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bluebird's (BLUE) Loss Wider Than Expected, Revenues Down Y/Y

Zacks Equity Research

Shares of bluebird bio, Inc. BLUE inched up 0.94% after the company reported mixed results for the first quarter.

The company reported a loss of $2.99 per share in the first quarter of 2019, wider than the Zacks Consensus Estimate of a loss of $2.80 and the year-ago quarter’s loss of $2.31. The wider-than-expected year-over-year loss was due to higher research & development (R&D), and general & administrative (G&A) expenses on lower revenues.

Revenues of $12.5 million beat the Zacks Consensus Estimate by 2.58%. Revenues were down from $16 million in the year-ago quarter.

bluebird’s stock has soared 42.1% in the year so far compared with 5.2% growth registered by the industry.


Quarter in Detail

R&D expenses escalated to $122.6 million in the first quarter of 2019 from $97.1 million a year ago, driven by costs incurred by the company to advance and expand the pipeline, resulting in increased clinical trial-related costs and manufacturing costs for development programs, higher laboratory expenses, elevated employee-related costs due to headcount growth, and escalated facility-related costs.

G&A expenses of $60.3 million were up 72.5% from the year-ago quarter, owing to overall growth of pipeline and commercial-readiness activities.

Pipeline Development

bluebird’s pipeline progress has been impressive in the first quarter. The pipeline includes candidates for severe genetic diseases. The company’s portfolio consists of candidates like LentiGlobin for the treatment of transfusion-dependent β-thalassemia (TDT) and severe sickle cell disease (SCD), and Lenti-D for the treatment of cerebral adrenoleukodystrophy (CALD).

In March 2019, the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) adopted a positive opinion recommending conditional marketing authorization for Zynteglo (autologous CD34+ cells encoding β A-T87Q-globin gene), a gene therapy for patients aged 12 years or older with TDT. The CHMP’s positive opinion will now be reviewed by the European Commission (EC).

In April 2019, bluebird bio treated the first patient in ALD-104, the company’s international, non-randomized, open-label, multi-site phase III study of Lenti-D product after myeloablative conditioning, using busulfan and fludarabine, in patients younger than or equal to 17 years of age with CALD.

The oncology pipeline includes CAR T cell product candidates — idecabtagenevicleucel  (formerly known as bb2121) and bb21217 — for the treatment of multiple myeloma. The company is co-developing and co-promoting bb2121 in the United States with Celgene Corp. CELG.

Our Take

bluebird’s progress with its pipeline is encouraging. The company has an impressive pipeline of gene therapies for genetic diseases and cancer. Zynteglo looks promising and a tentative approval in Europe is expected later this year. We are also positive about bluebird’s collaboration with Regeneron REGN, as this provides the former with funds. We expect investors to focus on pipeline updates.

Zacks Rank & A Stock to Consider

bluebird currently carries a Zacks Rank #2 (Buy).

Another attractive stock in the healthcare sector is Alexion Pharmaceuticals, Inc. ALXN, which currently sports the same rank as bluebird. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Alexion earnings per share estimates are up by 19 cents in the past 30 days.

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