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Expert Financial Analysis and Reporting

Cryoport (CYRX, Buy, $66.00) and bluebird bio: Investment Significance of bluebird’s Decision to Temporarily Suspend Sickle Cell Disease Trials of LentiGlobin and Marketing of Zynteglo in Europe

Cancer Concerns About bluebird bio’s Gene Therapy Products

bluebird bio announced a temporary suspension of two trials of its  LentiGlobin gene therapy for sickle cell disease (SCD) and also the suspension of marketing of a different gene therapy, Zynteglo, in Europe. The reason was a report that a sickle cell patient who was treated more than five years ago with LentiGlobin was diagnosed last week with acute myeloid leukemia (AML) and that a case of myelodysplastic syndrome (MDS) also occurred last week. In addition, there had been an MDS case reported three years ago. This was determined to result from a genetic mutation and was judged not to be related to LentiGlobin. These two new cases raised concerns that the viral vector used in these gene therapies might be responsible.

In gene therapy viral vectors are used to integrate a new gene into the genome of a patient. Once integrated the gene then causes the expression of a desired protein. In the case of LentiGlobin, this gives rise to the production of fetal hemoglobin. The vector used by bluebird bio is a lentivirus that is an engineered form of the HIV virus which is, of course,  altered so that it can not cause HIV. This viral vector is very good at delivering a genetic payload. However, the concern is that the vector somewhat randomly inserts into different parts of the genome. This gives rise to the theoretical possibility that it might insert itself in a region of the genome in which it could cause expression of genes that cause cancer. This possibility is very well known.

Investment Significance

This issue obviously impacts bluebird bio, but it has been viewed by some as potentially being a sharp setback for gene therapy and even CAR-T cell therapy. Cryoport has been impacted by the issue as it supports Zynteglo in Europe and its future is inextricably linked to CAR-T cell therapy and much less so to gene therapy. I can only speculate as to whether the bluebird vector may be linked to cancer. My intuitive guess is that it is not. If it is, it might have some negative effect on certain gene therapy products but not the entire field. I see zero effect on CAR-T products now in development. In regard to Cryoport, its business is overwhelmingly dependent on CAR-T drugs at this point in time and Zynteglo is an extremely small product. In all outcomes that I can envision, this has no impact on Cryoport’s growth prospects.

bluebird bio’s Decision  

bluebird’s press release is included in its entirety in appendix A of this report.

The decision by bluebird was not made because management concluded that LentiGlobin was definitely linked to causing the AML and MDS cases, but rather that it could not be ruled out. Thus, the ethical course of action was to suspend the sickle cell trials and halt marketing of Zynteglo until they could gain a better understanding. There are a broad number of factors to consider in trying to reach such an understanding. Not necessarily in order of importance, here are some:

  • Sickle cell disease causes great distress to the bone marrow so that SCD patients are at meaningfully greater risk of AML and MDS than healthy patients.
  • In the AML patient, the vector was integrated in the cancer cells. However, this does not establish that it caused the cancer. It could just be a bystander with the cancer being caused by some other issue.
  • The MDS patient had a genetic mutation that is known to be associated with causing MDS. It is not known if the AML patient had any such mutation.
  • In gene therapy for SCD, stem cells are removed from a patient, engineered with the lentivirus and then returned to the patient. Prior to re-administering the engineered cells, patients are given high doses of chemotherapy drugs to ablate the bone marrow of normal stem cells. This makes it easier for the newly engineered stem cells to integrate into the bone marrow. It is well known from many years of experience with stem cell transplants that this chemotherapy conditioning program can cause AML or MDS in some patients. It is a well-known and accepted risk.
  • bluebird says that its lentiviral vector was specifically engineered to avoid integrating into sections of the genome which might lead to the expression of cancer causing genes.
  • Remember that the vector was derived from HIV. If lentiviral vectors do indeed lead to cancer, we would expect to see much higher incidence of AML and MDS in HIV patients, but management says that this is not the case.
  • Some 67 thalassemia patients have been treated with the same viral vector as 47 SCD patients and there have been no reports of AML or MDS in these patients. This suggests that SCD patients may be at particular risk, but the numbers are too small to draw any conclusions.
  • The SCD patients were very advanced and had received much prior drug therapy. One commonly used drug is hydroxyurea which stimulates the production of red blood cells, but at the cost of significant distress to the bone marrow . This prior therapy might be linked to the AML and MDS.

