Janney Says Bluebird's Therapies Are 'Encouraging,' But Stock Is Fairly Valued

Bluebird bio Inc BLUE, a clinical-stage biotechnology company that focuses on therapies for the treatment of severe diseases and cancer, released "highly encouraging" clinical data in late 2017, according to Janney. But that doesn't mean investors should be aggressive buyers of the stock, which has near-zero upside from today's levels, the sell-side firm said.

The Analyst

Janney's Yun Zhong initiated coverage of bluebird bio's stock with a Neutral rating and $220 fair value estimate.

The Thesis

Bluebird bio is a "pioneer" in lentiviral gene therapy for severe genetic disorders and T cell-based immunotherapy for cancer, Zhong said in a Wednesday report. (See the analyst's track record here.) 

The company is also on track to submit regulatory applications for marketing authorization of multiple therapies in the near-term after "many years of rigorous R&D activities," the analyst said. The first therapy expected to receive marketing authorization is LentiGlobin in 2018, followed by bb2121 and Lenti-D in 2019.

Despite an encouraging pipeline, Zhong's neutral stance on the stock is based on three questions that management needs to address, he said:

• Will the protocol modifications in sickle cell disease be enough for LentiGlobin to demonstrate efficacy comparable to what was observed in subject 1204?
• What is the regulatory pathway and commercial potential for LentiGlobin in SCD?
• Will bb2121 move into earlier lines of treatment in multiple myeloma? 

Shares of bluebird bio have gained nearly 400 percent in the past 18 months, and until the management team can answer the analyst's questions, there isn't sufficient reason to believe the stock's upside potential outweighs any downside risk, Zhong said. 

Price Action

Shares of bluebird bio were down 1.61 percent Wednesday after the open. 

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