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Why bluebird bio (BLUE) Stock Plunged 60% Year to Date?

Shares of bluebird bio BLUE have lost 59.9% in the year so far, underperforming the industry’s 16.4% decline.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

Devoid of a marketed product, bluebird bio is entirely dependent on its pipeline development. Currently, BLUE submitted two biologics licensing applications (BLAs) to the FDA, seeking approval for its lenti-viral gene-therapies, both of which are already accepted for priority review.

The first BLA seeks approval for betibeglogene autotemcel (beti-cel) to treat adults, adolescents and pediatric patients with β-thalassemia across all genotypes requiring regular red blood cell transfusions. The second BLA seeks approval for elivaldogene autotemcel (eli-cel) to treat cerebral adrenoleukodystrophy (CALD) in patients aged less than 18 years with no matched donor sibling.

BLUE faced its first major setback at the onset of the year when management announced that the FDA extended the review period of both the BLAs by three months. The regulatory agency set new PDUFA action dates of Aug 19, 2022, for beti-cel and Sep 16, 2022 for eli-cel.

The delay is on account of the additional data submitted by BLUE on FDA’s request during the ongoing review of both beti-cel and eli-cel. Per the regulatory agency, the information submitted constituted major amendments to the data filed by bluebird bio in its earlier BLAs.

The extension affected BLUE’s prospects since it presently has no stable stream of revenues. A tentative approval to either beti-cel or eli-cel will provide bluebird bio with its first FDA-approved drug and at the same time make it eligible for a priority review vouchers (PRVs) from the FDA. BLUE anticipates selling these vouchers to boost its cash resources.

bluebird bio also faces the risk of a severe cash crunch. In February alongside the fourth-quarter result announcement, management expressed concerns over BLUE’s capacity to continue as a going-concern due to the pressure on its existing cash balance, which is expected to dry up in the near future.

Earlier this month, BLUE announced implementing a comprehensive restructuring to save up to $160 million to control its cash burn, thus allowing it to extend its cash runway to first-half 2023. To achieve this target, BLUE intends to reduce its workforce nearly 30%, which in turn, is expected to save 35-40% of estimated operating costs. This reduction should be reflected in bluebird bio’s operating budget for 2023.

These restructuring initiatives are intended to advance the near-term opportunities, including the pending FDA decision on BLUE’s two gene therapy candidates later this year and a potential submission for a third gene-therapy candidate lovotibeglogene autotemcel (lovo-cel) gene therapy for sickle cell disease (SCD) in first-quarter 2023.

Another factor attributable to the fall in share price is the multiple clinical holds placed by the FDA on bluebird bio’s clinical studies. Currently, the regulatory agency placed a full clinical hold on the clinical studies for eli-cel to address CALD and a partial hold on the clinical studies evaluating lovo-cel in SCD patients under the age of 18. Management is in active discussion with the FDA authorities to respond to the regulatory body’s queries on the removal of the hold.

bluebird bio, Inc. Price

bluebird bio, Inc. Price
bluebird bio, Inc. Price

bluebird bio, Inc. price | bluebird bio, Inc. Quote

Zacks Rank & Stocks to Consider

bluebird bio currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the overall healthcare sector are Angion Biomedica ANGN, Applied Therapeutics APLT and Vertex Pharmaceuticals VRTX. While Angion Biomedica sports a Zacks Rank #1 (Strong Buy), both Applied Therapeutics and Vertex Pharmaceuticals carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Angion Biomedica’s loss per share estimates for 2022 have narrowed from $2.59 to $1.79 in the past 30 days. The same for 2023 has narrowed from $3.11 to $2.19 in the past 30 days.

Earnings of Angion Biomedica beat estimates in three of the last four quarters and missed the mark once, the average surprise being 47.5%.

In the past 30 days, loss per share estimates of Applied Therapeutics for 2022 have narrowed from $3.39 to $2.47. The same for 2023 has narrowed from $2.52 to $2.01 in the past 30 days.

The bottom line of Applied Therapeutics topped estimates in three of the last four quarters and missed the mark on one occasion, delivering a surprise of 2.6%, on average.

Vertex Pharmaceuticals’ earnings per share estimates for 2022 have increased from $14.52 to $14.58 in the past 30 days. The same for 2023 has increased from $15.31 to $15.37 in the past 30 days. Shares of VRTX have risen 28.7% year to date.

Earnings of Vertex Pharmaceuticals beat estimates in each of the last four quarters, the average being 10%.

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