bluebird bio Secures up to $175 Million Debt Financing with Hercules Capital
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Insights
The strategic financial move by bluebird bio to secure a term loan facility with Hercules Capital is a significant one, indicating a proactive approach to managing its capital structure. The infusion of $75 million, with the potential for an additional $100 million, provides a cushion that is essential for sustaining operations, particularly when considering the high costs associated with the commercialization of gene therapies. The earmarking of funds based on commercial milestones aligns the interests of the lender with the company's performance, ensuring a focus on successful product launches.
From an investor's perspective, the extended cash runway through the first quarter of 2026 mitigates short-term liquidity concerns and provides a clearer horizon for evaluating the company's performance. However, it's important to monitor the achievement of the commercial milestones that trigger the additional tranches, as these are critical indicators of the company's ability to generate revenue from its approved therapies. The interest-only period for the first three years minimizes cash outflows, which is prudent for a company in the growth phase, but it also means a larger principal payment down the line, potentially impacting long-term financial stability.
The gene therapy market is rapidly evolving and bluebird bio's recent FDA approvals position the company at the forefront of this transformation. The funding from Hercules Capital is an endorsement of bluebird's potential to capture significant market share with its gene therapies. LYFGENIA, ZYNTEGLO and SKYSONA target severe genetic diseases with high unmet medical needs, which could translate into strong demand and substantial revenue streams.
Investors should pay attention to the adoption rates of these therapies as they will be a critical determinant of bluebird's financial success. The company's ability to effectively commercialize and scale the production of these treatments will be key to meeting the milestones required to unlock further funding. Additionally, the competitive landscape, pricing strategies and reimbursement policies are factors that will influence the market penetration of bluebird's products and, by extension, its financial performance and stock valuation.
The biotech industry is characterized by high research and development costs and the transition from approval to commercial success is often fraught with challenges. Bluebird bio's gene therapies are innovative but also come with complexities in manufacturing and delivery. The company's ability to navigate these technical hurdles will be important for its long-term success.
The terms of the loan with Hercules Capital suggest a confidence in bluebird's capabilities but also impose a financial discipline that is necessary in the high-stakes biotech field. Investors should consider the risks associated with the company's execution capabilities, regulatory environment changes and potential post-market safety issues that can affect the commercial viability of the therapies. The biotech sector's volatility necessitates a thorough risk assessment when such significant financial transactions are undertaken.
- Funding expected to extend the Company’s cash runway beyond the next 24 months -
- First tranche of
The term loan facility provides for up to
“Since establishing bluebird as an independent gene therapy company in 2021, we have been focused on diligently deploying our capital and strengthening our balance sheet to further our mission,” said Chris Krawtschuk, chief financial officer, bluebird bio. “This financing underscores the value bluebird offers as a standalone gene therapy leader and meaningfully extends our runway, bolstering our ability to bring transformative treatments to patients and their families.”
“Hercules is excited to partner with bluebird as they launch LYFGENIA and bring this transformational therapy to patients living with sickle cell disease,” said Michael Dutra, Managing Director and Senior Investment Officer at Hercules Capital. “We are proud to support bluebird’s mission of developing and commercializing treatments for severe genetic diseases. This financing should help support the availability of their novel gene therapies for patients,” added John Miotti, Principal at Hercules Capital.
Additional details of the loan agreement will be filed with the Securities and Exchange Commission on a Current Report on Form 8-K.
J. Wood Capital Advisors acted as sole financial advisor to the Company. Latham & Watkins LLP served as legal counsel to bluebird and DLA Piper served as legal counsel to Hercules.
About bluebird bio, Inc.
bluebird bio is pursuing curative gene therapies to give patients and their families more bluebird days.
Founded in 2010, bluebird has been setting the standard for gene therapy for more than a decade—first as a scientific pioneer and now as a commercial leader. bluebird has an unrivaled track record in bringing the promise of gene therapy out of clinical studies and into the real-world setting, having secured FDA approvals for three therapies in under two years. Today, we are proving and scaling the commercial model for gene therapy and delivering innovative solutions for access to patients, providers, and payers.
With a dedicated focus on severe genetic diseases, bluebird has the largest and deepest ex-vivo gene therapy data set in the field, with industry-leading programs for sickle cell disease, β-thalassemia and cerebral adrenoleukodystrophy. We custom design each of our therapies to address the underlying cause of disease and have developed in-depth and effective analytical methods to understand the safety of our lentiviral vector technologies and drive the field of gene therapy forward.
bluebird continues to forge new paths as a standalone commercial gene therapy company, combining our real-world experience with a deep commitment to patient communities and a people-centric culture that attracts and grows a diverse flock of dedicated birds.
For more information, visit bluebirdbio.com or follow us on social media at @bluebirdbio, LinkedIn, Instagram and YouTube.
bluebird bio, ZYNTEGLO, SKYSONA and LYFGENIA are registered trademarks of bluebird bio, Inc. All rights reserved.
Cautionary Note Regarding Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements that are not statements of historical facts are, or may be deemed to be, forward-looking statements, such as statements regarding the Company’s anticipated ability to draw future tranches under the loan agreement and the impact on the Company’s cash runway and statements regarding the Company’s plans and expectations for the launch trajectory of its approved gene therapies, the anticipated benefits of and activities under the loan agreement and the Company’s business strategy and plans. Such forward-looking statements are based on historical performance and current expectations and projections about our future financial results, goals, plans and objectives and involve inherent risks, assumptions and uncertainties, including internal or external factors that could delay, divert or change any of them in the next several years, that are difficult to predict, may be beyond our control and could cause our future financial results, goals, plans and objectives to differ materially from those expressed in, or implied by, the statements. No forward-looking statement can be guaranteed. Forward-looking statements in this press release should be evaluated together with the many risks and uncertainties that affect bluebird bio’s business, particularly those identified in the risk factors discussion in bluebird bio’s Annual Report on Form 10-K for the year ended December 31, 2022, as updated by our subsequent Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings with the Securities and Exchange Commission. These risks include, but are not limited to: delays and challenges in our commercialization and manufacturing of our products; the internal and external costs required for our ongoing and planned activities, and the resulting impact on expense and use of cash, has been, and may in the future be, higher than expected which has caused us, and may in the future cause us to use cash more quickly than we expect or change or curtail some of our plans or both; substantial doubt exists regarding our ability to continue as a going concern; our expectations as to expenses, cash usage and cash needs may prove not to be correct for other reasons such as changes in plans or actual events being different than our assumptions; the risk that the efficacy and safety results from our prior and ongoing clinical trials will not continue or be seen in additional patients treated with our product candidates; the risk of insertional oncogenic or other reportable events associated with lentiviral vector, drug product, or myeloablation, including the risk of hematologic malignancy; and the risk that any one or more of our products will not be successfully commercialized. The forward-looking statements included in this document are made only as of the date of this document and except as otherwise required by applicable law, bluebird bio undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240318783958/en/
Investors & Media
Investors:
Courtney O’Leary, 978-621-7347
coleary@bluebirdbio.com
Media:
Jess Rowlands, 857-299-6103
Jess.rowlands@bluebirdbio.com
Source: bluebird bio, Inc.
FAQ
What is the purpose of bluebird bio securing a $175 million term loan facility with Hercules Capital?
How much was the first tranche drawn by bluebird bio upon closing the transaction?
What additional funding can bluebird bio access based on the achievement of commercial milestones?
Which gene therapies are being launched by bluebird bio with the support of this funding?
Who is the financial advisor to bluebird bio in this transaction?
