bluebird bio (BLUE) announced that it had received European approval for its gene therapy Zynteglo to treat patients with beta-thalassemia. This was the first approval for the biotech which was an important milestone to reach. However, this is only the beginning. That's because bluebird bio expects to possibly file for approval of Zynteglo to the FDA by the end of this year. That would set up a potential U.S. approval for the gene therapy in 2020 for the very same indication.
Approval Based On Promising Data
The European Union approved Zynteglo to treat patients with transfusion-dependent beta-thalassemia (TDT) who are aged 12 and older. Specifically, it is for patients who do not have a certain genotype known as beta zero. On top of that, it was approved for those where a hematopoietic stem cell (HSC) transplant is available, but there is no matched donor. This is good news for the patients because the current treatment option involves constant blood transfusions. There are two reasons why this is bad. The first reason is that the patients have to go often for these blood transfusions. They are given the transfusion about once every 2 weeks. With Zynteglo, patients only need to be treated once and won't require lifelong blood transfusions. That's an improvement for the patient not having to go on trips often to receive treatment. The biggest reason why I view approval of Zynteglo a win for patients dealing with possible side effects for standard of care. While blood transfusions work, patients can get overloaded with excessive amount of iron. What's the problem with that? Excessive iron or iron overload leads to a weakened immune system, putting the patient at greater risk of developing an infection. In addition, organs can be poisoned leading to cancer, cirrhosis of the liver, and irregular heartbeat. The FDA approved the drug on highly promising data from multiple studies which were:
- Phase 1/2 HGB-205 study
- Phase 1/2 Northstar (HGB-204) study
- Phase 3 Northstar-2 (HGB-207) study
- phase 3 Northstar-3 (HGB-212) study
- Long-term follow-up study of LTF-303
All of these studies were responsible for getting Zynteglo approved in the European Union. If you look at the phase 1/2 HGB-205 study, it was shown that about 75% of patients achieved transfusion independence. What that means is that patients were able to be transfusion-free for at least 12 months or more. In addition, they achieved this by maintaining hemoglobin ≥9 g/dL. There are several other catalysts coming up as well. These include a regulatory filing to the FDA by the end of 2019 and potential U.S. approval for the gene therapy in TDT by 2020. There were a lot of non-serious adverse events for those treated with therapy like abdominal pain and chest pain. There was one serious adverse event, which was thrombocytopenia (low platelets in the body) related to treatment with Zynteglo. There are additional data related catalysts due out by the end of 2019. These will be updated results from Northstar-2 and Northstar-3.
According to the 10-Q SEC filing, bluebird bio has cash, cash equivalents, and marketable securities of $1.73 billion as of March 31, 2019. A lot of the cash has been going towards expanding the pipeline towards other indications. In addition, cash was used to build upon its manufacturing facility in Durham, North Carolina. The pharmaceutical company is in good shape because it believes that its cash on hand is enough to fund its operations into 2022. That means I don't foresee any dilution for quite some time.
bluebird bio receiving European approval for Zynteglo is good news for the biotech and the patients that will be receiving the gene therapy treatment. There is an additional opportunity to potentially file for FDA approval of Zynteglo by the end of this year. The risk is that despite receiving European approval for the treatment, there is no guarantee that the FDA will approve it. Another risk involves the pricing itself. A major problem with gene therapy companies is they offer the ability to be a "one off" treatment but are priced quite high. No set price has been listed yet, but other gene therapy companies have posted prices off the charts. For instance, Novartis (NVS) received FDA approval for Zolgensma to treat patients with spinal muscular atrophy (SMA). It is likely to price its gene therapy between $2 million and $3 million per treatment. This is a major risk for bluebird bio because it won't be easy to get countries to pay for its treatment. The good news is that the company has a strategy. It intends to tie a majority of the price of the treatment to performance of the product up to a 5-year period. bluebird bio will have a tough time at first, but I think it will be able to generate a game plan to space out the price of treatment over a period of time. This, in turn, should bring payers on board to provide Zynteglo to patients.
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