Business

Where will Bluebird Bio be in 1 year?


Jit’s been hard the last few years Bluebird Organic (NASDAQ: BLUE). The rare disease-focused gene therapy specialist has faced a series of clinical and regulatory headwinds, which have played a major role in its abysmal stock market performance since 2019. Bluebird shares have fallen nearly 97 % over the last three years. .

That said, there may be reason for optimism. The company is awaiting information from regulators in the United States for a few promising gene-editing therapies. If both are approved, Bluebird’s fortunes could improve significantly. However, if biotech encounters even more headwinds, investors jumping into the stock today could end up with worthless stocks.

With that as a backdrop, let’s take a look at what might be next year for Bluebird.

BLUE data by YCharts.

What’s going on with Bluebird?

Bluebird has achieved feats that compare favorably to most other gene-editing specialists on the market. The company has successfully secured approval for two of its gene-editing therapies in Europe, namely Zynteglo and Skysona. The first is a treatment for transfusion-dependent beta-thalassemia (TDT, a rare blood-related disease) which won the green light on the old continent in June 2019.

Meanwhile, Skysona, a treatment for a pediatric neurodegenerative disorder called cerebral adrenoleukodystrophy (CALD), was given the green light in Europe in July 2021. However, Bluebird decided to exit the European market as it failed to close lucrative deals with third-party payers for its approved gene-editing treatments. Yet the company has not given up on treating CALD and TDT.

In December, the company announced that the US Food and Drug Administration (FDA) had accepted its application for eli-cel – the CALD treatment known as Skysona in Europe – and granted it priority review. The agency originally set a PDUFA target date (the last day it was supposed to complete the regulatory process for the therapy) of June 17, although it has since pushed the date back to September 16.

Doctor holding patient's hands.

Image source: Getty Images.

The FDA also accepted and granted priority review to the TDT treatment beti-cel (known as Zyntenglo in Europe) in November and initially set a PDUFA target date of May 20, which has since been revised to August 19. If both gene-editing therapies get approval, that would be a big deal for the company. Although there are treatment standards for both diseases, there are currently no approved treatment options that address the underlying genetic causes of these rare diseases.

Granted, CALD and TDT are rare conditions. CALD is a severe manifestation of adrenoleukodystrophy (ALD), affecting between one in 10,000 and one in 17,000 people. CALD develops in 40% of people with ALD. Meanwhile, TDT affects around one in 100,000 people.

But even though both diseases are rare, gene therapies aren’t known to be cheap. Bluebird has already priced Zynteglo in Europe at 1.58 million euros ($1.72 million). Investors can expect high prices for eli-cel and beti-cel if approved in the United States. Bluebird could generate billions in revenue from the two drugs, even assuming a modest patient population of 1,000 each.

If all goes as planned for the company, both drugs will be approved within a year. And that could do wonders for its bottom line, especially since it hasn’t been stellar lately. In the press release announcing its fourth quarter and full year 2021 financial results, Bluebird highlighted its difficult financial situation.

The good news on this front is that the biotech company recently announced a series of cost-cutting measures designed to reduce cash burn and generate up to $160 million in savings over the next two years. If Bluebird manages to cut spending and get approval for eli-cel and beti-cel, we could see the company’s stock soar over the next 12 months.

A very risky game

Of course, that’s a lot of ifs. There is no guarantee that Bluebird applicants will obtain regulatory approval. The company could face more regulatory headwinds. Furthermore, the financial situation of biotech is worrying. These are all issues for investors to keep in mind – in addition to all the headwinds Bluebird has encountered over the past few years. The company’s market capitalization currently stands at a modest $328 million.

At these levels, it seems like the market doesn’t have high hopes for the company, and that’s understandable. While the shares could skyrocket if all goes according to plan, the slightest misstep could literally bankrupt the company. That’s why Bluebird is a high-risk, high-reward game that most investors should only watch from a distance. There are far better drug makers to consider investing in right now.

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Prosper Junior Bakiny has no position in the stocks mentioned. The Motley Fool recommends Bluebird Bio. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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