Better Buy: Bellicum Pharmaceuticals, Inc. vs. bluebird bio

This version of our ongoing better buy series pits two development-stage biotechs, Bellicum Pharmaceuticals (BLCM) and bluebird bio (BLUE -2.73%), against each other. The companies have something in common -- they're both developing chimeric antigen receptor T-cell (CAR-T) therapies to treat cancer -- but they've both got something else up their sleeves.

Alphabet soup

CAR-T technology and the related T cell receptor (TCR) technology both involve taking immune cells out of patients, inserting DNA that trains the immune cells to attack cancer cells expressing a certain protein, and then putting the cells back into the patient to do their work.

While both Bellicum Pharmaceuticals and Bluebird have therapies using CAR-T/TCR, they're not currently competing with each other directly because their respective CAR-T therapies train the immune cells against different targets expressed on different types of tumors.

Data sources: Company websites. BCMA = B-cell maturation antigen, PSCA = prostate stem cell antigen, PRAME = preferentially expressed antigen in melanoma, AML = acute myeloid leukemia, MDS = myelodysplastic syndromes.

The chart is a little bit of an alphabet soup with all the acronyms, but it's clear that there isn't much overlap between the two companies' strategies for now.

Image source: Getty Images.

Bellicum secret sauce

One of the problems with activating the immune system to attack a cancer is there are positive feedback loops through signaling molecules called cytokines that the immune system sends out to recruit additional cells. If CAR-T/TCR enabled cells get too overactive, they can create what's called a cytokine storm, which, if not stopped in time, can kill a patient.

Bellicum has developed a safety switch incorporated into the immune cells that can, depending on the construct, turn on or off the immune cells when the switch is activated by a drug called rimiducid, which otherwise has no effect on humans.

The biotech is actually using the safety switch in its lead product BPX-501, which uses immune cells to treat cancer but isn't a CAR-T. Instead, the switch is used to avoid a side effect of a treatment.

Many patients with blood cancers are given hematopoietic stem cell transplantation -- essentially, a patient's cancer and healthy cells are killed and replaced with a donor's immune cells -- but the transplant only works well when there's a perfect match between the donor and the patient. Otherwise, there's a chance of developing graft versus host disease (GVHD) when the donor's immune cells recognize the patient's cells as foreign and start attacking their host.

BPX-501 avoids the side effects of GVHD, which can be life-threatening, by using rimiducid to kill the donor cells, keeping them from further attacking the host. Initial results look promising, but the drug still needs to pass its pivotal clinical trial, which should read out in the second half of 2018 to gain approval in the EU. A separate trial will be required to gain approval in the U.S.

Bluebird's (sort of) unrelated technology

CAR-T/TCR is a remarkable technology, and developing the DNA constructs that could be inserted into immune cells to train them to attack cancerous cells was pretty ingenious, but the technology still requires a key step: getting the DNA into the immune cells.

Bluebird has been working on that technical problem for a while in its gene therapy programs, which seek to express a protein in cells to replace a mutant or missing protein. The company has a couple of gene therapies, including Lenti-D for cerebral adrenoleukodystrophy and LentiGlobin, which treats beta thalassemia and sickle cell disease. The former is further along, but LentiGlobin, especially to treat sickle cell disease, is likely to be a better seller given the larger market.

Bluebird has run into some potency issues with LentiGlobin -- the gene therapy seems to work, but not for every patient -- so the company made some manufacturing changes that it believes will increase expression of the protein responsible for making the cells normal. Investors will get to hear about how the new manufacturing procedure is helping patients at the American Society of Hematology meeting in December.

Better buy?

There's certainly nothing keeping investors from buying both biotechs. Despite the CAR-T/TCR connection, there isn't enough overlap to really worry about one company hurting sales of the other.

But if I had to pick one based on current valuations, I'd give Bellicum the edge on a risk-reward basis given its smaller size. I like Bluebird's gene therapy programs, and its CAR-T is a nice bonus, albeit still early in development, but at a market cap of more than $6 billion, there's a lot of success already priced into the valuation. Bellicum is the riskier of the two, but the potential payoff is also greater.