Bluebird's not looking to break speed records with its first gene therapy launch

Bluebird Bio CEO snares $24 million pay package as gene therapy advance
Bluebird's gene therapy Zynteglo could become a blockbuster if it gains a second approval to treat sickle cell disease, analysts estimate. (Bluebird Bio)

Bluebird Bio’s gene therapy to treat transfusion-dependent β-thalassemia (TDT), Zynteglo, is expected to be approved soon in Europe, but investors shouldn’t expect an aggressive rollout there. That was the main takeaway from the company’s analyst confab Thursday in New York.

“This innovation curve that we’re on is super-steep,” said Bluebird CEO Nick Leschly toward the start of the meeting, as he flipped to a slide showing a roller coaster, “and we’re trying to figure that out.”

Zynteglo will be the first product to emerge from 27-year-old Bluebird, so investors have good reason to be excited about the therapy’s commercial potential. But making it a success will be far from simple, the company explained during the event. Treatment centers need to be set up, physicians have to be trained to deliver the one-time, personalized therapy and payment models have to be established—all hurdles that could be different country-to-country.

Bluebird expects to launch first in Germany, in the second half of this year, followed by Italy, France and the U.K. in 2020, the company said during the analyst event. Leschly and his colleagues emphasized that their main focus is achieving a smooth launch rather than trying to recruit as many patients as possible right off the bat, which analysts at J.P. Morgan called “a prudent strategy” in a note to investors.

But that will likely translate into modest sales in the beginning, J.P. Morgan warned. “We suspect subsequent launches in the U.S. and for additional indications/products to be far more meaningful,” they wrote.

RELATED: Bluebird tees up its first gene therapy approval with Zynteglo thumbs-up in EU

Zynteglo is an altered form of the β-globin gene that’s inserted into patients’ blood stem cells. The hope is that the new gene will produce hemoglobin at normal levels, freeing patients from the frequent blood transfusions that constitute the standard of care for TDT.

Bluebird did not disclose its pricing plans for Zynteglo during Thursday’s presentation, making it challenging for analysts to place bets on the product’s performance. SVB Leerink analysts used Zynteglo prices of $900,000 in Europe and $1.2 million in the U.S. as the basis for its estimate that the product will peak in both regions at $800 million in TDT. Bluebird is also testing the product in sickle cell disease—a field that analysts believe could push the gene therapy into blockbluster territory by 2027.

But success will hinge on Bluebird’s ability to come up with alternative pricing models that payers across the world will accept. At the J.P. Morgan Healthcare Conference in January, the company disclosed a plan to charge insurers an upfront fee and spread the rest of the payments over five years, contingent on the treatment’s performance. During yesterday's analyst event, the company estimated that up to 80% of the treatment’s total price will be “at risk” because of that tie to its results.

“We see annuity models as a potential tailwind to product access if priced appropriately,” SVB Leerink analysts wrote in a note to investors.

RELATED: Senate bill backed by patient groups proposes value-based 'annuity' payments for pricey treatments

If Zynteglo is to reach blockbuster status, Bluebird will have to get U.S. payers on board with its alternative payment plan. The company estimated a potential FDA approval in 2020 in TDT and a target patient population of up to 1,500 people. The therapy could be approved in sickle cell disease in 2022, giving Bluebird the opportunity to reach an additional 110,000 patients.

Bluebird reported a high concentration of TDT and sickle cell patients in just 15 states—a fact that stood out to Evercore ISI analyst Josh Schimmer, particularly because there’s an 80% overlap in healthcare providers servicing both populations of patients. That trend “highlights the greater importance of properly laying the commercialization foundations of [TDT] to successfully build on other indications,” Schimmer wrote in a note to investors.

Analyst days are often focused on highlighting projects in the pipeline that could drive revenue growth many years into the future, but with the audience laser-focused on Zynteglo, Bluebird generated little excitement about what may be coming next. It did discuss some of its newer projects, including a transgenic T-cell receptor to treat Merkel cell carcinoma, CAR-T programs aimed at leukemia and lymphoma, and a gene therapy for Hurler syndrome, a lysosomal storage disease.

The early-stage programs are “intriguing,” concluded SVBLeerink, “but present difficult clinical trial design and execution challenges for a company with [Bluebird’s] limited experience in these end-markets.”