Shares of gene-editing pioneer Intellia Therapeutics (NTLA 1.01%) have burst higher in response to the most exciting clinical trial results the biotech industry has produced in a long time. It's still early, but it looks like the company found a way to edit troublesome genes on the fly.
Until now, experimental CRISPR-based therapies have been used to edit the genetic code contained in stem cells after they've been harvested from patients. Intellia employed the technology that underpins COVID-19 vaccines from Moderna and BioNTech to design a potential cure for a rare inherited disease, and can probably make more such cures.
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Unfortunately, drugs that interest biomedical researchers the most don't always generate blockbuster sales. Can Intellia turn landmark clinical trial data into a commercial success that pushes the stock miles higher?
It really works
On June 26, Intellia and its collaboration partner, Regeneron Pharmaceuticals (REGN 1.66%) presented interim trial results for Intellia's lead candidate, NTLA-2001. This is a potential new treatment for hereditary transthyretin amyloidosis with polyneuropathy (ATTR-PN). Patients with ATTR-PN experience severe nerve and organ damage when transthyretin, an important protein that transports vitamin A and thyroid hormones around the body, begins falling apart.
Over time, transthyretin fragments aggregate into dangerous plaques, but not for patients treated with NTLA-2001 in an ongoing dose determination trial. This revolutionary gene therapy sneaks messenger RNA (mRNA) strands to the liver; they can instruct cells to produce a CRISPR-Cas9 complex that unwinds chromosomes and disables the transthyretin gene specifically.
Just one dose of NTLA-2001 lowered transthyretin concentrations by more than half for the first three patients who received 0.1 milligrams per kilogram of body weight. Patients in the next group received a 0.3-milligram dose that lowered circulating transthyretin by a whopping 87% compared to baseline measurements.
Accidental editing of non-targeted genes is the major safety concern for Intellia and other CRISPR-focused companies that are trying to edit troublesome genes in the body. So far this hasn't been a problem for Intellia; there were no serious adverse events observed among the first six patients treated with NTLA-2001.
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Now what?
The compelling trial results that sent Intellia's stock price soaring 50% on the first trading day following the big announcement were measured just 28 days after patients were treated. This is a terrific beginning, but it's going to be a long time before we know if NTLA-2001 can generate enough sales to offset Intellia's investment. This trial's primary analysis doesn't occur until two years after treatment of the last patient.
Regeneron has agreed to pay for roughly half of NTLA-2001's development expenses, but Intellia still burned through $149 million over the past year. Worldwide, there are only about 50,000 people living with hereditary amyloidosis and only a fraction of this population is diagnosed with ATTR-PN. As a gene therapy to be administered just once, Intellia needs to put a seven-figure price tag on NTLA-2001 and reach a significant portion of its addressable patient population just to break even.
Think long-term
With competition from Alnylam Pharmaceuticals' (ALNY 2.34%) Onpattro for a limited population of ATTR-PN patients, NTLA-2001 sales probably won't bring Intellia to profitability. Fortunately, Regeneron's collaboration deal with Intellia includes up to 15 targets, and the transthyretin gene is just the first.
We'll probably hear about Intellia beginning more than one study with new on-the-fly gene-editing candidates before the end of the year, which will accelerate operating expenses. It could be years before Intellia can make ends meet, but its clinical-stage pipeline is about to swell to several times its current size.
Excitement surrounding NTLA-2001 has pushed Intellia Therapeutics' market cap up to $9.1 billion at recent prices. Biotech stocks tend to trade at mid-single-digit multiples of total product sales, so success for a few new drugs is already baked into Intellia's stock price.
A high valuation right now doesn't mean that enthusiasm for a revolutionary new way to treat diseases can't drive the stock even higher. That said, investors can expect a lot of volatility between now and whenever Intellia Therapeutics actually begins earning money for its shareholders.
