Shares of bluebird bio (NASDAQ:BLUE) recently took a pounding after the company's lead candidate hit a snag that investors find all too familiar. The company will no longer be applying for approval of bb1111 as a treatment for sickle cell disease (SCD) in the second half of 2021 as previously expected. Instead, Bluebird will spend about a year proving it can manufacture commercial-grade bb1111 identical to the product used in clinical trials supporting its application.

The Food and Drug Administration's insistence on analytical comparability means an application to treat sickle cell disease patients with bb1111 won't be ready for review until late 2022 at the earliest.

A confused-looking person scratching their head.

Image source: Getty Images.

Can this beaten-down biotech stock recover from its latest setback? Since bb1111 for SCD in the U.S. isn't the only iron Bluebird has in the fire right now, the answer's yes. Here's what could happen.

Multiple myeloma approval

In September, the FDA accepted an application for ide-cel, a cell-based cancer therapy that could become a new option for relapsed multiple myeloma patients who have run out of treatment options. Like bb1111, ide-cel hit a snag at the FDA regarding manufacturing issues earlier this year. Bluebird's collaboration partner, Bristol Myers Squibb (NYSE:BMY), quickly produced the missing data and refiled the application. 

Later in September, the FDA agreed to give ide-cel a priority review with an action date set for March 27, 2021. Investors shouldn't be surprised to see an early approval decision. Treatment with the target dose of ide-cel shrank tumors for 73% of patients treated with the target dose in a pivotal study underpinning the application.

Zynteglo's commercial launch

The SCD candidate that's been delayed in the U.S. earned conditional approval to treat a related disorder in Europe over a year ago. Instead of SCD, bb1111 is approved under the brand name Zynteglo to treat certain transfusion-dependent beta-thalassemia (TDT) patients throughout EU member states.

Unfortunately for Bluebird and TDT patients throughout the EU, Bluebird hasn't worked out reimbursement details with individual member states yet. Despite earning conditional marketing approval last June, Bluebird doesn't expect to sell Zynteglo to any patients in Europe until the end of 2020.

At the moment, Zynteglo's limited to a fairly limited population of TDT patients who don't have the most severe form of the disease, but still rely on frequent blood transfusions. While commercial sales from this indication aren't expected to be enormous, some regular revenue would be extremely encouraging.

Smiling scientist.

Image source: Getty Images.

Eli-cel for CALD

In the middle of 2021, Bluebird expects to send the FDA an application for eli-cel, a cellular treatment for a rare and lethal genetic disorder called cerebral adrenoleukodystrophy (CALD). The European Medicines Agency accepted an application for eli-cel in October, which means the company could finish 2021 with two approved therapies in the EU.

Around one in 17,000 newborns have adrenoleukodystrophy (ALD), an inherited disorder that causes fatty acids to build up in the brain and spinal cord. Built-up fatty acids begin damaging nerve cells for between 35% and 40% of patients who progress to CALD, a lethal condition marked by rapidly declining neurologic function.

The application Bluebird intends to submit looks like a slam dunk in terms of efficacy. During a study, 87% of CALD patients treated with eli-cel were alive and free of major functional disabilities at least 24 months after receiving a single administration. 

A clear path ahead

Despite three therapies in late-stage development for four indications, Bluebird's stock price probably won't return to previous peaks until investors feel confident about bb1111's future as a treatment for severe SCD. Treatment options are limited for around 100,000 Americans currently living with SCD, and despite its recent setback, Bluebird's program still appears ahead of potential competition.

CRISPR Therapeutics (NASDAQ:CRSP) and its collaboration partner Vertex Pharmaceuticals (NASDAQ:VRTX) are currently at work on CTX001, a gene therapy candidate that could eventually compete with bb1111 for SCD and TDT patients. While bb1111 reengineers patients' own stem cells to produce functional hemoglobin, CTX001 helps patients produce fetal hemoglobin.

Vertex and CRISPR Therapeutics recently reported follow-up results from five TDT patients, one of whom exhibited a slight decline in overall hemoglobin levels between months four and five, then dipped again during the six-month observation. Among two SCD patients treated with CTX001, one has just three months of follow-up data and the other recently reported hemoglobin levels at 12 months that were lower than levels observed at four months.

According to Bluebird, the FDA appears to have all the clinical evidence necessary to make an approval decision regarding bb1111. The latest delay is due to concerns about whether the commercial-grade product will be identical to the candidate that produced successful clinical trial results.

The wait ahead will be much longer than expected, but it isn't time to give up on Bluebird yet. 



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