Maxim analyst Jason McCarthy is out with a research report on shares of bluebird bio Inc (NASDAQ:BLUE) discussing the aftermath of Mast Therapeutics’ (NYSEMKT:MSTX) recent failure with its pipeline drug vepoloxamer and the subsequent implications for BLUE. In wake of the discontinuation of MSTX program, the sickle cell community is left with an unmet need, and the analyst is left questioning how sickle cell patients can best proceed: drug therapy or a cure using gene therapy i.e. blue’s LentiGlobin?

McCarthy believes the latter and sees gene therapy as quite possibly the ideal option in treating sickle cell disease. As such, McCarthy reiterates a Buy rating on BLUE while increasing the price target from $85 to $100, which represents a 46% increase from where the stock is currently trading.

While initially the analyst believed given the cost and risk of a Bone Marrow Transplant (BMT) that LentiGlobin would be a prospect for merely 3% of sickle cell-afflicted patients, McCarthy now believes, “We spent time with patients, several of whom had undergone allogeneic stem cell transplant, and transplant doctors, and learned that the technology and safety for an allo BMT have improved so much that it’s a viable option for more and more patients. These patients and doctors appear more open to gene therapy than we had originally believed, and we now see a potentially larger market opportunity in sickle cell for LentiGobin.”

The analyst now models LentiGlobin considering a jump in accessibility to 10% of sickle cell patients, compared to a past projection of just 3.5%. McCarthy reduced pricing estimates from $750K to $500K in light of the “larger opportunity,” all while factoring a risk adjustment of 50%. Additionally, McCarthy decreased pricing estimates in beta thalassemia from $750K to $500K, and delayed expectations around CAR-T from 2019 to 2021.

“Sickle cell drug development continues to struggle with only one drug approved. While many drugs are in development that may ultimately get to approval (or fail), we believe more and more patients may turn to gene therapy as a remedy,” McCarthy concludes.

As usual, we recommend taking analyst notes with a grain of salt. According to TipRanks, analyst Jason McCarthy is ranked #3,824 out of 4,181 analysts. McCarthy has a 39% success rate and faces a loss of 4.1% in his annual returns. However, when recommending BLUE, McCarthy earns 6.4% in average profits on the stock.

TipRanks analytics demonstrate BLUE as a Strong Buy. Based on 9 analysts polled in the last 3 months, 8 rate a Buy on BLUE, while 1 maintains a Hold. The 12-month price target stands at $94.83, marking a 37% upside from where the shares last closed.screen-shot-09-29-16-at-05-49-pm