Shares of Bluebird Bio (NASDAQ:BLUE) were trending higher today in premarket trading on news that the U.S. Food and Drug Administration (FDA) approved the biotechnology company’s gene therapy that treats a rare and deadly brain disorder in children.
BLUE stock has since dropped lower, down about 9% at the time of writing. However, it soared immediately following reports that the FDA approved SKYSONA, a gene therapy used to treat Cerebral Adrenoleukodystrophy (CALD), a rare but devastating neurodegenerative disease that primarily afflicts young boys.
Before today, BLUE stock had been down 40% year-to-date and trading at $6.34 per share.
BLUE Stock: What Happened
Following the FDA approval, Bluebird Bio said it plans for SKYSONA to be commercially available in the U.S. by year’s end through a select number of treatment centers.
“SKYSONA is the first FDA approved therapy shown to slow the progression of neurologic dysfunction in boys,” the company said in a written statement announcing the FDA approval of its gene therapy.
CALD is an extremely rare disorder that causes gene mutations. It often leads to the accumulation of fatty acids in the brain and spinal cord. Typically, it occurs in boys between the ages of three and 12 and can be fatal.
SKYSONA helps to produce a protein required to break down the fatty acids that accumulate in the brain of children who have CALD. It can help them to recover from the disease.
Why It Matters
The approval of SKYSONA is the second regulatory approval for a Bluebird Bio product in as many months. In August of this year, the company’s beti-cel therapy won FDA approval to treat a rare blood disorder.
The recent FDA approvals show that Bluebird Bio is on the right track with its gene therapies to treat rare disorders and is now posed to reap the benefits of commercial sales.
The approval of SKYSONA was not exactly a surprise. An FDA panel of outside advisers unanimously endorsed the treatment in June. Still, investors are applauding the latest regulatory victory.
What’s Next for BLUE Stock
BLUE stock got a much-needed lift today on news that its SKYSONA gene therapy received approval for use in the U.S. Although it is now down on the day, that is likely due to broader economic factors at play.
The latest FDA approval demonstrates a pattern of regulatory victories for the biotech company and investors are responding positively. Going forward, Bluebird Bio will need to show that its commercial sales of SKYSONA and other treatments will positively impact its bottom line.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.