutics has shown us results from just two patients with less than a year of observation after receiving CTX001. That means there's still a lot that could go wrong before the company has anything to sell besides shares of its own stock.