Bluebird Bio Raises $30 Million Series C To Accelerate Pipeline Development

Gene therapy biotech hopes to move lead program for childhood cerebral adrenoleukodystrophy into a registrational trial later this year.

Just a little over a year after raising a $35 million Series B, gene therapy-focused Bluebird Biotech has raised another $30 million, tapping its existing investors as well as a high-profile new venture backer, ARCH Venture Partners. As part of the financing, announced April 20, ARCH's managing director, Steven Gillis, will take a seat on Bluebird's board of directors.

Gene therapy is an arena long on hype and short on the delivery of actual results, with prior attempts to use certain viruses to deliver genetic medicines mostly a failure. However, advances in the science have caused some to view the field with renewed optimism. Bluebird's Series C is among the largest in the space in recent years, with other notable financings including Intrexon Corp.' s 2010 $56 million Series D and Neurotech USA's $35 million raise in November 2006.

"Fields may fall out of favor at various times for good reasons and potentially for the wrong reason and the real trick is to try to be there when it looks like novel technologies have an opportunity to make a big difference in terms of outcome," ARCH's Gillis said in an interview. "And we just thought, out of all the things that we've seen in the gene therapy space, this was far and away the best place for us to make an investment."

Prior to joining ARCH, Gillis founded and served as CEO of Corixa Corporation and also founded and served as CEO and chief science officer of Immunex Corporation. While at ARCH, he was chairman of Trubion Pharmaceuticals, leading its acquisition by Emergent BioSolutions last fall.

Cambridge, Mass.-based Bluebird, which changed its name from Genetix Pharmaceuticals last fall, is using stem-cell harvesting to develop gene therapies for rare diseases such as childhood cerebral adrenoleukodystrophy (CCALD) and beta-thalassemia/sickle-cell anemia. Its therapies are delivered via its LentiPak lentiviral technology directly into a patient's extracted and harvested bone marrow stem cells, which are later transplanted back into the patient. Bluebird believes it can provide an alternative to matched-donor only allogeneic bone marrow transplantation. It also thinks its approach could serve the roughly 70% of patients who can't find a donor.

The start-up raised the cash not out of a great need for money, but because of an opportunity to bring in the expertise of Gillis and to enable it to be "a little more aggressive on some of the clinical trials as well as building a little bit more depth in our people and our core capabilities," CEO Nick Leschly said in an interview.

In tandem with last March's Series B round, Bluebird brought in Mitchell Finer, former senior VP of product development at Novocell Inc., to serve as chief scientific officer. The current fundraising was preceded by the hiring of new Chief Medical Officer Andre LeBeaut, most recently the CSO at Axcan Pharma.

"At the end of the day, the people are going to make this company successful, so we're building some depth on the bench to allow us to have very deep manufacturing capabilities and know-how ... as well as a good, clear understanding of our target stem cell, which is the hematopoietic stem cell," Leschly said.

Bluebird currently has 30 full time employees, but anticipates adding another 10 to 15 personnel over the next 12 months according to Leschly. One advantage of the recent cash infusion: the biotech has sufficient capital to fund itself until the end of 2013, giving it time to seek out the most appropriate development partner.

Plan To Move CCALD Therapy Into Registrational Trial

The biotech's goal is to move lead program Lenti-D into a registrational Phase II/III trial for CCALD during the latter half of 2011. Bluebird's other clinical program is the Phase I/II LentiGlobin, intended to treat beta-thalassemia and sickle-cell anemia. For LentiGlobin, the firm plans to enroll another eight or nine patients in a trial in which one other patient already has been treated over the next 12 months. Then, it will consider a possible Phase II/III approach as is being planned for the CCALD program.

The firm's general approach is to develop gene therapies from stem cells harvested from the patient's own bone marrow to create treatments for diseases with few or no clinical options. Bluebird has seen initial clinical progress in two patients in a Phase I/II trial for Lenti-D in which patients demonstrated continued stable expression of CCALD protein and disease stabilization at three years.

Gillis said he is not concerned that the positive results seen so far with Bluebird's technology have occurred in such a small number of patients, "These are single-gene defects and the ability to get the biological signals that they've gotten, even in a small number of patients, we think bodes well for future success," he said.

The company calls its technology ex vivo lentiviral gene modification. After harvesting a patient's hematopoietic stem cells, it places a lentivirus on top of those cells and then reinjects the gene-modified cells back into the patient's body, which reconstitutes the bone marrow. This should prove much safer than previous methods in which donor stem cells were used, often leading to serious complications including graft-versus-host disease and immune suppression, according to Bluebird.

While the gene-modified cells go back into the patient's genome at random, Bluebird believes this will work safely and not cause off-target reactions because of the specific targeting capability of the lentivirus, Leschly said.

"We think the technology in lentiviral therapy is greatly advanced from the troubled past where others used retroviruses," he explained. "The safety profile has been greatly improved and we're taking advantage of that and driving that forward.

"We also think there's an increasing appetite with partners in the orphan drug space, where they're very interested in products," Leschly continued. "Over the next couple of years, we think there will be an opportunity to work with companies like ours to further development in these diseases and others."

Several big pharma companies are pursuing development of drugs for rare diseases, with some like Pfizer Inc. and GlaxoSmithKline PLC creating their own in-house units and others like Sanofi-Aventis SA buying expertise through a merger with Genzyme Corp. (Also see "Who's Afraid Of Big Pharma? Perhaps The Rare Disease Community" - Pink Sheet, 14 Apr, 2011.).

While the Series C was intended, in part, to put Bluebird in a position where it would not need a partner in the short term, the biotech is already fielding calls from interested suitors. "There's a lot of interest because we really have a product feel about us; this isn't just a theory, there's quite a bit of data," he said. "I definitely look in the next 12-24 months to be establishing some sort of partnership strategies to allow us to pursue the existing diseases, possibly more, and also build some capabilities."

In addition to ARCH, the Series C also is backed by returning investors Third Rock Ventures, TVM Capital, Forbion Capital Partners and Easton Capital Investment Group. Genzyme Ventures, which participated in last year's financing, is not involved this time because of complications related to the parent company's ongoing merger with Sanofi-Aventis, Leschly said.

Leschly came aboard as interim CEO from his position as a partner at Third Rock when the VC firm led the 2010 raise, and was named permanent CEO last year. Genzyme Ventures co-led the Series B, with participation from investors in the $15.6 million Series A in 2004 - TVM, Forbion and Easton Capital ([See Deal]).

-Joseph Haas ([email protected])