Bluebird (BLUE) Q4 Earnings Beat Estimates, Revenues Up Y/Y

bluebird bio, Inc. (NASDAQ:BLUE) reported a loss of $2.72 per share in the fourth quarter of 2018, narrower than the Zacks Consensus Estimate of a loss of $2.83 but wider than the year-ago quarter’s loss of $2.52. The wider-than-expected year-over-year loss was due to higher research & development (R&D), and general & administrative (G&A) expenses on lower revenues.

Revenues of $19.2 million beat the Zacks Consensus Estimate of $9.8 million. Revenues were also up from $4.2 million recorded in the year-ago quarter.

bluebird’s stock has gained 7.7% in the past three months compared with 1.1% growth registered by the industry.

Quarter in Detail

R&D expenses escalated to $119.7 million in the fourth quarter of 2018 from $92.6 million a year ago, driven by costs incurred to advance and expand the pipeline resulting in increased clinical trial-related costs and manufacturing costs for development programs, higher laboratory expenses, elevated employee-related costs due to headcount growth, and escalated facility-related costs.

G&A expenses of $53.5 million were up 83.8% in the year-ago quarter, due to higher employee-related costs as headcount increased to support overall growth.

In July 2018, bluebird raised approximately $600.6 million in net proceeds through a public equity offering. In August 2018, bluebird announced that Regeneron (NASDAQ:REGN) will make a $100-million investment in the company’s common stock at a price of $238.10 per share. The overall increase in cash, cash equivalents and marketable securities was offset by $40.0 million paid to Gritstone.

2018 Results

Revenues in 2019 came in at $54.6 million, up from $35.4 million in 2017.

Pipeline Development

bluebird’s pipeline candidates for severe genetic diseases include LentiGlobin for the treatment of transfusion-dependent β-thalassemia (TDT) and severe sickle cell disease (SCD), and Lenti-D for the treatment of cerebral adrenoleukodystrophy (CALD). The oncology pipeline includes CAR T cell product candidates — bb2121 and bb21217 — for the treatment of multiple myeloma. The company is co-developing and co-promoting bb2121 in the United States with Celgene Corp. (NASDAQ:CELG) .

The pipeline progress has been encouraging.

In December 2018, bluebird bio presented new data from its three NORTHSTAR studies of LentiGlobin in patients with transfusion-dependent β-thalassemia (TDT).

In November 2018, bluebird bio and Celgene completed enrollment for the KarMMa pivotal study of bb2121, the lead investigational anti-BCMA CAR T cell therapy candidate to treat patients with relapsed/refractory multiple myeloma. The open-label, single-arm, multi-center phase II study is evaluating the efficacy and safety of bb2121 in patients with relapsed/refractory multiple myeloma. Celgene and bluebird anticipate potential approval of bb2121 in relapsed/refractory multiple myeloma in the second half of 2020.

Earlier, bluebird announced that the European Medicines Agency (“EMA”) accepted the company’s marketing authorization application (MAA) for its investigational LentiGlobin gene therapy for the treatment of adolescents and adults with transfusion-dependent β-thalassemia (TDT) and a non-β0/β0 genotype. We remind investors that LentiGlobin was previously granted an accelerated assessment by the Committee for Medicinal Products for Human Use (“CHMP”) of the EMA in July 2018, which, in turn, should reduce the EMA’s active review time of MAA from 210 days to 150 days. A tentative approval is expected by the end of 2019. A filing in the United States is expected by 2019-end.

In January 2019, bluebird bio and Inhibrx, Inc. entered into an exclusive license agreement to research, develop and commercialize CAR T cell therapies using Inhibrx’s proprietary single domain antibody (sdAb) platform for multiple cancer targets.

Our Take

bluebird’s progress with its pipeline is encouraging. The company has an impressive pipeline of gene therapies for genetic diseases and cancer. LentiGlobin looks promising and a tentative approval in Europe is expected later in 2019. We are also positive about the company’s collaboration with Regeneron as it provides the company with funds.

We expect investors to focus on pipeline updates. bluebird plans to initiate a phase III study of LentiGlobin in patients with SCD by the end of 2019. The company is also developing CAR T therapies in collaboration with Celgene for myeloma. The CAR T market holds potential and the successful development of the candidates will positively impact the company’s results. Both the companies plan to initiate KarMMa-2 and KarMMa-3 studies in patients with second- and third-line multiple myeloma, respectively, in the first half of 2019.

Zacks Rank

bluebird currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the healthcare sector is BioDelivery Sciences, Inc. (NASDAQ:BDSI) , which currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

BioDelivery Sciences’ loss per share estimates has narrowed from 25 cents to 22 cents for 2019 in the past 60 days.

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