Intellia Therapeutics (NTLA) paused patient dosing and screening for its two phase 3 Nex-Z trials after reports of liver toxicity, however, its claim that the issue is specific to the gene target is unconvincing, RBC Capital Markets said in a note Monday.

The analysts said that other biotechnology companies, including Alnylam Pharmaceuticals (ALNY) and Ionis Pharmaceuticals (IONS), have a long and well-documented history of safely reducing expression of the same gene target, even though their mechanisms of action differ.

They added that while it is possible that Intellia can mitigate this safety risk through additional monitoring or dosing adjustments, and there is precedent for gene-editing companies recovering from similar safety concerns, this development significantly shifts the risk-benefit profile in an unfavorable direction.

The US Food and Drug Administration has not ordered this pause, it was triggered by the company's own safety rules. Intellia plans to discuss next steps with the FDA and expects a pause of a few weeks while a safety plan is developed, the management said, according to the note.

"Overall, we think Intellia Therapeutics has the broadest/deepest gene-editing toolbox, and we like the recent proof of concept for base editing and the non-viral delivery to bone marrow. We stay on the sidelines awaiting further update on the clinical progress," the analysts said.

RBC downgraded Intellia Therapeutics to sector perform from outperform and cut its price target to $14 from $21 and kept speculative risk.

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