Summary
- I estimate the fair value for BLUE between $5-7 billion based on similar acquisitions.
- 2021 could be an inflection point with the anticipated approval of the company's multiple myeloma treatment.
- BLUE's most recent share issuance caused significant dilution, but the value is below the last five offering prices back to 2016.
With a unique gene editing platform and multiple treatments with quantifiable efficacy expected to be approved by 2022, bluebird bio (NASDAQ:BLUE) appears undervalued at its current price. There have been numerous oncology, CAR-T specific, and rare disease acquisitions in the industry that help to inform BLUE's intrinsic value. The stakes are high in 2021 with numerous risks, but the potential for BLUE's first US commercial treatment approval could make those risks worth taking.
Company & Treatments
bluebird bio, Inc. is headquartered in Cambridge, MA, and specializes in gene therapy with four primary diseases in its crosshairs: Cerebral Adrenoleukodystrophy (CALD), Multiple Myeloma (MM) Sickle Cell Disease (SCD), and Transfusion-Dependent Beta-Thalassemia (TDT).
Source: BLUE 2022 Vision
Multiple Myeloma - BLUE discovered ide-cel, its anti-BCMA (B-cell maturation antigen) CAR-T cell therapy for Celgene which has since been acquired by BMY. Its approval is expected by Mar 27, 2021, but after delays last year, investors may be hedging their bets. If it remains on track, this treatment could be BLUE's first major commercial treatment approved in the US. The efficacy results are impressive in which a study with 128 patients, who had failed three other drugs, showed at least 65% responded, and at least 20% had complete responses.
A potential issue for BLUE is that a competitive treatment called cilta-cel, in a phase 1b/2 clinical trial with 97 patients, had a high response rate of 97% with 67% complete responses. That said, it's likely that the BLUE study had significantly sicker patients, so it's difficult to compare the results. There are also bi-specific antibody treatments in development from companies like Regeneron, but the general consensus is that bi-specifics and CAR-T treatments can co-exist for different use cases.
