After peaking at all-time highs recently, bluebird bio (NASDAQ:BLUE) shares have tumbled by more than 40 points since March 13. The company's retreat could be presenting a great opportunity for risk-tolerant investors to pick up shares ahead of what could be a transformational year. Here's why this young company is currently my favorite biotech stock to add to portfolios.

Big catalysts coming

The company doesn't have any products on the market yet, but that could change next year

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In January, bluebird bio revealed a business blueprint that includes filing three drugs for regulatory approval between now and 2020. Delivering on that goal could transform it from a promising biotech that's targeting some big advances in care into a high-growth commercial-stage company that's reshaping markets that are worth billions of dollars in sales annually.

The first of bluebird bio's treatments that could get filed for approval is LentiGlobin, a gene therapy that could change how doctors care for patients with transfusion-dependent beta thalassemia major, an inherited blood disease that can cause severe anemia. Overall, an estimated 30,000 people have beta thalassemia in the U.S. and European Union and up to 80% of those patients have beta thalassemia major, which is the severest form of the disease.

Currently, beta thalassemia major patients require lifelong blood transfusions or a bone marrow transplant. Transfusion-dependent patients risk iron overload that can damage the liver, heart, and endocrine glands and bone marrow transplants expose patients to risks, such as graft-versus-host disease, making them unsuitable for most people. 

If approved, LentiGlobin could end the need for those transfusions and transplants. Instead, it could restore a patient's ability to produce red blood cells by inserting a functional human beta-globin gene into the DNA of a patient's blood stem cells.

That process might sound like science fiction, but LentiGlobin could be available to patients as soon as next year. If its trials pan out, then management hopes to file for European approval by the end of 2018.

The company's also closing in on an approval for Lenti-D, a gene therapy for use in patients with cerebral adrenoleukodystrophy, or CALD, a rare X-linked metabolic disorder.

People with this genetic disease are unable to produce the adrenoleukodystrophy protein due to mutations in the ABCD1 gene. Over time, this can lead to a buildup of very long chain fatty acids that can destroy myelin and eventually lead to death. Currently, the only effective treatment is an allogeneic hematopoietic stem cell transplant, but that must be done early in childhood and it exposes patients to risks.

Similar to LentiGlobin, Lenti-D corrects the deficiency by inserting a functioning copy of the ABCD1 gene into a patient's own stem cells. Data from trials that could confirm Lenti-D's efficacy are expected later this year and if results are positive, then bluebird bio plans to file for an OK in 2019.

Finally, the third therapy at bluebird bio that's nearing the finish line is bb2121, a multiple myeloma treatment. In December, bluebird bio reported a 94% response rates to bb2121 in heavily pretreated multiple myeloma patients; a fairly remarkable achievement given these patients have exhausted most of their treatment options.

Unlike LentiGlobin and Lenti-D, bb2121 is a chimeric antigen receptor T-cell (CAR-T) therapy that supercharges a patient T-cells so that they can bind to a BCMA protein that's commonly expressed by multiple myeloma cells. The process involves removing a patient's T-cells, inserting a gene that can spot BCMA, and reinfusing them back into the patient's body. 

In this way, bb2121 works similarly to CAR-T's that have already won FDA approval for use in some patients with advanced leukemia and lymphoma. Celgene Corp. (NASDAQ:CELG) is co-developing bb2121 with bluebird bio and in February, the two companies began enrolling patients in a pivotal study that if successful, could clear the way to approval as a fourth-line treatment in 2019.

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That's not all

Clearly, bluebird bio's got a lot of important clinical trial data on deck. Admittedly, there's no guarantee trial results for these therapies will be good enough to warrant regulatory approval, but the FDA has expressed a willingness to accelerate game-changing gene therapies to market and that could work in bluebird bio's favor.

Additionally, bluebird bio's hard at work on programs that could lead to additional filings. For instance, Celgene and bluebird bio's plans include starting a pivotal study for bb2121 in third-line multiple myeloma patients this year and trials are already under way for a second-generation version of bb2121 -- bb21217 -- that may be even more effective than bb2121.

Later this year, bluebird bio also plans to update investors on trials investigating LentiGlobin's use in severe sickle cell disease (SCD), a form of chronic anemia that's caused by a gene mutation. Only about 10% of SCD patients qualify for a stem cell transplant from a sibling-matched donor and hydroxyurea treatment doesn't eliminate the vaso-occlusive crises SCD can cause. It can also cause toxicity at high doses. Clearly, there's an opportunity to improve treatment and if LentiGlobin's trials are a success, then perhaps, it could be the indication's next big advance.

Overall, clinical trial failure risks make bluebird bio's stock unsuitable for the faint of heart, but its maturing pipeline and multiple near-term opportunities for approval make me think that this stock is worth owning in aggressive portfolios. If I'm right, then picking up shares following their recent sell-off could wind up being a very profit-friendly decision.

 

Todd Campbell owns shares of Celgene. His clients may have positions in the companies mentioned. The Motley Fool owns shares of and recommends Bluebird Bio and Celgene. The Motley Fool has a disclosure policy.