UPDATE 3-Bluebird to spin off cancer drugs unit to focus on genetic diseases

(Adds details on the new companies, share price)

Jan 11 (Reuters) - Bluebird bio Inc said on Monday it plans to spin off its cancer drugs unit into a new, publicly traded company later this year to focus on rare genetic diseases.

The gene therapy developer suffered multiple regulatory setbacks last year for both its rare disease and cancer drug candidates. Splitting the company removes the diversification it has with having both cancer cell therapies and gene therapy programs, said J.P.Morgan analyst Cory Kasimov in a client note.

The split is an interesting strategic development, but how it plays out is largely to be determined, Kasimov said.

Shares of the company were down about 3% in early morning trading.

Gene therapies, which aim to potentially cure patients of life-threatening diseases, have attracted hefty investments from drug developers in recent years - but are expensive.

In November, the submission of a marketing application for bluebird’s blood disorder gene therapy, LentiGlobin, was pushed to 2022 from 2021 after the U.S. Food and Drug Administration set additional requirements.

LentiGlobin or Zynteglo is approved in Europe for treating beta thalassemia and is priced there at 1.58 million euros ($1.92 million) over five years.

The slimmer bluebird aims to expand access to Zynteglo in Europe and build on its gene therapy manufacturing expertise, the company said, which expects the separation to close in the fourth quarter.

Chief Executive Officer Nick Leschly will helm the new cancer company and take up a new role as executive chair of bluebird bio.

The president of bluebird bio’s severe genetic diseases business, Andrew Obenshain, will become its CEO.

The company and partner Bristol Myers Squibb Co also suffered a regulatory setback for their multiple myeloma therapy, ide-cel, last May. The drug still awaits the FDA’s decision by March.

On Monday, the Wall Street Journal first reported the move and said Leschly had cited the need for increased specialization as the reason for the split. ($1 = 0.8223 euros) (Reporting by Manojna Maddipatla in Bengaluru; Editing by Maju Samuel, Bernard Orr)