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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to                    

Commission File Number: 001-35966

 

bluebird bio, Inc.

(Exact Name of Registrant as Specified in Its Charter)

 

 

Delaware

 

13-3680878

(State or Other Jurisdiction of

Incorporation or Organization)

 

(IRS Employer

Identification No.)

 

60 Binney Street

Cambridge, Massachusetts

 

02142

(Address of Principal Executive Offices)

 

(Zip Code)

(339) 499-9300

(Registrant’s Telephone Number, Including Area Code)

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value per share

BLUE

The NASDAQ Global Select Market LLC

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes      No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes      No  

As of July 25, 2019, there were 55,269,239 shares of the registrant’s Common Stock, par value $0.01 per share, outstanding.

 

 

 

 

 


 

This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. We make such forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q are forward-looking statements. In some cases, you can identify forward-looking statements by words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “would,” or the negative of these words or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:

 

the initiation, timing, progress and results of our preclinical and clinical studies, and our research and development programs;

 

our ability to advance product candidates into, and successfully complete, clinical studies;

 

our ability to advance our viral vector and drug product manufacturing capabilities;

 

the timing or likelihood of regulatory filings and approvals for our product candidates;

 

the timing or success of commercialization of our product candidates, if approved;

 

the pricing and reimbursement of our product candidates, if approved;

 

the implementation of our business model, strategic plans for our business, product candidates and technology;

 

the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates and technology;

 

estimates of our expenses, future revenues, capital requirements and our needs for additional financing;

 

the potential benefits of strategic collaboration agreements and our ability to enter into strategic arrangements;

 

our ability to maintain and establish collaborations and licenses;

 

developments relating to our competitors and our industry; and

 

other risks and uncertainties, including those listed under Part II, Item 1A. Risk Factors.

Any forward-looking statements in this Quarterly Report on Form 10-Q reflect our current views with respect to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under Part II, Item 1A. Risk Factors and elsewhere in this Quarterly Report on Form 10-Q. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

This Quarterly Report on Form 10-Q also contains estimates, projections and other information concerning our industry, our business, and the markets for certain diseases, including data regarding the estimated size of those markets, and the incidence and prevalence of certain medical conditions. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained this industry, business, market and other data from reports, research surveys, studies and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data and similar sources.

 

 

 

 


 

bluebird bio, Inc.

Table of Contents

 

 

 

 

 

Page

PART I. FINANCIAL INFORMATION

 

2

Item 1.

 

Financial Statements (unaudited)

 

2

 

 

Condensed Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018

 

2

 

 

Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2019 and 2018

 

3

 

 

Condensed Consolidated Statements of Stockholders' Equity for the Three and Six Months Ended June 30, 2019 and 2018

 

4

 

 

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2019 and 2018

 

5

 

 

Notes to Condensed Consolidated Financial Statements (unaudited)

 

6

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

28

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risks

 

37

Item 4.

 

Controls and Procedures

 

37

 

 

 

PART II. OTHER INFORMATION

 

38

Item 1.

 

Legal Proceedings

 

38

Item 1A.

 

Risk Factors

 

38

Item 2.

 

Unregistered Sales of Equity Securities and Uses of Proceeds

 

66

Item 3.

 

Defaults Upon Senior Securities

 

66

Item 4.

 

Mine Safety Disclosures

 

66

Item 5.

 

Other Information

 

66

Item 6.

 

Exhibits

 

67

 

 

 

 

 

SIGNATURES

 

71

 

 

 

 

 

CERTIFICATIONS

 

 

 

 

 

 


 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

bluebird bio, Inc.

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands, except par value amounts)

 

 

 

As of

 

 

As of

 

 

 

June 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

Assets

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

280,995

 

 

$

402,579

 

Marketable securities

 

 

972,885

 

 

 

982,725

 

Prepaid expenses

 

 

25,427

 

 

 

19,762

 

Receivables and other current assets

 

 

21,473

 

 

 

13,931

 

Total current assets

 

 

1,300,780

 

 

 

1,418,997

 

Marketable securities

 

 

287,922

 

 

 

506,123

 

Property, plant and equipment, net

 

 

129,135

 

 

 

246,622

 

Intangible assets, net

 

 

16,480

 

 

 

13,169

 

Goodwill

 

 

13,128

 

 

 

13,128

 

Operating lease right-of-use assets

 

 

190,979

 

 

 

 

Restricted cash and other non-current assets

 

 

84,920

 

 

 

44,805

 

Total assets

 

$

2,023,344

 

 

$

2,242,844

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

29,458

 

 

$

17,831

 

Accrued expenses and other current liabilities

 

 

91,105

 

