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bluebird (BLUE) Gives Details on Oncology Business Spinoff

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bluebird bio, Inc. (BLUE - Free Report) has provided updates on the planned separation of oncology businesses into a new publicly-traded company, 2seventy bio. The company anticipates the completion of the planned spin-off by early November 2021.

Per the press release, after separation, it plans to distribute all the outstanding common shares of 2seventy bio to bluebird’s shareholders, i.e., a current shareholder will receive one share of 2seventy bio for every three shares of bluebird bio stock.

bluebird anticipates cash and cash equivalents balance to be $1 billion, which includes the company’s private placement financing and sale of its manufacturing facility in North Carolina. Out of the $1 billion, it proposes to fund approximately $480 million in cash to 2seventy bio, while retaining the remaining balance.

Per bluebird, the funding to 2seventy bio and the remaining funds available will be sufficient to fund both the companies in 2023 under their respective business plans.

These updates are based on a regulatory filing made by 2seventy bio with the U.S. Securities and Exchange Commission. Per the filing, the company aims to spin-off 2seventy bio as a tax-free transaction.

bluebird expects to earn revenues from existing and additional sources including the potential sale of priority review vouchers that would be issued with anticipated U.S. regulatory approvals of its regulatory filings for beta-thalassemia and cerebral adrenoleukodystrophy (CALD) candidates.

Following the spin-off, bluebird expects to focus on the gene-therapy business, which shows potential. Last month, it completed the rolling submission of its biologics license application to the FDA for betibeglogene autotemcel (beti-cel) for the treatment of all patients with transfusion-dependent β-thalassemia across all ages and genotypes. The company also plans to submit elivaldogene autotemcel (eli-cel) as a candidate for the treatment of CALD.

Please note that both beti-cel and eli-cel are already approved in the EU for similar indications under the trade names Zyntelgo and Skysona, respectively.

The company has also partnered with bigwigs like Bristol Myers Squibb (BMY - Free Report) and Regeneron (REGN - Free Report) to boost its pipeline development.

The company has partnered with Bristol Myers to develop CAR-T therapies for multiple myeloma. In March 2021, the FDA approved Abecma for the treatment of adult patients with relapsed or refractory multiple myeloma. It is also developing another CART-T therapy bb21217 for multiple myeloma. Both the therapies are part of the collaboration with Bristol Myers.

Though the company has received approval for its gene-therapy candidates in the EU, it remains highly dependent on its collaboration partners, which does not bode well for the stock. In March 2021, the license agreement with Novartis (NVS - Free Report) was terminated, and as a result, bluebird will no longer receive royalties or other payments on net sales of Kymriah (tisagenlecleucel) or any future products from the former.