Wall Street analysts are quite bullish about Intellia Therapeutics (NTLA 3.70%) stock. On average, they're estimating that it'll rise by around 157% within the next 12 months. In the context of the new bull market shaping up right now, it likely has a good shot of actually delivering what analysts are hoping to see.
Does that mean this stock's ascent is inevitable in the near term? Or is Wall Street getting ahead of itself?
Catalysts are indeed in store
Let's start by examining the case in favor of Intellia performing as the analysts expect. Before the close of 2024, the biotech will have two ongoing phase 3 clinical programs that aim to therapeutically, and potentially permanently, correct the genes responsible for a pair of heritable rare illnesses, transthyretin (ATTR) amyloidosis, and hereditary angioedema (HAE).
While the HAE program has not yet entered phase 3 trials, it should before the end of this year. And if everything goes well, the program will go before regulators at the Food and Drug Administration (FDA) for its shot at approval sometime in 2026.
Both the HAE and ATTR candidates would have relatively large markets despite the relative rareness of the underlying conditions. By 2029, GlobalData estimates that the market for HAE treatments will be worth $11 billion, and that the market for ATTR treatments will be worth $6 billion.
So far, so good for Wall Street's projections. With only collaboration revenue at present, if Intellia were able to commercialize either of those two programs it'd be able to report enormous top-line growth, and perhaps some bottom-line growth shortly thereafter. It wouldn't even need to capture a big market share for its stock to soar.
Speaking of its collaborations, the most important one for investors to know about is the partnership it has with Regeneron Pharmaceuticals around the HAE program. Per the terms of the deal, Regeneron will pick up 25% of the costs and profits. That's another point in support of Intellia's stock rising sharply as it means Intellia will be keeping the majority of the upside if it manages to commercialize its candidate.
In terms of financial resources, management says that its hoard of roughly $1 billion in cash, cash equivalents, and marketable securities should be enough to last it through the start of 2026. With trailing-12-month operating expenses of $537 million, and an expensive new phase 3 trial penciled in for the near term, Intellia's purse looks a bit light.
To stretch those resources, it announced a 15% cut to its staff in early January; it also said that it will be halting certain discovery-stage research and development (R&D) programs and activities. In other words, Intellia claims to have enough money to complete its strategic priority programs -- and it probably does -- but at the same time it's clear that there aren't many resources to spare beyond covering the necessities.
So in deciding whether the stock can reach the price point that analysts are banking on, Intellia's financial situation is neither clearly a plus nor a minus.
A good investment even if some exuberance is misplaced
While it's true that there are a few positive catalysts coming for Intellia's stock, it's difficult to see how the share price could possibly rise by as much as Wall Street currently calculates. At the moment, Intellia's market cap is $2.6 billion; it has no revenue from product sales, and will not for at least another two years.
Reporting positive data from late-stage clinical trials is typically a powerful catalyst for pre-revenue biotech stocks, but the competitive context of the data matters. In this case, there are already non-curative therapies on the market for both HAE and ATTR amyloidosis. That means the boost from good data will be lower since the market will be taking into account Intellia's need to fight incumbents for market share even if its therapy is superior.
There's also the chance that it will have a harder time delivering favorable data than earlier clinical trial results might suggest. With expectations so high, it wouldn't take much of a bump in the road to dash analysts' hopes.
So in summary, it's difficult to believe that this biotech stock is going to rise by 157% within the next 12 months, even if management delivers on its stated timelines perfectly. Even with a successful outcome for its biggest catalyst, regulatory approval, the company would struggle to bring about that outcome.
Still, Intellia is an ascendant biotech, and it can massively underperform lofty price targets and still be a good investment. Don't get caught up in whether or not it can live up to the hype.
