Over the past 12 months, shares of bluebird bio (BLUE 0.37%) are down by 53.4% -- not exactly a performance pointing toward a millionaire-making stock, especially considering the S&P 500 is up by about 6% over the same period. Sure, bluebird's performance in 2019 isn't necessarily indicative of its future. After all, what matters in the stock market is what will happen tomorrow, not what happened yesterday. That said, turning ordinary investors into millionaires isn't an easy thing to do, even for many of the most successful companies. Here's why bluebird bio could have what it takes to do just that.
Why bluebird bio's stock could skyrocket
bluebird bio primarily targets rare diseases such as sickle cell disease (SCD), a condition that distorts the shape of red blood cells. The company seeks to develop treatments using a technique known as gene editing, which consists of replacing the genes responsible for certain conditions with their healthier versions. bluebird bio currently has just one product approved, Zynteglo, which was given the green light to be marketed in Europe in June. Zynteglo is a treatment for transfusion-dependent b-thalassemia (TDT), a genetic blood disorder that leads to a lack of red blood cells.
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Patients with TDT produce insufficient levels of beta-globin, an element of a protein in red blood cells called hemoglobin that carries oxygen in the body. Patients with this condition can only survive by getting regular blood transfusions, or at least that was the case until bluebird bio developed Zynteglo, a one-time treatment that can potentially rid patients of TDT. This factor helps explain why bluebird decided to put an extremely high price tag on Zynteglo: The treatment will cost up to 1.575 million Euros ($1.8 million). However, Zynteglo provides enormous value to patients who would have had to receive regular blood transfusions for the rest of their lives otherwise.
bluebird bio also decided it would spread the cost of Zynteglo over several years: Patients provide an initial upfront payment of 315,000 million Euros to receive the treatment and make four more payments of 315,000 Euros over five years only if they remain transfusion-dependent. bluebird bio is in the process of launching Zynteglo throughout Europe, and management hopes to submit it for approval in the U.S. sometime this year. TDT affects about 1 in 100,000 patients and, given Zynteglo's high price tag, the treatment could rack up strong sales in the coming years.
Challenges
Two caveats need to be mentioned when discussing bluebird bio's prospects. First, Zynteglo is not appropriate for every patient with TDT; the treatment only works for patients "who do not completely lack beta-globin and who are eligible for stem cell transplantation but do not have a matching related donor." Second, other companies are currently looking to develop treatments for TDT, and for that matter, for SCD as well. One of these companies is a clinical-stage biotechnology company called CRISPR Therapeutics (CRSP 1.10%).
Last year, CRISPR Therapeutics announced positive results from a trial investigating the effects of its leading pipeline candidate -- CTX001 -- on two patients, one with TDT and one with SCD. The patient with TDT was transfusion-independent nine months after the treatment, whereas this patient required 16.5 transfusions per year (on average) before receiving the treatment. And unlike bluebird's Zynteglo, CTX001 seems to be appropriate for all patients with TDT.
Meanwhile, the patient with SCD experienced seven vaso-occlusive crises (VOC, a complication of SCD that causes acute pain) before the treatment. Four months after the treatment, this patient -- who was expected to experience two episodes of VOC within that time frame -- reported no such episode. While CRISPR Therapeutics still has a long road ahead before launching CTX001 on the market -- if this product gets approved at all -- this company could steal some of Zynteglo's market share in the future.
Can bluebird bio make you rich?
My feeling is that bluebird bio presents interesting -- but risky -- prospects. The launch of Zynteglo could be highly successful and help the company's revenue skyrocket. Also, the company could go on to market several more products for rare conditions. However, bluebird bio would need a string of successes with little, if any, room for error to turn ordinary investors into millionaires. So is bluebird bio a millionaire-making biotech stock? Probably not, but it is still a stock worth considering for those comfortable with a little risk and volatility.
