Goldman Sees bluebird bio Preparing For Flight, Adds To 'Conviction Buy' List

bluebird bio Inc BLUE shares are up 19 percent since the company announced that its Gen2 LentiGlobin had entered the clinic on September 8, although Goldman Sachs’ Salveen Richter believes that there are catalysts that could drive further upside in 2016/17 and beyond.

Richter maintained a Buy rating on the company, with a price target of $135.

Inflection Point

The analyst added the name to Goldman Sachs’ Americas Conviction List, given expectations of 115 percent upside potential for the stock.

“BLUE is entering a value-inflection point given: (1) a more potent gene therapy is in the clinic and we expect Gen1 vs. Gen2 data at the R&D day, with a full LentiGlobin update at ASH; (2) the CAR T/gene editing programs are to be unveiled; and (3) two pivotal readouts in mid-17+ result in a transition to commercial focus,” Richter mentioned.

Catalysts

One of the catalysts for the stock is expected to be bluebird bio’s R&D day, where the analyst expects to see a comparison of the existing or Gen1 drug versus Gen2 in the same patient cells.

Richter expects higher transduction efficiency for Gen2, along with better vector copy number, both of which could drive significant efficacy improvement, which is likely being underappreciated by the Street.

“At ASH (December 3-6), we expect the following LentiGlobin updates: (1) betathal data from the US (204) and EU (205) studies; (2) Gen2 in-drug VCN data (207/206); and (3) SCD data (206/205), with clarity on the pivotal strategy in 2017,” Richter added.

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