NVSEF - Intellia Therapeutics: Signs Of Possible Life

2023-04-21 13:45:05 ET

Summary

• Shares of CRISPR-Cas9 genomic editor Intellia Therapeutics, Inc. have retreated over 80% since hitting an all-time intraday high of $202.73 in late June 2021.
• Despite the pullback, very early returns suggest a functional cure for HAE and (possibly) ATTR amyloidosis from its first two clinical assets, representing a total $15 billion market opportunity.
• With the FDA clearing an IND to include U.S. hospitals in a Phase 2 HAE study and a pivotal ATTR-cardiomyopathy scheduled to commence near YE23, Intellia merited a deeper dive.
• A full investment analysis follows in the paragraphs below.

It's easy to attack and destroy an act of creation. It's a lot more difficult to perform one .”? Chuck Palahniuk.

Today, we take a deeper look at mid-cap developmental concern in the Gene Editing field. This company has some with some intriguing candidates within its pipeline. After a huge decline in the equity since mid-2021, the stock was initiated as a new Buy at Canaccord Genuity last week. A sign of a possible turnaround in the shares? An analysis follows in the paragraphs below.

Company Overview:

Intellia Therapeutics, Inc. ( NTLA ) is a Cambridge, Massachusetts-based early clinical-stage biopharmaceutical concern focused on the development of potentially curative therapies leveraging its CRISPR-Cas9 genome editing platform. The company has two programs in the clinic and four undergoing IND-enabling studies and has inked multiple collaborations and licensing deals for its technology. Intellia was founded in 2014 and went public in 2016, raising net proceeds of $112.1 million at $18 per share. The stock currently trades around $36.00 a share, translating to a market cap of $3.15 billion.

CRISPR-Cas9

The CRISPR-Cas9 technology buttressing Intellia was pioneered by one of its scientific co-founders, Jennifer Doudna, who along with Emmanuelle Charpentier received the 2020 Nobel Prize in Chemistry for their contribution to the field of genomic editing. CRISPR-Cas9 is an acronym for Clustered, Regularly Interspaced Short Palindromic Repeats-CRISPR associated 9. It is a system comprised of two molecules that introduce an edit into DNA. One (Cas9) is an enzyme (endonuclease) that acts as a pair of molecular scissors, cutting two strands of DNA at a specific location in the genome so that bits of DNA can then be added or removed. The other is a guide RNA (gRNA), consisting of a small piece of pre-designed RNA sequence (~20 bases in length and unique relative to the rest of the genome) that is complementary to those of the target DNA sequence in the genome and part of a longer RNA scaffold. The scaffold binds to DNA and the pre-designed sequence guides the Cas9 enzyme to the targeted part of the genome, where it executes the cut. Once spliced, the cell recognizes that its DNA is damaged and attempts a repair. Intellia leverages this DNA repair machinery to introduce changes to one or more genes in the genome of the cell of interest.

These " edits" can take on many forms, including knockout/deletion, repair, insertion, or consecutive editing.

The first type occurs when the resulting changes in the DNA from the splice impair the function of any encoded protein, effectually knocking it out. Intellia has identified gRNAs that perform this task at high frequency with no substantial off-target effects. Repair and insertion require – in addition to the Cas9 protein and gRNA – a template DNA containing the desired genomic sequence that is inserted to correct a patient’s original incorrect sequence. This sequence is delivered (in many cases) by lipo-nanoparticles (LNPs) in combination with a CRISPR-Cas9 complex. Consecutive editing is any combination of knockout and insertion.

LNPs are a desirable delivery system as they have already been validated as a delivery mechanism for therapeutic nucleic acids to the liver via intravenous administration, are well-tolerated, and can be manufactured at scale.

Pipeline:

From this CRISPR-Cas9 platform, Intellia has developed two delivery methodologies: its more advanced in-vivo approach; and an ex-vivo strategy in which the cells are removed from the body, modified by CRISPR, and returned. The former approach has produced two knockout clinical programs.

