It’s been a rough year for Bluebird Bio. The gene therapy developer saw three trials affecting two of its candidates delayed by a pair of clinical holds, one of which is still in effect. Those holds, plus quarterly results that missed expectations, sent the company’s stock plunging 60% over the past year.
Bluebird has also navigated the spinoff of its oncology business, a change of CEOs, a selloff of a U.S. manufacturing site, and a pullout from Europe after sparring with regulators over pricing for its treatments.
Nevertheless, CEO Andrew Obenshain says Bluebird is now in a much better position to address its multiple challenges—especially the longtime investor lament about the company being unable to execute on programs—by bringing to market three gene therapies for severe genetic diseases over the next two years, all while containing costs.
Key to that brighter future, Obenshain told GEN Edge, is the slimmer Bluebird Bio resulting from the separation of the company’s oncology interests into a new spin-out company. Bluebird’s 13 oncology programs (seven clinical, six preclinical) have been spun off into 2seventy bio, a new public company headed by “Chief Kairos Officer” Nick Leschly, who served as Bluebird’s CEO or “chief Bluebird” since 2010, when the company changed its name from Genetix Pharmaceuticals.
Joining Leschly in 2seventy bio’s executive suite are three Bluebird veterans: chief scientific officer Philip Gregory, DPhil, who held the same position at Bluebird; chief operating officer Nicola Heffron, previously Bluebird’s COO, Oncology; and CFO Chip Baird, who held the same role at Bluebird. Baird has been succeeded by Gina Consylman, who joined Bluebird as CFO, severe genetic disease in August from Ironwood Pharmaceuticals, where she was senior vice president and CFO.
The spinoff was completed earlier this month, leaving Bluebird with Obenshain, who was previously president of the company’s genetic diseases business, at the helm—as well as three late-stage gene therapy candidates for severe genetic diseases; a partnered Phase I short hairpin RNA (shRNA)-based treatment targeting BCL11A mRNA for sickle-cell disease (SCD); and “multiple” undisclosed preclinical candidates.
“We were pulling in different directions. Now that we’re split, we have an ability just to focus on our mission, which is getting these three products to our patients,” Obenshain said. “What we have now is zero distractions. We have a laser focus on launching our three transformational products. We’ve allocated all of our capital and management attention to our most important priorities, and those most important priorities are in severe genetic disease.”
Bluebird is not ruling out expanding beyond severe genetic disease. That could occur as Bluebird continues investing in extending its core lentiviral vector (LVV) platform into direct in vivo LVV, in which the company has what Obenshain called a “pretty exciting” early-stage research program that could be relevant for several target organs: A therapeutic payload (viral or non-viral) is delivered directly into the patient’s body and targeted to the tissue that has defective cells in vivo, the company explained in a September presentation.
“We will certainly be looking at the therapeutic areas over time,” he added.
Three pipeline anchors
Bluebird’s pipeline is anchored by three gene therapies:
- Betibeglogene autotemcel (beti-cel)—in development for β-thalassemia
- Elivaldogene autotemcel (eli-cel or Lenti-D™)—cerebral adrenoleukodystrophy (CALD)
- LentiGlobin™ for SCD (bb1111)—sickle cell disease
Furthest along is beti-cel, for which Bluebird recently completed a rolling Biologics License Application (BLA) submission to the FDA, seeking approval of the gene therapy in adult, adolescent and pediatric patients with β-thalassemia who require regular red blood cell transfusions, across all genotypes. Upon FDA approval, beti-cel would be the first hematopoietic stem cell ex vivo gene therapy for patients in the U.S.
Beti-cel (formerly LentiGlobin for β-thalassemia) is designed to treat the underlying cause of beta-thalassemia in patients with who require regular transfusions. To correct the deficiency of adult hemoglobin, beti-cel adds functional copies of a modified form of the β-globin gene into a patient’s own hematopoietic stem cells (HSCs). Once patients receive this βA-T87Q-globin gene, they can produce HbAT87Q or beti-cel-derived adult hemoglobin (Hb) at levels that may eliminate or significantly reduce the need for transfusions.
By the end of 2021, Bluebird expects to complete submission to the FDA of a second BLA, this one for eli-cel in patients with CALD. Eli-cel uses ex vivo transduction with the Lenti-D LVV to add functional copies of the ABCD1 gene into a patient’s HSCs. The addition of the functional ABCD1 gene allows patients to produce the ALD protein (ALDP), believed to facilitate the breakdown of very long-chain fatty acids.
