Intellia Therapeutics Stock vs CRISPR Therapeutics Stock
When you’re managing a portfolio of tech stocks with a limit on the number you can hold, you need to start making difficult judgment calls. Perhaps you find two compelling companies addressing the same theme and you need to pick “the best one.” This is the Palantir vs. C3 problem. Or you might be holding multiple companies that address a single theme because you were incapable of picking a winner and took the spray-and-pray approach. That’s where we’re at with our three gene-editing stocks.
Our goal has been to revisit our gene-editing holdings to make sure we’ve placed our bets appropriately. We started with a list of 27 gene-editing stocks and reduced it to five names. We then kicked Editas Medicine out of bed because of the AbbVie falling out and their inability to keep a leadership team intact. In their place, we put Beam Therapeutics, a firm that has plenty of irons in the fire and clearly defined milestones with the Pfizer relationship. Now we’re left with three companies to look at – Caribou (CRBU), Intellia Therapeutics (NTLA), and CRISPR Therapeutics (CRSP).
We’re not interested in spending much time on Caribou because we don’t invest in companies that small. Sure, that $357 million market cap might double when they release data at the end of this year, but it would still be too small. You may correctly point out we’ve already broken our rules when investing in gene editing, so what’s one more? Fair enough, but here’s our thought process. We’re already holding three gene-editing stocks, and we’d like to reduce that to two. Right now, it’s more important to do a relative comparison of Intellia vs. CRISPR to see if we can drop one. Ideally, we’d like to have no more than two stocks addressing any single tech investing theme.
Before we do anything, we need some basic criteria to assess these two companies. Since we lack the subject matter expertise to evaluate their respective technological competencies, we need to stick with simple stuff.
- Strength of partners. Have any bailed?
- Current status of lead drug
- Clear indications of progress
- Overlap between drug pipelines
Regarding that first bullet point, below you can see partnerships for the OGs of gene editing as of 2016.
Also consider that gene-editing stocks move in unison to a certain extent. When one firm has success, all firms benefit. Of course, that’s just hype, but it’s allowed us to recoup our entire cost basis on the three OGs we were holding when shares briefly went to the moon. While we generally shy away from market timing, sometimes when the hype is obvious, it makes sense to take some proceeds off the table.
Let’s start by looking at CRISPR Therapeutics.
Revisiting CRISPR Therapeutics Stock
In looking at the CRISPR Therapeutics pipeline, we’re only interested in their lead candidate. All the other stuff that’s “100% owned by CRISPR Therapeutics” or the regenerative medicine therapy they’re working on with ViaCyte is just noise. That’s because the real progress is being made in developing their lead candidate – CTX-1001 – which appears to be successfully curing patients with sickle cell diseases and beta thalassemia.
The company had their innovation day this past week and, based on the Twitter comments, you would have thought they spent the time on stage clubbing baby seals to death. As for the analysts, one moved to a price target of $60 and the other $120. Looking to the pundits or the masses for answers just creates more noise. Instead, let’s look at what the experts are saying.
Mr. Bell may be no expert in gene editing, but he did a great job of summarizing what’s happened so far in this succinct paragraph:
A gene editing medicine designed to treat two blood disorders has continued to perform strongly in clinical testing, with the latest results showing that, in the vast majority of treated patients, it alleviates the symptoms and burdens of both diseases.Credit: BioPharma Dive, Jacob Bell
The ability for the treatment to cure patients is kind of mandatory, so the fact CRISPR Therapeutics has treated 75 patients and nearly all of them “are now living without the most serious and impactful effects of their illnesses” is very notable. That’s the good news, but some concern was raised around two patients having “serious adverse events” which have fortunately been resolved. The article also talks about how complicated the procedure is. First, you need to take bone marrow from the patient and perform gene-editing magic on it, then you need to put it back in the bone after using chemotherapy to create space for the modified bone marrow to be re-introduced to the patient. At least it’s better than a bone marrow transplant which is the only known cure for sickle cell disease.
Called exa-cell, CRISPR’s gene-editing therapy is being developed alongside Vertex (VRTX), a $75 billion company that’s now changed up their language a bit around how they measure treatment success which could mean any number of things. Long story short, both firms hope to “ask for approval in the U.S., U.K., and Europe before the end of the year.” If approved, the therapy called exa-cell would become “the first marketed medicine based on CRISPR.” Generally speaking, CRISPR Therapeutics seems to be making great progress so far with their lead candidate.
And with that, we’d like to thank Mr. Bell for doing all the heavy lifting. Let’s move on to looking at Intellia Therapeutics.
