EDIT: Editas Medicine vs. Intellia Therapeutics: Which Genomics Stocks is a Better Buy?

Editas Medicine, Inc. (EDIT) and Intellia Therapeutics, Inc. (NTLA) are two emerging gene editing companies that are focused on developing transformative genomic medicines to treat a range of serious diseases. EDIT develops a proprietary genome editing platform based on CRISPR technology. NTLA, develops vivo programs focusing on liver diseases, as well as other research programs.

The COVID-19 pandemic and the race to develop a vaccine against it has made the power of genomics much more visible to the general public. The ongoing advancements in this sector of the healthcare industry have the potential to allow billions of people to live healthier lives. Moreover, this sector has the potential to largely transform traditional healthcare.

Both EDIT and NTLA have hit record highs this month and we think possess plenty more upside potential because of their continuing advancements in the genomic space and growing investments in research and development.

These stocks generated solid returns over the past year. While EDIT has returned 145.8% over this period, NTLA gained 255.1%. In terms of one-month performance, EDIT is the clear winner with 138.9% in gains versus NTLA’s 38.7% returns. But which of these stocks is a better pick now? Let’s find out.

Latest Movements

On December 10^h, EDIT announced the submission of its Investigational New Drug (IND) application with the U.S. Food and Drug Administration (FDA) for the initiation of a Phase 1/2 clinical trial of EDIT-301. This should be a significant milestone for the company as it continues to advance several ex vivo cell therapy medicines.

Earlier this year, the company announced that the U.S. Patent and Trademark Office has granted Broad’s motion for priority benefit in CRISPR Interference. This foundational patent portfolio should enable the company to garner substantial gains in the genome editing market in the coming months.

NTLA recently presented new preclinical data in support of NTLA-5001, the first potential CRISPR-based cancer treatment, at the 62^nd American Society of Hematology. This will enable the company to move quickly to a pivotal investigation stage for the treatment and develop an intellectual portfolio in the market.

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And on December 5, the company announced the closing of an underwritten public offering of 5.51 million shares of its common stock. The offering raised gross proceeds of approximately $201 million.

Recent Financial Results

In the third quarter ended September 30, 2020, EDIT’s collaboration and other research and development revenue surged 1533.1% year-over-year to $62.84 million, due primarily to the recognition of $59.9 million of previously deferred revenue. The company’s EPS has grown 118.2% year-over-year to $0.12.

NTLA reported a net income of $7.82 compared to net loss of $32.90 million in the prior-year quarter. Cash, cash equivalents and marketable securities have grown 18.4% for the nine-month period to $541.29 million.

NTLA’s collaboration revenue has increased 109.3% year-over-year to $22.22 million for the third quarter ended September 30, 2020. The company’s cash, cash equivalents and marketable securities grew 43.4% to $407.95 million, respectively, for the nine-month period.

Past and Expected Financial Performance

EDIT’s revenue and total assets have grown at a CAGR of 102.9% and 20.8%, respectively, over the past three years. The company’s tangible book value has grown at a CAGR of 35.4% over this period.

Analysts expect the company’s revenue to increase 314.1% in the current year. EDIT’s EPS is expected to grow 36.2% in the current year.

In comparison, NTLA’s revenue and total assets have grown at a CAGR of 35.5% and 22.6%, respectively, over the past three years. The CAGR of the company’s tangible book value has been 23.3%.

Analysts expect the company’s revenue to increase 53.5% in the current year. NTLA’s EPS is expected to decrease 9.5% in the current year.

Here EDIT is in an advantageous position.

Valuation

In terms of trailing-12-month Price/Sales, NTLA is currently trading at 46.44x, which is 1.3% more expensive than EDIT, which is currently trading at 45.84x. Though NTLA is less expensive in terms of Price to Book (9.74x versus 10.49x), its trailing-12-month EV/Sales of 50.41x is 12.2% higher than EDIT’s 44.92x.

Thus, EDIT is the more affordable stock here.

POWR Ratings

Both EDIT and NTLA are rated “Buy” in our proprietary POWR Ratings system. Here are how the four components of overall POWR Rating are graded for EDIT and NTLA:

EDIT has an “A” for Trade Grade and Peer Grade, a “C” for Buy & Hold Grade, and a “D” for Industry Rank. In the 408-stock Biotech industry, it is ranked #38.

NTLA has an “A” for Trade Grade and Peer Grade, a “C” for Buy & Hold Grade, and a “D” for Industry Rank. It is ranked #42 of 408 stocks in the same industry.

The Winner

Both EDIT and NTLA are good investment bets considering their market dominance and continued expansion. However, EDIT appears to be a better buy because it is a cheaper investment option and has a higher earnings and revenue growth potential.

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EDIT shares were trading at $76.54 per share on Wednesday afternoon, up $1.67 (+2.23%). Year-to-date, EDIT has gained 158.49%, versus a 17.66% rise in the benchmark S&P 500 index during the same period.

About the Author: Imon Ghosh

Imon is an investment analyst and journalist with an enthusiasm for financial research and writing. She began her career at Kantar IMRB, a leading market research and consumer consulting organization. More...