Goldman Sachs Sees 115% Potental Return in bluebird bio (BLUE) and Adds Stock to Conviction Buy List

(Updated - September 15, 2016 8:43 AM EDT)

Goldman Sachs upgraded bluebird bio (NASDAQ: BLUE) from Buy to Conviction Buy with a price target of $135, implying upside of 115%. Analyst Salveen Richter thinks the stock is at a value-inflection point and he sees a "slew of catalysts."

"BLUE is entering a value-inflection point given: (1) a more potent gene therapy (Gen2) is in the clinic and we expect Gen1 vs. Gen2 data at the R&D day (Oct 13), with a full LentiGlobin update at ASH (Dec 3-6); (2) the CAR T/gene editing programs are to be unveiled; and (3) two pivotal readouts in mid-17+ result in a transition to commercial focus," said Richter.

Listing catalysts, the analyst said, "First, at the R&D day, we will see a comparison of the existing drug (Gen1) vs. Gen2 in same patient cells. We expect higher transduction efficiency (~80%-90% vs. ~40% prior) and vector copy number (2x-4x higher) to drive substantial efficacy improvements, which may be underappreciated by the Street. At ASH (December 3-6), we expect the following LentiGlobin updates: (1) betathal data from the US (204) and EU (205) studies; (2) Gen2 in-drug VCN data (207/206); and (3) SCD data (206/205), with clarity on the pivotal strategy in 2017."

Richter added, "Initial data from lead CAR T bb2121 (BCMA, a validated target, CELGpartnered) is slated for 1H17, although it could be presented at ASH. We like the megaTAL gene editing platform and expect partnerships to emerge. Pivotal gene therapies Lenti-D (CCALD) and LentiGlobin (beta-thal) are on track for mid-2017/1Q18 data with commercial preparations underway."

For an analyst ratings summary and ratings history on bluebird bio click here. For more ratings news on bluebird bio click here.

Shares of bluebird bio closed at $62.89 yesterday.

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