The past few years have been harsh on Bluebird Bio (BLUE -5.68%). The rare-diseases-focused, gene-therapy specialist ran into a series of clinical and regulatory headwinds, which played a major role in its catastrophic performance in the stock market since 2019. Bluebird's shares have dropped by almost 97% in the past three years.
That said, there may be some reason for optimism. The company is awaiting word from regulators in the U.S. for a couple of promising gene-editing therapies. If both are approved, Bluebird's fortunes could improve drastically. However, if the biotech runs into even more headwinds, investors who get in on the action today could be left with worthless shares.
With that as a backdrop, let's look into what could transpire for Bluebird in the next year.
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What's going on with Bluebird?
Bluebird has achieved feats that compare favorably to those of most other gene-editing specialists on the market. The company managed to earn approval for two of its gene-editing therapies in Europe, namely Zynteglo and Skysona. The former is a treatment for transfusion-dependent beta-thalassemia (TDT, a rare blood-related disorder) that earned the nod in the old continent in June 2019.
Meanwhile, Skysona, a treatment for a pediatric neurodegenerative disorder called cerebral adrenoleukodystrophy (CALD), earned the green light in Europe in July 2021. However, Bluebird decided to exit the European market because it failed to land lucrative deals with third-party payers for its approved gene-editing treatments. Still, the company hasn't given up on treating CALD and TDT.
In December, the company announced that the U.S. Food and Drug Administration (FDA) had accepted its application for eli-cel -- the CALD treatment known as Skysona in Europe -- and had granted it priority review. The agency initially set a PDUFA goal date (the latest day by which it was supposed to complete the regulatory process for the therapy) of June 17 although it has since pushed the date back to Sept. 16.
Image source: Getty Images.
The FDA also accepted and granted priority review to TDT treatment beti-cel (known as Zyntenglo in Europe) in November and initially set a PDUFA goal date of May 20, which has since been revised to Aug. 19. If both gene-editing therapies earn approval, it would be a big deal for the company. While standards of treatment exist for both diseases, there are currently no approved therapy options that address the underlying genetic causes of these rare illnesses.
True, both CALD and TDT are rare conditions. CALD is a severe manifestation of adrenoleukodystrophy (ALD), which affects between one in 10,000 and one in 17,000 individuals. CALD develops in 40% of those with ALD. Meanwhile, TDT affects roughly one person in 100,000.
But even though both illnesses are rare, gene therapies aren't known to be cheap. Bluebird once set the price of Zynteglo in Europe at 1.58 million euros ($1.72 million). Investors can expect steep price tags for both eli-cel and beti-cel if they are approved in the U.S. Bluebird could generate billions in revenue from both medicines, even assuming a modest 1,000 patient population for each.
If all goes according to plan for the company, both medicines will be approved in a year. And that could work wonders for its financial results, especially considering they haven't been stellar of late. In the press release announcing its fourth-quarter and full-year 2021 financial results, Bluebird highlighted its difficult financial position.
The good news on this front is that the biotech company recently announced a series of cost-cutting measures intended to reduce cash burn and deliver up to $160 million in cost savings over the next couple of years. If Bluebird manages to keep its expenses down and earns approval for both eli-cel and beti-cel, we could witness the company's shares soar in the next 12 months.
A highly risky play
Of course, that's a lot of ifs. There is no guarantee that Bluebird's candidates will earn regulatory approval. The company could run into more regulatory headwinds. Also, the biotech's financial position is worrying. Those are all issues investors should keep in mind -- on top of all the headwinds Bluebird has encountered in the past few years. The company's market cap currently stands at a modest $328 million.
At these levels, it seems the market doesn't have high hopes for the company, and that's understandable. While shares could soar if everything goes according to plan, the slightest misstep could literally bankrupt the company. That's why Bluebird is a high-risk, high-reward play most investors should only watch from a distance. There are much better drugmakers to consider investing in right now.
