Editor's note: The story was updated on Dec. 11 at 9:10 a.m. to include more information about bluebird's commercial plans for Lyfgenia and the response from analysts.
Alongside a historic approval for the first therapy utilizing the Nobel Prize-winning CRISPR/Cas9 gene-editing technology, the FDA has cleared bluebird bio’s rival gene replacement therapy, Lyfgenia, also for sickle cell disease (SCD).
But a higher price tag, a black box warning and the absence of a much-needed cash infusion could usher in a tough time for bluebird, several analysts figured. Despite the FDA’s early approval, bluebird’s stock price plunged by 40% on Friday.
Bluebird is pricing Lyfgenia at a wholesale acquisition cost of $3.1 million, about 40% higher than the $2.2 million list price Vertex has placed on its CRISPR Therapeutics-partnered Casgevy. Previously, the U.S. drug cost watchdog, the Institute for Clinical and Economic Review (ICER), said both therapies could be cost-effective at a price up to $2.05 million after discounts.
Lyfgenia’s price reflects its clinical value and the positive impact it has on the healthcare system and on patients, bluebird’s chief commercial & operating officer, Tom Klima, said on a conference call Friday afternoon. But that doesn’t explain the huge pricing gap between two gene therapies that have shown very similar efficacy.
Analysts from William Blair, RBC Capital Markets, Jefferies, Cantor Fitzgerald and Barclays said in separate notes to clients that the higher price may put bluebird at a disadvantage in the upcoming market competition. Despite the list-price difference, analysts at J.P. Morgan said they expect the two drugs' net prices after discounts to be similar for treatment centers.
The two therapies are both one-time infusions, but they work differently. Lyfgenia uses a lentiviral vector to introduce genetic modifications into the patient’s blood stem cells to produce a type of hemoglobin A to fill in for dysfunctional ones. Before Friday’s approvals, bluebird had already won an FDA approval for Zynteglo, a sister med to Lyfgenia, for the blood disorder beta thalassemia.
By comparison, Casgevy uses CRISPR tech to edit blood stem cells to increase the production of fetal hemoglobin.
Sickle cell disease is an inherited blood disorder in which a mutation causes red blood cells to develop a “sickle” shape. These cells can limit oxygen delivery to the body and obstruct blood flow, leading to severe pain and vaso-occlusive events (VOEs) or vaso-occlusive crises (VOCs).
In a single-arm study, Lyfgenia helped 28 of 32 patients (88%) achieve complete resolution of any VOEs between six and 18 months after treatment. New data presented at the American Society of Hematology annual meeting showed that 30 of 33 patients (90.9%) who received Lyfgenia had complete resolution of VOEs during the period, and 32 (97%) saw no severe VOEs.
As for Casgevy, a single-arm trial showed the CRISPR-based therapy freed 29 of 31 patients (93.5%) of severe VOCs for at least 12 consecutive months.
Bluebird is offering payers outcomes-based reimbursement policies, including rebates if patients experience VOE-related hospitalizations in the three years following treatment, Klima said. The company also provides contracting options for state Medicaid agencies, although bluebird expects Medicaid will primarily rely on the medical exception process to grant access to Lyfgenia, he said.
The company is currently in advanced discussions with the nation’s largest payers and more than 15 Medicaid agencies representing 80% of patients with sickle cell disease in the U.S., according to Klima.
When asked on Friday’s call about the price gap, Klima said bluebird feels “very confident in our value-based approach.”
Surprise black box warning
Besides the higher price, a black box warning on Lyfgenia’s label highlighting the risk of hematologic malignancy surprised the team of J.P. Morgan analysts. Vertex’s Casgevy approval didn't come with a boxed warning.
Investigators in Lyfgenia’s clinical trial previously reported two cases of acute myeloid leukemia emergent after treatment. But the cases were deemed unlikely to be related to viral vector insertion from the gene therapy, and bluebird noted that the commercial Lyfgenia is now made with a different production process.
Lyfgenia’s clinical trial was previously put on hold after a patient was thought to have developed myelodysplastic syndrome. But the diagnosis was later revised to transfusion-dependent anemia. The case was found to have an alpha thalassemia trait, and this problem is now listed in the “Limitations of Use” section of Lyfgenia’s label.
