What happened
Shares of the gene therapy specialist Bluebird Bio (NASDAQ: BLUE) are having another rough session today. Specifically, the biotech's stock is down by 11% as of 12:56 p.m. ET on Monday.
Bluebird's shares are retreating today in response to two key issues:
- First, the company's 2021 fourth-quarter and full-year results, which were released last Friday, imply that the company may face a cash crunch relatively soon. In fact, Bluebird appears to have less than four full quarters of cash remaining at this point.
- Second, Bluebird's chief financial officer and treasurer, Gina Consylman, reportedly tendered her resignation last Friday. Consylman's resignation will become effective April 3.
Image source: Getty Images.
So what
Bluebird is definitely in a difficult position. While the company does have two high-value gene therapies under review with the Food and Drug Administration right now, it doesn't appear to have the capital necessary to ensure their long-term commercial success.
Now, Bluebird is reportedly exploring various financing opportunities to address this issue, including the possible sale of priority review vouchers. But the fact of the matter is that the biotech's current penny stock status (under $5 a share), coupled with its unfavorable near-term outlook, may limit its financing opportunities.
Now what
Is Bluebird's stock a contrarian buy? Unfortunately, this pioneer of the gene therapy game doesn't come off as a particularly strong comeback candidate in the face of these significant financial headwinds. Bluebird will probably have to raise capital in a highly risk-averse environment, and it is several years away from becoming cash flow positive. In short, Bluebird's stock is probably best viewed as watch list candidate until its long-term financing needs are met.
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George Budwell has no position in any of the stocks mentioned. The Motley Fool recommends Bluebird Bio. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
