Bluebird, short on cash, takes on $175M in debt financing

Gene therapy developer Bluebird bio has raised a large debt financing in a bid to extend its cash runway for another year. 

The company on Monday announced that it’s secured up to $175 million through a five-year term loan with Hercules Capital. Bluebird has drawn the first $75 million immediately, but will only get access to two other $25 million installments if it hits certain unspecified commercial milestones. 

Those tranches, if they materialize, would enable Bluebird to keep operating until the first quarter of 2026. In January, the company said it had about a year’s worth of cash. 

The final $50 million from the debt funding would only be available at Hercules’ “sole discretion,” the company said. Bluebird will pay interest on what it borrows over the next three years. 

The funding is the latest in a series of steps Bluebird has taken to shore up its balance sheet. The company has for years been a leading gene therapy developer and a key player in the field’s renaissance in the last decade. It’s successfully developed three gene therapies: Lyfgenia for sickle cell disease, Zynteglo for beta thalassemia, and Skysona for a rare brain disorder known as cerebral adrenoleukodystrophy. Six years ago, its shares were worth more than $115 apiece. 

Yet several commercial and clinical setbacks have caused its share price to erode and left the company in a precarious financial position. The company wound down its business in Europe after trouble getting reimbursements for its therapies there. Its sickle cell gene therapy faced multiple trial delays, enabling a rival treatment from Vertex Pharmaceuticals and CRISPR Therapeutics to catch up. In 2022, the company warned of insolvency and laid off 30% of its staff to save cash. 

Bluebird has responded by selling two “priority review” vouchers awarded by the Food and Drug Administration for about $200 million combined. The company also signed an accounts receivable deal with Alterna Capital Solutions in December, enabling it to collect cash from gene therapy sales more quickly.

Still, Bluebird only had about $275 million on hand at the end of 2023, and faces questions about its products’ commercial potential. Shares are also trading at just over $1 apiece, making equity funding harder to raise. The debt funding will give Bluebird more time to build sales. 

Bluebird has “been focused on diligently deploying our capital and strengthening our balance sheet to further our mission,” said Chief Financial Officer Chris Krawtschuk, in a statement. “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.”

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