The Bull Case for Intellia Therapeutics Stock Just Got Even Stronger

An improbable but serious risk facing the company’s investors just got minimized.

Intellia Therapeutics (NTLA -2.96%) just published some new data that suggests the company has what it takes to continue being a leader in the gene editing space. While there’s still a lot of work to be done to confirm Intellia’s new finding and make money from it, none of its peers have managed to cross the same bridge. Below are the details about what happened and why it matters.

A new proof of concept has big financial implications

Intellia’s primary objective is to develop gene editing therapies that are capable of correcting inborn genetic problems. Its lead program, NTLA-2001, aims to treat a rare illness called transthyretin amyloidosis (ATTR) by knocking out the gene that’s responsible for creating dysfunctional proteins that cause heart failure and shortness of breath. The more of those malformed proteins that are circulating in a patient’s blood, the worse their symptoms are, on average.

In theory, using this approach could fully cure the disease if the therapy could be delivered to all of the patient’s cells that have dysfunctional copies of the TTR gene. In practice, as per clinical trial data, after one round of treatment, there are still a small handful of cells that aren’t edited, but following up with another round of treatment isn’t within the mandate of the ongoing clinical trials.

However, that doesn’t stop NTLA-2001 from making a massive and likely permanent improvement to a patient’s health. If the candidate is eventually approved for sale, it will likely be branded as a functional cure for the condition.

By 2029, management predicts that the market for ATTR drugs could be as large as $11 billion annually, which, for a pre-revenue biotech stock like Intellia, implies the possibility of tremendous growth. At the moment, NTLA-2001 is gearing up for its phase 3 clinical trials, which it plans to start before the end of this year, so it could potentially be approved for sale within the next two years if it continues to perform as desired. But there’s a potential problem down the line.

If NTLA-2001 really is a functional cure for ATTR amyloidosis and patients only need one dose, it’s possible that Intellia could cure itself out of the market. Across the subtypes of the illness, there are thought to be fewer than 550,000 patients worldwide in total. Many of them may not be able to afford getting gene editing therapy, so sales could collapse and never return.

That brings us to the new development that’s bullish for Intellia.

Per the results of a proof-of-concept extension of the company’s clinical trial, published on June 25, it appears to be possible to safely re-dose patients who have already been treated with the gene-editing therapy so that they experience more complete relief than before. Before the re-dosing, the three patients in the extension cohort, who had previously been treated with the smallest possible dose of NTLA-2001 in the phase 1 trial, had only experienced a median of a 52% decline in their concentration of dysfunctional proteins. After receiving a much larger second dose, the median reduction of TTR protein was 95%, as measured from the patients’ baseline — the same amount as the other patients who had initially been given a dose of that size.

While it doesn’t make much sense for Intellia to aim to re-dose people with NTLA-2001 if they got the full benefit from the first dose, it’s not dangerous to do so. That means regulators at the Food and Drug Administration (FDA) will be more confident that the company’s approach doesn’t unintentionally edit the wrong genes, and delivery of the technology doesn’t pose a health risk on its own. Thus, this finding opens the door to testing follow-up dosing of Intellia’s other therapies, which, in turn, decreases the potential downside of its gene editing treatments that don’t provide permanent relief.

In other words, if safe re-dosing is possible, the risk of Intellia’s therapies requiring repeat dosing to maintain their benefit, as theoretically unlikely as that may be, isn’t scary anymore. Not only does it suggest that actual harm is less likely, but it also raises the possibility of boosting revenue from selling repeat treatments. It also creates an opportunity for imperfect gene editing interventions to be used multiple times to achieve a desired result, which lowers the bar for success by a considerable amount.

So far, none of Intellia’s competitors have been able to produce the same evidence.

This stock is on the riskier side

To put this new information in context, consider that Intellia hasn’t commercialized any of its medicines. Creating proofs of concept that expand the company’s set of options with all of its future research and development (R&D) activities in gene editing is unambiguously positive for the biotech’s growth. But for now, it’s still finding its footing.

With $953 million in cash, equivalents, and short-term investments as of the first quarter and trailing-12-month (TTM) operating expenses of $569.9 million, Intellia has less than two years of runway before it’ll need to raise more capital. It’s unlikely that it will be able to get one of its programs approved for sale beforehand. Furthermore, with the departure of Intellia’s chief financial officer (CFO) on June 26, its cash management and fundraising activities could be impacted in the near term.

Therefore, if you’re normally an investor in biotech stocks, it’s worth getting some exposure to this company as the potential of its core platform just got an upgrade. But if biotech is too risky for you, it’s a good idea to steer clear, as there’s plenty of risk of things going wrong for operators on the frontier of science like Intellia.

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top