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2020.01.05 Penn Wealth Report Vol 8 Issue 01

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05 Jan 2020 penn wealth Report volume 8 issue 01 13 Copyright 2020. All Rights Reserved. Science & Technology Investor Typically, red blood cells are flexible and round, allowing them to move freely through the body's blood vessels. Sickle cell disease occurs when red blood cells are distorted into a crescent, or sickle shape, causing them to become sticky and rigid. is, in turn, causes the cells to slow down or even block other cells from traversing the blood vessels, resulting in excruciating pain for the afflicted. e median life expectancy for a patient with sickle cell disease is 44 years. Bluebird Bio (BLUE $71-$86-$163), a $5 billion clini- cal-stage American biotech company, has a novel approach to fighting sickle cell disease and other life threatening gene mutations: remove T cells—a type of white blood cell of criti- cal importance to the immune system—from a patient's body, re-code them to kill cancer cells, grow millions more of them, then infuse the cells back into the patient's body and let them go to work. It seems like something out of a science fiction novel, but Bluebird currently has a number of its gene therapy treatment candidates in the clinical trial phase, and other biotechs and big pharma companies are taking notice. Bluebird and $135 billion biotech giant Novo Nordisk A/S (NVO) just entered into a research collaboration to jointly develop next-generation in vivo (living organism) genome edit- ing treatments for genetic diseases. e company has a similar strategic partnership with Celgene (now part of Bristol-Myers Squibb). And Regeneron Pharmaceuticals (REGN). And Medigene AG (MDGEF). And Gritstone Oncology (GRTS). We could go on, but the point is made: drug companies are grav- itating toward this dynamic firm due to its cutting-edge research capabilities. Bluebird Bio and the "fifth pillar" of cancer treatment. While investing in individual small- or mid-cap biotech compa- nies is always risky business, we added BLUE to the Penn New Frontier Fund because it is not a one-hit wonder; the firm is on the cutting edge of gene therapy and cancer immunotherapy— the "fifth pillar" of cancer treatment (surgery, chemotherapy, radiation, and targeted therapies being the first four). e company has seen steady revenue growth each year since 2016, and its short-term assets of $1.2 billion easily cover both short-term ($196 million) and long-term ($225 million) liabili- ties. e company holds no debt on its books, nor has it for the past five years. at is a rarity in this highly volatile industry. We opened BLUE at $87 per share and placed an initial price target of $125 on the shares, which would represent a 45% gain from here. We took a top-down approach to selecting Bluebird, meaning we began with our premise that health care—biotechs in particular—will have a strong 2020. To mitigate risk, consider picking up one the two medical funds in the Penn Dynamic Growth Strategy: the SPDR S&P Biotech ETF (XBI $93), or the Vanguard Health Care ETF (VHT $191). See our trades (and stop-loss orders) at the Penn Wealth Trading Desk. Biotechnology Gene addition therapy, gene editing, and immunotherapy are three exciting new weapons in the fight against cancer; this company is on the cutting edge of these technologies. Bluebird Bio: Leading the Gene erapy Revolution T-cells from the immune system attacking cancer cells. Image courtesy of NIH/National Cancer Institute.

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