When it comes to picking winning biotech companies, sometimes it pays to go with players who are at the cutting edge of their field. On Oct. 18, regulators at the Food and Drug Administration (FDA) confirmed that Intellia Therapeutics (NTLA 3.70%) is a leader in gene editing: The FDA approved the company's application to proceed with its phase 3 clinical trial for its candidate NTLA-2001, which aims to treat transthyretin (ATTR) amyloidosis, a fatal protein misfolding disorder of the liver. The trial is anticipated to start before the end of this year, and when it does, it'll be the first-ever late-stage test of a therapy designed to treat or cure a hereditary condition by permanently editing patients' genomes.

But investing in pioneers carries additional risks, as there may be many potential pitfalls that so far remain unknown or poorly understood. So is Intellia worth an investment -- on the chance it makes an even bigger mark on history by commercializing one of its gene-editing therapies sometime in the coming years -- or is its foray into the unknown too uncertain to be investable?

Making history isn't the same as making revenue

The case for buying Intellia stock is inseparable from the success of its bid to commercialize NTLA-2001. While it has other gene-editing therapies in clinical trials in its pipeline, like its NTLA-2002 program to treat or cure hereditary angioedema (HAE), the ATTR program is the one that'll make a bigger splash if it succeeds -- because it stands to be the first curative gene-editing medicine on the market. On that note, Intellia's chances in the ATTR market may or may not be large enough to be everything that investors are hoping for.

There are only around 50,000 people with the hereditary version of ATTR worldwide, and perhaps as many as 500,000 with the slightly less severe version. Management estimates that by 2026, the ATTR therapy market will be worth around $11 billion. If NTLA-2001 gets commercialized, it'll be competing with the likes of Pfizer, which sells a non-curative therapy for ATTR. So (depending on pricing) Intellia may find it tough both to get insurers to cover its medicine, and to find patients willing to pay if they're stable on the existing treatments.

Another issue is that the therapy could possibly cure enough patients to collapse its market. NTLA-2001 is intended as a one-time treatment; that suggests the price of each dose will need to be high. It also suggests that Intellia's research and development (R&D) of new medicines will need to continue aggressively advancing pipeline programs outside of ATTR to keep the company afloat in the long term.

It's set up for success, but there are still no guarantees

Despite the questions about the long-term viability of the ATTR market, there are a few reasons to believe that Intellia will at least survive until it can commercialize a medicine. And if it survives that long, it will probably be able to persist for at least a while after that.

As of the second quarter of 2023, Intellia has nearly $1 billion in cash, equivalents, and short-term investments. Its trailing-12-month operating expenses are $513 million. Therefore, to continue with its operations at their current pace, it will need to raise additional capital in a bit less than two years. That should be enough time to determine at least preliminarily if NTLA-2001 is working as intended.

Earlier findings indicate that the therapy is largely safe and highly effective, and that its effects are permanent. If the data from the phase 3 trial for NTLA-2001 looks consistent, the biotech won't have any trouble taking out fresh debt.

But the more likely outcome is that its development collaborator for the program, Regeneron Pharmaceuticals, will kick in for any additional costs necessary to get the therapy out the door. Success with one joint program will also likely push Regeneron to renew and deepen the pair's collaborations, which has already happened a few times in recent years.

Getting NTLA-2001 out the door would also cement Intellia's leadership in gene editing and cause the stock to soar.

Navigating issues with regulators will continue to be a key challenge in the lead-up to commercialization. The fact that the FDA let Intellia proceed into phase 3 is a very positive sign, but there's a high chance that regulators will turn their scrutiny dial to 11 when deciding whether to grant the final approval.

Intellia is running what will soon be the largest-ever gene-editing trial in living people. Those patients will experience permanent changes to their genes if the therapy works as advertised; the stakes of treatment are high. Thus there's a high probability that there will be at least a few anomalies in the clinical data which weren't present in the smaller earlier trials, and regulators will demand full explanations for any discrepancies they find.

Investors should thus appreciate the risk of a prompt clinical trial halt order in the event of anything unexpected. Likewise, don't be too surprised if the approval process requires a bit of back and forth.

Should you invest in this stock? If you're looking for the prospect of big catalyst-driven growth over the next few years, and the idea of your shares dropping significantly in the meantime sounds like it's tolerable, then yes, this is a good biotech stock pick. But if you're looking for something with consistent cash flow or a low-risk business model, look elsewhere. Even if Intellia gets NTLA-2001 out the door, it'll still face considerable risks with every other gene-editing candidate it advances.