"Bluebird Bio is about to become the
seller of the two most expensive drugs in the U.S., and by extension the world,
each fetching nearly $3 million.
While the high price tag is leading
to public backlash, one would think the company and its investors would at
least see a huge payoff as the drugs hit the market. Not quite. Two approvals
by the Food and Drug Administration this past summer might have rescued the
company from the financial abyss, but Boston-area-based Bluebird, which in
April announced significant cost cuts to stay afloat, is going to be
cash-strapped for a while.
The challenge is that the two
diseases Bluebird's therapies treat -- beta thalassemia and cerebral
adrenoleukodystrophy, or CALD -- afflict tiny portions of the population,
therefore limiting their economic potential. Take the treatment for beta
thalassemia, a genetic disease characterized by a shortage of healthy red blood
cells, which leads to anemia. In the most severe form of this disease, people
undergo blood transfusions every few weeks, basically tethering them to the
doctor's office. Bluebird's drug, Zynteglo, could be life-altering with only a
single treatment. It also could wind up saving money: The Institute for
Clinical and Economic Review, or ICER, has estimated that the treatment could
be cost-effective.
But the economics don't work as well
for investors because there are only an estimated 1,300 people with
transfusion-dependent beta thalassemia in the U.S. Sales for the two
treatments, Zynteglo and Skysona for CALD, might reach just over $200 million
by 2030, according to Luca Issi, an analyst at RBC Capital Markets. Contrast
that with Bluebird's cash burn rate. The company expects to go through just
under $340 million this year. As of the second quarter, it had about $218
million in cash. The upshot is that Bluebird needs to raise money, and fast.
The company has said it is exploring financing opportunities. But with the
stock market plunging, many biotech companies have been frozen out of the
capital markets.
Bluebird's struggles highlight the
challenge of developing drugs for extremely rare conditions. The government
does have incentives, such as priority review vouchers. The vouchers can be
redeemed to speed up FDA review of a future, more profitable drug. Bluebird got
two and hopes to cash them in for at least $200 million, giving it some
breathing room as it seeks to get a potentially more lucrative treatment for
sickle cell disease approved. The company "has a clear path to financial sustainability
and considerable positive momentum," a spokeswoman wrote.
The stakes go beyond just one
company: Andrew Lo, a Massachusetts Institute of Technology finance professor
who has sought ways to promote investment in rare-disease treatments, says there
is a risk that there could be a chilling effect on other such therapies if
Bluebird doesn't succeed. Currently there are only a handful of gene therapies
approved but, as more costly but potentially curative medications come to the
market, payers and manufacturers will have to find a way to deal with the
multimillion-dollar price tags. One solution -- which Bluebird is offering for
Zynteglo -- is a risk-sharing agreement, where the manufacturer could make
refunds if the product doesn't work.
The bull case for Bluebird, explains
analyst Yaron Werber at Cowen, is that its technology and manufacturing could
be applicable to other indications. The company is currently planning to file
for approval of lovo-cel early next year. While approval certainly would boost
the company's prospects, it could still face competition. Vertex
Pharmaceuticals and Crispr Therapeutics are also racing to receive approval for
their gene-editing therapy to treat sickle cell. Another problem is that, while
sickle cell disease offers a much bigger market, access and reimbursement
remain a tough challenge. Most sickle cell disease patients are
African-Americans, a population that has long lacked equal access to care.
At a market capitalization just shy
of $500 million, Bluebird isn't expensive for a biotech with two approved
therapies. But having the most expensive drug on the market isn't always a good
thing." [1]
1. World's Most Expensive Drugs Can't Cure What Ails This Biotech --- Bluebird Bio has priced two gene therapies at around $3 million, but its financial future remains uncertain
Wainer, David.
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 04 Oct 2022: B.12.