Analysts say Intellia Therapeutics stock could rise 157% this year, but will that happen?

Wall Street analysts are very optimistic about this. Intellia Therapeutics (NTLA -2.56%) inventory. On average, they estimate it will rise by about 157% in the next 12 months. With a new bull market now taking shape, there is a good chance that it will actually deliver what analysts expect.

Does this mean that a rise in this stock is inevitable in the near term? Or is Wall Street ahead of the curve?

The catalyst is actually in store

First, let’s review the case for Intellia performing as analysts expect. Before the end of 2024, the biotech company will develop two new technologies that aim to therapeutically and potentially permanently correct the genes responsible for the rare inherited diseases transthyretin (ATTR) amyloidosis and hereditary angioedema (HAE). We will have an ongoing Phase 3 clinical program.

The HAE program has not yet entered Phase 3 testing, but should be completed before the end of this year. And if all goes well, the program will go before Food and Drug Administration regulators for approval in 2026.

Both HAE and ATTR candidates would have relatively large markets despite the relative rarity of their underlying conditions. GlobalData estimates that the HAE treatment market will be worth $11 billion and the ATTR treatment market will be worth $6 billion by 2029.

So far, this has been a good fit for Wall Street’s outlook. Based on current collaboration revenues alone, if Intellia were able to commercialize either of these programs, it would be able to report significant revenue growth, and maybe even some profitable growth thereafter. You don’t even need to have a large market share for your stock price to skyrocket.

The most important thing investors need to know about collaboration is partnering. Regeneron Pharmaceuticals Around the HAE program. Under the terms of the deal, Regeneron will keep 25% of costs and profits. This is another point supporting the sharp rise in Intellia’s stock price, as it means the company will retain most of the upside if it commercializes its candidate.

In terms of financial resources, management said it has approximately $1 billion in cash, cash equivalents and marketable securities, which would be enough to sustain it through early 2026. With 12-month operating costs of $537 million and an expensive new Phase 3 trial scheduled for the near future, Intellia’s wallet is looking a little light.

To expand these resources, we announced a 15% staff cut in early January. It also said it would discontinue certain discovery-stage research and development (R&D) programs and activities. That said, Intellia claims it has enough money to complete its strategic priority programs, and it probably will. But at the same time, it’s clear that there aren’t many resources to spare other than covering the necessities.

So when it comes to determining whether the stock can reach the price range analysts expect, Intellia’s financial picture is clearly neither positive nor negative.

Even if a little vitality goes wrong, it’s a good investment.

While it’s true that there are some positive catalysts coming for Intellia’s stock, it’s hard to see how the stock could rise as much as Wall Street is currently calculating. Intellia’s current market capitalization is $2.6 billion. There is no revenue from product sales and will not be profitable for at least another two years.

Reporting positive data from late-stage clinical trials is typically a strong catalyst for pre-revenue biotech stocks, but the competitive context of the data is important. In this case, non-therapeutic treatments for both HAE and ATTR amyloidosis are already available on the market. This means that even if the treatment is superior, the increase from good data will be lower because the market will factor in Intellia’s need to fight incumbents for market share.

It is also possible that they may have difficulty providing data that is more favorable than early clinical trial results suggest. Expectations are so high that it won’t have much trouble crushing analysts’ hopes.

So, in summary, it’s hard to believe that this biotech stock will rise 157% within the next 12 months, even if management perfectly executes on its stated timeline. Even if there is a successful outcome on regulatory approval, which is the biggest catalyst, the company will have difficulty delivering on that outcome.

Nonetheless, Intellia is an emerging biotech, and could significantly underperform its lofty price targets and still be a good investment. Don’t get hung up on whether it can live up to the hype.