Aside from artificial intelligence (AI) and cryptocurrencies, a longtime hot stock on Wall Street revolves around gene editing research and development. Recently, Intellia Therapeutics (NASDAQ:NTLA) received a pivotal regulatory green light in this arena, catapulting NTLA stock higher. Although the biotechnology firm represents a “Strong Buy,” according to analysts, it still requires significant due diligence before proceeding. I am neutral on NTLA.
According to TheFly and republished by TipRanks, Intellia “announced that the U.S. Food and Drug Administration has cleared the company’s Investigational New Drug application for NTLA-2002 for the treatment of hereditary angioedema, enabling the company to include the United States in the global Phase 2 portion of its ongoing Phase 1/2 study.”
Significantly, NTLA-2002 represents an in-vivo genome editing candidate “designed to inactivate the target gene, kallikrein B1, to permanently reduce plasma kallikrein protein activity and thus prevent HAE attacks after a single-dose treatment.”
Notably, RBC Capital Markets analyst Luca Issi chimed in, stating that “this is an important milestone for Intellia as it is the first-ever (investigational new drug application) cleared by the FDA for in-vivo gene editing.” Fundamentally, the news has the makings of a game-changer as it forwards scientific progress in a promising therapeutic pathway.
Not surprisingly, NTLA stock jumped nearly 11% for the week ending March 3. However, investors should still exercise extreme caution with Intellia and gene editing in general.
NTLA Stock is Compelling, but Risk Factors Remain
On the surface, NTLA stock appears to rank among the most compelling market opportunities. In short, Intellia leverages CRISPR, which stands for Clustered Regularly Interspaced Short Palindromic Repeats. In simpler terms, it’s a gene-editing technology that promotes a faster, cheaper, and more accurate process of DNA editing compared to prior techniques.
Theoretically, CRISPR-based therapeutics open the door to resolving various chronic and genetic diseases, including rare conditions. Using enzymes, bioengineers can target specific DNA sequences, introducing cuts into the DNA strands. This process enables the removal of existing DNA for the insertion of replacement counterparts.
Given the radical implications of CRISPR innovations, several high-profile investors – including Cathie Wood – placed major bets on participating enterprises. While NTLA stock represents one of many sector players, its in-vivo gene editing greenlight helps it stand out.
Still, investors shouldn’t just jump aboard NTLA stock without carefully reviewing the facts about CRISPR. In particular, the Jackson Library mentioned that while it’s an extremely powerful tool, it also incurs limitations. Significantly, CRISPR is not 100% efficient. Thus, some treatment-receiving cells may not demonstrate genome editing activity.
Just as importantly, CRISPR is not 100% accurate. Indeed, the Jackson Library mentions the risk of off-target edits. While rare, when such incidents occur, they may impose severe consequences.
Also, while research continues, CRISPR might drive up cancer risk in edited cells. Put another way, if the innovation causes the disease for which it was meant to address, associated companies could crumble.
A Typical Aspirational Biotech
Beyond the science of NTLA stock, investors must also consider the underlying financials. Here, Intellia rates as a typical aspirational biotech, for better or for worse.
Most glaringly, Intellia features – outside of the biotech context – troubling operational statistics. For instance, its three-year revenue growth rate (on a per-share basis) slipped to -9.5%. Also, its operating and net margins plunged deeply into negative territory on a trailing-year basis. With the biotech context brought in, it’s not unusual to see such red ink, but that doesn’t make it acceptable.
Not surprisingly, then, while NTLA stock gained over 15% since the January opener, it’s down 37% for the trailing year. It’s also worth pointing out that previously-hyped gene-editing stocks also suffered ignominious implosions. Unfortunately, volatility is almost an inevitability in this space.
Is NTLA Stock a Buy, According to Analysts?
Turning to Wall Street, NTLA stock has a Strong Buy consensus rating based on 12 Buys, four Holds, and zero Sell ratings. The average NTLA stock price target is $92.40, implying 133.25% upside potential.
The Takeaway: NTLA Stock Entices, but be Careful
With the development of CRISPR opening the pathway to gene editing, humanity may eventually cure diseases, not just manage them. That’s the potential undergirding NTLA stock. Whether this materializes into an actionable therapeutic pathway remains to be seen.
Though CRISPR opens doors, some doors were never meant to be open. With the risk of unintended consequences clouding the sector, investors should take a prudent approach with NTLA stock.
