Enthused by ongoing results from bluebird bio Inc (NASDAQ:BLUE)’s LentiGlobin BB305, Wedbush have analysts assigned an Outperform rating on the Massachusetts-based company and set their 12-month price target at $94 per share. Following the release of data from an ongoing early-stage trial, the company’s market valuation soared to five times the valuation the company earned in its June 2013 initial public offering.
Bluebird bio’s recent study
In a statement released Monday, bluebird bio Inc (NASDAQ:BLUE) said the first four patients treated with its gene therapy for beta-thalassemia, a blood disease that can cause severe anemia, haven’t needed transfusions for at least three months. The company’s chief medical officer, David Davidson, said he is “very encouraged” by the data. He added that as the clinical data continues to mature, they will work closely with medical experts, patient communities and regulatory authorities to define the regulatory path forward for LentiGlobin.
Bluebird bio’s LentiGlobin BB305 differs from many of the other gene therapies in development around the world, which involve inserting corrective genes directly into a patient. Instead, the company’s method works by removing a patient’s hematopoietic stem cells, equipping them with a functional beta-globin gene, and then reinserting them through infusion.
In their research report dated Dec. 8, 2014, David M. Nierengarten and his team at Wedbush note that the updated data from Bluebird suggests the first four beta-thal patients treated with LentiGlobin are now transfusion-independent. The Wedbush analysts point out that the vector copy number (VCN) of 1.2 in the SCD patient is in-line with the VCN in beta-thal patients who became transfusion free. Although it’s still early, the analysts view the SCD data positively and expect this first patient to advance to transfusion-independent status in 2015.
Reiterates Outperform on Bluebird
The analysts note that enrollment in both the Northstar and HGB-205 studies are expected to be completed next year. They point out that in both Northstar and HGB-205, there have been no cases of clonal expansion or other serious treatment-related safety signals observed. The analysts highlight that in the absence of any serious safety concerns thus far from the FDA, the curative potential of the therapy makes LentiGlobin’s approval a matter of when, not if.
Enthused by their enhanced confidence in the approval, the Wedbush analysts reduced their discount rate on the LentiGlobin program from 30% to 20%.
By applying a multiple of 8 times estimated 2020 revenues for Lenti-D (discounted 35% annually) and LentiGlobin (discounted 20% annually), the Wedbush analysts also raised their 12-month price target to $94 from $51. The following captures the analysts’ estimates:
Nierengarten and his team at Wedbush also reiterated their Outperform rating on the clinical-stage biotechnology company.
