bluebird bio, Inc. is a pioneering biotechnology company at the forefront of the gene therapy revolution. Founded in 1992, the company has faced its fair share of ups and downs, but with three FDA-approved therapies now in its arsenal, bluebird bio is poised to make a significant impact in the lives of patients with severe genetic diseases.
Business Overview bluebird bio was incorporated in Delaware in 1992 and is headquartered in Somerville, Massachusetts. The company has devoted substantially all of its resources to researching, developing, and commercializing potentially curative gene therapies for severe genetic diseases based on its proprietary lentiviral vector (LVV) gene addition platform.
Throughout its history, bluebird bio has funded its operations primarily through the sale of common stock in public offerings, issuance of warrants, the sale of Rare Pediatric Disease Priority Review Vouchers, debt financing agreements, and through collaborations. In August and September 2022, the company received two Priority Review Vouchers under an FDA program intended to encourage the development of treatments for rare pediatric diseases. bluebird subsequently sold these vouchers, generating significant proceeds: $102 million from the first voucher sold in Q4 2022, and $92.9 million from the second voucher sold in Q1 2023.
The company has also engaged in substantial public offerings to raise capital. In Q1 2023, bluebird sold 23 million shares of common stock at $6 per share, raising net proceeds of $130.5 million. Later that year, in Q4 2023, the company sold an additional 83.3 million shares at $1.50 per share, generating net proceeds of $118.1 million.
Despite these financing activities, bluebird bio has incurred significant net losses since its inception. For the year ended December 31, 2023, the company reported a net loss from continuing operations of $211.9 million, highlighting the ongoing financial challenges faced by the biotech firm as it works to commercialize its gene therapies.
In 2020, the company spun off its oncology business into a separate entity, 2seventy bio, in order to focus solely on its rare disease gene therapy pipeline. However, the restatement of the company's financial statements for 2022 and 2023 due to accounting errors related to lease arrangements has subjected bluebird bio to increased scrutiny and uncertainty.
In September 2024, the company announced a restructuring plan that included a 25% reduction in its workforce, aimed at streamlining operations and reducing costs. The company has also faced delays in regulatory filings and financial restatements, which have resulted in potential NASDAQ delisting issues.
Financial Overview bluebird bio's financial performance has been mixed in recent years. The company reported annual revenue of N/A in its most recent fiscal year, with a net loss of N/A. Operating cash flow was N/A, while free cash flow came in at N/A. The company's balance sheet shows cash and cash equivalents of $118.7 million as of September 30, 2024, including $48 million in restricted cash.
Quarterly Performance Quarterly data for the third quarter of 2024 shows revenue of $10.6 million, down from $16.1 million in the prior quarter. The company reported a net loss of $60.8 million, or $0.31 per share, for the quarter. The decrease in revenue from the prior quarter was primarily attributable to one fewer infusion occurring in Q3 2024 compared to Q2 2023. The increase in cost of product revenue was primarily driven by increased inventoriable expenses.
bluebird bio expects to generate at least $25 million in revenue in the fourth quarter of 2024, as more patients are infused. The company has only reported revenue from the United States.
Liquidity The company's liquidity position remains a concern, with $118.7 million in cash and cash equivalents as of September 30, 2024. This includes $48 million in restricted cash, potentially limiting the company's financial flexibility. The cash balance consists of $70,650,000 in unrestricted cash.
bluebird bio has access to up to $175 million in debt financing through a term loan facility with Hercules Capital, Inc. This facility provides an initial tranche of $75 million, with additional tranches of $25 million, $25 million, and $50 million available upon meeting certain milestones.
The company's current ratio stands at 0.5094, while its quick ratio is 0.3272, indicating potential short-term liquidity challenges. bluebird bio's existing cash and cash equivalents are expected to enable them to fund operations into the first quarter of 2025, based on their current forecasts which assume continued cost saving initiatives, successfully renegotiating key contracts, and continued collaborative engagement from Hercules.
Operational and Commercial Progress Despite the financial challenges, bluebird bio has made significant progress on the operational and commercial fronts. The company has established a network of over 70 qualified treatment centers (QTCs) across the U.S. to administer its gene therapies, and has seen strong patient demand, with 74 patient starts completed or scheduled to date in 2024 across its portfolio.
