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Bluebird (BLUE) Down 5.6% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Bluebird Bio (BLUE - Free Report) . Shares have lost about 5.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Bluebird due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

bluebird Q3 Loss Narrower Than Expected, Revenues Beat

bluebird bio reported loss of $2.73 per share in the third quarter of 2018, narrower than the Zacks Consensus Estimate of loss of $2.88 but wider than the year-ago quarter’s loss of $1.73. The wider-than-expected year-over-year loss was due to higher research & development (R&D), and general & administrative (G&A) expenses on lower revenues.

Revenues of $11.5 million beat the Zacks Consensus Estimate of $8.3 million.

Revenues were also up from $7.7 million recorded in the year-ago quarter.

Quarter in Detail

R&D expenses escalated to $116.7 million in the third quarter of 2018 from $61.5 million a year ago, driven by costs incurred from the advancement and expansion of the company’s pipeline.

G&A expenses of $44.5 million were up 93.5% in the year-ago quarter due to increases in employee-related costs as headcount increased to support overall growth.

In July 2018, bluebird raised approximately $600.6 million in net proceeds through a public equity offering. In August 2018, bluebird announced that Regeneron will make a $100-million investment in the company’s common stock at a price of $238.10 per share. The overall increase in cash, cash equivalents and marketable securities was offset by $40.0 million paid to Gritstone.

Pipeline Development

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.

The pipeline progress in the third quarter was encouraging.

In the 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 MAA from 210 days to 150 days.

Meanwhile, based on ongoing discussions with the FDA, bluebird bio is modifying and expanding its clinical development plans to explore efficacy endpoints that may allow the company to pursue a more accelerated development path in the United States for the treatment of patients with SCD, who have a history of vaso-occlusive events (VOEs).

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

 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

Currently, Bluebird has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Bluebird has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.




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