UPDATED: Bluebird joins the layoff flock to reality as gene therapy biotech sheds staff to save itself
Bluebird bio is laying off about 30% of its workforce to save itself before the FDA decides the fate of two of its gene therapies in August and September and plans to file for a third approval in the first quarter of next year.
The dire situation came into clear view earlier this year when bluebird said in a quarterly filing its cash problems “raise substantial doubt regarding its ability to continue as a going concern” in the coming year. The CFO resigned the same day.
CEO Andrew Obenshain told investors Tuesday morning that clinical holds, extended FDA decision dates and the overall biotech downturn have all “taken some traditional financing options off the table in the near-term.”
Keep in mind, bluebird’s recent spinoff, 2seventy, also ran into cash problems and had to raise $170 million last month to stay afloat.
So bluebird is showing the exit to nearly one-third of its staff to extend its cash runway into the first half of next year and save $160 million over the next two years. The layoffs will take place this quarter and next, bluebird revealed in an SEC filing. Severance and termination costs will tally nearly $10 million, the filing went on. Bluebird had 518 full-time employees, 330 of whom are involved in R&D, as of Jan. 31, the latest public count.
Last month, the biotech said it planned to spend less than $400 million this year. Now, it’s saying that figure will be less than $340 million as bluebird expects a 35% to 40% dip in operating costs.
Bluebird is the latest in a string of biopharmas to enact layoffs. The list in March alone was enough for a book on the state of the industry. Another gene therapy player, Dallas-based Taysha, announced a 35% reduction last week, following the suit of Zosano, Ovid, Pacira, Passage, Adaptive, Athenex and others.
Back at bluebird, the company awaits two FDA decisions on its lentiviral gene therapies, one for beti-cel (marketed in Europe as Zynteglo) for β-thalassemia patients who require regular red blood cell and the other for eli-cel, which is targeting a metabolic condition called cerebral adrenoleukodystrophy. The FDA decision dates are Aug. 19 and Sept. 16, respectively. An FDA adcomm is tentatively slated for June 9 and 10.
The adcomm marks an important moment for the gene therapy field, William Blair analysts noted Tuesday, as it is the first time the Cellular, Tissue, and Gene Therapies Advisory Committee has met to discuss a product since Luxturna in October 2017.
Bluebird executives repeatedly declined to provide details on pricing of the gene therapies, should they get approved.
The company also needs to shore up costs to prepare for another gene therapy approval request. Bluebird will ask regulators to greenlight its sickle cell disease gene therapy, lovo-cel, in the first quarter of 2023.
“Management confirmed on call that the ability to achieve profitability rests on the approval and commercialization of the SCD gene therapy program, leaving the anticipated decision for approval of lovo-cel in SCD in late-‘23/early-’24 well beyond the scope of the current cash runway,” SVB Leerink analysts wrote in a note Tuesday morning.
Lovo-cel has been hit by regulator hurdles already. The agency placed a partial hold on bluebird’s sickle cell gene therapy trials for children under age 18 in December. In August 2021, the company halted a trial for a rare neurological disease after finding eli-cel likely caused a cancer-like condition in a patient.
Obenshain said the June adcomm could potentially “adjudicate” the clinical hold on eli-cel.
If all three therapies snag approval, bluebird could serve 22,000 patients in the US, Obenshain said on the conference call.
“The decision to reduce our workforce in support of a more focused set of priorities was not taken lightly, and we are grateful to every bluebird who has helped to progress the field of gene therapy and championed our mission,” Obenshain said in the news release.
Bluebird is looking at public and private equity financings, as well as considering monetizing priority review vouchers that might be issued upon approval of either of its gene therapies, the company said.
This story has been updated with comments from bluebird’s executives on an investor conference call and commentary from analysts.