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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, 2020
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)
__________________________________________________________________
Delaware13-3680878
(State or Other Jurisdiction of
Incorporation or Organization)
(IRS Employer
Identification No.)

60 Binney Street
Cambridge,Massachusetts02142
(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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par value per shareBLUEThe NASDAQ Stock 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.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller 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 31, 2020, there were 66,222,965 shares of the registrant’s Common Stock, par value $0.01 per share, outstanding.



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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, and to ensure adequate supply of our viral vectors and drug products;
the timing or likelihood of regulatory filings and approvals for our product candidates;
the timing or success of commercialization of our approved product, and any future approved products;
the pricing and reimbursement of our approved product, and any future approved products;
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 approved product, 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;
the impact of the COVID-19 pandemic; 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.


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bluebird bio, Inc.
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Page
CERTIFICATIONS



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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
bluebird bio, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
(in thousands, except par value amounts)
As of
June 30,
2020
As of
December 31,
2019
Assets
Current assets:
Cash and cash equivalents$1,198,768  $327,214  
Marketable securities350,614  779,246  
Prepaid expenses39,358  32,888  
Receivables and other current assets24,705  12,826  
Total current assets1,613,445  1,152,174  
Marketable securities49,411  131,506  
Property, plant and equipment, net155,376  151,176  
Intangible assets, net12,183  14,326  
Goodwill13,128  13,128  
Operating lease right-of-use assets189,464  185,885  
Restricted cash and other non-current assets74,783  79,229  
Total assets$2,107,790  $1,727,424  
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$26,181  $42,995  
Accrued expenses and other current liabilities135,612  141,556  
Operating lease liability, current portion20,955  20,175  
Deferred revenue, current portion3,915  8,474  
Collaboration research advancement, current portion10,518  10,380  
Total current liabilities197,181  223,580  
Deferred revenue, net of current portion25,762  9,791  
Collaboration research advancement, net of current portion23,917  27,834  
Operating lease liability, net of current portion174,564  170,812  
Other non-current liabilities4,335  10,414  
Total liabilities425,759  442,431  
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, 2020 and December 31, 2019
    
Common stock, $0.01 par value, 125,000 shares authorized; 66,196 and 55,368 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively
662  554  
Additional paid-in capital4,189,697  3,568,184  
Accumulated other comprehensive loss(2,400) (1,893) 
Accumulated deficit(2,505,928) (2,281,852) 
Total stockholders’ equity1,682,031  1,284,993  
Total liabilities and stockholders’ equity$2,107,790  $1,727,424  
See accompanying notes to unaudited condensed consolidated financial statements.
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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,
2020201920202019
Revenue:
Service revenue$78,357  $11,093  $95,190  $20,304  
Collaborative arrangement revenue109,674  465  111,976  2,431  
Royalty and other revenue10,859  1,738  13,587  3,032  
Total revenues
198,890  13,296  220,753  25,767  
Operating expenses:
Research and development
156,308  146,540  310,431  269,180  
Selling, general and administrative68,628  68,631  141,876  128,910  
Cost of royalty and other revenue1,554  613  2,579  1,043  
Change in fair value of contingent consideration
(1,655) 214  (4,763) 510  
Total operating expenses
224,835  215,998  450,123  399,643  
Loss from operations
(25,945) (202,702) (229,370) (373,876) 
Interest income, net
2,939  9,387  8,294  19,489  
Other income (expense), net1,551  (2,936) (2,896) (6,325) 
Loss before income taxes
(21,455) (196,251) (223,972) (360,712) 
Income tax (expense) benefit(10) 469  (104) 484  
Net loss
$(21,465) $(195,782) $(224,076) $(360,228) 
Net loss per share - basic and diluted:
$(0.36) $(3.55) $(3.86) $(6.54) 
Weighted-average number of common shares used in computing net loss per share - basic and diluted:
60,384  55,165  57,987  55,062  
Other comprehensive income (loss):
Other comprehensive income (loss), net of tax expense of $0.1 million and $0.8 million for the three months ended June 30, 2020 and 2019, respectively, and $0.1 million and $1.3 million for the six months ended June 30, 2020 and 2019, respectively
399  973  (507) 2,808  
Total other comprehensive income (loss)399  973  (507) 2,808  
Comprehensive loss
$(21,066) $(194,809) $(224,583) $(357,420) 
See accompanying notes to unaudited condensed consolidated financial statements.
