Superstar investor Cathie Wood is increasing her bet on a cutting-edge technology that could transform the treatment of many diseases. I'm talking about gene editing.
Wood has been progressively increasing her stake in specialist Intellia Therapeutics (NTLA 3.70%) since December. But she's picked up the pace of Intellia buys over the past month and scooped up more than 434,000 shares.
The company's stock has dropped about 17% since its peak in July, so Wood clearly saw this as an opportunity to add to her position in the biotech company. Considering Wood's strengths in picking out top innovators -- she was an early believer in electric-vehicle giant Tesla, for example -- you may be tempted to follow her latest moves. But should you, too, pile into Intellia shares right now?
Fixing faulty genes
First, let's take a close look at the gene editing company. Intellia is working on potential treatments that fix faulty genes responsible for disease. The idea is to knock out the problematic gene and insert a new DNA sequence that functions properly.
The biotech player's pipeline includes eight candidates, and the company also is progressing on various research programs that could lead to more candidates down the line. Today, the closest-to-market candidates are NTLA-2001 for transthyretin amyloidosis (ATTR) and NTLA-2002 for hereditary angioedema (HAE).
In ATTR, a misfolded protein impacts various organs and systems, including the heart and nerves. About 50,000 people worldwide suffer from the hereditary form of the disease.
Intellia's candidate aims to reduce the production of the disease-causing protein after one dose. Right now, the company expects to start a global pivotal study for the ATTR with cardiomyopathy candidate by year-end. And the ATTR with polyneuropathy candidate soon should enter phase 3 studies.
As for HAE, Intellia has identified all patients needed for its U.S. phase 2 trial due to major interest from doctors and patients. The company may start a phase 3 trial late next year.
HAE is characterized by an overproduction of a protein that promotes inflammation. As a result, patients with HAE experience recurrent and unpredictable swelling. Limited treatment options are available today.
Intellia's one-dose candidate aims to reduce the production of the protein -- and clinical study results have been encouraging. The company recently announced data showing all 10 patients treated saw a 95% reduction in monthly swelling crises after an average nine-month follow-up.
Right now, Intellia generates collaboration revenue but doesn't yet have products on the market. Unsurprisingly, the company's loss has deepened as it has funded its pipeline growth.
NTLA Revenue (Quarterly) data by YCharts.
More than $1 billion in cash
At the same time, though, Intellia reported $1.1 billion in cash during its most recent earnings call and about $200 million in liabilities. And operating expenses totaled about $145 million in the quarter. So the financial picture looks reasonable for a biotech company at this stage in its story.
Now let's get back to our question: Should you follow Cathie Wood and pile into Intellia?
It's important to consider your comfort with risk. Intellia carries some risk because it uses a newish and unproven technology -- and the company doesn't yet have products on the market to generate revenue. However, this is the case for many biotech companies. Still, if you're a cautious investor, Intellia probably isn't the right choice for you.
If you don't mind some risk, though, and hope to get in on a biotech innovator, Intellia represents a good option. The stock price has come down over the past year, even as the company has moved closer to the finish line with its potential products -- which could be game changers.
The stock may not soar overnight, but if one of Intellia's candidates makes it to commercialization over the next few years, early investors could score a win. If you like innovators and admire Wood's investment strategy, you may want to scoop up a few shares of this gene editing player.
