JPMorgan Downgrades bluebird bio to Underweight Following Q3 Results

JPMorgan analysts downgraded bluebird bio (NASDAQ:BLUE) from Neutral to Underweight following its third-quarter results, citing financial challenges and limited options for raising capital.

The company reported a loss per share of $0.31 for the quarter, missing revenue expectations with $10.6 million compared to the $18.3 million consensus. Additionally, bluebird revised its cash runway guidance, now projecting funds lasting only “into Q1 2025” instead of the previously stated “into Q2 2025.”

A significant setback came from the failure to secure enough shareholder votes to authorize a reverse stock split, which would have allowed for an increased allocation of shares for issuance. Without this approval, bluebird’s ability to raise equity financing is constrained, with only about 13 million shares available under the current structure. Compounding this issue is a covenant in its Hercules debt agreement, requiring the company to secure at least $75 million in gross financing proceeds by December 20 to access the next $25 million tranche of funds. These factors have severely limited the company’s options for bridging its cash shortfall.

While bluebird achieved its first Lyfgenia infusion and continues to ramp up patient starts across its portfolio, these milestones are overshadowed by ongoing negative gross margins. JPMorgan expressed skepticism about the company’s ability to achieve positive operating cash flow by the second half of 2025, particularly given uncertainties around the conversion rates from cell collection to infusions. The analysts also cast doubt on bluebird’s goal of reaching 40 infusions per quarter.