Why bluebird bio's Stock Jumped 12.9% on Wednesday

What : Shares of the clinical-stage gene therapy company bluebird bio jumped 12.9% Wednesday on heavier than normal volume.

Image source: Flickr via user South Florida Sun.

So what : The biotech's surge forward yesterday, however, wasn't due to a company-specific event. Instead, Bluebird's shares were apparently lifted by an industrywide rally that also drove the iShares Nasdaq Biotechnology ETF up by 5.88% on more than double the average volume for this broad-based fund.

This sudden renewed interest in biotech stocks by investors seems to stem from the failed merger between Pfizer and Allergan earlier this week . After the two large-cap drugmakers announced that they would abandon their planned merger, rumors immediately began to swirl about which companies Pfizer and/or Allergan would target as possible buyout candidates going forward. After all, Allergan is known for its penchant for acquiring promising biopharmas, and Pfizer undoubtedly needs to bring additional growth products into the fold in order to firmly put the patent cliff behind it.

Is Bluebird a viable buyout candidate? While anything is possible when it comes M&A activity in biotech and biopharma, my quick take is that Bluebird is still in the "prove it" mode of its life cycle, meaning that a buyout is unlikely right now.

Now what : The bottom line is that the commercial potential of Bluebird's lead product candidate, LentiGlobin -- indicated as a treatment for the rare blood disorder beta thalassemia andsevere sickle cell disease -- isn't exactly clear at this stage after a somewhat disappointing clinical update last November. So, until Bluebird's clinical pipeline matures further, I'd recommend investors stick to the sidelines with this risky clinical-stage company, and perhaps use a well-diversified ETF like the IBB to gain exposure to this particular group of stocks.

This iSecret stock could make this pop look tiny

The world's biggest tech company forgot to show you something, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here .

The article Why bluebird bio's Stock Jumped 12.9% on Wednesday originally appeared on

George Budwell owns shares of Allergan PLC, iShares NASDAQ Biotechnology Index (ETF), and Pfizer. The Motley Fool recommends Bluebird Bio. 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 .

Copyright © 1995 - 2016 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Other Topics


Latest Markets Videos

    The Motley Fool

    Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

    Learn More