The take-home message for bluebird bio (NASDAQ:BLUE) after presenting data at the American Society of Hematology (ASH) meeting this month: Gene therapy doesn't work on all patients yet.

But we already knew that.

The first attempt at gene therapy patient was 15 years ago. There have been plenty of iterations for different diseases, but there's only one approved gene therapy treatment, Uniqure's Glybera, which treats a genetic lipoprotein lipase deficiency, and it's approved in Europe but not the U.S.

bluebird bio is down about 28% since its ASH presentations and is currently sitting a whopping 69% off its high set in May when it looked like the biotech had finally figured it out. At ASH last year, bluebird bio presented data showing that its LentiGlobin BB305 therapy could help beta-thalassemia major patients produce enough hemoglobin that they didn't have to receive transfusion -- essentially a cure. At the European Hematology Association in June, the biotech followed up with data from one sickle cell disease patient that also was transfusion independent after treatment with LentiGlobin BB305.

With strong data showing the treatment worked, investors threw caution to the wind and bid up shares.

More patients, less patience
More recently, bluebird bio has released data on additional patients that weren't helped as well as the initial set, and investors have lost patience with the gene therapy.

Beta-thalassemia comes in multiple flavors depending on what genes the patients inherited from their parents. LentiGlobin BB305 appears to be helping patients with non-β00 and β0E genotypes, which are the easier to treat types of beta-thalassemia major; patients with those genotypes remain transfusion-free.

But patients with the harder-to-treat β00 genotype, who have no hemoglobin production, haven't fared nearly as well. At ASH, bluebird bio said those patients weren't able to produce enough hemoglobin to become transfusion-free although the treatment has reduced the amount of transfusions required.

bluebird bio has also seen mixed results in sickle cell disease. The second and third patients treated with LentiGlobin BB305 haven't produced enough non-mutated hemoglobin to help the patients no longer require transfusions.

Not perfect, but ...
It's certainly disappointing that the additional patients didn't respond as well to LentiGlobin BB305 as the initial patients did, but to expect the treatment to be a cure for every patient was asking a little much.

For beta-thalassemia major, it appears that bluebird bio should be able to get the LentiGlobin BB305 approved for less-severe patients if the additional patients of that type are also cured.

There's even an opportunity to get approved for the harder-to-treat beta-thalassemia patients if the treatment is creating a better quality of life by lowering the number of required transfusions. At that point, safety becomes a bigger factor in the benefit-risk analysis that the FDA will do.

For the sickle cell patients, we know it's possible to get high expression, so it really isn't a question of whether LentiGlobin BB305 can help sickle cell patients, but what percentage of patients are helped. With only three evaluable patients' it's impossible to know if the cure rate is 33% or higher or lower.

bluebird bio has some ideas about how to raise the cure rate. The expression of hemoglobin is determined by the number of copies of the gene are put into the patients cells and the number of those cells that are eventually incorporated into the patient's body. The two steps are fairly independent of each other, offering multiple ways to improve the expression level.

Potential competition
bluebird bio's valuation is probably also down a little because of potential competition from Global Blood Therapeutics (NASDAQ:GBT). The biotech has a competing sickle cell disease drug, GBT440, that appears to be helping patients -- the median sickle counts after 28 days of treatment decreased by 56% and 46% in the two doses tested, compared to a 14% increase for patients treated with placebo.

But bluebird bio's investors really don't need to be worried about Global Blood Therapeutics. GBT440's efficacy and safety still aren't definitive -- it's only been tested on 22 patients between the two treatment groups -- and Global Blood Therapeutics has tested its drug on easier-to-treat patients, while LentiGlobin BB305 is likely to be used on more-severe patients given the inherent risks with gene therapy. Even if both drugs end up working, there's plenty of room for Global Blood Therapeutics and bluebird bio to share the sickle cell disease market.

Buy the dip?
bluebird bio clearly got ahead of itself when it approached $200 per share earlier this year, but the risk-reward benefit looks better now given the substantially lower stock price. The lower cure rate balances that out somewhat, but an investment was arguably riskier at the higher price given the small number of patients.

The biotech certainly isn't out of the woods yet, but investors with a long-term time horizon willing to take the risk, can take advantage of the fire-sale price.