Breakthrough genome editing companies includingEditas (NASDAQ:EDIT) and Intellia Therapeutics (NASDAQ:NTLA) have been in a tailspin since late 2019, and the latest earnings reports from both of those companies show that their revenue from collaborations and partnerships has started to dry up despite positive revenue growth overall.

Both companies aim to produce gene therapies utilizing CRISPR-based genetic editing in living patients, though their methods of delivering that therapy differ substantially. Neither company has a product on the market, though Editas beat Intellia to clinical trialsin April when it began testing EDIT-101 for Leber congenital amaurosis, a type of congenital blindness. Nonetheless, Editas is many years away from its first therapy being approved for sale, assuming that EDIT-101 proceeds past phase 1.

Investors considering either of these two companies should be aware that both are risky choices with no guarantee of a payoff over any term. There is one significant difference that wise investors will weigh carefully, however: Editas's partnerships and strategic collaborations appear positioned to be far more fruitful for the company than Intellia's.

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Intellia is a slightly smaller company than Editas, but its pipeline is comparable in breadth. The companies are of similar age, with Editas having been founded in 2013 and Intellia in 2014. However, Intellia's network of collaborations and research partnerships is far less lucrative, and its pipeline projects may soon require new funding to move forward.

Intellia's partners include pharma giantNovartis (NYSE:NVS) and biotechRegeneron (NASDAQ:REGN). Novartis made a substantial equity investment in Intellia as part of that partnership, and Novartis also retained exclusive rights to develop any engineered CAR-T cancer therapies produced by the collaboration. Intellia also agreed to give Regeneron the exclusive right to develop CRISPR-based therapies targeted at any of 10 different genes in the liver.

The terms of these collaborations make Intellia unable to capitalize on major successes beyond extending the depth of integration with its partners. Thus, in the long view, the company's path forward would still require moving its wholly owned therapy candidates to market, even if its approach is proven by a collaborator's success.

Editas's partnerships, on the other hand, are substantially more equitable. Editas's major drug development collaborations include Allergan (now part of AbbVie (NYSE:ABBV) and biopharma giantBristol Myers Squibb (NYSE:BMY). The expectation with these collaborations is that the more mature partner companies will be responsible for clinical-stage development, with Editas providing trial-ready therapy candidates and a technology platform to develop similar therapies according to the partners' needs.

Should these candidates show promise in phase 2 clinical trials investigating preliminary efficacy, the company's collaborators would likely respond by initiating new collaborations to capitalize on Editas's platform before its output is replicated by a competitor like Intellia. But Editas isn't in the same position as Intellia with regard to its major collaborations because it has a chance to capture the upside of collaborators' successes as well.

Editas's collaboration with Allergan specifies that both parties have optionality to co-develop any successful programs, and that Editas will share the revenue and losses of those programs equally with Allergan.And Editas's previous collaborations with companies like Celgene demonstrate that companies collaborating with Editas do so to access its gene-editing platform as customers as much as partners.

Editas also has partnerships with research-stage small preclinical companies such as Sandhill Therapeutics. Sandhill's therapeutic platform could benefit immensely from integrating Editas' genetic editing technologies. A similar research-stage pact with BlueRock Therapeutics initiated in 2019 has already advanced to clinical pipeline collaborations for Editas, proving that working with external peers is one of the company's organizational strengths.

It's important to remember that Editas's collaboration advantage is far from the only ingredient the company needs to survive in the medium term. Reliable revenue remains absent, and collaborations are vulnerable to amendment if the company can't deliver what its collaborators need to move products through the clinical trial process.

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For the moment, neither Editas nor Intellia warrants a definite buy, and present holders of Intellia may want to consider selling. If Intellia cancels any of its preclinical programs, consider it a strong sign that the company's health is deteriorating. Look at Editas's performance in the second and third quarters to see if they're on the right track for a buy early next year, but understand that waiting until next year to reevaluate the company's situation is probably the wisest path.

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Here's Why Editas Could Beat Intellia to a CRISPR Therapy - Motley Fool