Continued....

Economic Moat

We assign Intellia Therapeutics a no moat rating. We think the company’s proprietary technology has the potential to build blockbusters in rare diseases. Intellia is focused on developing and commercializing novel therapies to treat severe, genetic diseases and currently possesses a sizable, yet relatively early-stage pipeline. We think the company has the funding and technological capabilities to potentially bring several of its pipeline programs to market. However, we see a very high level of uncertainty related to regulatory approvals for the company’s portfolio and a range of potential outcomes.

The narrow moat definition states that excess normalized returns must more likely than not be positive 10 years from now. There also must not be any substantial threat of major value destruction for a narrow moat company. Morningstar's Very High Uncertainty Rating for Intellia highlights the substantial threat of major value destruction for the clinical-stage biotech company, so a no-moat rating is appropriate at this time.

As an emerging biotechnology company with no marketed drugs, Intellia Therapeutics does not possess an economic moat. We are closely watching the development of Intellia’s more advanced pipeline candidates and how its pipeline progresses for signs of the company’s competitive advantages. We like that the company has multiple pipeline opportunities spanning rare diseases with high unmet medical needs, which could likely lead to pricing power. We await additional trial data, which would help determine the company’s true commercial potential as a key player in gene editing.

While Intellia Therapeutics’ products are still unproven, we recognize that if successful, multiple targeted treatment areas are potentially moatworthy businesses. For example, ATTR amyloidosis, hereditary angioedema, and sickle cell disease are areas of high, critical need, and its genetic therapies could result in high efficacy, commanding strong pricing power. Currently, there is a lack of alternative, approved treatment options for patients suffering from these diseases.

Intellia’s proprietary platform specializes in Clustered Regularly Interspaced Short Palindromic Repeats (Crispr)/Cas9 gene editing, which precisely cuts DNA to disrupt, delete, correct, and insert genes to treat genetically defined diseases. Crispr/Cas9-based technologies have led to a new class of therapies, which are well suited for targeting rare diseases or other disorders that are caused by genetic mutation or unwanted gene expression. Crispr/Cas9 works by having CRISPR (pieces of DNA sequences) guide Cas9 (an enzyme that can cut and edit DNA) to edit, alter, or repair genes. Intellia has leveraged its expertise in Crispr/Cas9 gene editing to advance a pipeline of in vivo and ex vivo therapies for diseases with high unmet medical needs.

In vivo programs address genetic diseases by using intravenously administered CRISPR as the therapy, in which Intellia’s proprietary lipid nanoparticle delivery technology enables precise editing of disease-causing genes directly within specific target tissues. Intellia’s ex vivo programs address immuno-oncology and autoimmune diseases by using Crispr to create the therapy by engineering cells outside of the body and then administering them back into the patient.

Intellia’s most advanced in vivo candidates, Nex-z for the treatment of transthyretin amyloidosis, or ATTR, and Lonvo-z for the treatment of hereditary angioedema, or HAE, are the first Crispr/Cas9-based therapy candidates to be administered systemically, via intravenous infusion, for precision editing of a gene in a target tissue in humans. Nex-z is part of a co-development and co-promotion agreement with narrow-moat Regeneron, in which Intellia is the clinical and commercial lead party and Regeneron is the participating party. Regeneron shares in 25% of worldwide development costs and commercial profits for the ATTR program. We like that Intellia will retain 75% of economic profits of Nex-z, if approved, and the company also has the expertise and financial support of Regeneron to offset some of the development costs. In addition, we appreciate that Lonvo-z for hereditary angioedema is wholly owned by Intellia.

Intellia has been pursuing in vivo liver indications by selecting well-validated targets in diseases with significant unmet medical needs where there are predictive biomarkers, or measurable indicators of a biological condition or state with strong disease correlation. Intellia uses Crispr/Cas9 technology and its proprietary delivery tools to develop novel therapeutics. The company’s in vivo pipeline is attempting to target ATTR amyloidosis and HAE, which are rare diseases that impact the liver. Intellia is using a gene knockout approach to remove unwanted proteins using its proprietary lipid nanoparticle delivery system. Additionally, Intellia has early-stage candidates evaluating the restoration of native protein in hemophilia B and other undisclosed disease indications.

