Bluebird bio plans to spin off cancer drugs unit

(Reuters) - Bluebird bio Inc plans to spin off its cancer drugs unit into a new, publicly traded company later this year to focus on rare genetic diseases, the company said on Monday.

The gene therapy developer’s Chief Executive Officer Nick Leschly will helm the new cancer company and take up new role as executive chair of bluebird bio.

The president of bluebird bio’s severe genetic diseases business, Andrew Obenshain, will become its CEO.

The move comes as bluebird suffered multiple regulatory setbacks last year for both its rare disease and cancer drug candidates.

In November, the submission of a marketing application for its blood disorder treatment, LentiGlobin, was pushed to 2022 from 2021 after the U.S. health regulator set additional requirements.

LentiGlobin or Zynteglo is approved in Europe for treating beta thalassemia and is priced there at 1.58 million euros ($1.92 million) over five years.

The company and partner Bristol Myers Squibb Co also suffered a regulatory setback for their multiple myeloma therapy, ide-cel, in May. The drug still awaits the FDA’s decision by March.

The split is an interesting strategic development but how this plays out is largely to be determined, J.P.Morgan analyst Cory Kasimov said in a client note.

“On one hand, segmenting the company by oncology and severe genetic diseases makes sense so that each individual entity can focus on their designated expertise. On the other, this removes diversification that comes with having both cell therapy and gene therapies programs,” Kasimov said.

The separation is expected to close in the fourth quarter, the company said.

On Monday, the Wall Street Journal first reported the move and said Leschly had cited the need for increased specialization as the reason for the split.

Goldman Sachs & Co LLC is the exclusive financial adviser to bluebird bio for the spin off.

($1 = 0.8223 euros)

Reporting by Manojna Maddipatla in Bengaluru; Editing by Maju Samuel