What: Shares of the gene therapy company bluebird bio (NASDAQ:BLUE) shed a third of their value on extraordinary volume this morning. This sharp decline was triggered by the company's presentation at the 57th American Society of Hematology Annual Meeting, where Bluebird updated investors on the progress of its experimental treatment, LentiGlobin BB305, indicated for patients with beta-thalassemia major and severe sickle cell disease . In a nutshell, some of the patients in these ongoing clinical studies are not responding as quickly as expected to treatment with LentiGlobin BB305. 

So what: Bluebird's stock went on a lengthy and marked rise last year after the company announced that LentiGlobin BB305 essentially cured one patient with beta-thalassemia without any serious side effects:

BLUE data by YCharts.

As a result, Bluebird looked primed to usher in a new era for gene therapy, and to become a leading growth stock within the closely watched iShares Biotechnology Index (NASDAQ:IBB).

Since then, however, this experimental gene therapy has run into trouble producing similar results in patients with more severe forms of the disease, suggesting that it may have a smaller commercial upside than originally thought. 

Now what: Bluebird's management reportedly did their best to downplay these initial results at the meeting, saying it's too early to draw any solid conclusions about the therapy's effectiveness at this point. While that may be true, today's substantial drop nicely illustrates why clinical-stage biotech stocks aren't for the faint of heart. More risk-adverse investors that still want exposure to the high-flying biotech industry therefore may want to consider adding a broad-based ETF like the iShares Biotech Index to their portfolio -- instead of rolling the dice on a single, developmental-stage biotech.