Dive Brief:

• U.S. biotech company Bluebird Bio, which specializes in developing gene therapies for severe genetic diseases and cancer, named a new CFO Wednesday as it scrambles to revise certain financial statements in light of previously-disclosed accounting errors.
• The company said in a press release that it plans to replace Bluebird CFO Chris Krawtschuk with O. James Sterling, who most recently served as finance chief of London-based Renalytix plc, a developer of artificial intelligence-enabled diagnostic tools for kidney disease.
• Krawtschuk is exiting Bluebird’s CFO seat after less than two years in the role. The change will be effective June 10, the company said.

Dive Insight:

Somerville, Massachusetts-headquartered Bluebird said in late March that it planned to restate its consolidated financial statements for the first three quarters and full-year 2022, as well as the first three quarters of 2023, following the discovery of accounting errors.

The company’s accounting policy required that lease and non-lease components in agreements with contract manufacturing organizations that are accounted for as leases be combined, according to a March securities filing.

The company determined that it did not consistently combine such components, resulting in an estimated understatement of lease assets and lease liabilities between $100 million and $200 million in the annual restated period, and an estimated understatement of lease assets and lease liabilities between $30 million and $125 million in each of the quarterly restated periods, the filing said. 

The ongoing issue has delayed Bluebird’s Annual Report Form 10-K for 2023 and its Q1 2024 Form 10-Q, the company said Wednesday, as part of its CFO announcement.

“The Company is continuing to work expeditiously to complete these filings,” the release said. “Consistent with previous updates, the restatement is not expected to impact the Company’s cash position or revenue.” 

Sterling will transition to oversee the restatement process upon his start date, the company said.

Renalytix announced on Tuesday that Sterling was stepping down from his role as its CFO after about six years. The company appointed former Minerva Surgical CFO Joel R. Jung to serve as its finance chief on an interim basis.

In his new role, Sterling, 53, will receive an annual base salary of $500,000 as well as a one-time sign on bonus in the amount of $100,000, according to a Wednesday securities filing.

Krawtschuk’s departure isn’t the result of a disagreement between him and Bluebird “on any matters relating to the Company’s accounting policies or business strategy,” the filing said.

The company’s CFO seat has seen a significant amount of turnover in recent years.

In September 2022, the company announced that its then-CFO, Jason Cole, was leaving after less than a year to “pursue other opportunities.” Cole’s predecessor, Gina Consylman, resigned in March 2022 as the company struggled to stay afloat financially.

Before joining Renalytix, Sterling served as managing partner of finance advisory firm Renwick Capital. Prior to that, he served as a managing director at investment banks Brock Capital Group LLC and Aleutian Capital Group.

“We are confident that his extensive experience in the healthcare sector and knowledge of the capital markets will position us well as we work to prove the commercial gene therapy model, and demonstrate progress on our path to profitability,” Bluebird CEO Andrew Obenshain said in the Wednesday release.