The eli-cel BLA filing is on track for the end of 2021, according to Bluebird, and can be made despite a clinical hold imposed last August after a patient dosed with eli-cel developed myelodysplastic syndrome (MDS)—a hold that sent Bluebird shares falling 24%.
“We do expect to get the clinical hold resolved in the very near future,” Obenshain said, although that might not happen until 2022.
The hold on eli-cel was the third imposed on a Bluebird clinical program this year. The FDA previously imposed a hold on two trials of LentiGlobin (the Phase I/II HGB-206 and Phase III HGB-210 studies) that Bluebird suspended in February after reports that two participants in the earlier-phase study developed blood cancers—one of MDS, the other of acute myeloid leukemia (AML).
In April, the trial’s treating investigator revised the diagnosis of the reported MDS patient to anemia. The FDA lifted that hold in June, three months after Bluebird said it was “very unlikely” that its BB305 LVV caused the case of AML. (Also in March, Bluebird’s chief medical officer David Davidson, MD, left the company but stayed on six months as a consultant—according to a regulatory filing, in order to “provide ongoing guidance and support for bluebird’s late-stage development programs in severe genetic disease, particularly as it navigates the regulatory interactions following the safety events reported to the company in February 2021.”)
The future of LentiGlobin for SCD will be the topic of a November 18 investor event at which Bluebird will announce the gene therapy’s path to regulatory approval and more details on its SCD program.
LentiGlobin is designed to add functional copies of a modified form of the β-globin gene (βA-T87Q-globin gene) into a patient’s own HSCs. Once patients have the βA-T87Q-globin gene, their red blood cells can produce anti-sickling hemoglobin (HbAT87Q) that decreases the proportion of HbS, with the goal of reducing sickled red blood cells, hemolysis and other complications.
Both LentiGlobin for SCD and beti-cel are manufactured using the BB305 LVV, a third-generation, self-inactivating LVV that the company has studied for more than a decade.
A lentiviral vector company
Bluebird’s pipeline also includes a Phase I shRNA LVV candidate targeting BCL11A for autologous gene therapy in SCD, though clinical studies are led not by the company but a research team led by hematologist David A. Williams, MD, of Dana-Farber/Boston Children’s Cancer and Blood Disorders Center. However, Bluebird says it has no plans to move beyond LVVs or embrace gene editing technologies.
There are some advantages in that the lentiviral vector can carry larger genes than AAV, for example. It is still one of the most or *the* most effective ways to do gene addition gene therapy, as opposed to cutting things like CRISPR guides or doing base edits, like some other companies do,” he added. “It has a very unique position in gene therapy and unique attributes, so I can say very definitively: We are a lentiviral vector company.”
Among Bluebird’s vectors, Obenshain said, BB305 was “well designed” with no plans for a redesign: However, eli-cel’s Lenti-D LVV vector “could be redesigned, but that is not something that’s on the table right now.”
Also not on the table is advancing additional clinical candidates beyond the three that are now the company’s focus.
“We are likely to have three of our programs on the market before we put anything else on the market,” Obenshain said. “We have a full plate, with some really promising opportunities that we need to deliver on first.”
Bluebird’s recent history has weighed heavily on investors. The new, post-spinoff Bluebird Bio started trading with a 19% stock price drop on Monday, to $10.70 from $13.14, after two analysts—Goldman Sachs’ Salveen Richter and Morgan Stanley’s Matthew Harrison—downgraded the stock, citing commercialization and other challenges.
Goldman Sachs changed its rating from “neutral” to “sell,” and lowered its price target from $23 to $10. Morgan Stanley went from “equalweight” to “underweight” but maintained a price target of $11. Mani Foroohar, MD, Managing Director, Genetic Medicines and a senior research analyst with SVB Leerink, lowered his firm’s price target on Bluebird shares from $20 to $14 but maintained a “market perform” rating.
However, Bluebird fared better later in the week, its stock climbing 9% to $11.68 at the close Thursday—60% below its November 11, 2020, closing price of $29.46.
And at least one analyst shares Obenshain’s bullishness over the company’s post-spinoff prospects.
“We believe Bluebird is well-positioned as a [severe genetic diseases]-focused company, with a BLA submission in β-thalassemia and clinical-stage [SCD] program, although recent safety concerns will persist at least near-term,” stated John Newman, PhD, of Canaccord Genuity Group.
Bluebird’s pipeline represents potential opportunities that investors are likelier to perceive if the company can follow through, Obenshain said.
