Bluebird Bio, a biotechnology company specializing in gene therapies, has caught the attention of Wall Street analysts. Despite seeing a 51% decrease in its stock value in 2023, these analysts believe that Bluebird Bio’s shares could potentially double in the near future. Their optimism is based on the potential approval of Bluebird’s gene therapy, lovo-cel, for the treatment of sickle cell disease.
Lovo-cel could be approved before the end of this year, which would make it the third gene therapy commercialized by Bluebird Bio. This news has spurred hope among analysts, as the approval of lovo-cel would open up new sales opportunities for the company. However, it is essential to note that Bluebird Bio is not currently profitable.
Delving into Bluebird Bio’s current prospects, it is evident that the company will significantly increase its total revenue in the next 12 months. Bluebird Bio currently has two medicines on the market in the U.S.: Zynteglo for beta thalassemia and Skysona for cerebral adrenoleukodystrophy (CALD). Sales of both gene therapies will be reflected in the company’s second-quarter earnings, expected in August. Additionally, lovo-cel has a potential addressable patient population of around 20,000 individuals.
Whilst Bluebird Bio’s future may seem promising, there are a few important factors to consider. Firstly, the company is targeting very specific patient populations, meaning that patients must have access to a qualified treatment center and wait for their therapy to be manufactured. The cost of treatment for Zynteglo is $2.8 million, which may present challenges when it comes to insurance coverage. These factors may impede the company’s ability to fully tap into its addressable markets.
Furthermore, Bluebird Bio has not yet demonstrated its ability to manufacture and sell its gene therapies profitably. With significant overhead costs and a sizable debt load, this poses a significant challenge. Wall Street analysts are betting on the company’s ability to monetize its gene therapies in the near term, with the possibility of raising additional funds through loans to bridge the financial gap until profitable sales commence.
Despite the optimism from Wall Street, it is advisable for investors to exercise caution. The uncertainties surrounding Bluebird Bio’s manufacturing process and the potential for future stock dilution could pose risks to shareholders. Additionally, the stock is currently valued at a high price-to-sales ratio of 89, indicating a potential overvaluation. Investing in Bluebird Bio may be considered a risky move, especially given the presence of other investment options with fewer risks.
In summary, Bluebird Bio’s potential approval of its gene therapy lovo-cel has generated excitement among Wall Street analysts. However, investors should be wary of the company’s profitability challenges, uncertainties surrounding its manufacturing process, and potential future stock dilution. While there may be optimism surrounding Bluebird Bio’s future prospects, it is advisable to approach investing in the company with caution.
