At market close on Wednesday, June 3 2015, bluebird bio, Inc. (NASDAQ: BLUE) announced that there had been an amendment to its CAR T agreement with biopharmaceutical behemoth Celgene Corporation (NASDAQ: CELG). During the session that followed, we saw – at its peak – a 10% decline in bluebird’s market capitalization, and it looked as though markets had interpreted the news as bearish for the company. However, we are now trading at a level not dissimilar to that which preceded the announcement, and pre-market open trading on Friday looks to have closed the gap entirely. So, with this said, what was the announcement, what does it mean for Bluebird, and what can Bluebird shareholders expect going forward? Further, is this recent dip and consolidation a good time to buy in to the company for those who do not yet have any exposure? Let’s take a look.

So, first, the announcement. Bluebird announced that its existing collaboration with Celgene had been amended and restated to focus on developing product candidates targeting B-cell maturation antigen (BCMA). Under the terms of new agreement, the two companies will work together on an initial phase I clinical trial (expected to be enrolled during 2016), and Bluebird will receive a $25 million payment from Celgene to fund phase I development. So why is this bad news? Well, back in 2013, Bluebird announced a global strategic collaboration with Celgene to advance its gene therapy programs in oncology. The collaboration was to focus on advancing its chimeric antigen receptor (CAR) T cell program, and the deal included an upfront payment (undisclosed) and up to $225 million per product in potential option fees and clinical regulatory milestones. The amended agreement sees this $225 million per product in option fees effectively scrapped, and it looks as though Celgene is no longer involved in bluebird’s other CAR T programs. The bearish momentum came as a result of markets questioning why Celgene no longer wished to be involved, and why they would switch so suddenly to involvement in BCMA, an as yet undeveloped program.

Chief executive officer of Bluebird, Nick Leschly, had this to say on the announcement:

“We have successfully achieved the initial goal of our collaboration with Celgene —identifying a promising lead development candidate in the CAR T cell field — and we are excited to focus our Celgene collaboration on the development of anti-BCMA products”.

So, then, this would suggest that Bluebird executives consider the move a positive one, and consider their initial agreement with Celgene complete and successful. They have not yet however reached the successful development stage that would command a $225 million payout, and so this optimism could perhaps be a masking of the real situation. Investors have to ask themselves why Celgene would agree to fund the development of a brand-new candidate, rather than see through the already identified lead candidate for bluebird’s CAR T pipeline.

Regardless, however, any speculation as to what we will see going forward is just that – speculation. Markets, especially when it comes to biotech, are notoriously volatile and driven pretty much exclusively by interpretation of market news that can have numerous different influences, and so, with this said, is it worth getting into Bluebird at this stage in advance of the new collaboration with Celgene?

Well, this is where things could get interesting. The announcement means that – over the next 24 months – we will likely get a stream of preclinical updates related to the new investigative trial, and – if we get any positive insights – we could see some upside momentum build in bluebird shares. The company has already been one of the darlings of the biotech space year-to-date, up more than 100% since January, and we are currently trading about 5% off yearly highs – primarily as a result of the decline driven by the Celgene announcement. This means that an aggressive investor could gain exposure to the new Celgene collaboration at a discount at current rates.