BlueBird Bio, Inc., Former High-Flyer, has Crashed to Earth

May 31, 2023 | News


Bluebird bio (NASDAQ:BLUE), once a darling of the pre-revenue hot-biotech-money crowd, has entered its death spiral. Access to capital for bringing any product to market becomes increasingly dilutive and forces management into additional stock sales. Its core technology has been eclipsed by newer, safer, and more reliable treatment pathways. CEO Andrew Obenshain is now compelled to parrot a less and less credible portrayal of patient populations, treatment risks, and insurance reimbursement uptakes for his drug candidates. In this researcher’s view, Bluebird’s time for achieving escape velocity is past, and the forces of gravity pulling it toward a liquidation or dissolution scenario can no longer be escaped.

Key Takeaways:

  • BlueBird also raised new funds in January only days after publicly stating that it had sufficient funds for the remainder of the year. The company also just recently filed a new shelf offering. We see BlueBird as a dilution machine.

  • Considering BlueBird’s operational cash needs and dire prospects for commercial success, we believe the company will have to continue to dilute shareholders for the foreseeable future.

  • Notably, almost the entire executive team and board of directors exited in late 2021, amidst the recent spin-off of BlueBird’s oncology division.

  • We believe BlueBird is in a death spiral – foreseen by management who jumped at the chance to bail out during the oncology division spin-off after raking in piles of cash. We believe BlueBird will continue to dilute investors while putting forth false hopes and narratives.

  • Projections made by BlueBird rely on old and inaccurate data, while some more recent data suggests a lower total addressable market for both the Zynteglo (Beta-Thalassemia) and the SCD (Sickle Cell Disease) treatment.

  • BlueBird withdrew its Conditional Market Authorization from the European Union for “commercial reasons”. This is a strong indication that BlueBird’s treatments are simply commercially unviable outside the U.S., while its window of opportunity narrows within the U.S… The EMA (European Medicines Agency) had stricter guidelines and exclusion criteria for Zynteglo compared to the FDA (Food and Drug Administration); those policies considerably shrank the total addressable European market size. Moreover, BlueBird’s treatments are extraordinarily expensive: $3.0 for Skysona and $2.8 million for Zynteglo. These are among the highest priced treatments in the world. Even with the “adjustments” and “payment facilitation” offered by BlueBird, we doubt the treatment can ever be commercialized anywhere outside the U.S.A. This considerably reduces the economic prospects of these treatments and, most likely, for the future treatments as well. (See Pt 3 for the full story)

  • Potentially eligible patients for BlueBird’s treatments “Zynteglo” and new lovo-cel, which are aiming to cure TDT (Transfusion Dependent Thalassemia) and SCD (Sickle Cell Disease), are, according to numerous experts we consulted, far fewer than the company portrays. (See Pt 3 for the full story)

  • BlueBird’s recent Q4 2022 and Q1 2023 reports were filled with disappointing news, including a delay in their BLA submission for their SCD treatment and a very low number of patients that have initiated cell collections on both available treatments. Moreover, specifically for Zynteglo, 13 Qualified Treatment Centers (QTC) have been activated as of May 8th, 2023. According to the company, these were set up in the most prominent areas in terms of eligible patients, making these low numbers very alarming. We believe these early signs of non-adoption are very telling with regard to future market share. (See Pt 3 for the full story)

  • Experts we consulted stressed that BlueBird has placed undue focus on parts of its clinical results data to make its treatment seem more beneficial than it actually is. Data cherry-picking and misrepresentation is, in our opinion, rampant in BlueBird’s disclosures. (See Pt 3 for the full story)

  • We think management and the company have long realized that BlueBird is crashing and are trying to salvage the parts that might have more promise. But we also think there might be a more nefarious reason for management and board to abandon the company, which is to avoid legal liabilities. (See Pt 4 for the full story)

  • The long-lasting legal battle that started in 2017 against San Rocco Therapeutics (SRT), which BlueBird attempted to de-emphasize in its disclosures, seems to have recently turned in SRT’s favor. Indeed, the Arbitrator Final Award dated February 7th, 2023 states that SRT has “exclusive, royalty-free commercial license” to patents that are indispensable to BlueBird’s technology. These patents appear to have been wrongfully used by BlueBird to develop their gene therapy treatments. (See Pt 4 for the full story)

  • Following the recent Arbitrator Award, SRT filed a new lawsuit on April 27th, essentially trying to stop BlueBird’s alleged illegal use of SRT’s technology. We believe this suit poses an enormous risk to BlueBird’s future. The patents are essential to BlueBird’s technology, and the company is not in a position to afford a big penalty. The new lawsuit seeks $500 million in damages. (See Pt 4 for the full story)

  • BlueBird’s technology is way less advanced and older than its competitors’. Most scientists we consulted agree that it also bears more risks. While direct competitors are using the CRISPR/CAS9 technology, which allows selecting only a specific DNA section to modify and limit the risk of oncogenesis, BlueBird’s treatment is a widespread injection with unknown potential inclusions and side effects more likely to develop. (See Pt 5 for the full story)

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