 

 

99,393

 

Operating lease liability, current portion

 

 

18,872

 

 

 

 

Deferred revenue, current portion

 

 

9,484

 

 

 

18,602

 

Collaboration research advancement, current portion

 

 

13,190

 

 

 

10,605

 

Total current liabilities

 

 

162,109

 

 

 

146,431

 

Deferred revenue, net of current portion

 

 

13,739

 

 

 

16,338

 

Collaboration research advancement, net of current portion

 

 

28,333

 

 

 

33,349

 

Contingent consideration

 

 

5,740

 

 

 

5,230

 

Operating lease liability, net of current portion

 

 

175,350

 

 

 

 

Financing lease obligation, net of current portion

 

 

 

 

 

153,319

 

Other non-current liabilities

 

 

1,699

 

 

 

3,107

 

Total liabilities

 

 

386,970

 

 

 

357,774

 

Commitments and contingencies (Note 8)

 

 

 

 

 

 

 

 

Stockholders’ Equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.01 par value, 5,000 shares authorized; 0 shares issued and

   outstanding at June 30, 2019 and December 31, 2018

 

 

 

 

 

 

Common stock, $0.01 par value, 125,000 shares authorized; 55,228 and 54,738

   shares issued and outstanding at June 30, 2019 and December 31, 2018,

   respectively

 

 

553

 

 

 

547

 

Additional paid-in capital

 

 

3,489,112

 

 

 

3,386,958

 

Accumulated other comprehensive loss

 

 

(819

)

 

 

(3,627

)

Accumulated deficit

 

 

(1,852,472

)

 

 

(1,498,808

)

Total stockholders’ equity

 

 

1,636,374

 

 

 

1,885,070

 

Total liabilities and stockholders’ equity

 

$

2,023,344

 

 

$

2,242,844

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

2


 

bluebird bio, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(unaudited)

(in thousands, except per share data)

 

 

 

For the three months ended

June 30,

 

 

For the six months ended

June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Collaboration revenue

 

$

11,558

 

 

$

7,437

 

 

$

22,735

 

 

$

23,045

 

License and royalty revenue

 

 

1,738

 

 

 

414

 

 

 

3,032

 

 

 

763

 

Total revenues

 

 

13,296

 

 

 

7,851

 

 

 

25,767

 

 

 

23,808

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

146,540

 

 

 

115,014

 

 

 

269,180

 

 

 

212,123

 

General and administrative

 

 

68,631

 

 

 

41,168

 

 

 

128,910

 

 

 

76,094

 

Cost of license and royalty revenue

 

 

613

 

 

 

21

 

 

 

1,043

 

 

 

36

 

Change in fair value of contingent consideration

 

 

214

 

 

 

262

 

 

 

510

 

 

 

796

 

Total operating expenses

 

 

215,998

 

 

 

156,465

 

 

 

399,643

 

 

 

289,049

 

Loss from operations

 

 

(202,702

)

 

 

(148,614

)

 

 

(373,876

)

 

 

(265,241

)

Interest income, net

 

 

9,387

 

 

 

2,436

 

 

 

19,489

 

 

 

3,824

 

Other (expense) income, net

 

 

(2,936

)

 

 

182

 

 

 

(6,325

)

 

 

297

 

Loss before income taxes

 

 

(196,251

)

 

 

(145,996

)

 

 

(360,712

)

 

 

(261,120

)

Income tax benefit

 

 

469

 

 

 

 

 

 

484

 

 

 

 

Net loss

 

$

(195,782

)

 

$

(145,996

)

 

$

(360,228

)

 

$

(261,120

)

Net loss per share - basic and diluted:

 

$

(3.55

)

 

$

(2.91

)

 

$

(6.54

)

 

$

(5.22

)

Weighted-average number of common shares used in computing

   net loss per share - basic and diluted:

 

 

55,165

 

 

 

50,153

 

 

 

55,062

 

 

 

50,038

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss), net of tax expense of $0.8

   million and $0.0 million for the three months ended June 30,

   2019 and 2018, respectively, and $1.3 million and $0.0

   million for the six months ended June 30, 2019 and 2018,

   respectively

 

 

973

 

 

 

(345

)

 

 

2,808

 

 

 

(1,189

)

Total other comprehensive income (loss)

 

 

973

 

 

 

(345

)

 

 

2,808

 

 

 

(1,189

)

Comprehensive loss

 

$

(194,809

)

 

$

(146,341

)

 

$

(357,420

)

 

$

(262,309

)

 

See accompanying notes to unaudited condensed consolidated financial statements.


