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Is bluebird bio a Bad News Buy?

By Brian Orelli, PhD and Keith Speights - Apr 14, 2021 at 5:30AM

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The biotech has had a rough couple of years.

bluebird bio (BLUE 0.07%) ran into some issues with manufacturing its gene therapy, and then the drugmaker was sideswiped by the possibility that its treatment might cause cancer. In this video from Motley Fool Live, recorded on March 22, contributors Brian Orelli and Keith Speights discuss the biotech's issues and how the concerns may already be priced into the company's valuation. On the downside, Bluebird has lost its lead on companies such as CRISPR Therapeutics (CRSP 0.20%), which has already generated early clinical data for its gene-editing therapy for beta thalassemia and sickle cell disease that will compete against Bluebird's betibeglogene.

Brian Orelli: There's a question about Bluebird Bio. It's been in a two-year decline and so they asked, "Do you think that gene therapy treatment will be successful?" The problem with Bluebird Bio, it's had a couple of issues. One it had delay in manufacturing for its gene therapy for sickle cell disease, so that's a big part of the decline. Then they also have more recent issue, they had a patient that had been in their clinical trial who developed cancer. The other question was, "Is the gene therapy causing cancer?" I think they've basically got enough data to be fairly certain and be able to convince the FDA that their gene therapy is not causing cancer. The delay to get the manufacturing setup for sickle cell disease is definitely bad, but I think it's already priced into the stock. I feel more confident in bluebird now than I did a couple of months ago and definitely it looks more attractive than it did a few years ago when it was at a higher price. What's your thoughts Keith?

Keith Speights: I totally agree. Bluebird bio has really been through the ringer. But I do think that you're exactly right, Brian, that the issues the company has faced are priced into the stock right now. I do think it has pretty good upside potential. Now Joseph asked, "Do we think the gene therapy treatment will be successful?" Yeah. I think it will. The question is going to be exactly how much market success Bluebird achieves with it. But I do think there is upside potential for the stock right now, especially after getting just absolutely hammered over the last year or so.

Orelli: The other issue is that they're going to have a lot of competition. They had like a big lead on the CRISPR stocks, who are also developing treatments for sickle cell disease and they basically have withered that away so I think that's a big negative toward the company in terms of how much competition that they going to have by the time that they get up and launched. I don't think that their head start is not going to be nearly as large as it was.

Speights: Yeah. I would agree. I think that's one of the biggest issues for Bluebird is that they, it wasn't them necessarily, but their head start was essentially blown. Although it still going to be a little while before CRISPR Therapeutics and Vertex are able to get approval for their gene editing therapy.

Orelli: They are definitely going to have a head start. But I think maybe it's going to be a year or two versus three or four possibly.

Speights: Right.

Orelli: If they had kept on their normal path to got the manufacturing set up earlier, then they would have been in a better position. It was basically a year delay, I think, on the manufacturing which was huge.

Speights: Yeah.

Brian Orelli, PhD and Keith Speights have no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Bluebird Bio and CRISPR Therapeutics. The Motley Fool has a disclosure policy.

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Stocks Mentioned

bluebird bio, Inc. Stock Quote
bluebird bio, Inc.
$6.72 (0.07%) $0.01
CRISPR Therapeutics Stock Quote
CRISPR Therapeutics
$78.82 (0.20%) $0.16

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