Biotech companies can skyrocket in a short period because of excellent clinical or regulatory progress. And if we take the word of Wall Street analysts, some of them will do precisely that in the next year.
Take CRISPR Therapeutics (CRSP 10.17%) and Intellia Therapeutics (NTLA 3.02%), two biotechs specializing in gene editing. The former's average price target, according to Yahoo! Finance, is $83.60; the latter earns a price target of $50.80 from analysts. That implies an upside of about 66% for CRISPR Therapeutics and 415% for Intellia Therapeutics.
These two companies have significantly lagged the market over the past three years. Could they turn around and live up to Wall Street's expectations?
NASDAQ: CRSP
Key Data Points
1. CRISPR Therapeutics
CRISPR Therapeutics has accomplished something many pure-play gene-editing companies haven't: regulatory approval for a therapy. The biotech's Casgevy, a treatment for sickle cell disease (SCD) and transfusion-dependent beta-thalassemia (TDT), which it developed with Vertex Pharmaceuticals, is now approved in the U.S., Canada, the U.K., the European Union, Saudi Arabia, and Bahrain. The CRISPR gene-editing technique used for Casgevy won its creators a Nobel Prize in chemistry.
Despite this monumental achievement, the stock has been in decline for a while. CRISPR Therapeutics remains unprofitable, and Casgevy has yet to contribute much revenue. Could the company turn things around and hit the Street's average price target in the next year? That might come as a result of stronger financial results or clinical progress.
Unfortunately, there's little reason to expect CRISPR Therapeutics' sales to increase substantially in the next 12 months -- gene-editing treatments take time to administer. The medicine will slowly ramp up its sales over time, but not enough for investors to bid up CRISPR Therapeutics' stock price by more than 50% by this time next year.
The biotech could record exciting clinical progress, especially with CTX112, a potential gene-editing therapy for certain malignancies. CTX112 received the "regenerative medicine advanced therapy" (RMAT) designation from the U.S. Food and Drug Administration, meant to help speed up the development of promising regenerative therapies for serious diseases. CRISPR Therapeutics will report some clinical data from ongoing clinical trials for CTX112 in the next year, but it's unlikely to see the stock doubling even as a result of strong progress. So don't expect it to meet Wall Street's expectations in the next year.
Still, though it's a bit risky, I'd advise investors with a high tolerance for volatility to consider initiating a small position in CRISPR Therapeutics. Casgevy has little competition to speak of, and an addressable market of about 58,000 patients; the therapy looks destined to generate well over $1 billion in annual sales at its peak.
Meanwhile, the company has a pipeline of exciting CRISPR-based candidates beyond CTX112. It had $1.9 billion in cash and equivalents as of Dec. 31, which should allow it to run its operations at least until Casgevy starts generating significant revenue. Between ramping up sales of Casgevy and making significant clinical and regulatory progress in the next few years, CRISPR Therapeutics could deliver solid returns along the way.
NASDAQ: NTLA
Key Data Points
2. Intellia Therapeutics
Intellia Therapeutics doesn't have a single drug on the market. Even though it's made some clinical progress in the past couple of years, that hasn't been enough to attract investors. The biotech does have potential catalysts on the way, though, which Wall Street thinks could help send its stock price soaring.
The company's two leading candidates are NTLA-2002 and nexiguran ziclumeran (formerly NTLA-2001), now known informally as "nex-z." NTLA-2002 is a potential treatment for hereditary angioedema, a rare disease that causes swelling of the limbs. Nex-z targets transthyretin (ATTR) amyloidosis, a condition caused by a dangerous buildup of protein in body organs. These two candidates could release solid late-stage clinical data in the next year or so.
It's also worth pointing out that Intellia is partnering with Regeneron Pharmaceuticals, a well-established biotech giant with plenty of cash, to develop nex-z; that should help it with funding. Intellia ended 2024 with about $862 million in cash and equivalents, which, along with anticipated cost savings, it thinks will be enough to fund its operations until the first half of 2027. That's also an impressive amount of cash for a stock with a market cap of just $1.25 billion.
Intellia estimates that nex-z's addressable market could be worth $12 billion by 2028, and NTLA-2002's could be about $5 billion. If these projections are accurate, and both medicines capture decent portions of these respective spaces, they could be highly successful. However, either candidate could fail phase 3 studies. If they do, Intellia's shares will fall off a cliff.
Even if both products succeed, how fast will their sales ramp up? Intellia's projections represent the worldwide markets for ATTR amyloidosis and hereditary angioedema, but the target patient population will be smaller. For instance, Intellia's ongoing phase 3 study for nex-z targets just one indication: ATTR amyloidosis with cardiomyopathy. It might go after some label expansions later, but it will be years before nex-z generates strong sales.
So, even if the company aces late-stage clinical trials for nex-z and NTLA-2002, I don't expect its stock to rise by more than 400%. And considering the fact that Intellia Therapeutics still has no products on the market, it looks too risky for most investors. There are better biotech stocks on the market.
