bluebird bio stock has been on an upswing for most of the year, having recently taken a spike after positive news at the ASH Annual Meeting.
bluebird bio stock has been on an upswing for most of the year, having recently taken a spike after positive news at the American Society of Hematology (ASH) Annual Meeting. It has since dropped back a little, but investors and analysts—and doctors—seem quite pleased with the company overall. Todd Campbell, writing for The Motley Fool, discusses why.
The biggest reason is the data released as the ASH meeting of bb2121, that the company is developing with Summit, NJ-based Celgene. It’s being tested in patients with late-stage relapsed/refractory multiple myeloma. Although there were the usual issues with adverse side effects, primarily cytokine release syndrome (CRS), it was the efficacy of the treatment that has everyone excited. In the study, 17 out of 18 patients received an objective response, 16 out of 18 had at least a very good partial response, 10 out of 18 had a complete response (7) or unconfirmed complete response (3), and 9 out of 10 patients who could be evaluated for minimal residual disease (MRD) status were MRD-negative. Which really means a 94 percent overall response rate and a 56 percent complete response rate.
Campbell writes, “What makes those results so impressive is the fact that people participating in this trial are among the sickest patients with multiple myeloma. On average, they have already tried and failed or not responded to seven therapies. To put bb2121’s performance in additional context, consider that past drugs on the market for fourth-line or higher use in multiple myeloma were approved based on overall response rates in the 20 percent to 30 percent range. Johnson & Johnson‘s Darzalex, for instance, won approval with a 29 percent overall response rate and a 3 percent complete response rate.”
Although the bb2121 study is early stage, those results are dazzling. If it can deliver in later-stage trials and the side effects are manageable, it seems like a slam-dunk for approval. But in the world of drug development, that’s a lot of “ifs.”
From the company’s perspective, though, it’s likely to be coming into money, either via milestone payments or royalties. It’s possible it might exercise its option to co-commercialize bb2121 in the U.S.
Campbell writes, “Under its agreement with Celgene, bluebird bio will be reimbursed for bb2121’s manufacturing costs, plus a small markup. While it could choose to receive milestones plus a royalty ranging from the mid-single digits to low teens, it’s already said it will exercise its option, and if it does, then it will split costs and profit on bb2121 in the U.S. After exercising its option, it can still receive up to $10 million in clinical milestone payments and up to $54 million in ex-U.S. regulatory milestone payments, plus $36 million in ex-U.S. commercial milestone payments. Furthermore, it’s entitled to tiered royalty payments from the mid-single digits to low teens on sales outside the U.S.”
Consider the potential sales of the drug: Celgene has a big presence in the multiple myeloma market, with Revlimid strong for first- and second-line treatment, and its Pomalyst is the best-selling third-line treatment. Celgene is projecting $8 billion-plus in Revlimid revenue this year and $1.6 billion for Pomalyst. bb2121 could compete with Pomalyst if it’s approved as a fourth-line therapy.
If bb2121 continues to dazzle in trials and makes it to the market, it’s likely to be the top choice for fourth-line therapy, which could bring in annual sales reaching nine figures, even with a royalty split with Celgene. But that could just be a piece of the pie.
“Celgene and bluebird bio are investigating bb2121 in earlier-line treatment and they’re working on bb21217, a second-generation version of bb2121,” Campbell notes. “If those studies go well, one of those therapies might become Revlimid’s successor someday.”
