Bluebird bio, one of the pioneers in gene therapy, will split into two publicly traded drug companies, one devoted to treating severe genetic diseases, the other to forms of cancer.
Nick Leschly, the Cambridge biotech’s chief executive since 2010, will head the yet unnamed oncology company while the current president for severe genetic diseases, Andrew Obenshain, will become CEO of bluebird, the company announced Monday.
Shares of bluebird had fallen in the past year, losing more than 46 percent of their value. The stock closed at $50.40 on Monday, up 3.8 percent.
The announcement came on the first day of the J.P. Morgan 39th Annual Healthcare Conference, which typically is held in San Francisco but is taking place online this year because of the pandemic. Drug companies sometimes unveil changes in direction at the conference.
“After careful strategic review, it is clear to us that the two businesses are best served by independent leadership and teams to drive strategic and operational objectives,” Leschly said in the company’s announcement. He added that it believes “it is the right time to double down on the respective businesses.”
Bluebird, which was created with money from the Boston venture capital firm Third Rock Ventures, won approval of its first gene therapy in 2019, when the European Medicines Agency granted conditional marketing authorization in the European Union for Zynteglo. It was approved as a one-time treatment for patients 12 and older with transfusion-dependent beta thalassemia, a genetic disorder that reduces the production of hemoglobin, the iron-containing protein in red blood cells.
But the company has struggled to win commercial approvals in the United States and with manufacturing concerns.
Leschly said bluebird is “on the cusp of several potential product approvals with a strong pipeline of earlier oncology research candidates on the horizon.”
In a note to investors Monday, Mani Foroohar, an analyst with SVB Leerink, endorsed spinning off bluebird’s oncology business. He said the investment community had questioned the ability of bluebird to “execute on the incompletely aligned needs” of the cancer and genetic disease business units. With the split, bluebird will be able to focus on such genetic disorders as sickle cell disease, he wrote, while the new firm will take on forms of cancer such as non-Hodgkin’s lymphoma and multiple myeloma. The split is expected to be completed in the last quarter of the year.
Gene therapies are among the most promising areas in medicine. By engineering a virus to carry functioning genes to cells to compensate for defective ones, drug makers have developed several revolutionary treatments for devastating genetic diseases, from a rare neurodegenerative disorder to a form of blindness.
The one-time treatments carry jaw-dropping price tags. Zolgensma, a Novartis drug approved in 2019 for spinal muscular atrophy, a leading cause of infant death, costs $2.1 million for a one-time dosing. Proponents, however, say such expensive medicines may actually be cost-effective by curing debilitating diseases that can strain the health care system if treated for years with conventional drugs and hospitalizations.
Jonathan Saltzman can be reached at firstname.lastname@example.org.