JP Morgan Downgrades Gene Therapy Focused Bluebird Bio, Cites Limited Funding Options

On Thursday, Bluebird Bio Inc. BLUE reported a third-quarter EPS loss of 31 cents, compared to a loss of 80 cents a year ago, beating the consensus loss of 36 cents.

The gene therapy company reported sales of $10.6 million, down from $12.39 million, missing the consensus of $18.1 million.

The company’s cash, cash equivalents, and restricted cash balance were approximately $118.7 million, which is expected to provide a cash runway into the first quarter of 2025.

Also Read: Worries Mount Over Cancer Risks in Bluebird Bio’s Gene Therapy

The company anticipates quarterly cash flow break-even in the second half of 2025, assuming it scales to approximately 40 drug product deliveries per quarter and obtains additional cash resources to extend its runway.

JP Morgan downgraded Bluebird after the third-quarter results. The analyst notes a reduced cash runway to “into 1Q25” from “into 2Q25.”

JP Morgan highlights that Bluebird did achieve the milestone of its first Lyfgenia infusion during the quarter (and revenue recognition) and continues to increase the pace of patient starts (cell collections) across its portfolio but is doing so against a backdrop of continued negative gross margins.

• 57 patient starts completed to date in 2024 (35 Zynteglo, 17 Lyfgenia, 5 Skysona).
• Seventeen additional starts are scheduled through the remainder of 2024.

“Altogether presenting few avenues to emerge from remaining a going concern,” the analyst says. JP Morgan has downgraded from Neutral to Underweight.

The analyst writes that the proxy vote did not gather enough support to approve a reverse stock split and increase the number of shares available for issuance. This outcome effectively eliminates equity financing as an option for raising capital.

In September, Bluebird bio implemented a restructuring to optimize its cost structure and enable quarterly cash flow break-even in the second half of 2025.

Price Action: BLUE stock is down 11.2% at $0.32 at last check Friday.

Photo by Ground Picture on Shutterstock

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