3


 

bluebird bio, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(unaudited)

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

other

 

 

 

 

 

 

Total

 

 

 

Common stock

 

 

paid-in

 

 

comprehensive

 

 

Accumulated

 

 

stockholders'

 

 

 

Shares

 

 

Amount

 

 

capital

 

 

loss

 

 

deficit

 

 

equity

 

Balances at December 31, 2018

 

 

54,738

 

 

$

547

 

 

$

3,386,958

 

 

$

(3,627

)

 

$

(1,498,808

)

 

$

1,885,070

 

Adjustment to beginning accumulated deficit from

   adoption of ASU 2016-02

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,564

 

 

 

6,564

 

Vesting of restricted stock units

 

 

131

 

 

 

2

 

 

 

(2

)

 

 

 

 

 

 

 

 

 

Exercise of stock options

 

 

189

 

 

 

2

 

 

 

9,502

 

 

 

 

 

 

 

 

 

9,504

 

Purchase of common stock under ESPP

 

 

11

 

 

 

 

 

 

1,231

 

 

 

 

 

 

 

 

 

1,231

 

Stock-based compensation

 

 

 

 

 

 

 

 

32,341

 

 

 

 

 

 

 

 

 

32,341

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

1,835

 

 

 

 

 

 

1,835

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(164,446

)

 

 

(164,446

)

Balances at March 31, 2019

 

 

55,069

 

 

$

551

 

 

$

3,430,030

 

 

$

(1,792

)

 

$

(1,656,690

)

 

$

1,772,099

 

Vesting of restricted stock units

 

 

66

 

 

 

1

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

Exercise of stock options

 

 

93

 

 

 

1

 

 

 

3,972

 

 

 

 

 

 

 

 

 

3,973

 

Stock-based compensation

 

 

 

 

 

 

 

 

55,111

 

 

 

 

 

 

 

 

 

55,111

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

973

 

 

 

 

 

 

973

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(195,782

)

 

 

(195,782

)

Balances at June 30, 2019

 

 

55,228

 

 

$

553

 

 

$

3,489,112

 

 

$

(819

)

 

$

(1,852,472

)

 

$

1,636,374

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

other

 

 

 

 

 

 

Total

 

 

 

Common stock

 

 

paid-in

 

 

comprehensive

 

 

Accumulated

 

 

stockholders'

 

 

 

Shares

 

 

Amount

 

 

capital

 

 

loss

 

 

deficit

 

 

equity

 

Balances at December 31, 2017

 

 

49,406

 

 

$

494

 

 

$

2,540,951

 

 

$

(4,205

)

 

$

(913,808

)

 

$

1,623,432

 

Adjustment to beginning accumulated deficit from

   adoption of ASU 2014-09

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(29,375

)

 

 

(29,375

)

Vesting of restricted stock units

 

 

74

 

 

 

1

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

Issuance of common stock upon public offering, net

   of issuance costs of $2,563

 

 

277

 

 

 

3

 

 

 

48,698

 

 

 

 

 

 

 

 

 

48,701

 

Exercise of stock options

 

 

301

 

 

 

3

 

 

 

19,727

 

 

 

 

 

 

 

 

 

19,730

 

Purchase of common stock under ESPP

 

 

9

 

 

 

 

 

 

687

 

 

 

 

 

 

 

 

 

687

 

Stock-based compensation

 

 

 

 

 

 

 

 

22,995

 

 

 

 

 

 

 

 

 

22,995

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(844

)

 

 

 

 

 

(844

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(115,126

)

 

 

(115,126

)

Balances at March 31, 2018

 

 

50,067

 

 

$

501

 

 

$

2,633,057

 

 

$

(5,049

)

 

$

(1,058,308

)

 

$

1,570,201

 

Vesting of restricted stock units

 

 

33

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of stock options

 

 

125

 

 

 

1

 

 

 

5,616

 

 

 

 

 

 

 

 

 

5,617

 

Stock-based compensation

 

 

 

 

 

 

 

 

28,056

 

 

 

 

 

 

 

 

 

28,056

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(345

)

 

 

 

 

 

(345

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(145,996

)

 

 

(145,996

)

Balances at June 30, 2018

 

 

50,225

 

 

 

502

 

 

 

2,666,729

 

 

 

(5,394

)

 

 

(1,204,303

)

 

 

1,457,534

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

 

 

4


 

bluebird bio, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands)

 

 

 

For the six months ended June 30,

 

 

 

2019

 

 

2018

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(360,228

)

 

$

(261,120

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Change in fair value of contingent consideration

 

 

510

 

 

 

796

 

Depreciation and amortization

 

 

7,831

 

 

 

8,199

 

Stock-based compensation expense

 

 

87,452