Bluebird Confronts Financial Shortfall as It Approaches Breakeven Milestone
Bluebird bio is on the brink of a financial crisis. As of September 30, the gene therapy firm revealed that it has 8.7 million in cash and equivalents, which is projected to sustain operations into the first quarter of 2025. During an earnings call on Wednesday, company executives indicated they anticipate reaching cash flow break-even by the latter half of 2025.
This outcome hinges on the company’s ability to overcome their cash challenges and generate revenue from at least 40 drug products each quarter. However, analysts are left questioning the feasibility of this expectation, with the team at William Blair emphasizing the “significant” financial burdens looming over the company.
Increased Transfusions
Company leaders mentioned that Bluebird has successfully doubled the initiation of patients in its gene therapy lineup, which features Lyfgenia, Zynteglo, and Skysona. The total patient count on treatment surged from 27 to 57, indicating that revenue from these therapies has begun to flow. Anticipating future patient enrollments for the remainder of the year, Bluebird expects there to be 74 patients currently or soon to be treated, with 30 additional patients already scheduled for 2025, as stated by Chief Commercial & Operating Officer Tom Klima.
“This trajectory continues to support the potential path to cash flow breakeven in the later part of 2025 as these patient initiations evolve into product deliveries and infusions,” Klima noted.
In terms of earnings, Bluebird reported .6 million in revenue for the third quarter, down from .1 million in the previous quarter. CFO James Sterling explained that this decline was anticipated due to fluctuations in manufacturing timelines.
Concerns have been raised by analysts at William Blair regarding the potential for Bluebird to miss its patient initiation targets in the fourth quarter, despite having made strides in establishing new qualified treatment centers for its gene therapy offerings.
“We have doubts about the company’s capacity to convert these developments into patient starts and subsequent revenue, especially as it appears likely that Bluebird will not meet its 2024 patient start guidance,” the William Blair team stated.
Klima clarified on the earnings call that there is a two-quarter delay between initiating a patient and actual product delivery, implying that revenue does not materialize instantly. Recently, it was reported that patients have begun to receive transfusions of the sickle cell gene therapy Lyfgenia, which gained approval for use in December 2023.
Given the rigorous demands of gene therapy, which can potentially provide lasting cures for persistent ailments such as sickle cell disease, many patients align their treatment schedules with significant life events. During the earnings call, William Blair’s Sami Corwin inquired about how the forthcoming holiday season might influence patient initiation rates. This pattern was reflected in Bluebird’s earnings from the prior year, which showed a downturn in fourth quarter revenue.
Despite these concerns, Klima expressed optimism that Bluebird would meet its revenue target of million for the quarter, noting that the company is monitoring the infusion rates occurring at the beginning of Q4 closely.
Financial Outlook
Bluebird has implemented considerable cost-reduction strategies that are expected to lower spending by 20% in the third quarter of 2025. Recent measures included workforce reductions affecting 25% of its R&D staff.
Despite these efforts, Bluebird is anticipated to exhaust its cash reserves by the first quarter, leaving a gap before achieving break-even. Executives were vague on plans to address this issue, only mentioning ongoing collaboration with lending partner Hercules Capital to secure further financing.
In March, Bluebird arranged a five-year term loan deal with Hercules that allows for debt financing up to 5 million through four phases, contingent on meeting specific milestones. Bluebird has already drawn million, which will need to be repaid in the future. After the second quarter, the terms were renegotiated to extend the patient start milestone, unlocking an additional million in cash.
“We’ve outlined a plan for financial stability and achieving cash flow break-even in the latter half of the upcoming year, provided we can secure necessary funding,” CEO Andrew Obenshain mentioned during the call.
When pressed about strategies to cover the financial shortfall, Sterling referenced Hercules. “Hercules has been an excellent partner for us, and we maintain frequent communication with them. While it’s premature to divulge the exact nature of those discussions, potential strategies to lengthen our financial runway include renegotiating key agreements and implementing additional cost-saving initiatives, with Hercules being crucial in advancing these efforts.”
This issue was not revisited. As of publication, Bluebird had not responded to BioSpace‘s request for comment.
Bluebird is also facing challenges regarding compliance with Nasdaq’s minimum listing criteria and is pursuing a reverse stock split to align its share price with the minimum requirement. A recent shareholder meeting was postponed and extended into early December to facilitate more voting. Should this effort succeed, the analysts at William Blair believe it could assist Bluebird in meeting Nasdaq’s regulations.
William Blair summarized its insights by stating, “We are uncertain whether Bluebird will successfully evolve into a profitable, commercially viable entity.”
Bluebird shares this sentiment, noting a “going concern” warning in its SEC earnings report.
“We must secure additional capital, which may not be attainable under favorable conditions, or at all,” the report states. “Failure to obtain this essential funding when necessary might necessitate delays, limitations, or halts in our commercial operations, product development, or other business activities.”