Is Green Bird Bio stock worth buying?

If you've had a birdie tell you lately that you're thinking about making a purchase.Bluebird Bio (NASDAQ: BLUE)If you're looking for a stock to buy, there's a lot of information you need to evaluate. This small biotech company has already launched new products in the market, and with recent product launches expected to pick up the pace, it might be reasonable to consider the stock as a potential buy.

However, the company's financial constraints will likely tie its wings down and prevent it from really taking off. Here's what you need to know about whether Bluebird Bio is worth buying.

As much as possible, Gwen has been injected with new capital, but time is running out.

One of Bluebird's longstanding problems is that its gene therapies are extremely complicated and expensive to produce and administer to patients. Even though the company has three products on the market, it is not profitable, with 12-month revenues of just $21.7 million and total expenses of $157.8 million. Changes need to be made quickly to close the huge gap between costs and revenues.

At the end of 2023, Greenbird held $222 million in unrestricted cash, cash equivalents and short-term investments, and $53 million in restricted cash. on March 18, the company commenced a new term loan facility with Hercules Capital, which, on paper, could provide it with up to $175 million in additional cash over the next five years. cash over the next five years. But it's unclear whether the biotech will actually receive that funding.

Although the company has already drawn down the first $75 million, the total amount of this capitalization is four loans. The next two loans of $25 million each are related to the company meeting certain commercialization milestones, while the final $50 million loan can only be disbursed at the lender's discretion. For the first three years of the loan, Bluebird Bio will only be required to make interest payments, so the biggest financial impact will begin in April 2027, when the company will also begin repaying principal.

With this new capital, management has indicated that the Company will be able to operate through approximately the first quarter of 2026 if it meets its milestones and secures two $25 million loans. That may be enough to get the company to the milestones desired by Hercules Capital, but there's no guarantee. The bigger question for investors is what happens afterward.

Stay away from this company.

The outlook for Green Bird Bio looks limited. In addition to financial challenges that may become unmanageable in the near future, the company's product line consists of only two programs, both of which are gene therapies for sickle cell disease. One is in phase III clinical trials and the other is in early to mid-stage trials.

It is clear that Bluebird Bio's current financial situation is not sufficiently robust for capital-intensive R&D, which is a huge problem for a biotech company. Without a steady stream of projects into the discovery and pre-clinical testing segments, the company cannot bring new drug candidates into the human clinical testing segment.

Without a steady stream of clinical projects in rotation, a biotechnology company has no future in the long run, as its commercialized therapeutic product portfolio will eventually lose exclusive protection and market share to its pharmacy competitors. In addition, a company with little hope of generating additional revenue if it is not the first to introduce a new therapy.

Looking at the company's scarce product line, the situation on this side of the noodle is actually worse than it looks on the surface. Even if Bluebird Bio succeeds in commercializing one or both of its drug candidates for sickle cell disease, they will come late to the game, and the market has already beenVertex PharmaceuticalsThe company's sickle cell gene therapy was also recently approved.

The company recently received approval for its sickle cell gene therapy, and expects to treat up to 105 patients this year. Given that these treatments are expensive (around $3 million per patient), that means the company's sales are likely to grow significantly. But that's also a big risk, because more patients means more doses of the treatment, so it could just be burning through investors' money at a higher rate than before, since it hasn't proved it can turn a profit yet.

Aggregate, there doesn't seem to be a good reason to buy Bluebird Bio's stock right now, or even if selling it might be a good idea.

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Alexis Calcidi does not own any of the stocks mentioned above.The Motley Fool holds a recommendation for Vertex Pharmaceuticals.The Motley Fool recommends Bluebird Bio.The Motley Fool has a disclosure policy.

Is Bluebird Bio Stock Worth Buying? This post was originally published by The Motley Fool