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bluebird bio, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(unaudited)
(in thousands)
Common stock
Additional
paid-in
capital
Accumulated
other
comprehensive
loss
Accumulated
deficit
Total
stockholders'
equity
Shares
Amount
Balances at December 31, 201955,368  $554  $3,568,184  $(1,893) $(2,281,852) $1,284,993  
Vesting of restricted stock units
204  2  (2) —  —    
Exercise of stock options
20  —  750  —  —  750  
Purchase of common stock under ESPP
28  —  1,872  —  —  1,872  
Stock-based compensation
—  —  36,335  —  —  36,335  
Other comprehensive loss
—  —  —  (906) —  (906) 
Net loss
—  —  —  —  (202,611) (202,611) 
Balances at March 31, 202055,620  $556  $3,607,139  $(2,799) $(2,484,463) $1,120,433  
Issuance of common stock upon public offering,
   net of issuance costs of $33,465
10,455  105  541,431  —  —  541,536  
Vesting of restricted stock units
114  1  (1) —  —    
Exercise of stock options
7  —  347  —  —  347  
Stock-based compensation
—  —  40,781  —  —  40,781  
Other comprehensive income
—  —  —  399  —  399  
Net loss
—  —  —  —  (21,465) (21,465) 
Balances at June 30, 202066,196  $662  $4,189,697  $(2,400) $(2,505,928) $1,682,031  

Common stock
Additional
paid-in
capital
Accumulated
other
comprehensive
loss
Accumulated
deficit
Total
stockholders'
equity
SharesAmount
Balances at December 31, 201854,738  $547  $3,386,958  $(3,627) $(1,498,808) $1,885,070  
Adjustments 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, 201955,069  $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, 201955,228  $553  $3,489,112  $(819) $(1,852,472) $1,636,374  
See accompanying notes to unaudited condensed consolidated financial statements.
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bluebird bio, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
For the six months ended
June 30,
20202019
Cash flows from operating activities:
Net loss$(224,076) $(360,228) 
Adjustments to reconcile net loss to net cash used in operating activities:
Change in fair value of contingent consideration(4,763) 510  
Depreciation and amortization9,430  7,831  
Stock-based compensation expense84,822  87,452  
Unrealized loss on equity securities3,343  6,184  
Other non-cash items(1,841) (7,064) 
Changes in operating assets and liabilities:
Prepaid expenses and other assets(13,813) (20,694) 
Operating lease right-of-use assets11,085  11,037  
Accounts payable(14,042) 6,652  
Accrued expenses and other liabilities(14,025) (9,301) 
Operating lease liabilities(10,131) (259) 
Deferred revenue11,412  (11,716) 
Collaboration research advancement(3,779) (2,431) 
Net cash used in operating activities(166,378) (292,027) 
Cash flows from investing activities:
Purchase of property, plant and equipment(15,478) (37,925) 
Purchases of marketable securities(101,421) (471,365) 
Sales of marketable securities29,878    
Proceeds from maturities of marketable securities580,875  704,803  
Net cash provided by investing activities493,854  195,513  
Cash flows from financing activities:
Proceeds from public offering of common stock, net of issuance costs541,536    
Proceeds from exercise of stock options and ESPP contributions2,549  15,004  
Net cash provided by financing activities544,085  15,004  
Increase (decrease) in cash, cash equivalents and restricted cash871,561  (81,510) 
Cash, cash equivalents and restricted cash at beginning of period381,709  417,099  
Cash, cash equivalents and restricted cash at end of period$1,253,270  $335,589  
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents$1,198,768  $280,995  
Restricted cash included in receivables and other current assets$  $100  
Restricted cash included in restricted cash and other non-current assets$54,502  $54,494  
Total cash, cash equivalents and restricted cash$1,253,270  $335,589  
Supplemental cash flow disclosures from investing and financing activities:
Purchases of property, plant and equipment included in accounts payable and accrued expenses
$1,257  $8,869  
Right-of-use assets obtained in exchange for operating lease liabilities$14,663  $17,489  
See accompanying notes to unaudited condensed consolidated financial statements.