In Q2 2024, bluebird reported 27 patient starts across their portfolio. In Q3 2024, they more than doubled this to 57 patient starts. The company has also reported 30 patient starts already scheduled for 2025.
Importantly, bluebird bio has also secured coverage and reimbursement for its therapies from both commercial and government payers. More than half of U.S. states have affirmed coverage for LYFGENIA, the company's gene therapy for sickle cell disease, and nearly 50% of Medicaid-insured individuals with SCD live in a state that has already approved prior authorization for the treatment.
The company continues to anticipate quarterly cash flow breakeven in the second half of 2025, assuming they scale to approximately 40 drug product deliveries per quarter and obtain additional cash resources.
Product Portfolio bluebird bio's current product portfolio consists of three FDA-approved gene therapies: ZYNTEGLO, SKYSONA, and LYFGENIA.
ZYNTEGLO (betibeglogene autotemcel) was approved by the FDA in August 2022 for the treatment of adult and pediatric patients with ß-thalassemia who require regular red blood cell transfusions. During the three months ended September 30, 2024, ZYNTEGLO generated $5.49 million in product revenue, and $35.21 million for the nine months ended September 30, 2024. The company noted that six individual customers accounted for 84% of ZYNTEGLO product revenue for the nine-month period.
SKYSONA (elivaldogene autotemcel) received FDA accelerated approval in September 2022 to slow the progression of neurologic dysfunction in boys 4-17 years of age with early, active cerebral adrenoleukodystrophy (CALD). For the three months ended September 30, 2024, SKYSONA recorded $2.49 million in product revenue, and $7.43 million for the nine months ended September 30, 2024.
LYFGENIA (lovotibeglogene autotemcel) received FDA approval in December 2023 for the treatment of patients 12 years of age or older with sickle cell disease and a history of vaso-occlusive events. During the three months ended September 30, 2024, LYFGENIA generated $2.63 million in product revenue, which was the company's first full quarter of sales for this newly approved therapy. For the nine months ended September 30, 2024, LYFGENIA contributed $2.63 million in revenue.
Overall, bluebird bio's total product revenue for the three months ended September 30, 2024 was $10.61 million, and $45.27 million for the nine months ended September 30, 2024. The company plans to double manufacturing capacity for LYFGENIA in 2026 to meet anticipated demand.
Risks and Challenges While bluebird bio has made strides in commercializing its gene therapies, the company faces several significant risks and challenges. Chief among these is the risk of adverse events, including the development of hematologic malignancies, in patients treated with its therapies. The SKYSONA and LYFGENIA product labels both carry boxed warnings for the risk of blood cancers, and the company continues to closely monitor patients for any such events.
Additionally, bluebird bio's manufacturing and supply chain operations remain complex, with the company relying on third-party contract manufacturers for the production of its lentiviral vectors and drug products. Any disruptions or delays in this process could impact the company's ability to meet patient demand.
Finally, the restatement of bluebird bio's financial statements has eroded investor confidence and subjected the company to increased regulatory scrutiny. The company's ability to access capital markets and secure additional financing to fund its operations is crucial to its long-term success.
Outlook and Conclusion Despite the challenges, bluebird bio's prospects remain cautiously optimistic. The company's three FDA-approved gene therapies address severe genetic diseases with significant unmet medical needs, and the strong patient demand and payer coverage seen to date suggest a path to commercial success.
However, bluebird bio must navigate the complex manufacturing and safety risks associated with its therapies, while also regaining the trust of investors and securing the necessary funding to sustain its operations. The company's ability to execute on its commercial plans, manage its costs, and mitigate the risks facing its business will be critical in determining its long-term trajectory.
bluebird bio previously guided for gross-to-net discounts in the range of 20-25% in 2024, with fluctuations based on product and payer mix as well as utilization of their outcomes-based agreements. The company's focus on scaling its operations, improving manufacturing efficiency, and securing additional financing will be key to achieving its goal of reaching quarterly cash flow breakeven in the second half of 2025.
Ultimately, bluebird bio's story is one of both promise and peril. As a pioneer in the gene therapy space, the company has the potential to transform the lives of patients with rare genetic disorders. But it must first overcome its recent challenges and prove that it can deliver on the commercial potential of its innovative therapies. The coming quarters will be crucial in determining whether bluebird bio can successfully navigate its financial constraints and capitalize on the growing demand for its gene therapies.