NTLA-2001 . The company’s first systemically delivered CRISPR-based therapy is NTLA-2001, which is undergoing investigation in a Phase 1 study in the treatment of transthyretin ((ATTR)) amyloidosis, a disease where the liver produces faulty transthyretin ((TTR)) proteins. These abnormal proteins break apart, misfold on themselves and form clumps of amyloid fibrils. They are carried by the circulatory system and deposited in nerves or (typically) in the left ventricle of the heart, causing polyneuropathy or cardiomyopathy, respectively. As such, patients afflicted with ATTR amyloidosis suffer heart failure, shortness of breath, muscle weakness, and sensory deficits. Intellia believes that this malady vexes between ~250,000 and ~550,000 worldwide, of which ~50,000 cases are hereditary. Life expectancy after diagnosis is two to seven years for cardiomyopathy (ATTR-CM) patients and approximately ten years for polyneuropathy (ATTRv-PN) patients. There are three FDA-approved therapies for ATTRv-PN and one for ATTR-CM, which have varying degrees of effectiveness, but all require lifetime dosing. By contrast, NTLA-2001 aspires to be a one-time dose with curative potential. The company places the FY26 global market opportunity for ATTR amyloidosis treatments at ~$11 billion.

Back to the clinical trial, it is an open-label, two-part, two-arm study – one for ATTR-CM and the other for ATTRv-PN. In addition to assessing safety, tolerability, pharmacokinetics, etc., the single-ascending dose Part 1 phase is designed to identify a recommended dose for Part 2. Interim data, readout in June and November 2022 were very encouraging for both arms. In the 12 evaluable ATTR-CM patients, NTLA-2001 demonstrated serum TTR reductions of greater than 90% at the 0.7 mg/kg and 1.0 mg/kg doses at day 28 that was sustained with patient follow-up ranging from four to six months. In the ATTRv-PN arm, patients dosed at 0.3 mg/kg (n=3) experienced an 89% reduction in serum TTR levels at month 12; patients dosed at 0.7 mg/kg (n=3) saw an 87% reduction at month 6; and patients dosed at 1.0 mg/kg (n=6) realized a 93% reduction at month 6. Although in an admittedly small patient population, the durability and persistence of effect suggest NTLA-2001 has significant potential as a one-time intravenously administered treatment.

Intellia has completed enrollment for the dose expansion phases of both arms, with the company eyeing pivotal initiations for both indications by late 2023 (ATTR-CM) and 2024 (ATTRv-PN), with the former including a mid-2023 IND submission to include U.S. sites in the trial.

NTLA-2001 has received orphan drug designations from both the FDA and European Commission.

The development of NTLA-2001 is being conducted in conjunction with Regeneron. The details of that and other collaborations are discussed below.

NTLA-2002 . Intellia’s other clinical program is NTLA-2002, which is undergoing evaluation in the treatment of Type I or Type II Hereditary Angioedema ((HAE)). The disease is characterized by recurrent, painful, and unpredictable episodes of severe swelling, typically of the limbs, face, intestinal tract, and airway with an average age of onset near 20 years. These manifestations are a function of increased levels of the protein bradykinin. Most HAE patients are lacking C1 esterase inhibitor (C1-INH) protein, which thwarts bradykinin overproduction. The rare genetic disorder afflicts more than 15,000 in the U.S. and Europe. There are approved treatment options with varying degrees of efficacy, but none that hold the promise of knocking out the kallikrein B1 gene with a one-and-done administration. Management places the FY26 global market opportunity for HAE therapies at north of $4 billion.

NTLA-2002 is being assessed in a Phase 1/2 trial, which like NLTA-2001 has yielded promising results. Patients at all three dosages saw meaningful reductions in plasma kallikrein levels: 64% decrease at week 32 for the 25 mg dose; 81% reduction at day 22 for the 50 mg dose; and 92% at week 16 for the 75 mg dose. All dose levels were generally well-tolerated and most importantly, all patients who completed the pre-specified 16-week observation period – during which a substantial reduction of attacks from baseline (91% at 25 mg; 78% at 75 mg) was observed – remained attack-free through the data cut-off date (anywhere from 2.3 to 10.6 months), suggesting a functional cure for HAE. Intellia initiated the Phase 2 portion in early 2023, selecting the 25 mg and 50 mg doses. Furthermore, the FDA greenlighted NTLA-2002’s IND in early March 2023, allowing it to include the U.S. as part of this global trial.

