Intellia Therapeutics (NTLA 3.70%) has announced a good deal of positive news in recent months, from progress in clinical trials to an expanded partnership with big biotech Regeneron Pharmaceuticals. The gene editing company doesn't yet have a product on the market, but its trial data in diseases of great need have been positive, and Intellia even plans on starting a phase 3 study as early as next year for one candidate.
This doesn't mean a product launch is right around the corner, but the company clearly is progressing, and rewards could be significant. The share price hasn't reflected the company's potentially bright future though. The stock has slid about 45% over the past year, missing out on this year's broader rally in growth stocks. Now, it's fair to ask: Is Intellia a buy at these levels, or does the biotech player represent too much risk? Let's find out.
A growing market
Intellia specializes in gene editing, a market expected to grow in the double digits over the next ten years. Other players operate in this field, but they often focus on different treatment areas, suggesting there is room in the market for several companies to succeed. Gene editing involves the fixing of faulty genes involved in the disease process, so if it's successful, the technology could be a game-changer for patients -- and an opportunity for blockbuster revenue for companies.
Intellia has about eight candidates in the pipeline from research stage through early stage clinical trials, and it also has a handful of research programs that could lead to more candidates down the road. The company focuses on severe diseases that today don't have many compelling treatment options.
Its most advanced candidates are designed to treat transthyretin amyloidosis (ATTR) and hereditary angioedema (HAE). ATTR involves the buildup of a misfolded protein, which causes problems with the heart, kidneys, and other organs. HAE leads to severe recurrent swelling throughout the body. Both of these diseases could significantly shorten patients' lives.
NTLA-2001 for ATTR is designed to halt the production of the problem-causing protein, and Intellia plans on reporting additional phase 1 data on the candidate by the end of the year. As for NTLA-2002 for HAE, the company aims to launch a phase 3 trial as early as the third quarter of next year. This candidate works by knocking out a gene in the liver in order to reduce the production of a protein involved in the disease.
High interest from patients
Intellia said patient and doctor interest in NTLA-2002 was so high the company quickly was able to identify all participants for its global phase 2 trial, with enrollment to reach completion by the end of the year.
Meanwhile, Regeneron, already a partner in the ATTR and hemophilia programs, has recently expanded its work with Intellia. The companies now will work together to develop potential gene editing candidates for neurological and muscular diseases. This will involve combining Regeneron's delivery technology with Intellia's gene editing capabilities to alter a targeted gene.
Now, let's get back to our question: After declines this year, is Intellia a buy? Intellia's partnership with top biotech Regeneron represents a vote of confidence in its technology and possibly a source of income if their work together is successful. I also like the fact that Intellia has more than $1 billion in cash, and the value of its assets greatly outweigh its total liabilities.
Potential rewards
Finally, Intellia's progress in clinical trials looks promising, and even though it will take years for the company to potentially launch a product, rewards could be great.
This doesn't mean every investor should snap up the shares though. Cautious investors probably should look for other opportunities as, this far from commercialization, many hurdles could arise and hurt both the share price and earnings potential.
Still, for investors with tolerance for these risks, Intellia makes a great buy today for all of the points I've highlighted above. The company's potential products could be game changers, and that could equal impressive revenue and top share performance down the road.
