Bluebird spins itself into two companies, severing gene therapy and cancer units
Bluebird bio, once one of biotech’s flashiest companies, is taking a sweeping step as it looks to right the ship after a series of high-profile setbacks: splitting the company in two.
The Cambridge-based company will split itself into a unit focused on cancer and a unit focused on rare disease, severing the cell therapy and gene therapy units that the biotech rode to prominence. CEO Nick Leschly explained the move as a practical one, reflecting the different kinds of expertise in the disease areas.
“You don’t build an oncology company by hiring people who are experts in severe genetic disease, nor do you do vice versa,” Leschly told WSJ. “A lot of this comes down to … priorities and focus.”
Yet the move comes as bluebird’s stock has lost much of its initial luster, as bluebird has struggled to turn strong data into commercial therapies and investors moved on to newer gene therapy companies such as CRISPR Therapeutics.
And it will effectively end Leschly’s day-to-day involvement in the biotech he has become synonymous with and a gene therapy field where he long served as the most prominent CEO. Leschly will lead the as-yet-unnamed newco, while Andrew Obenshain, their longtime European chief, will lead bluebird bio. Leschly will hang on as bluebird’s executive chair.
Analysts were skeptical that the approach was the solution. In a note to investors, Piper Sandler’s Tyler Van Buren said bluebird had struggled to replenish its pipeline over the years, despite significant funding, and he worried that they didn’t have enough assets or cash to sustain multiple companies.
“Ultimately, while these two franchises are different, we are not convinced that their respective pipelines are robust enough to sustain the independent entities,” he wrote, “and we believe some investors appreciated the balance of the two franchises.”
The company’s stock $BLUE, which has fallen dramatically from its 2018 peak, when it was worth over $11 billion, remained flat at just under $49.
After commanding attention with curative data for a sickle cell gene therapy and numerous remissions in trials for a multiple myeloma cell therapy, bluebird has struggled to bring both past the finish line.
After their most recent delay, the company remains nearly two years away from submitting their sickle cell gene therapy to the FDA. The FDA is now reviewing the multiple myeloma cell therapy ide-cel, now partnered with Bristol Myers Squibb, but the agency initially served the company with a refuse-to-file letter for submitting insufficient manufacturing information.
The gene therapy, known as Zynteglo, was approved in Europe for another rare blood disease, beta thalassemia. But the $1.8 million price tag bluebird placed on it shocked analysts and industry watchers and, with the pandemic hitting shortly after their official launch, the company had yet to sell a single unit as of their November Q3 filing.
Despite the setbacks, the company still remains at the front of a now crowded pack to commercialize a sickle cell cure, and analysts peg peak sales for ide-cel as high as $900 million. Bluebird also has an immunotherapy for Merkel cell carcinoma and a gene therapy for cerebral adrenoleukodystrophy in clinical development.