Summary

BLUE fell 20% after mixed Northstar data.

But SCD is the larger market than beta-thalassemia major.

BLUE has one solid patient result so far in SCD, and is enrolling more patients in the trial.

(Check my profile for my real time biotech trade alerts services for those who want to go in-depth into biotech investing.)

bluebird bio (NASDAQ:BLUE) fell more than 20% since November 5, on release of the abstracts from the upcoming ASH conference in December. The data showed that while 4 non-β0/β0 genotype patients from Northstar and 2 β0/βE genotype patients from HGB-205 were doing well, 3 β0/β0 patients were not.

This is somewhat mixed data, but what I find even more important is that from the mixed trial HGB-205, one SCD patient -a 13 year old boy - is also doing extremely well, producing 15% more anti-sickling hemoglobin than the 30% required for a disease-modifying effect. That is the only patient whose data seems to be available so far - the data from the pure SCD HGB-206 is from July and does not report how patients are doing. However, one hint of good results visible internally is that BLUE is raising patient enrollment from 8 to 20. One opinion is that higher patient enrollment means there is some suspicion of good data, which will be better tested in a larger cohort. I cautiously agree to that view.

Consider also that BLUE has almost $1bn in cash - more than a third of its market cap - and that Oppenheimer recently increased its stake by over 6o% in the company. Consider also that more detailed SCD results will be available on the bylines of ASH next month, and also how badly the stock is doing right now, and I believe this is a good time for a cautious entry into the stock.

On the flipside, as some have noted, is whether insurers will be willing to pay upfront for longer term effects, but that is a story yet to be written. The cautionary note is about the SCD data. Given that some of its essays in beta-thalassemia is non-effective, and CAR-T is still pre-clinical, SCD is the only deal in town right now. If data from SCD is not good enough, the stock will fall further.