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bluebird bio, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
1. Description of the business
bluebird bio, Inc. (the “Company” or “bluebird”) was incorporated in Delaware on April 16, 1992, and is headquartered in Cambridge, Massachusetts. The Company is a biotechnology company committed to researching, developing and commercializing potentially transformative gene therapies for severe genetic diseases and cancer. Since its inception, the Company has devoted substantially all of its resources to its research and development efforts relating to its product candidates, including activities to manufacture product candidates, conduct clinical studies of its product candidates, perform preclinical research to identify new product candidates and provide selling, general and administrative support for these operations, including commercial-readiness activities.
The Company’s programs in severe genetic diseases include betibeglogene autotemcel (beti-cel; formerly LentiGlobin for β-thalassemia gene therapy) as a treatment for transfusion-dependent β-thalassemia, or TDT; its LentiGlobin® product candidate as a treatment for sickle cell disease, or SCD; and elivaldogene autotemcel (eli-cel; formerly Lenti-D gene therapy) as a treatment for cerebral adrenoleukodystrophy, or CALD. The Company’s programs in oncology are focused on developing novel T cell-based immunotherapies, including chimeric antigen receptor (CAR) and T cell receptor (TCR) T cell therapies. Idecabtagene vicleucel, or ide-cel, and bb21217, are product candidates in oncology under the Company’s collaboration arrangement with Bristol-Myers Squibb ("BMS"), formerly Celgene Corporation ("Celgene") prior to its acquisition by BMS in November 2019. ide-cel and bb21217 are CAR T cell product candidates for the treatment of multiple myeloma. Please refer to Note 9, Collaborative arrangements, for further discussion of the Company’s collaboration with BMS.
In June 2019, the Company received conditional marketing authorization from the European Commission for beti-cel as a treatment of patients 12 years and older with TDT who do not have a β00 genotype, for whom hematopoietic stem cell (HSC) transplantation is appropriate but a human leukocyte-matched related HSC donor is not available. beti-cel is being marketed as ZYNTEGLO™ in the European Union. Through June 30, 2020, the Company had not generated any revenue from product sales of ZYNTEGLO.
As of June 30, 2020, the Company had cash, cash equivalents and marketable securities of $1.60 billion. The Company expects that its cash, cash equivalents and marketable securities will be sufficient to fund current planned operations for at least twelve months from the date of issuance of these financial statements, though it may pursue additional cash resources through public or private debt and equity financings and establish collaborations with or license its technology to other companies.
2. Basis of presentation, principles of consolidation and significant accounting policies
Basis of presentation
The accompanying condensed consolidated financial statements are unaudited and have been prepared by the Company in accordance with accounting principles generally accepted in the United States (“GAAP”) as found in the Accounting Standards Codification ("ASC") and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). Certain information and footnote disclosures normally included in the Company’s annual financial statements have been condensed or omitted. These condensed consolidated financial statements, in the opinion of management, reflect all normal recurring adjustments necessary for a fair presentation of the Company’s financial position and results of operations for the interim periods ended June 30, 2020 and 2019.
The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full year. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2019, and the notes thereto, which are included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 18, 2020.
Certain items in the prior year’s condensed consolidated financial statements have been reclassified to conform to the current presentation.  However, no subtotals in the prior year condensed consolidated financial statements were impacted as a result.
Amounts reported are computed based on thousands. As a result, certain totals may not sum due to rounding.
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The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Any reference in these notes to applicable guidance is meant to refer to GAAP. The Company views its operations and manages its business in one operating segment.
