bluebird bio Inc (NASDAQ:BLUE) has magnetized a new confident analyst to its bullish camp, as Canaccord analyst John Newman finds himself intrigued by bb2121, designed together between Blue and Celgene as a chimeric antigen receptor T-cell (CAR-T) therapy targeting B-cell maturation antigen (BCMA) for patients with relapsed/refractory multiple myeloma. This candidate could hit $1.94 billion in peak sales domestically by 2023, by the analyst’s calculation.
Long-term, this drug could become even more compelling as an alternative or substitute to stem cell transplant in multiple myeloma, Newman wagers, believing Bluebird could gain access to roughly 80% of patients who are ineligible for transplant. This translates to a sales prospect on just a domestic front circling $8.3 billion.
As such, the analyst initiates coverage with a Buy rating on BLUE stock while setting a price target of $202, which implies a 24% upside from where the shares last closed. (To watch Newman’s track record, click here)
With an option to walk into a profit split in the U.S. and another option to co-promote domestically, Newman predicts the drug maker’s royalties from EU sales could hit a peak of $2.5 billion, indicating around $327 million in peak royalties.
Meanwhile, “LentiGlobin [is] looking up in beta-thalassemia,” the analyst commends Bluebird for enhancing its gene therapy candidate’s process to treat both the rare blood disorder beta-thalassemia as well as sickle cell disease, which betters the opportunity to gain a green light for both therapies.
Meanwhile, sickle cell is “moving in [the] right direction,” adds Newman, who highlights: “Bluebird bio’s sickle cell disease (SCD) program for LentiGlobin has proven challenging, but new changes in ‘process 2’ are showing improvement, which may lead to robust transfusion independence. Early data for LentiGlobin in SCD showed rapid loss of vector copy number (VCN) in transfused cells, leading to minimal effect on independence from blood transfusions. However, data from Process 2 shows both a higher VCN for the manufactured drug product, and also a higher proportion of cells taking up the vector.”
Overall, the bigger picture for Bluebird looks promising, and “even more interesting long term,” as Newman concludes, “We believe bluebird bio’s Process 2 changes have significantly improved the outlook for its LentiGlobin product in beta-thalassemia and sickle cell disease […] Also, we view bb2121 as a long-tailed, recurring revenue product with strong potential in transplant that has yet to be contemplated by investors.”
In beta-thalassemia, the analyst forecasts Bluebird’s LentiGlobin could reach around $721 million in global peak sales, with approximately $1.2 billion global peak sales potential in sickle cell disease.
TipRanks points to an optimistic analyst consensus for BLUE, with 10 out of 14 analysts rating a Buy on the stock in the last 3 months, 3 maintaining a Hold, and 1 issuing a Sell. However, is this biotech player an overvalued one when taking under account these analyst expectations? The 12-month average price target stands at $156.82, which indicates a 3% downside from where the shares last closed.