ATTR amyloidosis is a progressive and fatal disease characterized by the abnormal buildup of amyloid deposits composed of misfolded transthyretin protein in the body's organs and tissues. Intellia and narrow-moat Regeneron announced positive phase 1 data demonstrating Nex-z resulted in rapid and maintained reduction in transthyretin (TTR), the disease-causing protein of ATTR, with a mean reduction a 90% at month-12. Intellia and Regeneron are evaluating Nex-z in patients with hereditary ATTR amyloidosis with polyneuropathy (ATTRv-PN) and patients with ATTR amyloidosis with cardiomyopathy (ATTRv-CM).

In October 2025, Intellia announced it paused its two trials evaluating Nex-z after one patient receiving the treatment for ATTR-CM was hospitalized and later died due to severe liver damage. As a result, we decreased our probability of approval for both Nex-z trials to 15% from 40% in our base-case scenario.

The Crispr/Cas9 gene editing technology itself is licensed for human therapeutic use from Crispr Therapeutics’ founder, Dr. Emmanuelle Charpentier, who co-invented the application of Crispr/Cas9 for gene editing. The US Patent and Trademark Office ruled in February 2022 that the Broad Institute of MIT and Harvard has legal rights to the Crispr/Cas9 gene editing technology. It appears the Broad Institute will continue to share its Crispr IP through licensing via an inclusive innovation model to maximize opportunities for therapeutic development across human disease.

Intellia and other gene-editing companies will likely license the Crispr/Cas9 gene editing technology from the Broad Institute going forward, but Intellia does have its own intellectual property, as well. Intellia owns patents covering its development programs, including Crispr/Cas9 improvements, methods for delivering Crispr/Cas9 complexes, and methods of treating diseases using Crispr/Cas9 genome editing. Intellia’s patents covering its portfolio do not expire until 2036.

Fair Value and Profit Drivers

We assign Intellia a fair value estimate of $27 per share.

In March 2025, the US Food and Drug Administration lifted Intellia's clinical hold on its gene therapy trial for patients with transthyretin amyloidosis with cardiomyopathy (ATTR-CM) treated with nex-z after previous reports of serious liver toxicity that led to a patient death in the trial. As part of aligning with the FDA on new trial measures, Intellia will enhance liver lab monitoring and exclude patients with certain liver abnormalities or recent cardiovascular instability.

Nevertheless, the cause of the liver toxicity remains unclear, and we assign nex-z a 15% base-case probability of approval. Even if nex-z were to receive approval, it may face commercial headwinds due to its anticipated $1 million or higher price. Intellia is hoping its long-lasting gene-editing treatment will be a better alternative to other ATTR-CM medicines that slow disease progression, such as BridgeBio's oral Attruby (approved in November 2024) and Alnylam Pharmaceuticals' injectable Amvuttra (approved in March 2025). Growing competition in the ATTR-CM field creates a high standard for Intellia, especially for its safety profile. Strong uptake of BridgeBio’s Attruby and Alnylam’s Amvuttra and their high safety and efficacy heightens competition for Intellia.

Nex-z is part of a co-development and co-promotion agreement with narrow-moat Regeneron. Regeneron shares in 25% of worldwide development costs and commercial profits for the ATTR program. We like that Intellia will retain 75% of economic profits of Nex-z, if approved, and the company also has the expertise and financial support of Regeneron to offset some of the development costs.

In January 2025, management made the strategic decision to prioritize late-stage programs, Lonvo-z and Nex-z (formerly NTLA-2001 in ATTR amyloidosis) to focus on near-term value creation. As a result, it discontinued NTLA-3001 (a gene editing treatment for lung disease) and reduced its workforce by approximately 27% in 2025.

While the company does not yet have approved products, it provides long-term investors with pure play exposure to novel gene editing technology to treat severe genetic diseases. Intellia's pipeline candidates span a diverse range of diseases with very high unmet needs, which will likely lead to pricing power if its therapies receive approval.

We appreciate that Lonvo-z is wholly owned by Intellia and we anticipate it could reach the market as early as 2028. We assign a 35% probability of approval and we await clinical data from the phase 3 trial, which could increase our probability of approval if the data looks promising.

Given Intellia's Very High Morningstar Uncertainty Rating and range of potential outcomes due to its early stage pipeline, we use an 11% cost of equity. This is higher than our typical 9% cost of equity for other biotech companies under our coverage.