Cash-strapped bluebird bio is aiming to raise a quarter of a billion dollars through two funding vehicles—a public offering and a deal with finance firm Alterna—to support its general and commercialization operations.
Pictured: Illustration showing a tunnel of money/iStock, alexfiodorov
Bluebird bio on Monday announced that it is accessing two funding opportunities that could potentially bump up its cash position by a total of $250 million.
The first is an underwritten public offering in which the Massachusetts-based biotech plans to put shares of its common stock up for sale, seeking to raise $150 million. The offering also includes a 30-day option for underwriters to buy up to an additional $22.5 million of bluebird shares.
Proceeds from the public offering will support the commercialization and manufacturing of bluebird’s approved gene therapy products Zynteglo (betibeglogene autotemcel), Skysona (elivaldogene autotemcel) and Lyfgenia (lovotibeglogene autotemcel). Funds raised will also act as the biotech’s working capital and will be used for general corporate purposes, according to Monday’s announcement.
The offering and its specific terms are dependent on market conditions and there “can be no assurance as to whether or when the offering may be completed,” the company said. Goldman Sachs & Co. and J.P. Morgan Securities will act as joint book running managers for the transaction, while Raymond James & Associates will act as its co-manager.
Bluebird’s second funding opportunity is an accounts receivable factoring agreement with finance firm Alterna Capital Solutions. Under the deal, bluebird will sell Alterna “certain trade accounts receivable,” referring to potential sales from its three gene therapies from treatment centers that dispense these products.
The deal with Alterna will give bluebird $100 million which it will use on a revolving basis, the biotech indicated in its SEC filing for the funding agreement.
“The Agreement will enable the Company to collect cash earlier as part of this process,” bluebird added, however noting that it will only receive 90% of the total amount of the sales until Alterna receives complete payment from the centers. Bluebird will also have to pay additional fees to Alterna.
Proceeds from the Alterna funding agreement will fulfill bluebird’s general working capital needs, according to the biotech.
However, shares of bluebird bio dropped 13% on Monday following the announcements.
Monday’s funding initiatives follows the market’s lukewarm reaction to bluebird’s recently approved sickle cell disease gene therapy Lyfgenia.
The biotech set Lyfgenia’s wholesale acquisition cost at $3.1 million, which is nearly $1 million higher than Vertex Pharmaceuticals and CRISPR Therapeutics’ Casgevy (exagamglogene autotemcel), which won FDA approval on the same day as Lyfgenia.
Lyfgenia also comes with a boxed warning for instances of hematologic malignancies.
Monday’s potential $250 million raise will also help bluebird cover an FDA priority review voucher that it failed to secure alongside Lyfgenia’s approval. Bluebird had previously planned to sell the voucher to Novartis for $103 million.
Bluebird’s cash, cash equivalents, marketable securities and restricted cash balance was approximately $227 million as of the end of September 2023. In its third-quarter results last month, the company said it anticipated full-year 2023 net cash burn to be in the range of $270 million to $300 million and that based on current operating plans expected its cash at the time “to be sufficient to meet bluebird’s planned operating expenses and capital expenditure requirements into the second quarter of 2024.”
Tristan Manalac is an independent science writer based in Metro Manila, Philippines. He can be reached at tristan@tristanmanalac.com or tristan.manalac@biospace.com.
