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bluebird (BLUE) Q2 Loss Wider Than Expected, Revenues Miss


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bluebird bio, Inc. BLUE reported a loss of $2.91 per share, much wider than the Zacks Consensus Estimate of a loss of $2.30 and the year-ago loss of $1.73. The wider-than-expected loss was due to higher research & development (R&D) and general & administrative (G&A) expenses on lower revenues.

Revenues of $7.9 million missed the Zacks Consensus Estimate of $10.9 million. Revenues were also significantly down year over year as a result of out-licensing arrangements entered in the second quarter of 2017.

bluebird's stock has lost 12.1% in the year so far, worse than the 2.2% decline registered by the industry .

Quarter in Detail

R&D expenses escalated to $115.0 million in the second quarter of 2018 from $63.9 million a year ago on increased costs due to pipeline advancement and expansion. Also, higher clinical trial-related costs, manufacturing expenses for development programs, employee-related costs due to headcount growth supporting research and development activities, and license milestones and fees drove the same.

G&A expenses of $41.2 million was up 94.2% in the year-ago quarter, due to increases in employee-related costs as headcount increased to support overall growth, commercial-readiness activities, and professional and consulting fees.

Cash Guidance

In July 2018, bluebird bio raised approximately $600.6 million in net proceeds through a public equity offering. The company expects that its cash, cash equivalents and marketable securities will be sufficient to fund operations in 2022, courtesy of the company's current business plan.

Pipeline Development

bluebird's pipeline candidates for severe genetic diseases include LentiGlobin product candidate, for the treatment of transfusion-dependent β-thalassemia (TDT) and severe sickle cell disease (SCD), and Lenti-D product candidate, for the treatment of cerebral adrenoleukodystrophy (CALD). The pipeline progress in the second quarter was encouraging.

In July 2018, the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) granted an accelerated assessment to LentiGlobin in TDT. bluebird remains on track to submit a Marketing Authorization Application (MAA) to the EMA for LentiGlobin in 2018.

In April 2018, the company enrolled its first patient in the phase III study, Northstar-3 (HGB-212) for LentiGlobin in patients with β0/β0 genotypes.
bluebird and partner Celgene Corporation CELG presented new encouraging data from the ongoing phase I CRB-401 study on investigational anti-B-cell maturation antigen (BCMA) CAR T cell therapy, bb2121, in 43 patients with late-stage relapsed/refractory multiple myeloma. 

In July 2018, the EMA also granted access to its Priority Medicines (PRIME) scheme for Lenti-D, for the treatment of patients with CALD. Earlier in May 2018, the FDA also granted Breakthrough Therapy designation to Lenti-D, for the treatment of patients with CALD. We note that Lenti-D was earlier granted Orphan Drug designation by the FDA and EMA as well as Rare Pediatric Disease designation by the FDA.

Our Take

While the wider-than-expected loss on higher expenses was disappointing, bluebird's progress with its pipeline is encouraging. bluebird has an impressive pipeline of gene therapies for genetic diseases and cancer.  The LentiGlobin product looks promising. Data from ongoing Starbeam clinical study on Lenti-D in patients with CALD is also expected in the second half of 2018.

bluebird bio, Inc. Price, Consensus and EPS Surprise

bluebird bio, Inc. Price, Consensus and EPS Surprise | bluebird bio, Inc. Quote

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. CAR T therapies are in focus since 2017 with the approval of

Gilead's GILD Yescarta and Novartis' NVS Kymriah. Celgene is expected to initiate a phase III study on bb2121 in third-line multiple myeloma in the second half of 2018. Hence, we expect investors to focus on pipeline updates from the company.

Zacks Rank

bluebird carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Business , Stocks
Referenced Symbols: NVS , GILD , CELG , BLUE



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