Bluebird Bio to Spin Off Cancer-Drug Unit
Pioneer in the field of gene therapies will split into one company focused on rare diseases and a second devoted to cancer therapies
Bluebird Bio Inc., BLUE 0.37% a biotech pioneer in the field of gene therapies, plans to split itself in two later this year, spinning off its cancer-drug unit into a new, publicly traded company so it can focus on rare diseases.
Bluebird Chief Executive Nick Leschly will helm the new cancer company and assume a new position as executive chairman of Bluebird. Andrew Obenshain, currently Bluebird’s president of severe genetic diseases, will become its chief executive, the company said.
The separation is expected to close in the fourth quarter, the company said.
“We built this powerful product engine, and the question is: ‘What is the best way to think about the next five to 10 years?’ ” Mr. Leschly said in an interview. “We don’t believe the past is the best way to head into the future.”
The restructuring comes as Bluebird struggles to match its scientific achievements advancing its drug pipeline with commercial success. The Cambridge, Mass., biotech has grappled with painful delays in securing U.S. regulatory approvals and generating revenue from a rare-disease blood drug cleared in Europe.
Bluebird’s stumbles have fueled analysts’ concerns over the company’s operational acumen and a selloff in its shares.
During the past 12 months, Bluebird shares have fallen nearly 47% and the company has shed $1.8 billion in market value. The company posted a loss of $418.8 million in the first nine months of last year. Throughout its 28-year history, the company has accumulated a net deficit of $2.7 billion.
Mr. Leschly said the impetus for the split is the need for increased specialization as the company matures and prepares to bring multiple promising drugs to market. There are significant differences between cancer and rare genetic-diseases when it comes to conducting clinical trials, interacting with regulators and manufacturing at scale, he said.
“You don’t build an oncology company by hiring people who are experts in severe genetic disease, nor do you do vice versa,” Mr. Leschly said. “A lot of this comes down to…priorities and focus.”
Bluebird is one of the biotechnology industry’s pioneers of gene therapy, which help fight disease by replacing defective genes or adding new ones to fight disease. The drugs promise to treat, if not cure, intractable conditions but at a high price.
Bluebird uses a similar technology to deliver drugs for cancer and rare diseases, and housing both units under the same roof made sense as the company built out its pipeline, Mr. Leschly said. For years, Bluebird resisted splitting the units because they complemented each other but now will be stronger apart than together, he said.
“I think we got two aces on our hands here,” said Mr. Leschly, referring to a blackjack strategy. “We’re gonna split the aces.”
Bluebird’s leading cancer treatment, for a blood cancer called multiple myeloma, is under development with Bristol-Myers Squibb Co.
The drug—which uses genetically engineered immune cells to fight tumors—hit a speed bump last May when, the companies said, the U.S. Food and Drug Administration refused to consider approval before receiving additional details on the drug’s manufacturing process.
The companies have since then resolved the issue, and the FDA is scheduled to make an approval decision by the end of March.
The drug could reach annual global sales of $900 million in 2025, according to forecasts by Ronny Gal, a Sanford C. Bernstein & Co. analyst, though it may face stiff competition from rival companies such as Johnson & Johnson that are developing similar treatments.
The new oncology-focused company, which hasn’t yet been named, will also inherit several earlier-stage drugs aimed at treating other blood cancers, such as acute myeloid leukemia and so-called solid tumors that typically affect organs, bones and muscles, Mr. Leschly said. The company’s cancer unit is also working on new approaches to treating cancers such as non-Hodgkin lymphoma.
Bluebird’s rare-disease pipeline is more advanced than the company’s cancer portfolio.
In 2019, European Union regulators approved its drug Zynteglo for the treatment of beta thalassemia, a rare condition in which a defective gene hinders the body’s ability to transport oxygen through the blood. Bluebird’s treatment genetically modifies patients’ stem cells to contain a functional copy of the gene.
Bluebird priced the one-time therapy at €1.6 million, equivalent to $1.96 million, in Europe, and it has proposed allowing governments or insurers to pay over a five-year installment plan, with payments contingent on the drug working.
The company had aimed to start selling the drug in Germany before the end of last year, but the treatments were delayed because of restrictions related to the Covid-19 pandemic, Mr. Leschly said. The company is on the cusp of treating patients in Germany and continues to negotiate reimbursement terms with other European nations, he said.
Bluebird is testing the same drug to treat sickle cell anemia, a life-threatening blood disorder that, in the U.S., largely afflicts Black people.
Bluebird had been planning to seek U.S. approval for the drug in the second half of 2021, but said in November the request would be delayed until late 2022 because of manufacturing requirements requested by the FDA.
Bluebird didn’t disclose financial details of the split but said it intends to capitalize each company with sufficient cash to be successful and create value for shareholders. As of the end of September 2020, Bluebird had cash, cash equivalents and marketable securities of approximately $1.44 billion, according to regulatory filings.