What: Shares of bluebird bio (NASDAQ:BLUE), 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.
Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
The Motley Fool owns shares of and recommends Celgene. The Motley Fool has the following options: short October 2016 $95 puts on Celgene. The Motley Fool recommends Bluebird Bio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.