It was never supposed to be this difficult. bluebird bio (BLUE) promised to usher in a new era of genetic medicine by developing gene therapies at affordable prices in efficient time frames. Although a string of promising clinical data readouts launched the company to a $12 billion market valuation in 2018 on what seemed like imminent approvals, the glow quickly wore off. Manufacturing problems, long-term side effects in patients, and allegations of stolen intellectual property by the company and Memorial Sloan Kettering collided to send shares tumbling over 98% from all-time highs.
But there's finally some good news for shareholders. Last week, two advisory committee (AdComm) meetings met to discuss the risk/reward profile of two drug candidates put forward by the company. Both earned unanimous positive recommendations. The U.S. Food and Drug Administration (FDA) doesn't have to follow the recommendations from independent stakeholders, but regulators usually do.
Shares of bluebird bio were halted on June 9 and June 10 ahead of the regulatory de-risking events, but the successful milestones are likely to launch the stock higher this week, albeit from a significantly depressed starting point. Can shareholders finally celebrate?
What Just Happened With bluebird bio?
The FDA sometimes invites independent scientists and stakeholders to debate the risk/reward profile of controversial drug candidates. An AdComm meeting was held for two of the company's drug candidates:
- eli-cel, a gene therapy for a rare genetic condition called cerebral adrenoleukodystrophy (CALD) primarily affecting children
- beti-cel, a gene therapy for a rare blood disorder called beta-thalassemia that requires risky blood transfusions
What made the two experimental assets so controversial to begin with? Many gene therapies in the industry pipeline use inactivated viral vectors as shuttles to deliver therapeutic genes to patient cells. Both eli-cel and beti-cel are lentiviral vector (LVV) gene therapies, which are useful but limited tools.
- They have a relatively small capacity, meaning they can only carry small genes into cells.
- They can only be used outside of a patient, or in ex vivo settings, meaning cells have to be harvested and engineered in the lab.
- They can damage DNA near the edit site, potentially increasing the risk of developing cancer or other deleterious conditions.
Regulators were primarily concerned with safety risks associated with LVV gene therapy after multiple patients treated in clinical trials developed cancers. bluebird bio also encountered manufacturing problems when attempting to produce commercial batches of viral vectors.
Nonetheless, the AdComm votes were unanimous in recommending beti-cel and eli-cel for approval, respectively. That likely paves the way for formal FDA approval in August 2022 and September 2022, respectively, but it may not be smooth sailing from here.
What's Next for bluebird bio?
LVVs were among the first type of gene therapy explored in clinical trials. As the limitations of the tools became clear, scientists developed new technologies with more flexibility. Adeno-associated virus (AAV) vectors offer higher capacity and little cancer risk, while emerging herpes simplex virus (HSV) vectors offer even larger capacities and can be re-dosed infinitely. Newer types of gene therapy may not even require viral vectors for delivery.
Meanwhile, more precise DNA editing tools such as CRISPR gene editing, CRISPR base editing, and peptide nucleic acids (PNAs) could offer patients safer, more effective, and more convenient outcomes. The latter could potentially be dosed directly to patients.
Once one of its greatest advantages, the fast pace of innovation in biotech now presents challenges for bluebird bio. CRISPR Therapeutics (CRSP) and Vertex Pharmaceuticals (VRTX) are developing a CRISPR gene editing drug candidate, CTX001, for treating beta thalassemia and sickle cell disease. Data presented to date suggest the treatment provides durable outcomes for patients – so far, anyway. The FDA may require longer monitoring of patients, especially considering first-generation gene editing tools may be associated with increased cancer risk.
Nonetheless, investors may not have much time to celebrate. bluebird bio fumbled what was once a multi-year lead in treating beta thalassemia and sickle cell disease (a third drug candidate, lovo-cel, is in late-stage development). Even in a best-case scenario today, the greatly weakened company may only have 12 to 18 months of market exclusivity. It will likely be run over by better-funded peers.
That presents a tricky scenario for individual investors. bluebird bio will absolutely need to take advantage of this week's share pop by exploring its funding options, likely through a dilutive offering of common stock. It might be able to sell itself at a steep discount to a deep-pocketed drug developer willing to take a risk, but nearing FDA approval hardly guarantees the drug candidates would enjoy commercial success. Despite the potential for near-term gains, investors need to acknowledge the elevated risks associated with the gene therapy pioneer.