Time to Resolve the Issue

Management was optimistic that there is technology available that may lead to the resolution of this issue within a matter or weeks and not months.

Does This Have Any Read Through to CAR-T Cell Therapies that Use Lentiviral Vectors?

Management was asked if there was any read through for its CAR-T product ide cel that is partnered with Bristol-Myers Squibb; it uses a lentiviral vector to engineer T-cells. This product is targeted at the BCMA antigen that is widely expressed on multiple myeloma cells. Management said there was no read through but didn’t elaborate. I would note that in the case of CAR-T, it is T-cells that are engineered with the lentivirus. These T-cells circulate in the blood and after some time, perhaps several months, are exhausted and no longer present. However, in the case of SCD and thalassemia patients, the stem cells are permanently integrated into the bone marrow.

It is also important to understand that the patient population currently addressed by CAR-T drugs are patients with advanced cancers who have months or a few years to live and have exhausted therapeutic options. For this patient population concern about AML or MDS arising several years after treatment is not an issue.

What About the Chemotherapy, Lymphodepletion Agents Used with Gene Therapy and CAR-T Cell Therapy

Short sellers claimed that both the chemotherapy conditioning agents and not the lentiviral vectors were the cause of the AML and MDS cases. They proposed that this also could deal a sharp setback to gene and cell therapy. I believe this rationale, which as I just discussed, is wrong. However, it played a prominent role in a shorting attack on Cryoport. There have been two major short selling attacks on Cryoport in the last year. One was launched at $16 per share and a second at $48 per share.





Appendix A: Complete bluebird Press Release

bluebird bio Announces Temporary Suspension on Phase 1/2 and Phase 3 Studies of LentiGlobin Gene Therapy for Sickle Cell Disease (bb1111)

CAMBRIDGE, Mass.--(BUSINESS WIRE)--Feb. 16, 2021-- bluebird bio, Inc. (Nasdaq: BLUE) announced today that the company has placed its Phase 1/2 (HGB-206) and Phase 3 (HGB-210) studies of LentiGlobin gene therapy for sickle cell disease (SCD) (bb1111) on a temporary suspension due to a reported Suspected Unexpected Serious Adverse Reaction (SUSAR) of acute myeloid leukemia (AML).

In line with the clinical study protocols for HGB-206 and HGB-210, bluebird bio placed the studies on temporary suspension following a report received last week that a patient who was treated more than five years ago in Group A of HGB-206 was diagnosed with AML. The company is investigating the cause of this patient’s AML in order to determine if there is any relationship to the use of BB305 lentiviral vector in the manufacture of LentiGlobin gene therapy for SCD. In addition, a second SUSAR of myelodysplastic syndrome (MDS) in a patient from Group C of HGB-206 was reported last week to the company and is currently being investigated.

No cases of hematologic malignancy have been reported in any patient who has received treatment with betibeglogene autotemcel for transfusion-dependent β-thalassemia (licensed as ZYNTEGLO in the European Union and the United Kingdom), however because it is also manufactured using the same BB305 lentiviral vector used in LentiGlobin gene therapy for SCD, the company has decided to temporarily suspend marketing of ZYNTEGLO while the AML case is assessed.

“The safety of every patient who has participated in our studies or is treated with our gene therapies is the utmost priority for us,” said Nick Leschly, chief bluebird. “We are committed to fully assessing these cases in partnership with the healthcare providers supporting our clinical studies and appropriate regulatory agencies. Our thoughts are with these patients and their families during this time.”

The independent safety review board monitoring the company’s studies as well as the U.S. Food and Drug Administration (FDA) and European Medicines Agency (EMA) have been advised of these cases and bluebird bio will continue to work with regulatory agencies to complete its investigation.

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