Revisiting Intellia Therapeutics Stock
As we did with CRISPR Therapeutics, we’re focusing only on lead candidates. For Intellia, we’ll consider two lead candidates – an ex-vivo (outside the body) therapy being developed with Novartis for sickle cell diseases, and an in-vivo (inside the body) treatment being developed with Regeneron. As for the former, Novartis is currently enrolling patients for a “proof-of-concept study following subjects for two years after transplantation.” Seems a bit behind the ball considering that CRISPR Therapeutics has already treated 75 patients and essentially cured them, so our main focus will be on the in-vivo treatment which is showing signs of promise. For news on that, we’ll turn to Ben Fidler of BioPharma Dive who penned an excellent piece of prose on the topic.
The article goes on to talk about how Intellia and Regeneron Pharmaceuticals (REGN), a $67 billion drug developer, are working together to develop the first CRISPR candidate to be administered intravenously to edit a gene inside the human body. The candidate, NTLA-2001, uses a non-viral lipid nanoparticle to knock out a gene in the liver that causes a protein to fold incorrectly which progressively kills people. The disease is called ATTR amyloidosis and its hereditary manifestation affects around 50,000 in the world. A further 200-500 thousand people develop the disease spontaneously, and the therapy is meant to treat them as well. So far, it seems to be having the desired effect for the 15 patients they’ve tested it on. The below chart is fairly easy to read – along the bottom you can see increased dosage (adjusted for weight) and the increasing percentage (good) shows the decline in the bad TTR protein thingy.
As for the side effects, mild rash, back pain, nausea, and vomiting were observed. Sounds like they got off easy compared to our last employee offsite in Pattaya. There’s an even better chart (page 7 of this deck) that shows how the four cohorts of 15 patients fared over time and the ranges of improvement. It’s easy to interpret and insightful. The BioPharma Dive article goes on to talk about how Intellia is slightly changing their focus now to compete with other therapies being developed that don’t involve gene editing. The firm burned through $147 million last quarter, and they have $750 million in cash on hand now, so that’s about a year and a quarter left before needing to raise capital in a difficult economic environment.
Our CRISPR and Intellia Holdings
Essentially curing 75 patients as CRISPR Therapeutics has done without anything bad happening (more or less) seems like a big deal. The progress the firm is making with their lead candidate is promising, though they burned $179 million last quarter which gives them a runway of about two years given the $1.6 billion in cash on their books. If they’re hoping to ask for approval before the end of this year, and that doesn’t happen after two years pass, then we’ll start to worry. We’re also concerned about Bayer backing out of their relationship with CRISPR back in 2019 and that whole Casebia dissolution. If anything goes pear-shaped with exa-cell, we’re kicking what’s left of our CRISPR position to the curb.
As for Intellia, they’re also showing progress treating a smaller set of patients for a disease that’s being targeted by other drug manufacturers. We also noted Intellia has developed their own base editing approach, though we’re not sure how they can be spending much time on that when they’re occupied with other initiatives. Given the progress being made and the caliber of partners Intellia is working with (still the same from six years back), we’re not inclined to dump shares of the company for no reason. After all, we’re playing with house money here.
It would be great to free up one extra slot in our tech stock portfolio, but it looks like these two holdings are sticking around for now.
Some Final Thoughts
When you lack the subject matter expertise to assess a technology as complex as gene editing, you need to resort to looking for red flags. If a large pharma company backs out of a deal, or hands the reigns back over to the company, or fails to progress any drug candidates, we see that as a huge red flag. Another cause for alarm is when company management starts to sing a different tune, or there’s a large degree of turnover on the senior leadership team.
Our belief is that the lead drug for any company is their best foot forward. If that program starts to stumble, it spells problems for the remainder of the pipeline. Raising capital is becoming more difficult for firms of all types, and for gene-editing companies, that will only happen at favorable terms when good/great news gets released. This usually happens around milestone time, so expect lots of volatility going forward as the market processes the new information. Should the lead candidates for either of these companies stumble, then we’ll need to revisit our thesis. In the meantime, no news is good news, unless there’s no news for a long time, then it’s bad news.
The risk inherent to gene-editing stocks is palpable. Literally anything can happen. All it takes is for one patient to come down with cancer, or develop some strange side effect, and everyone will start panicking. It doesn’t matter if it’s related to gene editing or not, any bad event that happens will require further investigation and stall progress. Regulatory authorities are the gatekeepers, and they alone decide what gets approved and under what terms. All these uncontrollable risks create a great deal of volatility, so we’re happy to be playing with the house’s money and won’t look to commit any more capital aside from perhaps topping up our Beam position a bit. If we do that, Nanalyze Premium subscribers will be the first to know.
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