Cathie Wood is the founder of the ARK Innovation ETF (ARKK). Her approach focuses on disruptive innovation, and identifying companies with the potential to transform industries. Her portfolio primarily contains stocks that are in the early stages of development, but are expected to become major players in their respective industries. Furthermore, Cathie Wood emphasizes a long-term investment horizon. This enables ARK to realize the full potential of disruptive technologies as they mature and become widely adopted.
In this article, we'll look at one such company, Intellia Therapeutics (NTLA). As the No. 9 holding in Wood's flagship fund, NTLA accounts for a 3.6% weight in the ARK Innovation ETF, indicating Wood's confidence in the company's long-term growth prospects. Wall Street is also very optimistic, rating the stock a "strong buy" and expecting it to skyrocket by over 200%.
What Does Intellia Therapeutics Do?
Valued at $2.15 billion, Intellia Therapeutics (NTLA) is a small-cap clinical-stage biotech company. Its primary goal is to create treatments for genetic diseases using CRISPR/Cas9-based technologies.
Intellia aims to use CRISPR/Cas9 technology to develop one-time treatments that have the potential to cure diseases at their genetic roots. The company's pipeline includes several programs aimed at various genetic disorders, with an emphasis on in vivo (inside the body) and ex vivo (outside the body) applications.
So far this year, Intellia’s stock has dropped 26.2% YTD, compared to the S&P 500 Index's ($SPX) gain of 9.8%, presenting an opportunity to buy this growth stock on the dip.
Intellia is still in the clinical stage, with no approved products. It did, however, generate $28.9 million in revenue in the first quarter from collaborations and licensing agreements.
The company has reached several significant milestones in its clinical programs. Notably, NTLA-2001, its lead in vivo candidate for transthyretin amyloidosis (ATTR), has shown promising early results, with a significant reduction in disease-causing proteins. The company has started the process of enrolling patients in the Phase 3 MAGNITUDE clinical trial.
Furthermore, it plans to start a separate trial by the end of the year to test NTLA-2001 for the treatment of hereditary ATTR amyloidosis with polyneuropathy. Intellia has a collaboration with Regeneron Pharmaceuticals (REGN) to develop and commercialize NTLA-2001 once it is approved.
On top of that, Intellia expects the Phase 3 study of NTLA-2002 for the treatment of hereditary angioedema (HAE) to begin in the second half of the year.
While this is all good news, the company is still in its early stages, and losses are expected to mount due to rising clinical trial R&D (research and development) costs. Q1 R&D expenses totaled $11.8 million, resulting in a net loss of $107.4 million for the quarter. At the end of the quarter, NTLA's cash, cash equivalents, and marketable securities totaled $953.4 million.
The future of Intellia Therapeutics as a biotech company is dependent on obtaining regulatory approval for its clinical candidates. Once approved, these therapies have the potential to address significant unmet medical needs while capturing a sizable market share. The commercial success of its leading candidates (if and when approved) will have a significant impact on the company's financials in the long run.
We should learn more about Intellia's pipeline progress when the company releases its second-quarter results on Aug. 8.
What Do Analysts Say About Intellia Stock?
Overall, Wall Street rates Intellia stock as a “strong buy.” Of the 26 analysts covering NTLA, 18 have a “strong buy” recommendation, two suggest it's a “moderate buy,” and six suggest a “hold.”
In June, Brookline Capital Markets analyst Leah R. Cann reiterated her “buy” rating for the stock with a price target of $24. Based on the positive clinical trial results, the analyst believes Intellia and Regeneron could launch NTLA-2001 for Transthyretin Amyloidosis (ATTR) by 2027, penetrating 20% of the global market by 2030. Furthermore, Cann estimates that global NTLA-2001 sales could reach $10.9 billion by 2030, accounting for 47.9% of Intellia's total sales.
Similarly, promising gene editing clinical trial results prompted BMO Capital analyst Kostas Biliouris to reiterate his "buy" rating for the stock, with a target price of $70.
The analysts' average price target of $72.26 implies the stock has an upside potential of 221% over current levels. Plus, the Street-high price estimate for the stock is $144.
The Bottom Line on Intellia Stock
Gene editing is the future of medicine, and it has the potential to cure diseases from their root causes. Between 2003 and 2028, the global gene editing market is expected to grow at a compounded annual rate of 15%, totaling $10.6 billion.
Intellia's efforts to develop CRISPR/Cas9-based therapies have the potential to revolutionize the treatment of genetic disorders. However, investors must understand the risks associated with clinical-stage biotech stocks, which include clinical trial failure, regulatory risks, and other market uncertainties. Furthermore, developing a successful therapy takes several years. As a result, Intellia represents a high-risk, high-reward investment opportunity for long-term investors.
On the date of publication, Sushree Mohanty did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
