Amid yet another soft session on Wall Street, biotechnology firm Intellia Therapeutics (NASDAQ:NTLA) brightened the room considerably. Receiving a regulatory green light from the Food and Drug Administration (FDA), Intellia can now begin testing its CRISPR gene-editing technology in human patients. Naturally, NTLA stock jumped on the implications, initially popping up 10%. However, prospective investors should also recognize certain risk factors.
CRISPR, which stands for Clustered Regularly Interspaced Short Palindromic Repeats, represents “…the hallmark of a bacterial defense system that forms the basis for CRISPR-Cas9 genome editing technology,” according to the Broad institute. Scientists note that this innovation underlies a faster, cheaper and more accurate process of DNA editing than previous techniques.
Specifically for NTLA stock, the FDA’s go-ahead to Intellia represents the first domestic test of an in-vivo gene-editing drug. According to Investor’s Business Daily, “With this approach, the genetic edit takes place inside the body. The treatment is also systemic, meaning a doctor infuses it into a patient’s arm. From there, the gene-editing instructions must find their way to the proper organ. In this case, that’s the liver.”
Prior to this development, Intellia tested its in-vivo tech in people in other countries. However, this is the first time the FDA signed off on human testing. Previously, the agency allowed only ex-vivo gene editing tests, or gene-editing that occurs outside the body and is later infused into patients.
NTLA Stock Enjoys Upside Opportunities But Risks Remain
Significantly, the FDA’s approval demonstrates momentum for advanced technologies addressing genetic diseases. “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,” RBC Capital Markets analyst Luca Issi said in a report.
As well, the market bolstered NTLA stock for the underlying firm’s expansionary ambitions. “The clearance today from U.S. regulators is another important milestone that highlights how Intellia continues to pave the way as the leading genome editing company,” Intellia spokeswoman Rebecca Spalding wrote in an email to Investor’s Business Daily.
However, NTLA stock still has hurdles to climb. Although shares gained nearly 28% in the new year, they’re down almost 48% in the past 365 days. At least some of the volatility may be tied to concerns about CRISPR gene editing.
According to the Jackson Library, while CRISPR represents an extremely powerful tool, it has important limitations. Technically, it’s not 100% efficient, so impacted cells may not yield genome editing activity. As well, it’s not 100% accurate. Further, “off-target” edits – though rare – may generate severe consequences.
Prospective investors of NTLA stock should also note that the deployment of CRISPR sparks much debate. While CRISPR indeed carries relevancies for difficult-to-treat conditions, the risk factor of unintended consequences rings high.
In particular, Investor’s Business Daily mentions critics’ concerns about causing potentially permanent errors. And these errors may lead a patient to develop cancer in the future.
Why It Matters
While NTLA stock may have its naysayers, so far, Wall Street analysts strongly support it. Presently, analysts peg Intellia shares as a consensus strong buy. Also, their average price target stands at $95.14, implying nearly 114% upside potential.
On the date of publication, Josh Enomoto did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.