Zynteglo gets the nod, and the hard work begins

Bluebird’s gene therapy is to be launched in the US priced $2.8m per patient, but can the company tread the cautious path to profitability?

Getting Zynteglo over the US regulatory line, as Bluebird managed yesterday, gives some justification for the company splitting off its oncology business into 2seventy Bio. But, while Zynteglo becomes the first gene therapy for US beta-thalassaemia patients, the hard work is only just beginning in terms of making it profitable.

As such all eyes now turn to Bluebird’s commercial strategy, which includes a scheme to refund up to 80% of Zynteglo’s $2.8m cost if a patient fails to achieve and maintain transfusion independence up to two years after infusion. For many Bluebird’s experience in the EU, where Zynteglo was approved but withdrawn, will weigh heavy.

Still, the two markets are very different, and Zynteglo is not the first gene therapy to be approved in the EU and still fail commercially: think Uniqure’s Glybera and GSK’s Strimvelis, for instance. Nevertheless, a lot is riding on Zynteglo as far as proving that gene therapy in general can be commercially viable.

In the EU Bluebird had set $1.8m as the per-patient cost for Zynteglo, but famously failed to convince any payers to cough up and withdrew the therapy. In the US it is going in with a wholesale acquisition cost of $2.8m, though presumably the actual price might be lower depending on any deals struck.

Short of Icer

After a unanimous adcom recommendation Zynteglo’s US approval was perhaps not a surprise, but immediate comparisons will now be made against a recent pricing assessment by the US watchdog Icer.

Icer’s modelling suggested that Zynteglo would be cost effective for the US healthcare system if priced at $2.1m and subjected to an 80% refund if a patient slipped back into transfusion dependence over the following five years. Bluebird’s pricing will thus be noted as coming up somewhat short of this.

No doubt Bluebird will argue that $2.8m does not break its commitment to be socially responsible, an issue Nick Leschly had made much of during his time as the group’s chief executive. The 80% refund pledge softens the blow, as perhaps does the group’s claim that the lifetime cost of treating someone with transfusion-dependent beta-thalassaemia can reach $6.4m.

Clearly the hope, for patients and Bluebird alike, is that not too many refunds have to be paid out, and the group says all participants in Zynteglo’s pivotal studies who achieved transfusion independence have remained transfusion free.

Financing problems

But the company faces pressing problems: it had $173m in the bank in mid-2022, and plans to burn through almost $340m this year.

The market, presumably expecting an imminent equity raise, sent its stock down 15% this morning. The roughly $100m Bluebird would likely receive for selling the priority review voucher handed to it along with Zynteglo’s approval looks like chump change.

The group cites 1,300-1,500 US individuals with transfusion-dependent beta-thalassaemia, suggesting a market worth up to a $4bn at Zynteglo’s set cost. Analysts see cautious penetration, suggesting that Zynteglo’s sales will reach $391m in 2028, according to Evaluate Pharma’s sellside consensus.

Investors will be desperate to know how much Zynteglo Bluebird needs to sell at $2.8m a go for the therapy to be profitable. All this is set against the fact that gene therapy finds itself at a delicate point: Novartis’s Zolgensma is a success story of sorts, but fears continue over patient deaths and clinical holds.

The world is watching.

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