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Why bluebird bio Is Worth a Look Today

By Patrick Bafuma - Updated Mar 19, 2021 at 9:15PM

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It's good news for investors as this biotech brings impressive results to the rare disease market.


Buzzy biotech bluebird bio (BLUE -2.39%) released some good news Monday for the severe-genetic-disease side of its business, though it was hard to tell by looking at the share price, which barely budged. Having announced in January that it will be spinning off its oncology segment by year's end, Bluebird is redoubling its focus on rare diseases. This week's positive results had to do with a genetic therapy called eli-cel it is testing for a rare disease called cerebral adrenoleukodystrophy (CALD).

Bluebirds severe genetic disease segment is coming into focus


Remarkably effective

CALD is a devastating, progressively worsening disease that only affects males. This disease results in the deterioration of nerve cells in the brain that are responsible for thinking and muscle control, with symptoms usually first occurring in early childhood. Unfortunately, severe loss of neurologic function and often death follow for most patients within two years of diagnosis. CALD affects just over 1,000 patients in the U.S., and just over 6,000 in the UK, France, Italy, and Germany combined.

Monday's results from a phase 2/3 study showed that Bluebird's eli-cel was able to keep 90% of patients (27 out of 30) alive at a two-year follow-up -- and that these patients were also free of major functional disabilities. Long-term, 14 boys remained without major functional disability for at least five years, demonstrating a prolonged treatment effect.

Another encouraging sign was the lack of autoimmune responses to the treatment -- patients did not experience any issues with the method Bluebird uses to administer its gene therapy, a delivery system called Lenti-D. This is good news, as Lenti-D is the delivery system for all three of the company's severe-genetic-disease treatments currently in clinical trials or already approved.

Time to fly?

The other potential treatment for CALD is investigational stem cell transplantation, but stem cell treatment has an 18% mortality rate at one year, and 31% of recipients have an autoimmune reaction -- both significantly higher than eli-cel's numbers. In the EU, Bluebird is hoping for eli-cel to be approved this year, and it seems to be on target for U.S. approval and launch in 2022. What will this mean for investors? For context, consider Novartis's Zolgensma, which has a total addressable market of about 10,000 patients and sells for about $2 million per treatment. Zolgensma posted 2019 full-year sales of about $400 million. While eli-cel is likely to have an addressable market closer to 8,000 patients worldwide, it will probably come with a cost of at least $1.75 million -- similar to the price of Bluebird's other recently approved gene therapy, Zynteglo (with which the company treated its first patient last month).

The future of Bluebird's severe genetic disease division after the spinoff is looking bright, and approval for eli-cel at this point seems nearly inevitable. The market shrugged off this good news this week, but I view it as reinforcement that Lenti-D works well, further lowering the risk of this potential billion-dollar treatment. Healthcare investors looking to get in on the gene therapy market on the cheap may want to take a look at Bluebird and its low $2.1 billion market cap.

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