Shares of biotech Intellia Therapeutics (NTLA 3.62%) are down by around 33% over the past 30 days, amid the publication of some new data from an early stage clinical trial on Nov. 16 and its third-quarter earnings on Nov. 7.Usually, updates like those two would act as positive catalysts for a stock, assuming there was good news to share.
In this case, there wasn’t exactly any bad news, but the stock is clearly still smarting from the damage in October, when some clinical results from its gene editing program for hereditary angioedema (HAE) didn’t stack up very favorably against a competitor’s candidate.
So is this stock still worth a purchase, or is there a problem that’s starting to pick up speed?
Don’t let the market fool you
First, let’s examine the most recent information produced by this biotech to see if there’s anything overtly bearish.
Intellia’s investigational gene-editing therapy called nex-z (formerly known as NTLA-2001) aims to treat or cure a rare, progressive, and ultimately fatal hereditary illness called transthyretin amyloidosis, or ATTR amyloidosis. Nex-z is intended to be a one-time intervention with durable results, because it edits the patient’s genes permanently to correct the issues that cause the disease. It’s also one of Intellia’s lead programs, and it’s currently enrolling patients for a phase 3 clinical trial, with another phase 3 trial slated to start before the end of this year.
But because the therapy edits patients’ genes directly, the company is obligated to follow a protracted schedule for its safety testing, meaning that it needs to follow patients in its earlier phase 1 trials for quite some time. That also opens the door for taking a few peeks at efficacy data over time in the small cohort of patients in those trials.
Per the company’s update about the phase 1 trial on Nov. 16, for 11 of the 36 patients in the trial, nex-z appeared to be extremely effective at reducing the level of circulating protein responsible for causing ATTR symptoms by an average of 89% for at least 24 months without any further dosing. The other patients in the trial haven’t had enough time pass to be eligible for their 24-month follow-up appointment yet. But in their follow-ups so far, there is no evidence of ATTR’s recurrence. So, in all likelihood, their 24-month efficacy data will look just as good.
Intellia is keen to mention that these data indicate that nex-z is probably capable of altering the disease’s course to the benefit of patients by slowing or halting its progression. Nonetheless, nex-z’s safety data are a bit less encouraging, which might be one thing that is motivating investors to sell the stock.
While these issues weren’t proven to be linked to the treatment itself, a handful of patients still experienced cardiovascular problems like cardiac failure after being treated. One explanation for this may be that because ATTR amyloidosis is progressively more harmful to a patient’s body over time, treatment with nex-z might only stem further damage, not heal the previously accumulated harm, which it isn’t designed to do.
In other words, the market’s expectations for nex-z’s performance may be unrealistically high, even though it could still credibly be a cure for the condition it intends to address.
There could still be major pitfalls in store
If it’s ever commercialized, Intellia thinks that nex-z could have an addressable market as large as 550,000 people with ATTR and its various subtypes worldwide, and that the market for interventions for the condition could be worth more than $11 billion annually by 2029.
Capturing even 5% of the market and holding it for a couple of years would quickly make nex-z a blockbuster drug, and it’d make for a dramatic addition to the biotech’s current sales revenue of $0. The fact that the program’s early stage data continue suggesting that things are on track should give investors confidence that the late-stage trials have a good chance of success.
Furthermore, Intellia has $944.7 million in cash, equivalents, and marketable securities as of the third quarter. Management thinks that it should have enough money to operate at its current intensity through late 2026, given the expected inflows from collaborations. As its total operating expenses for the first three quarters of 2024 were $442.8 million, that estimate is reasonable. Should it need to raise more money to launch nex-z, if it continues generating positive clinical data, it shouldn’t have too much trouble doing so.
Of course, there is no guarantee that it will have an easy time getting the program commercialized. Regulators at the U.S. Food and Drug Administration (FDA) will scrutinize its safety data very carefully, given the gravity of making permanent changes to patients’ genomes. The odds of regulators asking for more comprehensive safety data are thus higher than with most other biotech candidates.
Still, the recent decline in Intellia’s stock price seems to be an overreaction. The company doesn’t have any serious obstacles today that it didn’t have before the last 30 days. If you’re inclined to take a bet on a biotech stock with a meaty serving of risk, this stock is a good candidate for buying the dip and holding for at least a few years, so that it has enough time to try moving one of its programs to market.