Bluebird is prepared to “appropriately characterize” the secondary cancer risk to physicians so that they can explain it to patients, bluebird’s chief medical officer, Rich Colvin, M.D., Ph.D., said on Friday’s call. Klima also suggested that, black box or not, doctors already knew about the cases and the potential risks.
Before the FDA’s approvals, a physician survey conducted by J.P. Morgan showed that 80% of doctors saw no difference between Lyfgenia and Casgevy. A survey of 33 doctors conducted by Leerink Partners showed that more than 60% of hematologists who treat SCD don’t see major differences between the two gene therapies on safety and efficacy. For the rest, more saw Lyfgenia as having better efficacy and safety.
Some doctors in Leerink’s survey raised potential off-target gene-editing as a potential risk that could sway their decision. Off-target editing is included in the less serious “Warnings and Precautions” section of Casgevy’s label. The risk is currently only theoretical as no such cases have been observed with Casgevy.
As for payers, Klima said bluebird has been transparent in their discussions, which have lasted for about five years. The Massachusetts biotech “would not expect the box warning to have an impact on negotiations or discussions with payers,” he said.
But the boxed warning isn’t just a safety deterrent. It comes with a requirement to monitor patients for cancer through complete blood counts at least every six months for at least 15 years, plus viral vector integration site analysis at month 6, 12 and as warranted.
Such monitoring defeats the purpose of a one-time therapy, so Cantor Fitzgerald analysts suspected that patients are likely to prefer Casgevy when given an option.
J.P. Morgan analysts see the black-box warning less of an issue for the overall competitiveness of Lyfgenia. Instead, the lack of a priority review voucher from the FDA is a bigger threat to bluebird, they said.
Limited cash runway
The FDA issued a rare disease priory review voucher (PRV) accompanying the approval for Casgevy but not for Lyfgenia. Companies can use these vouchers to expedite FDA’s review of other drugs.
Analysts at Cantor suspected that because bluebird already got a PRV on Zynteglo, which is a twin therapy to Lyfgenia, the FDA may have viewed the request for a new PRV as double-dipping.
Before the approval, bluebird had already agreed to sell a PRV to Novartis for $103 million. Now, without the expected cash infusion from the PRV deal, bluebird only has cash to sustain the business until the second quarter of 2024.
With two gene therapies on the market, bluebird recorded $21.7 million in revenues during the first nine months of 2023. By comparison, Vertex, known for its cystic fibrosis franchise, collected nearly $7.4 billion in product revenues during the same period.
While struggling on the financial front, bluebird has one advantage in Lyfgenia’s favor. Because Zynteglo was approved by the FDA 14 months ago, the company has already built a network of qualified treatment centers. Of the 35 existing centers for Zynteglo, 27 are already ready to receive Lyfgenia patient referrals, and the rest will be fully activated by the end of the first quarter 2024, Klima told investors on Friday’s call.
In contrast, Vertex has nine centers for Casgevy, including six that also offer Lyfgenia, Cantor analysts noted.
Bluebird expects cell collection for the first Lyfgenia patients to begin in the first quarter of 2024. Bluebird CEO Andrew Obenshain said the company will book revenue when the final product is infused, and that the product manufacturing could take 70 to 105 days.
J.P. Morgan analysts were more optimistic about bluebird’s clearer commercialization plan and market priming by Zynteglo. But a William Blair team highlighted Vertex’s “extensive commercial experience” in general as a threat to bluebird’s ability to compete in the commercial market.
Obenshain said his company is talking to the FDA in hopes of changing the agency's PRV decision, and it’s exploring additional financing options in the meantime. Without any new developments, the financial constraints and the black-box label made Leerink analysts wonder if bluebird will be able to effectively commercialize Lyfgenia.
Overall, Jefferies, RBC and J.P. Morgan analysts all projected a slow sales ramp for both SCD gene therapies. Besides the therapies’ various risk factors and time needed for the infrastructure build, the myeloablative conditioning required for both drugs carries the risk of infertility, so egg or sperm freezing will represent an additional cost burden for patients. The RBC team believes the current blockbuster revenue predictions for the class will only materialize when better preconditioning procedures become a reality.