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bluebird (BLUE) Undertakes Restructuring Moves to Curb Cash Burn

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bluebird bio (BLUE - Free Report) announced that it will implement a comprehensive restructuring to save up to $160 million in costs over the next two years. At the same time, BLUE is set to extend the existing cash runway into first-half 2023.

To achieve these targets, the company intends to reduce its workforce by nearly 30%. The reduction in workforce is expected to reduce bluebird’s 2022 cash burn to less than $340 million, resulting in 35-40% savings in estimated operating costs. This reduction is anticipated to be reflected in BLUE’s operating budget for 2023.

Currently, bluebird has no FDA-approved drug. Hence, the lack of a stable revenue stream puts pressure on its existing cash position. Prior to the restructuring plan, BLUE realized that its cash resources wouldn’t be enough to support operations beyond 2022.

While the company continues to evaluate additional financing options, the restructuring initiatives are intended to advance near-term opportunities, including the pending FDA decision on BLUE’s two gene therapy candidates later this year and a potential submission for a third gene-therapy candidate next year.

bluebird has plunged 49.7% in the year so far compared with the industry’s 12.1% decline.

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Two biologic license applications (BLA) filed by the company for its lentiviral vector (LVV) gene-therapies betibeglogene autotemcel (beti-cel) and elivaldogene autotemcel (eli-cel) as treatments for β-thalassemia and cerebral adrenoleukodystrophy, respectively, are undergoing FDA review. A decision on the BLAs for beti-cel and eli-cel is expected by August 2022 and September 2022, respectively.

An FDA approval to either eli-cel or beti-cel or both will provide bluebird with its first approved/marketed drug. Following FDA approval of its BLAs, bluebird expects to secure priority review vouchers. The company expects to monetize the sale of these priority review vouchers to further extend cash resources.

BLUE also plans to file a BLA for lovotibeglogene autotemcel (lovo-cel) gene therapy for sickle cell disease in first-quarter 2023.

Restructuring initiatives have been taken up by bluebird bio with the objective of maintaining targeted research efforts focused on the LVV gene therapy, while deprioritizing direct investments in reduced toxicity conditioning and cryopreserved apheresis.

Zacks Rank & Key Picks

bluebird bio carries a Zacks Rank #3 (Hold) at present. Some better-ranked stocks in the overall healthcare sector include AVROBIO (AVRO - Free Report) , Collegium Pharmaceutical (COLL - Free Report) and ProPhase Labs (PRPH - Free Report) . While Collegium Pharmaceutical sports a Zacks Rank #1 (Strong Buy), AVROBIO and ProPhase Labs each carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Collegium Pharmaceutical’s earnings per share estimates for 2022 have increased from $3.79 to $5.76 in the past 60 days. The same for 2023 has increased from $4.79 to $7.96 in the past 60 days. Shares of COLL have risen 7.5% year to date.

Earnings of Collegium Pharmaceutical missed estimates in three of the last four quarters and beat the mark on one occasion, with the negative surprise being 57.6%.

ProPhase Labs’ earnings per share estimates for 2022 have increased from 3 cents to 27 cents in the past 60 days. The same for 2023 has increased from 65 cents to 73 cents in the past 60 days. Shares of PRPH have risen 8.1% year to date.

Earnings of ProPhase Labs missed estimates in three of the last four quarters and beat the mark on one occasion, with the negative surprise being 157.7%.

AVROBIO’s loss per share estimates for 2022 have narrowed from $2.16 to $2.02 in the past 60 days. The same for 2023 has narrowed from $1.81 to $1.80 in the past 60 days.

Earnings of AVROBIO beat estimates in two of the last four quarters while missing the mark in the other two, delivering an average surprise of 2.6%.

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