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Shares of the gene-therapy biotech bluebird bio have tumbled in recent months, with the stock dropping 46.4% over the past year as the S&P 500 Health Care sector index has climbed 14.2%.
Now, the company is trying something entirely different in an effort to stop the downward spiral. In a move announced Monday morning, bluebird (ticker: BLUE) said it planned to split into two public companies by the end of the year. One will focus on rare diseases and the other will work on treating cancer.
“After careful strategic review, it is clear to us that the two businesses are best served by independent leadership and teams to drive distinct strategic and operational objectives,” said the company’s CEO, Nick Leschly, in a statement.
Bluebird shares were up 5.1% in premarket trading.
Bluebird’s gene therapy Zynteglo, which treats the blood disorder beta-Thalassemia, has been approved in Europe, though treatments have not yet begun due to the Covid-19 pandemic, according to the Wall Street Journal. The gene therapy, one of the first in the world to achieve regulatory approval, does not yet have approval from the U.S. Food and Drug Administration.
The news came in the course of an unsettling few days for the gene-therapy field.
Shares of Sarepta Therapeutics (SRPT) fell 51.3% on Friday on news that its gene therapy for Duchenne muscular dystrophy had failed in a trial to improve muscle strength in patients. And data from BioMarin Pharmaceutical (BMRN) on Sunday night about its Phase 3 trial of its gene therapy valoctocogene roxaparvovec in patients with severe Hemophilia A, while positive, failed to rouse enthusiasm among investors. Shares were down 0.1% in early trading on Monday.
The news is likely raise to questions about whether investors are running out of patience for gene therapy, after decades of investment and only a couple of marketed products to show for it.
In its statement, bluebird said that the new severe genetic disease company would focus on therapies for the blood diseases beta thalassemia and sickle cell disease, and a rare disease called cerebral adrenoleukodysrophy. It said the company would work on expanding access and reimbursement for its gene therapy Zynteglo in Europe.
The new cancer company, it said, would focus on commercialization of its CAR T cell therapy ide-cel, on which it is collaborating with Bristol Myers Squibb (BMY). The product is under FDA review. It said its pipeline would focus on non-Hodgkin lymphoma, acute myeloid leukemia, and other cancers.
Despite its stumble in recent months, the stock remains popular on the Street: Of the 24 analysts who cover bluebird tracked by FactSet, 16 rate it Buy or Overweight, and eight rate it a Hold.
The company scheduled a conference call to discuss the announcement for 8 a.m. Eastern.
Write to Josh Nathan-Kazis at [email protected]
