Bluebird Bio (BLUE) - Get Report was climbing Monday after the company and Bristol Myers Squibb (BMY) - Get Report said the Food and Drug Administration had approved Abecma as a potential treatment for relapsed or refractory multiple myeloma, a type of blood cancer.
Bluebird Bio shares were rising 7.7% to $32.29 in premarket trading, while Bristol-Myers Squibb was off slightly to $63.84.
The approval was based on positive results from a Phase 2 trial, where Abecma, or idecabtagene vicleucel, elicited rapid responses in the majority of patients.
Roughly 72% of the patients achieved an overall response, while 28% of the patients achieved a stringent complete response.
The treatments are part of a class of drugs called CAR-T therapies that involve drawing white blood cells from a patient, processing them to target cancer cells, and infusing them back into the patient.
Last year, the FDA declined to move forward on the companies' application for their experimental multiple myeloma treatment.
Analysts responded positively to the announcement. Mizuho's Difei Yang raised his price target on Bluebird Bio to $70 from $69 and reiterated a buy rating.
The FDA's approval represents an "important milestone" for Bluebird given recent setbacks surrounding the company's gene therapy programs, Yang said in a research note.
He said he believes the approval "could give renewed comfort to investors and improve sentiment around the stock."
Piper Sandler analyst Tyler Van Buren boosted his price target on the stock to $35 from $30, while keeping a neutral rating.
The Abecma approval was the "good news that bluebird needed," Van Buren said. However, given the significant infrastructure spend, the analyst believes it is unlikely that Bluebird records "meaningful" profits this year, and potentially next.
Still, the analyst said that Abecma could achieve $2.5 billion-plus in U.S. sales, and could generate $700 million in profits for Bluebird, says Van Buren.
BMO Capital's Matthew Luchini raised his price target on Bluebird Bio to $35 from $31, while maintaining a market perform rating.