Intellia Therapeutics Could Rise 167%, Per Wall Street, But Is It a Buy?

Wall Street analysts are quite bullish right now on gene-editing specialist Intellia Therapeutics (NTLA 3.70%) -- expecting, on average, the stock to soar 167% in the coming 12 months. Yet, Intellia has a very long way to go before it has a chance to commercialize any of its product candidates, and there's nothing to suggest it's on the verge of suddenly hitting the lottery and bringing in hundreds of millions in revenue.

So what are the analysts getting at with their estimates, and should you buy this stock? 

Don't hold your breath for spectacular near-term returns

Intellia's pipeline has two focuses, both of which pertain to its use of gene-editing technologies to treat or cure illnesses. 

The first focus is on in vivo (that's Latin for "in life") programs, of which there are two in early and mid-stage clinical trials. In this context, you can consider its "in vivo" candidates to be attempts at curing people of their hereditary illnesses by editing their genes directly. One of its programs, NTLA-2001, aims to address transthyretin (ATTR) amyloidosis, whereas the other, NTLA-2002, could be the solution for hereditary angioedema (HAE).

NTLA-2002 for HAE could start its phase 3 trials in the second half of next year, and the preliminary results of its ongoing phase 1/2 trial look to be quite promising. All 10 of the patients enrolled in the current phase of the study experienced a 95% reduction in their monthly number of disease-associated swelling attacks after just one dose of Intellia's candidate. In other words, it looks like they were successfully cured by getting their genes edited with the company's candidate, which is a hugely bullish sign, assuming those results hold up.

The company thinks that the market for HAE therapies could be as large as $4 billion by 2026, despite there only being around 15,000 patients in the U.S. and the E.U. But it'll still be years before it will go before regulators for a shot at approval, and regulators will likely have very high standards for the evidence of the treatment's safety and its enduring efficacy.

The second focus of its pipeline is producing cancer and autoimmune disease therapies that are created using advanced gene-editing techniques, but which don't actually edit the genes of patients with the goal of changing them permanently for the better. Medicines made by competitors like Bluebird Bio with similar approaches are already approved for sale and on the market, so they aren't as exciting as the more groundbreaking in vivo work. Plus, Intellia hasn't yet made it to the clinic with any of its candidates in the segment, so there's very little information for investors to evaluate anyway.

A long road ahead, but it could lead to riches

Given the above, there are not any catalysts coming up that would drive Intellia's stock to rise by more than double. Confirming its preliminary positive clinical trial results in later-stage investigations will certainly give its shares a boost. But appreciating the nature of the real catalyst coming up requires a quick and highly simplified science lesson.

When editing a gene, there are a few basic operations that are possible. Both NTLA-2001 and NTLA-2002 aim to "knock out" and therefore deactivate defective genes that either code for useless and noxious symptom-causing proteins, or that cause useful proteins to accumulate harmfully in the wrong places. It's also possible to "knock in" or replace copies of defective genes with functional versions, which is what the company is aiming to do with its NTLA-3001 program to treat alpha-1 antitrypsin deficiency (AATD), a hereditary disease of the lung and liver.

From a technical perspective, safely knocking genes in is more challenging than knocking them out, but it's worth trying to do, because it opens the door to treating a different set of illnesses. Eventually, it's even imaginable that knock-in treatments could be used to permanently improve the health of already healthy people. But nobody has come anywhere remotely close to commercializing an in vivo medicine that uses a knock-in approach thus far. 

Intellia aims to submit the paperwork for permission to start testing NTLA-3001 in humans before the end of this year. That means it could soon become one of the global leaders of the field of in vivo gene editing on the basis of its technical accomplishments. That could easily put its shares on track to double in value, just like Wall Street is anticipating, if it can provide some favorable early stage data from clinical trials next year. But be aware that there is absolutely no guarantee that its data will impress the market, or that regulators will give it permission to proceed whatsoever.

So should you buy this stock in hopes that its grand gene-editing play pays off? Only if your portfolio is sufficiently diversified and balanced with more conservative investments already. As a young biotech stock, Intellia could easily fail in its clinical trials and go out of business. If, on the other hand, you're looking for a highly risky bleeding-edge business approaching a very exciting stage of its development that could wow the market if things go well, dive right in.