On March 21, 2023, the FDA granted NTLA-2002 a Regenerative Advanced Medicine Therapy designation, making it eligible for priority review or accelerated approval with less than complete data sets, as well as early interactions with the FDA.

In addition to NTLA-2001 and NTLA-2002, Intellia has three other assets it is prepping for the clinic: knockout candidate NTLA-2003 for alpha-1 antitrypsin deficiency ((AATD))-liver disease; insertion candidate NTLA-3001 for AATD-lung disease; and NTLA-6001, an ex-vivo allogenic CAR-T therapy that administers sequential gene edits to protect T cells from immune rejection by host T cells and NK cells, for CD30-expressing hematologic cancers such as relapsed or refractory classical Hodgkin lymphoma.

Collaborations

Regeneron . Intellia also has another insertion program for the treatment of Hemophilia B in IND-enabling studies, but its development is being managed by Regeneron. It is part of a collaboration that includes up to 15 in-vivo targets with a mix of co-developed and licensed programs. For NTLA-2001, Regeneron Pharmaceuticals, Inc. ( REGN ) will share 25% of the costs and profits; for the Hemophilia B program, Regeneron will share 65% of the costs and profits; and for targets exclusively developed by Regeneron, Intellia is eligible to receive milestones of $320 million per target in addition to high single to low double-digit royalties.

Novartis . Intellia also had a research collaboration agreement with Novartis AG ( NVS ) that terminated in 2019 but resulted in the latter selecting undisclosed CAR-T cell, hematopoietic stem cell [HSC], and ocular stem cell targets for continued development. Intellia is eligible for milestone payments of $230 million per product with mid-single digit royalties. It should be noted that Novartis did abandon its ex-vivo HSC program for sickle cell disease in February 2023, citing a broad pipeline reorganization. It is from Novartis that Intellia in-licensed its LNP technology.

Others . The company also outlicensed its technologies to privately held concerns ONK Therapeutics, Kyverna Therapeutics, and Sparing Vision, and maintains an ownership interest (33%) in immunonocology concern AvonCell that leverages Intellia’s ex-vivo technology.

Balance Sheet & Analyst Commentary:

To fund its research, the company held cash and marketable securities of $1.26 billion at YE22, which should provide a cash runway well into FY25. Intellia restocked its coffers with a December 2022 secondary offering in which it raised net proceeds of $337.9 million at $45.80 per share, complementing its at-the-market ((ATM)) facility that provided net proceeds of $189.0 million over the course of FY22, sold at an average price of $57.43 a share. It has $205 million remaining on its ATM.

Based on their price objectives, Street analysts are extremely bullish on Intellia and its CRISPR-Cas9 platform, featuring six buy and eleven outperform ratings against three holds. Their median twelve-month price objective is just over $80 with an extremely wide range of $39 to $120 a share. representing 5% to 223% upside from the stock’s March 23, 2023 close.

Verdict:

After briefly trading below $10 during the pandemic selloff of March 2020, shares of Intellia Therapeutics, Inc. surged over $200 a share (intraday) on June 30, 2021, three days after the company announced its initial data from NTLA-2001 in the treatment of ATTR amyloidosis. The company wisely used that investor enthusiasm as a liquidity event, raising close to $600 million in a secondary offering conducted at $145 per share. Net of balance sheet cash, the market is assigning a ~$2 billion valuation to its liver franchise, consisting of a potential single-dose functional cure for HAE and a single-dose halt (and potential reversal) of two ATTR amyloidosis indications, representing a combined $15 billion market opportunity – not to mention the optionality of its preclinical programs.

While the company's pipeline is too early staged to be considered for a large stake, it has some intriguing candidates. To be sure, the data sets are small, but the massive pullback in shares of Intellia Therapeutics, Inc. provides a solid long-term entry point for a small " watch item" position for now. This is story that deserves to be circled back on as it develops.

The object of the artist is the creation of the beautiful. What the beautiful is another question .”? James Joyce.

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