U.S. Markets open in 2 hrs 47 mins

Waiting for bluebird bio to Sing at ASH

Brian Orelli, The Motley Fool

bluebird bio (NASDAQ: BLUE) released third-quarter earnings last week, but it was an initial look at what the biotech plans to present at the American Society of Hematology (ASH) meeting next month that had investors excited.

Bluebird results: The raw numbers

Metric

Q3 2018

Q3 2017

Year-Over-Year Change

Revenue

$11.5 million

$7.7 million

49%

Income from operations

($149.8 million)

($77.7 million)

N/A

Earnings per share

($2.73)

($1.73)

N/A

Data source: Bluebird.

What happened with Bluebird this quarter?

  • Obviously the biotech's revenue isn't particularly important. It mostly comes from manufacturing costs for the CAR T program that are reimbursed by Bluebird's partner Celgene (NASDAQ: CELG).
  • Most importantly on the financial report, the company ended the quarter with $2.0 billion in the bank, giving it a substantial runway to get to profitability (or raise more cash at a higher valuation).
  • In October, Bluebird submitted a European marketing application for its gene therapy, LentiGlobin, as a treatment for transfusion-dependent beta-thalassemia, setting up a potential approval in the middle of next year.
  • LentiGlobin is also being tested as a treatment for sickle cell disease, and the company has worked out a plan with the Food and Drug Administration to use expression of hemoglobin that the gene therapy produces as well as measurement of total hemoglobin as a basis for approval. Typically, the FDA has required companies to show a reduction in vaso-occlusive events -- characterized by severe pain due to sickled blood cells blocking blood vessels -- but the agency appears to be convinced that increasing hemoglobin can be used as a surrogate for the clinical endpoint.
  • In August, Bluebird signed a deal with Regeneron Pharmaceuticals (NASDAQ: REGN) to collaborate on the development of cancer therapies. It looks like a good fit, with Regeneron bringing its expertise on antibodies, while Bluebird adds its gene-therapy technology.
  • The release of the ASH abstracts, especially early data for Bluebird's next-generation CAR T therapy, bb21217, and BCL11a shRNAmiR in patients with sickle cell disease, suggest the biotech has a promising pipeline.
Normal and sickled red blood cells.

Image source: Getty Images.

What management had to say

Bluebird's president and CEO Nick Leschly noted that the presentations at ASH will have updated data, since the abstracts had to be turned in months ago: "I'm excited to share that we have 10 presentations at ASH this year, 7 of which will be oral presentations. The abstracts you saw yesterday were largely placeholders, including those for our studies of LentiGlobin in beta-thal and sickle cell disease."

Chief medical officer David Davidson talked about using hemoglobin levels as a surrogate endpoint and how LentiGlobin might be different than other drugs that increase levels of normal and sickled hemoglobin (hemoglobin S):

So the existing data correlating hemoglobin levels with clinical events, I think, is most powerful in the context of stroke risk, where we certainly know that transfusions can markedly attenuate stroke risk in many patients. What makes it a little challenging in terms of directly extrapolating the correlation between hemoglobin levels in sickle cell disease patients and outcomes is that we are indeed, with LentiGlobin, introducing an engineered anti-sickling globin, which is going to, we hope, interfere with the fundamental pathophysiology of the disease. So it's actually quite distinct from, for instance, approaches that might simply be elevating levels of hemoglobin S and elevating total hemoglobin made up of hemoglobin S, where, in contrast, we are taking a strategy, which is radically altering the pathophysiology of the disease.

Looking forward

Clearly ASH will be a big meeting for Bluebird. While LentiGlobin data will set the stage for near-term revenues, updated results for bb21217 and BCL11a shRNAmiR will give investors a sense of how robust Bluebird's pipeline has become.

More From The Motley Fool

Brian Orelli has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Bluebird Bio and Celgene. The Motley Fool has a disclosure policy.