Intellia Earnings: Gene Editing Pipeline Makes Progress; Shares Very Undervalued

Intellia Therapeutics NTLA reported second-quarter results in line with our expectations, and its pipeline candidates are continuing to progress in development. Collaboration revenue totaled $13.6 million, representing an 8% increase from the first quarter of 2023. We appreciate that Intellia ended the quarter in a healthy financial position with about $1.1 billion in cash and marketable securities, 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 about 54% below our fair value estimate.

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 its early-stage portfolio and a range of potential outcomes. Despite our very high uncertainty rating, we have a positive outlook for Intellia due to its developing pipeline spanning many rare diseases.

We await additional longer-term safety and durability data from Intellia’s ongoing study evaluating NTLA-2001, which is expected by year-end. NTLA-2001 is for the treatment of ATTR amyloidosis with cardiomyopathy and polyneuropathy, which is being developed with narrow-moat Regeneron. We assign base-case probabilities of approval of 25% and 15% for NTLA-2001 in cardiomyopathy and polyneuropathy, respectively. We forecast Intellia’s ATTR program could become a blockbuster and generate over $1 billion annually toward the end of our 10-year forecast. Under Intellia’s agreement with Regeneron, Intellia will retain 75% of economic profits of NTLA-2001, if approved, and the company also has the expertise and financial support of Regeneron to offset some of the development costs.