Why bluebird bio, Inc. Stock Gained 10% in September

10/4/17

What happened

Shares of bluebird bio, Inc. (NASDAQ:BLUE), a clinical-stage biotech developing cell-based therapies, rose 10% in September according to data from S&P Global Market Intelligence. Although there were a few positive developments last month, investors were mostly pleased with Celgene's (NASDAQ:CELG) decision to license the second program from bluebird's growing stable of experimental cancer therapies.

So what

At the end of September, Bluebird announced that it had dosed the first multiple myeloma patient in a phase 1 study with bb21217. This is the company's second in an exciting new classof treatments known as CAR-T that involves reprogramming a patient's own immune cells to recognize and fight cancer.

Rolled up dollar bills arranged in shape of an upward sloping chart.

IMAGE SOURCE: GETTY IMAGES.

Bluebird stock soared in August when Gilead Sciences acquired a peer developing similar treatments for $11.9 billion, and the first CAR-T therapy, Kymriah from Novartis, earned an FDA approval. Although beginning clinical trials for a CAR-T candidate isn't necessarily a big deal on its own, the fact that bluebird's partner, Celgene, has already licensed the program speaks volumes about its odds of success down the road.

Now what

Celgene provided just $15 million upfront, and Bluebird is still on the hook for phase 1 trial expenses. If successful, though, Celgene will take over financial responsibility for further development and commercialization of bb21217, if it eventually earns an approval. Although the deal shifts a great deal of risk to Celgene, Bluebird remains entitled to pre-specified milestone payments and an unspecified royalty percentage on any sales.

The candidate's predecessor, bb2121, reduced disease activity in 15 of 15 evaluable patients in its phase 1 trial. It's hard to see how the new candidate can improve on such stellar data, but having a backup candidate to mitigate any unforeseen issues should help investors rest a bit easier.

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