Morgan Stanley Cuts bluebird bio, Slashes Price Target From $143 To $69

• Shares of bluebird bio Inc BLUE have gained 14 percent in the last one month, after having declined for most of the year.
• Morgan Stanley’s Matthew Harrison downgraded the rating on the company from Overweight to Equal-weight, while reducing the price target from $143 to $69.
• Updated sickle data has turned the risk/reward for an investment in the company unfavorable, Harrison stated.

bluebird bio released ASH data, which has overturned the risk/reward thesis related to the company. Analyst Mathew Harrison mentioned that responses in sickle cell disease patients were expected to be robust, given the “historical 4-5g Hb production generated by BB305 treatment across diseases.”

The latest data, however, revealed the inability of BB305 to consistently produce enough hemoglobin in sickle cell patients. Harrison added that although management is working on ways to improve the efficacy in SCD patients, it will take time.

Although CAR-T may represent an upside driver, data from the company sponsored study is expected only after a year. “While we remain convinced that Bluebird has an encouraging gene therapy platform, we think that this one is going to take more time,” the analyst added.

Harrison reduced the expected price of BB305 for SCD from $1.25 million to $1 million, while pushing the expected launch date from 2020 to 2021. The analyst also reduced the peak penetration in SCD from 26 percent to 13 percent and into the β/β beta-thalassemia market to zero percent.