After hearing positive news from Bluebird Bio on Wednesday, Jim Cramer has a warning for investors who are salivating over the cancer immunotherapy plays.
"I need to warn you: this is a high-risk group and I have noticed a pattern that is less than ideal," the "Mad Money" host said.
Bluebird is a development-stage gene therapy company that is a leading player for cancer immunotherapy. It announced positive interim phase 1 clinical trial data for its multiple myeloma therapy, which appeared to have few severe side effects, though it was a small study.
Cramer noticed that when a company like Bluebird reports good news, only the company's stock will rally. The rest of the group will barely move. But when a company reports bad news, the entire cohort gets crushed.
One case of this happened recently with Juno Therapeutics, another leading player for cancer immunotherapy. One of the reasons this group has been so hot is that it is supposed to have fewer side effects than other cancer therapies. But last Wednesday, Juno put one of its clinical trials on hold because its lead drug caused serious brain swelling in two patients, and one passed away.
Companies like Bluebird and Juno work with what is known as chimeric antigen receptor T-cell immunotherapy, also known as CAR-T. Lately, it seemed to Cramer that everyone wants to get in on the CAR-T business because it is viewed as a promising area of oncology.
"You might think this problem was Juno's and Juno's alone, but if CAR-T immunotherapy is more dangerous than we thought, then it calls the whole group into question," Cramer said.
So, when dealing with early-stage drug companies that are on the cutting edge of science, like cancer immunotherapy, Cramer reminded investors that bad news from any member of the group is bad news for the whole group.
"I am not saying you shouldn't speculate on these stocks, but the pin action here is clearly one-sided, which means there is a whole other level of risk you need to consider," Cramer said.