Bluebird feathers nest while going is good

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There is no doubt that $500m is a huge follow-on fundraising, especially for a company that has treated only a handful of patients so far. But is the frenzy over Bluebird Bio just a sign of a buoyant market, or a warning that the biotech bubble is close to bursting?

The deal also raises the question of why Bluebird, which is already sitting on a $330m nest egg, needs more cash. It might just be making the most of positive sentiment while it can, or it could already be thinking about improving its negotiating position if a suitor comes calling.

And the sheer scale of the fundraising – eclipsing the $450m brought in by Alnylam Pharmaceuticals earlier this year – gives Bluebird bragging rights over its closest rival Oxford BioMedica, which is also using a lentiviral vector to deliver its gene therapy. Bluebird now has a $6bn market cap versus Oxford’s $375m.

Whatever the motivation, Bluebird is taking the chance to fatten up. But why are investors so keen to part with their cash? True, the company is in the hot areas of gene and immunotherapy – but its lead projects, in rare diseases, are still at a fairly early stage. This has not stopped its share price growing nearly sevenfold since it went public in June 2013.

Big Bird

Bluebird’s stock reached a peak at the end of May, ahead of a presentation at the European Hematology Association meeting on its LentiGlobin haemoglobin gene therapy candidate in just three patients in the HGB-205 study. One of these was the first sickle cell disease (SCD) sufferer to be treated with the project. SCD is the bigger opportunity for LentiGlobin, which is also being studied in beta-thalassemia, another inherited blood disorder.

But the response to these results looked a tad enthusiastic. Based on this one patient, Bank of America Merrill Lynch analysts raised their share price target for Bluebird from $214 to $241, citing "a higher probability of success in SCD". They believe that LentiGlobin has a 48% chance of approval in this indication.

First, Bluebird will have to prove the therapy’s worth in a bigger patient population. If all goes to plan and the company launches LentiGlobin in 2019, it is forecast to bring in sales of $126m by 2020.

Slightly ahead in its pipeline is Lenti-D, currently in a phase II/III trial in andrenoleukodystrophy, a rare genetic disorder, which is expected to be launched in 2018. Bluebird is also placing bets on cancer immunotherapies and has both CAR-T and engineered T-cell receptor candidates, through collaborations with Celgene and Kite Pharma respectively, at an earlier stage of development.

While a lot of people are banking on Bluebird, its future still hangs in the balance. It might crash and burn like other gene therapy hopefuls before it – but if it gets it right, it could end up being a high flier.

Study Trial ID
HGB-205 NCT02151526
Phase II/III study of Lenti-D NCT01896102

To contact the writer of this story email Madeleine Armstrong in London at madeleine@epvantage.com or follow @medtech_ma on Twitter

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