• The gene-therapy biotech Bluebird Bio announced plans on Tuesday to slash its budget and headcount.
  • The Massachusetts biotech previously warned investors about "substantial doubt" about its future.
  •  The restructuring will fund the business into the first half of 2023, the company said. 

In a move to survive, the gene-therapy developer Bluebird Bio said Tuesday it will trim down its budget and workforce. 

In March, Insider identified Bluebird as one of 13 biotech companies facing a precarious financial future. These 13 businesses recently warned investors in filings with the Securities and Exchange Commission that they face "substantial doubt" about their ability to stay in business for the next 12 months.

Bluebird said it will reduce its workforce by about 30% as part of a plan to reduce costs by up to $160 million over two years. The company employed 518 people as of January 31. As part of the restructuring, the company is also narrowing its research focus, and now forecasting a cash burn of less than $340 million in 2022. 

Bluebird ended last year with $442 million in cash and equivalents and recorded a $563 million net loss in 2021. In its SEC filing, the Massachusetts biotech said it planned to save money by spinning off its cancer research programs into a separate company called 2Seventy Bio, moving from Cambridge to Somerville, Massachusetts, and winding down its European operations. These "substantial doubt" warnings are often a prelude to companies implementing cost-saving measures, such as debt financings, asset sales, and layoffs. 

Bluebird has crashed back to earth after reaching peak excitement in 2018, hitting a market capitalization of $11 billion. Gene therapies have proven challenging to make and sell, dampening investor enthusiasm. Bluebird's stock price has fallen 70% in the past year, with the company now valued at $370 million. Shares traded down 1% on Tuesday morning.

Now, much of Bluebird's future prospects will hinge on Food and Drug Administration approval decisions for its first gene therapies. The FDA is expected to reach decisions by August 19 for Bluebird's beta-thalassemia treatment and by September 16 for a gene therapy treating a rare metabolic disorder called cerebral adrenoleukodystrophy.

Read more: Insider identified 13 drug companies that are in a dangerous financial position and struggling to survive through 2022

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