Exit Europe
“It’s not that difficult to look at gene therapy pricing, look at 22,000 [American] patients, and see that there’s a massive opportunity to make both an impact on patients but also a return to shareholders,” the CEO said. “We just have to focus and execute, so that’s what we’re focused on right now.”
Of those potential 22,000 patients, the vast majority—about 20,000—are living with severe SCD. The therapeutic area has seen three new therapies approved since 2017— Endari® (L-glutamine) oral powder by Emmaus Medical; ADAKVEO® by Novartis; and Oxbryta® (voxelotor) by Global Blood Therapeutics—whose CEO Ted W. Love, MD, this summer discussed the drug on the GEN Edge video series “Close to the Edge.”
“That’s really very good progress in terms of what we had before,” Obenshain acknowledged. “However, none of these therapies really eliminate the symptoms, they don’t stop the disease progression, or they don’t prevent early mortality. They don’t address sickle cell at the genetic level. And we’re hopeful that with our gene therapy, that we potentially can transform the lives of these patients.”
Another roughly 1,500 are patients living with transfusion dependent β-thalassemia, while some 50 patients annually live with CALD.
All 22,000 patients are in the U.S., where Bluebird is refocusing its severe genetic disease gene therapy business. The company is winding down operations in Europe after it was unable to agree with European payers on pricing for its gene therapies. In announcing the pullout in August, Bluebird said it would explore how to ensure that European patients can still access its gene therapies, though no such program has emerged so far.
The planned pullout from Europe was announced 4 months after Bluebird withdrew ZYNTEGLO™ (beti-cel’s trade name in Europe) from Germany after failing to come to terms with payers on pricing. The company sought to price the one-time gene therapy for β-thalassemia at $1.8 million after European Commission approval in 2019, but talks with reimbursement authorities failed to yield an agreement.
“We were given a price for the therapies that simply didn’t support the business,” said Obenshain, who joined Bluebird in 2016 to head its European operations. Previously, he oversaw a portfolio including seven rare disease products as general manager of France and Benelux for Shire, since acquired by Takeda Pharmaceutical.
“The reality is that it would cost Bluebird more to deliver these therapies to patients than what European authorities were willing to pay,” Obenshain said. “As a small company without profit or revenue, we could not sustain operations through prolonged reimbursement negotiations in a healthcare market that is not ready to recognize the value of a one-time potentially curative therapy.”
“Our hand was forced, so we had to make a decision that if we wanted to get this to patients, we had to withdraw from Europe and focus on the U.S., where we think value will be recognized,” Obenshain added.
Given pricing in Europe, he added, “we can’t go back in the current iteration—not until we evolve the technology to either go to in vivo LVV or have a different type of scale of manufacturing that would allow us to deliver at a lower cost.”
Focus on cutting costs
In refocusing on severe genetic diseases, Obenshain said, Bluebird is also intent on cutting costs.
During the first nine months of this year, Bluebird finished in the red with growing losses, reporting a net loss of $664.157 million compared with a $418.388 million net loss in pandemic-challenged Q1-Q3 2020. Operating expenses rose 11% year-over-year, to $731.94 million, while total revenues shrunk to $42.94 million from $240.02 million a year ago, as both service revenue and collaborative arrangement revenue shriveled.
Bluebird’s new cost-cutting commitment, Obenshain said, is reflected in two recent actions. In July, the company agreed to sell its “Bluebird Research Triangle” (bRT) gene therapy LVV manufacturing site in Durham, NC, to National Resilience for $110 million—roughly 10 times the $11.5 million for which the company acquired the site in 2017. Obenshain said Bluebird no longer needed the site as the LVV being produced there was for oncology programs spun off into 2seventy bio.
The sale of that site reflects Bluebird moving away from owning its own manufacturing sites toward full outsourcing—a contract to the company’s embrace of both internal and external capacity for producing its vectors.
The cost-cutting focus also shaped Bluebird’s recent decision to relocate its headquarters from Cambridge, MA. The company said Monday it expects to save more than $120 million over six years by relocating two miles north to suburban Somerville, MA. About 425 employees are expected to move into 455 Grand Union Blvd. next spring from 60 Binney St. in Cambridge, where the company says it will maintain lab space and operations through 2023.
The new HQ would accommodate most of the approximately 520 employees of post-spinoff Bluebird. The remaining employees include some 70 “lab birds” or laboratory employees who will remain in Cambridge while Bluebird maintains operations there.
Bluebird’s headcount is not expected to grow until 2023, when the company will need additional staffers toward commercializing the gene therapies it expects to bring to market over the next two years. “We will grow more in 2023 but we actually have the team that we need for the next year,” Obenshain said.