As biotech investors know all too well, companies in this industry can be highly volatile. Substantial price swings over short periods aren't that rare, particularly for clinical-stage biotechs. That means many of these stocks boast significant upside potential, but picking the wrong drugmaker could leave investors with worthless shares.

Let's consider one biotech that could be on the verge of a massive upswing despite its struggles over the past few years: Bluebird Bio (BLUE -4.91%). Is this gene-editing specialist worth your hard-earned money? Here are two arguments for each side of that question.

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Reason to buy: Upcoming approvals on the way?

Bluebird Bio had earned approval in the European Union for two of its gene-editing therapies. However, it decided to exit the European market last year after failing to reach favorable deals with third-party payers for these treatments.

While it doesn't have any products on the market in the U.S. right now, that could change soon. In June, the biotech announced that advisory committees convened by the U.S. Food and Drug Administration (FDA) had given positive opinions of Bluebird therapies the agency is currently considering.

The first is beti-cel, a potential treatment for a rare blood-related disorder called transfusion-dependent beta-thalassemia (TDT). The 13-member committee reviewing beti-cel unanimously voted yes when asked whether the benefits of beti-cel exceed the risks.

Then there's eli-cel, a potential treatment for cerebral adrenoleukodystrophy (CALD), a neurological disease typically diagnosed in early childhood. The 15 experts examining the merits of eli-cel all agreed that its benefits outweigh its potential risks for the concerned patient population. Eli-cel's PDUFA goal date (the latest date by which the FDA should complete the review of Bluebird's application) is Sept. 16, while beti-cel's is Aug. 19.

Regulators aren't obligated to follow the lead of the experts, but most of the time, they do. That means Bluebird could be getting ready to launch two products in the U.S. market within two months, and these approvals would likely send the company's stock price soaring.

Reason to sell: Financial troubles

Funding is always a lurking problem for small biotechs with no products on the market. It takes a lot of money -- and a lot of time -- to develop innovative therapies. These companies often do not generate revenue and can find themselves in financial trouble if it takes too long to market their therapies.

Bluebird is facing such problems right now. The company has encountered multiple regulatory delays on its way to marketing its therapies in the U.S., not to mention its aforementioned problems in Europe. Earlier this year, management expressed doubt as to the company's ability to complete the fiscal year 2022 as a result of its precarious financial situation.

Bluebird has since implemented cost-cutting measures to extend its cash runway through the first half of 2023. But that doesn't mean all is well. If more regulatory headwinds happen -- and if the approvals of eli-cel and beti-cel are delayed -- the situation will get much worse for Bluebird.

Proceed with caution

As with other gene-editing specialists on the market, Bluebird's stock is risky, even given the potential approvals coming its way. On the other hand, the company's assets are valuable. Even if eli-cel and beti-cel fail to earn approval within the next couple of months, given the experts' opinions, it seems likely that they will eventually make it to market. And once they do, expect them to generate substantial revenue.

After all, when beti-cel earned approval in Europe as Zynteglo, a treatment was priced at 1.58 million euros. At this price, even a modest 650-patient population would have allowed beti-cel (or Zynteglo) to generate over 1 billion euros in revenue. Both eli-cel and beti-cel will almost certainly have similarly high price tags, partly because gene-editing therapies can be complicated to administer.

But Bluebird's market cap at the moment is just $289 million. At these levels, the company could return several times invested capital. This high-risk, high-reward profile means only those comfortable with heightened volatility should consider investing in the stock. Thankfully, we'll know more about Bluebird's long-term prospects by the end of the year.