About a week ago, Intellia Therapeutics (NASDAQ:NTLA) released its Q1-2022 results. Earnings missed expectations with the stock losing 9% in the following trading hours. In this article, I will propose a thorough review of the financial results and I will provide an update on the most significant events that affected the company in the last 3 months. If you are not familiar with the business of Intellia Therapeutics, you can have a look at my previous article where I gave an overview of the Company.
Intellia Therapeutics is currently trading at $39.9/share (down 50% from my previous article), equivalent to a market cap of $3.1bn. The stock is down 66% year-to-date and down 40% year-on-year. After reaching the 52-week maximum of $176.8/share on September 3rd, 2021, the stock started a constant decline path until yesterday when it reached the 52-week minimum. Like many other biotech stocks, Intellia Therapeutics is affected by substantial volatility: the 52-week standard deviation is $35.3/share equivalent to 89% of the current trading price or 33% of the 52-week average price.
Intellia Therapeutics generated revenues of $11.3M (+75% year-on-year) exclusively from collaborations since - as of today - the Company does not have its own products on the market. In particular, $5.7M comes from a deal with Regeneron Pharmaceuticals for the research and development in the ATTR amyloidosis, while other $5.6M comes from a collaboration with AvenCell Therapeutics for the development of allogeneic universal CAR-T cell therapies.
Total operating expenses have increased by $103M (+194%) year-on-year, from $53M in Q1-2021 to $155M in Q1-2022, with the largest cost item being represented by R&D at $133M, or 85% of the total. R&D costs saw a steep increase (+239%) for several reasons, among which:
G&A expenses increased by 66% year-on-year, or $9M.
Overall, Intellia Therapeutic reported a net loss of -$144M versus -$46M in the same quarter of the previous year.
Looking at the cash position, Intellia has cash and marketable securities for a total of $994M (vs $1.1bn$ as of Q1-2021): considering that in Q1-2022 cash flow from operations was -$80M, ceteris paribus, Intellia could be able to carry out its activities for at least 12 quarters without funding issues.
NTLA-2001 is one of the first CRISPR-based therapy that could be used to edit genes in the human body with the final purpose of becoming the first single-dose treatment for transthyretin amyloidosis (ATTR). On February 28th, Intellia provided positive preliminary results from an ongoing Phase 1 clinical study. The Phase 1 study consisted in administering different doses of NTLA-2001 to 15 patients with polyneuropathic ATTR: as Intellia announced, NTLA-2001 was effective in reducing serum transthyretin (serum TTR) reaching mean reductions of 52%, 87%, 86% and 93% respectively in the 0.1 mg/kg, 0.3 mg/kg, 0.7 mg/kg, and 1.0 mg/kg NTLA-2001 dose groups. Moreover, the lower level of serum TTR remained stable throughout the observation period.
This preliminary result is of extreme importance because it shows that Intellia is going in the right direction of finding the first single-dose therapy to stop disease progression in people affected by ATTR. In addition to being encouraging for NTLA-2001, these results also enabled Intellia's R&D team to gather relevant information on the CRISPR technology that could be applied to the wider pipeline.
Based on data collected in Phase 1, Intellia is now advancing the study with the evaluation of the potential use of a single fixed dose of 80 mg. Additional data from the ongoing Phase 1 are expected to be announced at the EASL International Liver Congress 2022, on June 22nd-26th.
NTLA-2002 is an in-vivo program that is being developed with the purpose of knocking out the KLKB1 gene in the liver to reduce the plasma kallikrein protein, responsible for hereditary angioedema (HAE). So far, Intellia has completed the first dose-escalation cohort (25 mg) and has just started the second dose study (75 mg). In the second half of 2022, the Company should provide some preliminary results, most likely about the safety of the therapy.
Despite the stock being down year-to-date and year-on-year, analysts have positive views on Intellia Therapeutics. Out of 22 analysts that rated the stock in the last 90 days, 20 gave a BUY or Strong BUY rating and only 2 analysts suggested a HOLD rating. The average target price is $137/share, equal to a 243% upside from the current stock price. Noteworthy, even the minimum target price ($55/share) is above the trading price (+38%).
Personally, I believe that, at the current price, Intellia is undervalued and the market is not factoring in all potential upsides. What I like about Intellia is that, so far, the Company has developed a small number of partnerships (Regeneron, AvenCell, SparingVision, Kyverna Therapeutics, ONK) meaning that there is room for potential further increase in revenues from collaborations or even for strategic M&A activities. In addition, Intellia's main competitor, Crispr Therapeutics, mostly focuses its research on ex-vivo gene editing, leaving Intellia alone in the in-vivo area. Finally, it is worth remembering that, with its most advanced candidate (NTLA-2001), Intellia is targeting a potential pool of 300K patients that today are mostly administered Vyndaquel, a Pfizer's medication that in 2020 generated $1.3bn revenues.
Overall, despite Intellia Therapeutics reporting a strong loss and product revenues are still non-existent, I believe that Intellia has great potential ahead and, at the current price, I think it is worth buying. In addition to the previously mentioned NTLA-2001 and NTLA-2002, Intellia has a wide pipeline of other potentially life-changing therapies that are now being evaluated: on one side, the presence of many different programs increases the success chance and, on the other, is a lever to manage risk since it allows not to bet everything on one single project.
In the next months, the stock price will be for sure affected by some key catalysts including the EASL International Liver Congress with the NTLA-2001 data and the NTLA-2002 results.
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Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.