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What: Shares of bluebird bio (BLUE +0.00%), a clinical-stage biotechnology company focused on the development of gene-based therapies to treat severe and/or rare genetic disorders, tumbled 9.4% on Thursday after reporting a wider-than-expected loss during the second quarter.
So what: On Wednesday, after the closing bell, Bluebird reported revenue of $1.6 million, a decline from the $4.9 million reported in the year-ago quarter. Bluebird attributed the drop to an amendment of its collaboration agreement with Celgene in June 2015. Net loss for the quarter rose to $58.8 million -- $1.59 per share -- as general and administrative expenses soared 72%, to $18.4 million, and research and development expenses fell 6%, to $41.8 million. For context, Bluebird lost $51.8 million in Q2 2015.
By comparison, Wall Street had been expecting Bluebird to report revenue of $2.5 million – albeit revenue from a clinical-stage company isn't too closely monitored when it comes to quarterly earnings reports – and a loss of $1.44 per share. Bluebird's wider-than-expected loss can be a bit worrisome for a company still without a product on pharmacy shelves.
Additionally, Bluebird's press release notes that it burned through $86.8 million in cash during the quarter, ending the first-half of 2016 with $779 million in cash, cash equivalents, and marketable securities. Based on its current cash burn rate, Bluebird anticipates having sufficient capital to fund its operations through 2018.
Now what: The best thing for shareholders to do after a day like today is simply breathe. Clinical-stage biotech companies are expected to lose money, and it's very difficult for Wall Street analysts to get a read on what R&D and G&A expenses might look like from quarter to quarter. Getting too wrapped up in a wider-than-expected Q2 loss, with $779 million in cash and cash equivalents on its balance sheet, would be a mistake.
Instead, investors should be focused on the next big market-moving fundamental event, which is likely to be the release of data on LentiGlobin, one of Bluebird's most-advanced experimental products, at the American Society of Hematology's (ASH) annual meeting in December.
LentiGlobin is being studied as a treatment for transfusion-dependent beta-thalassemia and severe sickle-cell disease. At last year's ASH meeting in December, Bluebird reported a transfusion reduction of 33% to 100% in patients with B0/B0 genotypes, and transfusion independence for those with non-B0/B0 genotypes, which has led to excitement that Bluebird could have a winner on its hands.
Sometimes, an investor's patience can be tested; but today's earnings-based hiccup isn't a thesis-altering event.
