Intellia Earnings: Gene Editing Pipeline Continues To Make Progress; Shares Very Undervalued

Intellia Therapeutics NTLA reported first-quarter results in line with our expectations, and its pipeline candidates are continuing to make progress. Collaboration revenue totaled $12.6 million for the quarter, representing a 12% increase from the prior year period. Intellia ended the quarter in a healthy financial position with about $1.2 billion in cash, which will help fund its research and development expenses as it develops its pipeline candidates. We maintain our positive outlook and fair value estimate of $85 per share. We view the stock as very undervalued, currently trading in 5-star territory.

Intellia provides long-term investors who have a high degree of risk tolerance with pure-play exposure to novel gene editing technology. We do not assign an economic moat to Intellia since it is an emerging biotech company with no approved drugs. We see a very high level of uncertainty related to regulatory approvals for the company’s early-stage portfolio and a range of potential outcomes. We believe Intellia merits a positive moat trend due to its developing pipeline spanning many rare diseases, which we view as possessing strengthening intangible assets.

Intellia has begun dosing in the phase 2 study of NTLA-2002, which is a CRISPR-based, single-dose treatment for hereditary angioedema. Management plans to complete enrollment later this year. If approved, we forecast NTLA-2002 could reach the market as early as 2026. Additionally, Intellia is continuing to make progress in its phase 1 study of NTLA-2001 for the treatment of ATTR amyloidosis with cardiomyopathy and polyneuropathy, which is being developed with narrow-moat Regeneron. Management plans to present additional clinical data from the ongoing phase 1 study of NTLA-2001 later in 2023. We assign NTLA-2001 in cardiomyopathy a 25% probability of approval in our base case, and we forecast Intellia’s ATTR program could become a blockbuster and generate over $1 billion annually toward the end of our 10-year forecast.