Gene-editing specialist Bluebird Bio (BLUE 1.13%) has been making plenty of noise since 2019, which is when it first earned marketing authorization for one of its breakthrough therapies, beta-thalassemia (TDT) treatment Zynteglo, in Europe. A lot has happened since then: It won more regulatory green lights in Europe and the U.S., but it had to exit the European market.
However, Bluebird stock hasn't been a particularly good investment in this period. Let's see how much people who bought $1,000 worth of the company's shares in early 2019 would have today and what it means for investors going forward.
BLUE Total Return Level data by YCharts.
A catastrophic performance
Though Bluebird has made some progress in the past five years, it's been a slow grind. The expression "progress is a slow process" definitely applies here. Further, the biotech has encountered a series of headwinds. Most notably, some of its products have come under scrutiny from regulators due to suspected adverse reactions, leading to clinical holds.
It's also worth highlighting why Bluebird exited the European market. Due to the high price tag of its gene-editing treatments -- Zynteglo cost 1.58 million euros in the Old Continent -- it had trouble striking deals with third-party payers. These issues (and others) compounded, sending Bluebird's shares tumbling. As the graph shows, the biotech recorded a negative compound annual growth rate of 53.58% in the past five years.
So, how much would an investor who put $1,000 into the company in 2019 have today? The answer is roughly $21.55. The same $1,000 would have turned into something in the neighborhood of $1,948.32 if invested into an ETF that tracks the S&P 500, given the index's CAGR of 14.3% in the past half-decade.
Is there hope for Bluebird?
Bluebird reached an important milestone late last year when it earned approval for Lyfgenia, a gene-editing therapy for sickle cell disease (SCD). This is by far the most promising of the company's three approved products. Lyfgenia's target market in the U.S. is roughly 20,000 patients. Bluebird's other gene-editing therapies target a combined maximum of 1,540 people, or less than 10 times the number of patients who could be eligible for Lyfgenia.
This new SCD treatment will cost $3.1 million for a treatment course, so the company is looking at a potential opportunity worth $62 billion. However, there is a catch; in fact, there is more than one.
First, Lyfgenia has a boxed warning for blood cancer. The risk is small but real.
Second, it will go up against another newly approved SCD treatment Casgevy, developed by the team of CRISPR Therapeutics and Vertex Pharmaceuticals. Casgevy will be priced at $2.2 million in the U.S., has no boxed warning, and is being marketed by one company that has significantly more funds than Bluebird, namely Vertex Pharmaceuticals.
Still, given that there are few treatment options for SCD, we can expect Lyfgenia to encounter some success on the market, but will it be enough to resurrect Bluebird's hopes? My view is that the risks are too high.
Yes, Bluebird's shares could soar if it executes its commercialization plan for Lyfgenia perfectly and manages to grab a decent share of the SCD market in the U.S. in the next five years. However, the biotech has no room left for mistakes. A significant headwind at this point could lead to the door of bankruptcy or beyond.
That's why Bluebird Bio looks far too risky a stock to invest in right now: It isn't clear that it will perform much better than it did in the past five years moving forward. Thankfully, there are other great biotech stocks to consider buying.
