bluebird bio (BLUE -5.36%) is a biotech company that focuses on gene editing. This technology seeks to treat diseases by replacing the defective genes responsible for them with their healthy counterparts. Year to date, shares of Bluebird are down by 33.9%, which is significantly worse than the performance of the S&P 500, which is down by 11.4% since the beginning of the year.
Bluebird has also been outperformed by one of its competitors in the gene-editing industry, namely CRISPR Therapeutics (CRSP -4.44%). Shares of CRISPR are down by 13.1% since the year started. With that said, past performance isn't a guarantee of anything. To figure out which stock will outperform the other from here on out, let's dig a little deeper into these companies' respective businesses.
CRISPR Therapeutics has a promising pipeline candidate
CRISPR Therapeutics currently has no approved products. However, the company has a very promising pipeline candidate called CTX001. This product is a potential treatment for transfusion-dependent beta-thalassemia (TDT) and sickle cell disease (SCD), both of which are blood disorders. Last year, CRISPR Therapeutics reported positive results from a clinical trial investigating the safety and efficacy of CTX001 as a treatment for TDT and SCD. The trial involved two patients, one with TDT and one with SCD.
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The patient with TDT required 16.5 blood transfusions per year before receiving the treatment, but this patient was transfusion-independent nine months after the treatment. Also, the SCD patient experienced an average of seven vaso-occlusive crises (VOC, a side-effect of SCD that causes acute pain) per year. This patient did not experience any such episodes four months after the treatment. These results are very encouraging, and CRISPR Therapeutics is looking to replicate them in other clinical trials. If the company manages to do so, its stock could skyrocket, as there are few treatment options for TDT and SCD patients to go around.
bluebird bio's Zynteglo could be a significant growth driver
Bluebird currently has just one product on the market: Zynteglo, a treatment for TDT. This product was approved by the European Medicines Agency (EMA) in June 2019. However, there are two crucial caveats investors should keep in mind. First, not all TDT patients are eligible for Zynteglo. The EMA notes that this treatment is only 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, Zynteglo requires highly trained healthcare workers and the proper facilities to be administered properly.
As Bluebird itself said: "Due to the highly technical and specialized nature of administering gene therapy in rare diseases, bluebird bio is working with institutions that have expertise in stem cell transplant as well as in treating patients with TDT to create qualified treatment centers that will administer Zynteglo." Bluebird has been launching Zynteglo throughout Europe, and given the treatment's high price tag -- TDT patients have to pay 1.58 million Euros (about $1.7 million) for it -- the company's revenue could increase significantly.
Bluebird does have several products in its pipeline. Back in March, the company submitted ide-cel -- which it is developing with Bristol Myers Squibb (BMS) -- to the U.S. Food and Drug Administration (FDA) for review as a potential treatment for multiple myeloma (a form of blood cancer) for patients who have had at least three prior therapies. Bluebird is also developing LentiGlobin, a potential treatment for sickle cell disease (SCD).
Comparing their financials
Most clinical-stage biotech companies aren't flush with cash. For investors looking to purchase shares of such companies, it is essential to make sure that the business has the funds necessary to run its operations. The table below shows a few key financial metrics for CRISPR Therapeutics and Bluebird for fiscal 2019.
|
Company |
Market Cap |
Revenue |
Net Income (Loss) |
Cash and Cash Equivalents |
|---|---|---|---|---|
|
CRISPR Therapeutics |
$3.2 billion |
$289.6 million |
$66.9 million |
$943.8 million |
|
bluebird bio |
$3.2 billion |
$44.7 million |
($789.6) million |
$1.24 billion |
Source: Companies' Financial Statements.
With a higher revenue, higher net income, and slightly lower cash and cash equivalents, CRISPR Therapeutics seems to be in a better position than Bluebird. CRISPR owes its strong financial positions in part to its partnership with Vertex Pharmaceuticals (VRTX 0.91%). Last year, CRISPR Therapeutics received an up-front payment of $105 million in a licensing agreement to develop gene-editing therapies with Vertex. CRISPR Therapeutics is eligible to receive additional milestone and royalty payments based on the sale of the products it develops with Vertex.
Which is the better buy?
Despite CRISPR Therapeutics' better financial position at the moment, I think Bluebird is the better buy. Bluebird already has an approved product on the market, and will likely have another one (ide-cel) sometime next year. By contrast, although CRISPR Therapeutics' CTX001 is promising, this treatment could still run into regulatory hurdles or negative results from clinical trials. In short, CRISPR Therapeutics is the riskier of these two biotech stocks, and at the moment, Bluebird looks likely to outperform CRISPR Therapeutics in the long run.