Significant accounting policies
The significant accounting policies used in preparation of these condensed consolidated financial statements for the three and six months ended June 30, 2020 are consistent with those discussed in Note 2 to the consolidated financial statements included in the Company’s 2019 Annual Report on Form 10-K, except as noted immediately below and as noted within the "Recent accounting pronouncements - Recently adopted" section.
Marketable securities
Effective January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Statements ("ASU 2016-13" or "ASC 326"), using the effective date method. As the Company had never recorded any other-than-temporary-impairment adjustments to its available-for-sale debt securities prior to the effective date, no transition provisions are applicable to the Company.
The Company assesses its available-for-sale debt securities under the available-for-sale debt security impairment model in ASC 326 as of each reporting date in order to determine if a portion of any decline in fair value below carrying value recognized on its available-for-sale debt securities is the result of a credit loss. The Company records credit losses in the condensed consolidated statements of operations and comprehensive loss as credit loss expense within other expense, net, which is limited to the difference between the fair value and the amortized cost of the security. To date, the Company has not recorded any credit losses on its available-for-sale debt securities.
Accrued interest receivable related to the Company's available-for-sale debt securities is presented within receivables and other current assets on the Company's condensed consolidated balance sheets. The Company has elected the practical expedient available to exclude accrued interest receivable from both the fair value and the amortized cost basis of available-for-sale debt securities for the purposes of identifying and measuring any impairment. The Company writes off accrued interest receivable once it has determined that the asset is not realizable. Any write offs of accrued interest receivable are recorded by reversing interest income, recognizing credit loss expense, or a combination of both. To date, the Company has not written off any accrued interest receivables associated with its marketable securities.
Stock-based compensation
The Company estimates the fair value of its option awards using the Black-Scholes option pricing model, which requires the input of subjective assumptions, including (i) the expected stock price volatility, (ii) the calculation of the expected term of the award, (iii) the risk-free interest rate, and (iv) expected dividends. Effective January 1, 2020, the Company eliminated the use of a representative peer group and uses only its own historical volatility data in its estimate of expected volatility given that there is now a sufficient amount of historical information regarding the volatility of its own stock price.
Use of estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results could materially differ from those estimates. Management considers many factors in selecting appropriate financial accounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of these financial statements. Management must apply significant judgment in this process. In addition, other factors may affect estimates, including: expected business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes and management must select an amount that falls within that range of reasonable estimates. This process may result in actual results differing materially from those estimated amounts used in the preparation of the financial statements. Estimates are used in the following areas, among others: future undiscounted cash flows and subsequent fair value estimates used to assess potential and measure any impairment of long-lived assets, including goodwill and intangible assets, and the measurement of right-of-use assets and lease liabilities, contingent consideration, stock-based compensation expense, accrued expenses, revenue, income taxes, and the assessment of the Company's ability to fund its operations for at least the next twelve months from the date of issuance of these financial statements.
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Recent accounting pronouncements
Recently adopted
ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Statements, ASU No. 2019-5 Financial Instruments – Credit Losses (Topic 326): Targeted Transition Relief, ASU No. 2019-11, Codification Improvements to Topic 326, Financial Instruments - Credit Losses
In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Statements.  The new standard, as amended, requires that expected credit losses relating to financial assets measured on an amortized cost basis and available-for-sale debt securities be recorded through an allowance for credit losses. It also limits the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value and also requires the reversal of previously recognized credit losses if fair value increases. The targeted transition relief standard allows filers an option to irrevocably elect the fair value option of ASC 825-10, Financial Instruments-Overall, applied on an instrument-by-instrument basis for eligible instruments. The Company adopted this standard on January 1, 2020 on a prospective basis and the adoption did not have a material impact on its financial position and results of operations.
ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. The new standard removes certain disclosures, modifies certain disclosures, and adds additional disclosures related to fair value measurement. The Company adopted this standard on January 1, 2020, and it did not have a material impact on its financial position and results of operations upon adoption.
