Take Long View

A narrowing of its collaboration with biotech Goliath Celgene Corp (NASDAQ:CELG) led shares of bluebird bio (NASDAQ:BLUE) to tumble 13.3% in June (via data from Capital IQ).

Casting aside CAR-T
Bluebird bio and Celgene had previously been collaborating on the development of immunotherapies that re-engineer a patient's T-cells to better identify and kill cancer cells.

Specifically, under a deal cut between the two companies in 2013, the two were partnering on chimeric antigen receptor, or CAR-T, cell approaches in which T-cells are removed from a patient, altered to recognize a key protein expressed on the surface of cancer cells, and then reintroduced to the patient.

CAR-T therapies are among the most promising advances in cancer treatment; however, Celgene restructured its deal with bluebird bio in June, effectively ending its collaboration on them.

Going forward, Celgene and bluebird bio will focus instead on the development of B-cell maturation antigen, or BCMA, medicine targeting the BCMA protein selectively expressed by B-cell cancer cells, such as in multiple myeloma -- the indication for which Celgene already generates the majority of its annual revenue.

Looking ahead
After discontinuing its CAR-T research with bluebird bio, Celgene then went on to ink a massive $1 billion, 10-year CAR-T collaboration with Juno Therapeutics that includes having Celgene take a nearly 10% equity stake in the company.

That Celgene discontinued researching CAR-T with bluebird bio only to team up with Juno Therapeutics suggests that, in Celgene's view, bluebird bio's CAR-T program wasn't as good as Juno Therapeutics'.

Although that's a disappointing revelation for those hoping that bluebird bio's relationship with Celgene would lead to a blockbuster CAR-T therapy, bluebird bio still has some fascinating research under way that could reward investors.

For example, bluebird bio is in late-stage studies for Lentiglobin BB305, a treatment for beta-thalessemia, a rare blood disorder. In May, bluebird bio outlined a regulatory strategy for BB305 including plans to apply for conditional approval in Europe.

Overall, bluebird bio remains an intriguing company, but a $5.8 billion market cap and uncertainty as to when it could eventually turn profitable suggests investors should approach it with a hefty dose of caution.  

Todd Campbell owns shares of Celgene. Todd owns the equity research firm E.B. Capital Markets, LLC. E.B.  Capital's clients may have positions in the companies mentioned. The Motley Fool recommends Bluebird Bio, Celgene, and Juno Therapeutics. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.