What happened

After its collaboration partner, Celgene Corp. (NASDAQ:CELG), agreed to acquire a competing gene therapy company, Juno Therapeutics (NASDAQ:JUNO), shares in bluebird bio (NASDAQ:BLUE) are flying 11.9% higher at 1:45 p.m. EST on Monday. 

So what

Rumors have been swirling for a week that biotech giant Celgene might make a bid for Juno Therapeutics, and this morning, Celgene's management laid speculation to rest with a $9 billion deal that instantly catapults it to the forefront of developing gene therapies for non-Hodgkin lymphoma.

A businessman wearing a suit and strapped to metal wings with rockets prepares to lift off into the sky.


Celgene's been collaborating with Juno Therapeutics on chimeric antigen receptor T-cell cancer therapies since 2015, so the news has investors speculating that Celgene may end up acquiring others it's collaborating with, including Bluebird.

Celgene and Bluebird are working together on CAR-T therapies for multiple myeloma, and in December, Bluebird updated results from an early-stage trial of its most advanced drug, bb2121. In its trials, bb2121 delivered an impressive 94% overall response rate in heavily pretreated patients, suggesting that it could make its way quickly to the FDA and eventually reshape how doctors treat multiple myeloma.

Now what

Celgene and Bluebird are already conducting a pivotal study of bb2121, and Bluebird's management told investors at a key industry conference early this month that a filing for bb2121's approval could come in 2019. If approved, bb2121 has a good shot at billion-dollar blockbuster status -- and since Celgene's already the market share leader in first-line, second-line, and third-line multiple myeloma, it stands to reason that it could be interested in buying Bluebird lock, stock, and barrel. Currently, Celgene and Bluebird plan to share profit on bb2121 sales in the United States.

Although Juno Therapeutics is developing its own CAR-T for multiple myeloma, that therapy is only in early-stage development. Celgene's management told investors today that it remains committed to bb2121, adding confidence to the thinking that Bluebird is an attractive takeover target.

No one knows if Celgene's kicking Bluebird's tires, but there's another reason that it could be. In addition to bb2121, Bluebird plans to file two other gene therapy applications with the FDA for approval in 2019. Those therapies, LentiGlobin and Lenti-D, target beta thalassemia and cerebral adrenoleukodystrophy, respectively, and each has a good shot at peak sales in the nine-figure range if it gets a green light. Currently, Celgene doesn't have any rights to those two therapies, so those therapies make Bluebird even more attractive. 

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