ASU No. 2018-15, Intangibles-Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract
In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments in this update. The Company adopted this standard on a prospective basis as of January 1, 2020, and it did not have a material impact on its financial position and results of operations upon adoption.
ASU No. 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606
In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606, (“ASU 2018-18”). The amendments in this update clarify that certain transactions between collaborative arrangement participants should be accounted for as revenue under ASC 606, Revenue from Contracts with Customers (“Topic 606” or "ASC 606") when the counter party is a customer in the context of a unit of account. ASU 2018-18 also precludes companies from presenting transactions with collaborative partners that are outside the scope of Topic 606 together with revenue within the scope of Topic 606. The Company adopted this standard on a retrospective basis on January 1, 2020. As a result, revenue for prior periods are presented in accordance with the new standard.
Prior to the adoption of ASU 2018-18, the Company presented all revenue recognized under its collaborative arrangements as collaboration revenue on its condensed consolidated statement of operations and comprehensive loss. However, as the Company recognizes revenue under its collaborative arrangements both within and outside the scope of Topic 606, the Company has revised its presentation of revenue on its condensed consolidated statement of operations and comprehensive loss as follows: service revenue includes revenue from collaborative partners recognized within the scope of Topic 606 and collaborative arrangement revenue includes revenue from collaborative partners recognized outside the scope of Topic 606. The disaggregation of revenue recognized under Topic 606 and outside of Topic 606 had previously otherwise been disclosed in the Notes to Condensed Consolidated Financial Statements.
ASU No. 2019-4, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments
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In April 2019, the FASB issued ASU 2019-4, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. This update provides clarifications for three topics related to financial instruments accounting, some of which apply to the Company. The Company adopted this standard on January 1, 2020 on a prospective basis, and it did not have a material impact on its financial position and results of operations upon adoption.
Not yet adopted
ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("ASU 2019-12"), which is intended to simplify the accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. The new standard will be effective beginning January 1, 2021. The Company is currently evaluating the potential impact ASU 2019-12 may have on its financial position and results of operations upon adoption.
3. Marketable securities
The following table summarizes the marketable securities held at June 30, 2020 and December 31, 2019 (in thousands):
Description
Amortized
cost / Cost
Unrealized
gains
Unrealized
losses
Fair
value
June 30, 2020
U.S. government agency securities and treasuries
$201,362  $1,294  $(5) $202,651  
Corporate bonds
151,305  1,620    152,925  
Commercial paper
34,922    34,922  
Equity securities
20,017  (10,490) 9,527  
Total
$407,606  $2,914  $(10,495) $400,025  
December 31, 2019
U.S. government agency securities and treasuries$633,970  $2,014  $(48) $635,936  
Certificates of deposit
960      960  
Corporate bonds
185,827  824  (43) 186,608  
Commercial paper
74,378      74,378  
Equity securities
20,017    (7,147) 12,870  
Total
$915,152  $2,838  $(7,238) $910,752  
No available-for-sale debt securities held as of June 30, 2020 or December 31, 2019 had remaining maturities greater than five years.
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Table of Contents
4. Fair value measurements
The following table sets forth the Company’s assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2020 and December 31, 2019 (in thousands):
Description
Total
Quoted
prices in
active
markets
(Level 1)
Significant
other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
June 30, 2020
Assets:
Cash and cash equivalents$1,198,768  $1,198,768  $  $  
Marketable securities:
U.S. government agency securities and treasuries202,651    202,651    
Corporate bonds152,925    152,925    
Commercial paper34,922    34,922    
Equity securities9,527  9,527      
Total$1,598,793  $1,208,295  $390,498  $  
Liabilities:
Contingent consideration$3,214  $  $  $3,214  
Total$3,214  $  $  $3,214  
December 31, 2019
Assets:
Cash and cash equivalents$327,214  $311,245  $15,969  $  
Marketable securities:
U.S. government agency securities and treasuries635,936    635,936    
Certificates of deposit960    960    
Corporate bonds186,608