Earlier this week, Grizzy Research released a short report on gene therapy company bluebird bio Inc (NASDAQ:BLUE), citing concerns about the company’s addressable market sales and share dilution.
Analysts at Baird aren’t changing their Outperform rating and $10 price target, according to note to clients published Wednesday.
“While we will continue to evaluate the points brought up by Grizzly, overall, we believe these risks are well appreciated at the current valuation and continue to see upside to shares on the increasing uptake of [bluebird therapies] Zynteglo and Skysona, and potential approval of lovo-cel,” analysts wrote.
Grizzly’s report argues that bluebird's prevalence estimates for sickle cell disease (SCD) and transfusion-dependent beta thalassemia (TDT) are somewhat exaggerated. Baird believes that even if that’s true, it’s not inherently enough to justify a short.
“While we understand that having a sense for the prevalence of a disease is needed to gauge the market opportunity, we're not sure we'd be able to come up with too many longs if ‘the company is embellishing the prevalence’ was a cogent short argument,” analysts wrote.
“To that end, in our March initiation report we outlined our view that there is significant upside to shares utilizing our estimate of that the initial target US SCD patient population could be ~3,750 (despite this estimate [being] less than the ~20,000 number referenced by drug developers).”
Then there’s the question of a patent dispute between bluebird and San Rocco Therapeutics, with the latter alleging that lovo-cel and Zynteglo infringe on its patents.
“Bluebird disputes this claim and has taken numerous measures to invalidate San Rocco's patents,” analysts wrote. “.... Grizzly's own report outlines how bluebird's agreement with Sloan Kettering Institute indemnifies bluebird of any damanges related to claims brought forward by San Rocco. While we're not law experts, given the context surrounding this situation we believe this litigation should have minimal impact moving forward.”
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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