- Bluebird bio will split in two after several challenging years, announcing on Monday plans to spin off its cancer drug business into an independent, publicly traded company.
- Bluebird will retain its name and several medicines it's been developing rare blood and brain diseases, including the beta thalassemia treatment Zynteglo. Nick Leschly, Bluebird's current chief executive, will run the new, as-yet unnamed oncology company, which will take with it a multiple myeloma treatment under regulatory review as well as drugs for lymphoma and solid tumors.
- The major restructuring is meant to revive the fortunes of both divisions, which have struggled to capitalize on Bluebird's once-leading position in the emerging fields of cell and gene therapy. A succession of setbacks and delays have weighed on the company's stock price, which, at less than $50 per share, is about one-fifth its March 2018 peak.
Bluebird won one of the first approvals anywhere of a gene therapy for an inherited disease, securing a historic clearance from European regulators for Zynteglo a year and a half ago. The company has for years led cell therapy developers aiming to target multiple myeloma, an incurable blood cancer. And CEO Leschly has long been an outspoken champion of cell and gene therapies, advocating for changes that would make it easier for healthcare systems to swallow the high upfront cost of what are meant to be definitive, or even one-time, treatments.
But Bluebird has struggled to match pioneering science with operational execution. While Zynteglo won approval in the EU in June 2019, the company hadn't recorded any sales through September of last year after initially postponing the treatment's launch. And in the U.S., Bluebird has had difficulty getting Food and Drug Administration agreement on what additional data needs to be included for an application. The company expects to submit the drug this year for approval.
Bluebird also hopes to win approval for a sickle cell disease gene therapy, but said in November that it wouldn't be able to file the drug with the FDA until late 2022 — a delay of about one year versus previous expectations.
There have also been challenges in cancer, although Bluebird and partner Bristol Myers Squibb expect to win U.S. approval for their multiple myeloma treatment ide-cel by March.
Splitting in two, in theory, could help each newly created company focus more intensely on their respective area. "After careful strategic review, it is clear to us that the two businesses are best served by independent leadership and teams to drive distinct strategic and operational objectives," Leschly said in a Monday statement.
Wall Street analysts, however, were unsure, with some noting the two divisions combined offered advantages in diversification. Separated, each company will also have a thinner pipeline than Bluebird as currently structured.
"We are not convinced two birds are better than one just yet," wrote analysts at Piper Sandler in a note to clients. Shares in Bluebird fell on announcement of the split, but then recovered to gain about 2% in Monday morning trading.
Both companies will also have substantial competition. The delays with Zynteglo and in sickle cell have allowed other companies like CRISPR Therapeutics to progress rival therapies, while ide-cel is now joined in development by a host of other similar multiple myeloma treatments including one from J&J.
Bluebird, which had $1.3 billion in cash as of Dec. 31, said it plans to capitalize both companies after the split with "sufficient cash runway" for each to achieve their planned milestones.
Andrew Obenshain, currently president of the severe genetic disease business, will serve as CEO of Bluebird, while Leschly will retain a role as the company's executive chair.
The deal is expected to close in the fourth quarter of this year.
In splitting, Bluebird is following a similar strategy as Agios Pharmaceuticals, which in December agreed to sell its cancer drug business to French pharma Servier and focus exclusively on rare disease. Both drugmakers debuted as publicly traded companies in the summer of 2013 and struck notable partnerships with Celgene before it was bought by Bristol Myers Squibb for $74 billion.
Editor's note: This article has been updated with additional detail and reaction from analysts.