Please ensure Javascript is enabled for purposes of website accessibility

Here's Why Shares of bluebird bio Slumped Today

By Brian Orelli, PhD - Apr 17, 2019 at 5:15PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

No-news anxiety-selling seems to be to blame for the biotech's woes.

What happened

Shares of bluebird bio (BLUE 1.74%) closed with a 9.5% drop on Wednesday, having been down as much as 10.3%, on no apparent news.

So what

The biotech has been flying high, up 55% year to date through yesterday, buoyed by an upcoming EU approval for Zynteglo, its gene therapy for the treatment of transfusion-dependent beta-thalassemia that gained a positive opinion from the European Medicines Agency's Committee for Medicinal Products for Human Use. An OK from the European Commission should come in the next couple of months.

At that point, it's anyone's guess how high sales could go, which could explain today's apparent anxiety-selling at these inflated stock prices. A few countries in Europe don't have price controls, but the prices for treatments in many European countries are highly regulated. How much Bluebird will be able to charge for Zynteglo, which is a one-time treatment, is unknown at this point.

Arguably, it should be easier for Bluebird to fetch a higher price in countries with one-payer systems, since, as the name implies, transfusion-dependent beta-thalassemia patients need to get regular transfusions. One-payer systems can factor that cost savings from not having to give future transfusions into the price they're willing to pay.

That argument will be a little harder in multi-payer countries, such as the U.S., where Zynteglo should be approved in 2021, since an insurer paying for the one-time treatment can't be guaranteed the savings if the patient moves to another insurer.

Technician helping patient with an infusion

Image source: Getty Images.

Now what

Given the lack of news, today could be a good opportunity for long-term investors to pick up shares at a discount. While there's some risk of not knowing exactly how well the launch of Zynteglo will end up going, Bluebird has additional options to bring in revenue by expanding Zynteglo into sickle cell disease and a very promising CAR-T immuno-oncology program.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

bluebird bio, Inc. Stock Quote
bluebird bio, Inc.
BLUE
$3.21 (1.74%) $0.06

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
344%
 
S&P 500 Returns
120%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.