Troubled gene therapy player bluebird sold for a song

12 years after going public, beleaguered gene therapy company bluebird bio will be sold to private equity groups Carlyle and SK Capital Partners for around $29 million – less than half its current value and a fraction of its peak market cap of around $9 billion.

Shares in the company plunged 42% to just over $4 after the announcement of the $3-per-share deal, which comes as it was at risk of defaulting on financial commitments and is "the only viable solution to generate value for stockholders."

Shareholders could get more of a payoff in future, as the agreement includes a contingent value right (CVR) worth $6.84 per share tied to its current gene therapies – for sickle cell disease, beta-thalassemia, and cerebral adrenoleukodystrophy (CALD) – which could achieve $600 million in 12-month sales before December 2027.

That looks like quite a reach at the moment, though, given that bluebird has predicted revenues in 2024 will end up in the region of $70 million, reflecting gene therapy companies' challenges in winning the reimbursement coverage for the expensive, one-shot medicines needed to build a sustainable business.

In its third-quarter results, bluebird revealed that it had achieved only 57 patient starts on treatment for its gene therapies, including 35 for thalassaemia drug Zynteglo (betibeglogene autotemcel), 17 for SCD product Lyfgenia (lovotibeglogene autotemcel), and five for CALD therapy Skysona (elivaldogene autotemcel).

Analysts at William Blair – who are predicting sales of the trio will be less than $550 in 2027 – said that the chance of achieving the CVR contingency "is very low."

David Meek – who was formerly CEO of Mirati before its $5.8 billion takeover by Bristol Myers Squibb and also held the top job at Ipsen – will lead the company after bluebird returns to private hands.

In a statement, bluebird said Carlyle and SK will provide the capital to scale up commercial delivery of the gene therapies, as well as commercial expertise. The takeover is expected to close in the first half of this year.

One of the reasons for the precipitous sale is that bluebird recently failed in an attempt to persuade the FDA to give it a priority review voucher for Lyfgenia, which could have been sold to provide a cash injection. The company previously sold two other PRVs for around $100 million each and had already lined up a buyer for the third before the FDA denied its request.

"bluebird is built on an extraordinary legacy of scientific breakthroughs, and we are committed to unlocking its full potential for patients," said Meek.

"With the backing of Carlyle and SK Capital, we will bring the capital and commercial capabilities needed to accelerate and expand patient access to bluebird's life-changing gene therapies."