Investors looking for stocks that can rocket higher overnight know the biotech space is full of them. None of these companies have products to sell but all of them are working on potential new drugs that could go on to generate billions in annual sales.

Find out what drove their stock prices through the roof to see if they deserve a place in your portfolio.

Company Year-to-Date Gain Market Cap
Applied Molecular Transport (NASDAQ:AMTI) 110% $2.3 billion
Gritstone Oncology (NASDAQ:GRTS) 265% $700 million
Rubius Therapeutics (NASDAQ:RUBY) 98% $1.2 billion

Data source: Yahoo! Finance.

1. Applied Molecular Transport 

This clinical-stage biotech is working on an easier way to transport therapeutic proteins through our digestive systems, instead of through regular injections or infusions. Generally, proteins large enough to have any benefit are cut down to tiny pieces before they're absorbed.

Scientist looking into a microscope.

Image source: Getty Images.

Shares of Applied Molecular Transport have been soaring in anticipation of phase 2 trial results for its lead candidate, AMT-101. This is an oral version of interleukin-10 (IL-10) for the treatment of ulcerative colitis and related autoimmune diseases of the digestive tract.

While IL-10 has been tested as a potential treatment for immune disorders of the digestive system, injectable blockbuster drugs like Stelara are the current standard. This biotech is betting that AMT-101's unique delivery technology can provide an even better benefit because it allows IL-10 to enter digestive tract tissues without passing all the way through to the bloodstream. 

Chronic inflammatory diseases of the bowel lead to increased costs of care that health insurers and government payers are eager to avoid. If this company can prove AMT-101 provides a benefit over blockbuster drugs like Stelara, it could easily generate billions in annual revenue for the company's top line.

2. Gritstone Oncology

This company's developing targeted immunotherapies for cancer, but this isn't what drove the stock higher this year. In January, Gritstone Oncology signed an agreement with the National Institute of Allergy and Infectious Diseases (NIAID) to start a clinical trial with a coronavirus vaccine candidate.

The FDA has already authorized three vaccines that train immune systems to recognize the spike protein on the surface of the virus responsible for COVID-19. Gritstone Oncology thinks its vaccine could play an important role in the fight against variant strains of the virus because it trains immune systems to recognize several additional targets instead of just the spike protein. 

Shares of Gritstone Oncology could also get a boost from the company's cancer vaccine candidates. The company's lead candidate, Granite, teaches immune systems to look for 20 specific surface protein fragments found on the surface of tumors. The company's also developing Slate, an off-the-shelf cancer vaccine that uses 20 of the most commonly found tumor-specific neoantigens.

Scientist with a pipette.

Image source: Getty Images.

3. Rubius Therapeutics

This clinical-stage biotech is developing cellular cancer therapies that can be manufactured in bulk. Today's cell-based cancer treatments are highly effective, but a new batch needs to be manufactured for each patient. Shares of Rubius Therapeutics have been soaring in anticipation of proof-of-concept study results expected this spring for its off-the-shelf cellular treatments.

This April, at the annual meeting of the American Association for Cancer Research (AACR), Rubius Therapeutics will present results for its lead candidate, RTX-240 as a potential treatment for leukemia patients who relapsed or never responded to previous treatments. 

Successful blood cancer drugs can generate blockbuster sales, but sales of autologous cellular cancer treatments have been disappointing. With a much easier manufacturing process that allows patients to begin treatment the moment their oncologist calls for it, Rubius Therapeutics' candidate has a much better chance of success. 

Not worth the risk

Gritstone Oncology's COVID-19 vaccine is so far behind the competition that there's zero chance the FDA will consider authorizing it for emergency use by the time the company can complete a phase 3 trial.

Variant strains of the virus won't factor into Gritstone's future because the FDA intends to regulate minor adjustments to currently authorized vaccines the same way it handles influenza shots. A strain-specific booster from Moderna (NASDAQ:MRNA) aimed at the South African variant is already in clinical trials.

Success for a phase 2 study with UC patients that began last year could drive Applied Molecular Transport shares through the roof, but it's probably best to wait for meaningful signs of success before risking your hard-earned money. Previous clinical results from 12 UC patients treated with AMT-101 compared to three who received a placebo were good enough to warrant further study, but the company wasn't able to report significantly improved outcomes.

Investors also want to steer clear of Rubius Therapeutics until the company posts tumor response rates on par with today's autologous cellular cancer therapies. If the company doesn't have impressive response rates to present this spring, the stock could fall hard. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.