NTLA Stock Tumbles Nearly 10% After $180 Million Share Offering Spooks Investors

When a company files for a discounted share offering at the worst possible time, a certain kind of silence descends upon a biotech trading desk. As the news about Intellia Therapeutics made its way across the wires on Tuesday night, you can practically picture the screens glowing in half-empty offices along Madison Avenue. By Wednesday morning, NTLA had dropped to roughly $11.93 per share, down nearly 10%, and the conversation on biotech forums had once again become negative.

Anyone who has watched gene-editing names in recent years will recognize the setup. The Cambridge-based CRISPR startup Intellia, which emerged from the initial surge of scholarly interest in the technology, raised about $180 million by pricing 16.74 million new shares at $10.75 each. The deal was raised from its initial $150 million goal, which the business claimed was due to high demand. Naturally, investors interpret it differently. They observed dilution. They observed management deciding to issue more paper at a discount rather than wait, and they saw a stock that had already traded at $28 last year now changing hands below $12.

The market may be acting too harshly. By most reasonable standards, Intellia is doing better than the share price indicates. The pipeline still includes programs for sickle cell disease and hereditary angioedema, as well as nex-z, a treatment for ATTR amyloidosis that is being co-developed with Regeneron. According to the most recent report, quarterly revenue increased by nearly 79% year over year. Scientifically, something is going on here that the chart isn’t showing.

However, most people only see the chart. The chart has also been unattractive. Before the offering was even formally priced, the stock had already begun to decline, from the high $16s on April 22 to the low $13s by April 28. There’s a feeling that someone knew, somewhere. In these circumstances, biotech investors typically assume the worst, and they are frequently correct.

If you attend any small-cap biotech conference, you’ll hear the same grievance over and over again. Businesses dilute their long-term supporters by raising money too late and at the wrong price. The money prolongs the runway, the science is still valid, and John Leonard has been a reliable hand since 2018, according to Intellia’s supporters. Even so, it’s difficult to ignore the impression that pre-revenue gene-editing stories are now valued differently by the market. The joy of 2021 has vanished. All that remains is a colder calculation concerning timeliness, cash burn, and whether any of these treatments will truly reach patients in a way that is commercially significant.

The mood is not improved by the financials. EBITDA is deeply in the red, net losses are close to $96 million, and return on equity is worse than negative 40%. With more than $449 million in cash before this raise, the balance sheet is strong, but biotechs consume capital in the same way that construction sites consume steel. Before anything produces actual revenue, there’s always another trial, another regulatory obstacle, and another year of costs.

It’s really unclear what will happen next. An additional potential supply is added by the underwriters’ 30-day option to purchase additional shares. Today’s $10.75 buyers might appear prophetic if the science is correct. If it doesn’t, this serves as yet another warning about the lengthy and costly path that gene editing takes from petri dish to pharmacy shelf. For the time being, NTLA is in that awkward middle position—too promising to give up, too unprofitable to rejoice.