Sometimes, the financial markets can be highly unpredictable. Reportedly, the U.S. Food and Drug Administration (FDA) lifted its partial clinical hold on Bluebird Bio’s (NASDAQ:BLUE) studies of a sickle cell disease (SCD) treatment candidate. This should, one might assume, propel BLUE stock higher. Yet, surprisingly enough, shares dropped quickly after the opening bell rang on Wall Street today.
Bluebird Bio is a fairly small biotechnology business, so any regulatory news can have an outsized impact on the company. Today’s news, according to a press release, is that the FDA has “lifted its partial clinical hold for patients under the age of 18 in studies evaluating lovotibeglogene autotemcel (lovo-cel) for sickle cell disease (SCD).”
Understandably, Bluebird Bio Chief Medical Officer Richard Colvin is quite happy with this development. “We are very pleased to have addressed the FDA’s questions and resolved the partial clinical hold,” Colvin stated in the release.
Apparently, the partial clinical hold was related to a possible complication involving an adolescent patient. The issue seems to be resolved now. So, BLUE stock shareholders should be in celebration mode, right?
What’s Happening With BLUE Stock?
As always, it’s wise to avoid making assumptions on Wall Street. Despite the evidently positive news, BLUE stock gapped down this morning. Shares are currently in the red by 10%.
This price action is unexpected, especially considering Bluebird’s confident-sounding press release. The release states that the company is “on track to submit a Biologics License Application (BLA) to the U.S. FDA for lovo-cel” in the first quarter of 2023.
Perhaps management is right to be confident. After all, the FDA has already granted four different designations to lovo-cel. These include orphan drug, fast track, regenerative medicine advanced therapy (RMAT) and rare pediatric disease designations.
However, it’s possible that financial traders already anticipated the lifting of the FDA’s clinical hold. In other words, today’s share-price dump may be an instance of “buy the rumor, sell the news.”
Or feel free to come up with your own explanation for today’s selloff in BLUE stock. Just don’t forget the lesson here: Always be prepared for unexpected outcomes.
On the date of publication, David Moadel did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.