Better Buy: CRISPR Therapeutics vs. Intellia

The gene editing revolution is taking the market by storm, garnering the attention of large pharma companies and investors alike. This technology allows scientists to change an organism's DNA and can transform the way many diseases are treated. Only a handful of companies specialize in this area, and they offer investors substantial growth opportunities in a high-risk, high-reward field.

Both CRISPR Therapeutics (CRSP 1.33%) and Intellia Therapeutics (NTLA 0.70%) offer promising gene editing tools that could alter some medical treatments. Which of these two small-cap biotech stocks should you choose? The best way to evaluate these two companies is to start with their pipelines, so let's find out what each has to offer.

IMAGE SOURCE: GETTY IMAGES.

CRISPR Therapeutics' pipeline

CRISPR Therapeutics has a portfolio of therapeutic programs in various diseases including hemoglobinopathies, oncology, regenerative medicine, and rare diseases. It has nine product candidates total, with four promising studies in the clinical testing phase.

The company's lead gene-editing product candidate, CTX001, developed in collaboration with Vertex Pharmaceuticals (VRTX -0.43%), shows lots of promise. CTX001 is an investigational treatment for two rare blood disorders: transfusion-dependent beta thalassemia (TDT) and sickle cell disease (SCD).

In late 2019, the company announced its first clinical data for CTX001, which represented a key milestone in using CRISPR-based therapies with patients with severe hemoglobinopathies such as TDT and SCD. The hemoglobinopathy market is expected to reach $12.6 billion by 2026 and to expand at a compound annual growth rate (CAGR) of 10.2%. If continued trials prove safe and effective, this drug could potentially be a game-changer, but it could also face competition from other gene editing companies.

CTX001 has already received several regulatory designations to expedite drug development from both the Food and Drug Administration (FDA) and the European Medicines Agency (EMA).

CRISPR Therapeutics is also working on its own portfolio of chimeric antigen receptor T-cell (CAR-T) therapies based on gene editing technology. Management believes that its CRISPR/Cas9 technology will help improve upon current CAR-T therapies.

Currently, three therapies are in the clinical testing phases for immuno-oncology: CTX110, CTX120, and CTX130. CTX110 and CTX120 use an allogenic approach to targeting tumors; the former targets an antigen called CD19 for B-cell malignancies, and the latter targets BCMA, which is expressed in multiple myeloma, a rare cancer of the bone marrow. The third candidate, CTX130, is involved in solid tumors and targets CD70, which is seen in blood cancers, certain lymphomas, and kidney cancer.

Success of any one of these CAR-T cell therapies can potentially catalyze the company's growth. The immuno-oncology market is expected to grow to $38.9 billion by 2025 and to expand at a CAGR of 21.8%. The company expects to report data on its CTX110 trial at the end of 2020.

Intellia Therapeutics' portfolio

Intellia has a diversified portfolio of 10 total therapies: five in vivo programs in which CRISPR is the therapy and five ex vivo programs in which CRISPR creates the therapy.

The in vivo approach targets genetic diseases such as transthyretin amyloidosis (ATTR) and hereditary angioedema (HAE). More recently, this approach will be considered for a potential hemophilia A and B CRISPR/Cas9-based treatments. These treatments (ATTR, hemophilia A and B) are being developed in collaboration with Regeneron Pharmaceuticals (REGN -0.47%).

The ex vivo programs consist of two different efforts, one targeting Wilms Tumor 1 (WT1) for acute myeloid leukemia (AML) and one focused on CAR-T cells, hematopoietic stem cells (HSCs), and ocular stem cells of the eye. These are being pursued in partnership with Novartis (NVS -0.51%).

In March 2020, the FDA accepted the Investigational New Drug (IND) application submitted by Novartis for OTQ293, a treatment of SCD using HSC. The company will begin investigating the drug candidate on adult patients with severe SCD. As mentioned earlier, the SCD market offers a massive opportunity if Intellia achieves its milestones successfully. However, other gene-editing companies with similar projects could create competition.

Three programs, both in vivo and ex vivo, are in the IND-enabling phase to submit for IND or IND-equivalent applications:

• NTLA-2001 for ATTR in mid-2020
• NTLA-2002 for HAE in the second half of 2021
• NTLA-5001 for AML in the first half of 2021

While these three programs might show promise, this early in the drug development process, the company's strategy could change based on regulatory decisions and further data. OTQ293 trials will set the tone for Intellia's strategy, and their success could pave the way for other candidates in the ex vivo approach.

Head to head: financials and valuation

Data source: Wall Street Journal, Yahoo! Finance, CRISPR Therapeutics, Intellia Therapeutics.

Financially, both companies have plenty of cash to operate and are reporting losses as they continue to develop their drug candidates. Intellia expects to remain operational until the end of 2021 with its current cash position, while CRISPR Therapeutics can continue for longer. CRISPR recently enlarged its cash stash to $900 million with a milestone payment it received from the Vertex collaboration in April, and it is eligible to receive up to $800 million in additional milestone payments from these programs.

CRISPR Therapeutics commands a market valuation of $3.8 billion, more than four times the $900.2 million market cap of Intellia. This value reflects the differences in their portfolios and how far ahead CRISPR Therapeutics is in the drug development process. CRISPR has an attractive valuation based on its price-to-sales ratio of 12.73, which implies that there's room for its stock to run higher.

Which is the better buy?

While Intellia has promising programs and collaborations, CRISPR Therapeutics still has the edge. The companies' financial situations are similar, but CRISPR has better opportunities to improve its cash position thanks to its collaboration with Vertex Pharmaceuticals. CTX001 shows a lot of promise due to receiving fast-track designations from regulatory bodies and to the trial's first clinical data, which was reported in late 2019. Combine that with the CAR-T portfolio and its lead candidate, CTX110, and CRISPR Therapeutics is the more appealing biotech stock for a long-term investment.