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Is a Disappointment in Store for bluebird (BLUE) Q3 Earnings?

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bluebird bio. (BLUE - Free Report) is expected to release third-quarter 2018 results on Nov 7.

In the last reported quarter, bluebird missed earnings expectations by 26.5%. The company’s track record is dismal too. In the last four quarters, it missed earnings estimates on all occasions, with average negative earnings surprise being 25.4%. Let’s see how things are shaping up for this quarter.

bluebird bio, Inc. Price, Consensus and EPS Surprise


bluebird bio, Inc. Price, Consensus and EPS Surprise | bluebird bio, Inc. Quote

Pipeline Progress in Focus

We expect investors’ to focus on pipeline updates as the company has no approved product in its portfolio, yet.

bluebird’s pipeline candidates for severe genetic diseases include LentiGlobin for the treatment of transfusion-dependent β-thalassemia (TDT) and severe sickle cell disease (SCD), and Lenti-D for the treatment of cerebral adrenoleukodystrophy (CALD). The oncology pipeline includes CAR T cell product candidates — bb2121 and bb21217 — for the treatment of multiple myeloma. The company is co-developing and co-promoting bb2121 in the United States with Celgene Corporation (CELG - Free Report) .

Last month, bluebird announced that the European Medicines Agency (EMA) accepted the company’s marketing authorization application (MAA) for its investigational LentiGlobin gene therapy for the treatment of adolescents and adults with transfusion-dependent β-thalassemia (TDT) and a non-β0/β0 genotype. We remind investors that LentiGlobin was previously granted an accelerated assessment by the Committee for Medicinal Products for Human Use (CHMP) of the EMA in July 2018, which, in turn, should reduce the EMA’s active review time of the MAA from 210 days to 150 days.

In September 2018, bluebird announced updated results from phase II/III Starbeam study (ALD-102), evaluating its investigational Lenti-D gene therapy in boys aged 17 years or below with CALD. The company also announced initial results from the ongoing observational ALD-103 study of outcomes from allogeneic hematopoietic stem cell transplant (allo-HSCT) in boys aged 17 years or below with CALD. The phase II/III Starbeam study completed its targeted enrollment and had a total study population of 31 patients as of Apr 25, 2018. Of these 31 patients, 29 received Lenti-D and the median follow-up for all treated patients was 34 months. bluebird also entered into an agreement with the FDA and the EMA on the clinical development program to support future marketing applications for Lenti-D in the treatment of CALD. Data from the phase II/III Starbeam study suggest that Lenti-D, which utilizes a child’s own cells and does not require a matched donor, may be a potential treatment for CALD.

Meanwhile, the company entered into a collaboration agreement with Gritstone Oncology, Inc.  to research, develop and commercialize products for the treatment of cancer using cell therapy.

In August 2018, bluebird announced that Regeneron (REGN - Free Report) will make a $100-million investment in the company’s common stock at a price of $238.10 per share. Both companies have collaborated to apply their respective technology platforms for the discovery, development and commercialization of novel immune cell therapies for cancer. Regeneron will leverage its VelociSuite platform technologies for the discovery and characterization of fully human antibodies and T cell receptors (TCRs) directed against tumor-specific proteins and peptides, while bluebird will contribute its field-leading expertise in gene transfer and cell therapy. Regeneron and bluebird jointly selected six initial targets and will equally share the costs of research and development up to the point of submitting an Investigational New Drug (IND) application. Both companies might select additional targets over the five-year research collaboration term.

Earnings Whispers

Our proven model does not conclusively show that bluebird will beat on earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to be able to beat estimates. Unfortunately, that is not the case here, as you will see below.

Earnings ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +16.03%. This is because the Most Accurate estimate is -$2.42, while the Zacks Consensus Estimate is -$2.88. You can uncover the best stocks to buy or sell, before they’re reported, with our Earnings ESP Filter.

Zacks Rank: bluebird currently carries a Zacks Rank #4 (Sell). While the ESP is positive, we need to have a favourable rank as well to be confident of an earnings beat.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Share Price Performance

bluebird’s stock has lost 35.6% year to date compared with the industry’s decline of 18.7%.

A Stock That Warrants a Look

Here is a health care stock you may want to consider as our model shows that this has the right combination of elements to post an earnings beat this quarter.

Alnylam Pharmaceuticals, Inc. (ALNY - Free Report) has an Earnings ESP of +12.54% and a Zacks Rank #3. The company is expected to release third-quarter results on Nov 6. You can see the complete list of today’s Zacks #1 Rank stocks here.

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