This Stock Is Up 58% This Year. Is It too Late to Buy?

Intellia Therapeutics (NASDAQ: NTLA), a clinical-stage biotech company, did not start the year on a strong note. The company was dealing with regulatory issues: The U.S. Food and Drug Administration had put a pair of its phase 3 studies on clinical hold following the death of a patient from liver damage. However, Intellia Therapeutics was able to overcome that obstacle and resume its late-stage clinical trials. And since then, the company has made even more progress on the clinical front, helping send its stock price much higher. Shares are up 58% year to date. Is it still time to invest in Intellia Therapeutics?

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A promising gene editing treatment

On April 27, Intellia Therapeutics announced positive results from a phase 3 clinical trial for one of its leading candidates, lonvo-z. This investigational gene-editing medicine targets hereditary angioedema (HAE), a rare genetic condition that causes painful swelling attacks across the body. Although there are standards of care for this condition, there is no permanent cure. The disease, although very rare (it affects about one person in 50,000), places a significant financial burden on patients, their families, and the healthcare system.

Lonvo-z could help address some of those issues as a one-time gene editing treatment for HAE. But is it effective? The phase 3 data Intellia Therapeutics recently released tells us that it is. In the study, patients who received a single infusion of lonvo-z had an 87% reduction in attacks compared with those who received a placebo after about six months of treatment. Further, 62% of patients who received lonvo-z were completely free of attacks, compared with just 11% in the placebo group.

Intellia Therapeutics has begun submitting an application to the FDA for approval of lonvo-z. It plans to launch the medicine in the first half of 2027.

Looking at the commercial opportunity

Lonvo-z could become the standard of care in HAE. How much in sales might the medicine generate at its peak? First, note that since it affects one person in 50,000, that means there are roughly 7,000 people in the U.S. who suffer from it. That seems like a small patient population. However, gene editing treatments tend to be expensive. We don't know how much lonvo-z will cost if it earns approval, but it wouldn't be surprising if it goes for several hundred thousand dollars, perhaps even over $1 million. It's also worth noting that lonvo-z is an in vivo gene editing therapy.

That means it avoids the complex cell collection and editing process that ex vivo methods typically require and that can take weeks to complete. In fact, lonvo-z is administered in just two to four hours, after which the patient can go home. This will make the medicine much more attractive to health insurance companies and other third-party payers, as well as to patients and their families. For the sake of argument, let's suppose lonvo-z will be priced at $1 million per treatment course, while keeping in mind that, since this is a one-time gene-editing treatment, once a patient receives the therapy, they are no longer in the addressable pool.

So, it could have a total addressable opportunity of $7 billion in the U.S. It likely won't capture this entire opportunity on its own. Assuming a 50% penetration rate, we could estimate lonvo-z's lifetime sales at about $3.5 billion in the country. And since it will take a while to ramp up revenue for the medicine, annual peak sales may never get to $1 billion.

Is Intellia Therapeutics stock a buy?

The market is well aware that even though lonvo-z looks promising, its commercial opportunity in HAE is fairly small. That's why even after its impressive run this year, Intellia Therapeutics is worth just about $2.1 billion. In my view, that's a somewhat fair valuation given lonvo-z's potential. However, Intellia Therapeutics has other pipeline candidates that could be even more promising. Nex-z, the medicine whose phase 3 studies were put on clinical hold by the FDA, is being investigated in patients with transthyretin amyloidosis (ATTR).

This progressive genetic condition leads to various cardiovascular (and other) symptoms and can be life-threatening. Intellia Therapeutics is developing nex-z in partnership with Regeneron Pharmaceuticals (NASDAQ: REGN). There are between 250,000 and 500,000 patients with ATTR worldwide, and there is a significant need for new treatment options. Provided nex-z can ace its ongoing late-stage clinical trials, Intellia Therapeutic' prospects will get much brighter, and its shares will soar. We likely won't see results for nex-z's ongoing studies until next year, though, given that Intellia Therapeutics plans to complete enrollment for one of the studies in the second half of 2026.

Intellia Therapeutics has enough cash on hand to keep the lights on through all this, though, at least until 2028, according to management. And the collaboration with a biotech giant of Regeneron's stature can help in that department as well. With all that said, what should investors do? There is a significant risk in investing in a clinical-stage company, particularly one specializing in gene editing. Unforeseen clinical and regulatory setbacks are fairly common in this niche. And if that does happen to Intellia, its share price will drop off a cliff. However, for investors comfortable with significant volatility, Intellia Therapeutics might offer ample upside if it can execute its strategy nearly flawlessly over the next few years.

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intellia Therapeutics and Regeneron Pharmaceuticals. The Motley Fool has a disclosure policy.