A $9.4 million deal between a Massachusetts biotech firm and the
California stem cell agency has quietly collapsed, raising questions
about whether the firm will fulfill its promise to open facilities
and hire people in the Golden State.
The company is
bluebird bio (the company prefers the lower case
spelling) of Cambridge, Mass., which was acclaimed for the success of
its initial stock offering last June that ultimately raised $116
million.
One year ago this month, the governing board of the $3 billion
stem cell agency awarded bluebird $9.4 million with little public discussion. The stem cell agency, which is known as
CIRM,
said the money would help create “a
stem cell and gene therapy approach to correct a genetic disease in
young patients with B-thalassemia, an inherited blood disorder that
can cause widespread organ damage and premature death.”
In addition to the funds, the action also provided a “Good
Housekeeping Seal of Approval” for bluebird from a major and
well-respected funding organization. Bluebird
said at the time it was
“delighted.” Both the “seal” and the ostensible cash
proved to be valuable later when generating investor interest in
bluebird's stock offering.
|
Nick Leschly, CEO of bluebird bio, calls himself "chief bluebird" |
|
|
The award was one of the first in the agency's business-friendly
strategic partnership program. However, as months passed,
negotiations
continued fruitlessly between the CIRM staff and the
company, which is 28 percent owned by
the storied Boston biotech venture capital firm,
Third Rock.
When asked today about the discussions,
Kevin
McCormack, CIRM's senior director of public communications, said,
“They decided not to take the money.”
Bluebird, with no fanfare, had already disclosed the breakdown of the deal as part of
a routine SEC filing on Aug. 14. The company said,
“The award was conditioned upon terms and conditions by CIRM
generally applicable to its grant recipients and the negotiation of a
grant agreement with CIRM. No amounts have been received under this
award. The company no longer expects it will accept the CIRM award.
The company is currently exploring other opportunities to engage in
CIRM programs.”
The
California Stem Cell Report has queried the company for
further explanation and will carry its response verbatim when it is
received. The company, however, has not yet even responded to a query from
last May.
One of the questions involves statements by bluebird that it
planned a substantial expansion in California.
According to
the CIRM summary of the review of the bluebird
application, the company said,
“We will have at least two clinical sites in California, and
more likely up to 4 sites, 2) our viral vector manufacturing will
occur in California, 3) our cell processing will occur in California,
4) we will hire several consultants and full-time employees within
California to support the program. Overall, several million dollars
will be spent employing the services of people, academic
institutions, and other companies within the state of California.”
The company has said that it is working with
Donald Kohn at
UCLA
and
Elliot Vichinsky at Oakland's
Children's Hospital.
The
NIH clinical trials Web site shows that bluebird is recruiting
patients for a beta-thalassemia
trial at an unspecified location in Oakland.
Last spring, the bluebird Web site listed a California location at
1001 Bayhill Dr, Suite 200, in San Bruno, which is south of San
Francisco. An Internet search last spring indicated, however, that
is a generic address for a number of business including a realty
firm, a roof repair business and a family law attorney. Today bluebird's Web site no longer lists a California
location.
Like most biotech companies, bluebird is losing money.
According to an article Aug. 15 in the
Boston Business Journal by
Don Seiffert,
bluebird's first quarterly report since going public also showed that
the firm “lost share value on a per share net loss that was six
times worse than analysts were expecting.”
Stories are important for any company, particularly one that is
involved with an initial stock offering.
Ben Fidler of
Xconomy wrote about the bluebird story just last week. He said,
“Given the failures of gene therapy in the past, how was
Bluebird able to raise so much money from both public and private
investors? (Nick) Leschly (the company CEO) notes that bluebird had
to be careful in the way it told its story to generate excitement
rather than fear. To do so, it started with the rare disease it was
going after, rather than the method it was using to do it.
“'We needed to retrain peoples’ receptors from not running to
the [other] side of the room when you heard the words gene therapy
to, ‘just hold on, let us tell you the data,' he says. 'So it
really became gene therapy at the intersection of orphan diseases
very quickly.'
“What bluebird didn’t anticipate, however, was that gene
therapy 'all of a sudden got interesting.' Large pharmaceutical
companies started investing in the field again, and it woke investors
up, and buoyed bluebird as it tried to raise more cash—ultimately
carrying out one of the most successful biotech IPOs this year.
“'I’d love to say it was planned. No, it was good timing I
think with a good story, and that combination led to a successful
IPO,' he said.”
Earlier today we asked the California stem cell agency for a copy
of the letter from bluebird rejecting the $9.4 million. CIRM's
McCormack replied,
“Bluebird didn't send us a formal letter or email announcing
they were not taking our money. It was a phone call in which they
explained that circumstances changed with their successful IPO and
the money that came in from that. In light of that success bluebird
no longer needed our money to co-fund the project. They were able to
move the project forward on their own and decided to do so.
“So how do we feel about this? Well, our goal has always been to
help move the most promising therapies into clinical trials, and in
this case that is what is happening. Having our independent panel of
experts review and recommend their project, and then having our
governing board approve funding clearly helps establish the
credibility and viability of any company’s research. Funding
approval from CIRM is the scientific equivalent of getting the Good
Housekeeping Seal of Approval and undoubtedly helped with their IPO.
So, now they are moving the project ahead on their own, and we still
have almost $10 million that we can use to help other companies and
other promising therapies.
“As for their 'exploring other opportunities to engage in CIRM
programs' that may be the case but we are not currently in any
discussions with them.”
(Photo credit: bluebird bio)