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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, 2021
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 August 3, 2021, there were 67,578,549 shares of the registrant’s Common Stock, par value $0.01 per share, outstanding.



Table of Contents
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 betibeglogene autotemcel (beti-cel), elivaldogene autotemcel (eli-cel), LentiGlobin for SCD, and our oncology product candidates;
the timing or success of commercialization of beti-cel, eli-cel, LentiGlobin for SCD, and our oncology product candidates following marketing approval, if and when obtained;
our ability to obtain adequate pricing and reimbursement of beti-cel, eli-cel, LentiGlobin for SCD, and our oncology product candidates following marketing approval, if and when obtained;
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;
the timing, effects, costs, and benefits, including the tax treatment of the planned separation of our portfolio of products and programs into two independent, publicly-traded companies; 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.


Table of Contents
Summary of the Material and Other Risks Associated with Our Business
Below is a summary of the material risks to our business, operations and the investment in our common stock. This summary does not address all of the risks that we face. Risks and uncertainties not presently known to us or that we presently deem less significant may also impair our business operations. Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found below under the heading “Risk Factors” and should be carefully considered, together with other information in this Quarterly Report on Form 10-Q in its entirety before making investment decisions regarding our common stock.

We have limited experience as a commercial company and the marketing and sale of beti-cel, eli-cel, LentiGlobin for SCD, and our oncology product candidates following marketing approval, if and when obtained, may be unsuccessful or less successful than anticipated.
The commercial success of beti-cel, eli-cel, LentiGlobin for SCD, and our oncology product candidates, will depend upon the degree of market acceptance by physicians, patients, third-party payers and others in the medical community. Following marketing approval of beti-cel in the European Union, we did not reach agreement with payers on an acceptable price for reimbursement in our priority markets in Europe, and as a consequence, we are focusing on our severe genetic disease business on the U.S. market. If we fail to obtain sufficient pricing or reimbursement approval in the United States for beti-cel, eli-cel, LentiGlobin for SCD, and our oncology product candidates following marketing approval, if and when obtained, our revenues may be adversely affected and our business may suffer.
If the market opportunities for our product or any future products are smaller than we believe they are, and if we are not able to successfully identify patients and achieve significant market share, our revenues may be adversely affected and our business may suffer.
We rely on a complex supply chain for beti-cel, eli-cel, LentiGlobin for SCD, and our oncology product candidates. The manufacture and delivery of our lentiviral vectors and drug products present significant challenges for us, and we may not be able to produce our lentiviral vectors and drug products at the quality, quantities, locations or timing needed to support our clinical programs or commercialization following marketing approval, if and when obtained. In addition, we may encounter challenges with engaging or coordinating with qualified treatment centers needed to support commercialization.
We cannot predict when or if we will obtain marketing approval to commercialize our product candidates, and any marketing approvals that we receive may ultimately be for more narrow indications than we expect.
Insertional oncogenesis is a risk of gene therapies using viral vectors that can integrate into the genome, and a patient with CALD treated with eli-cel in one of our clinical studies has been diagnosed with myelodysplastic syndrome likely mediated by Lenti-D lentiviral vector insertion. As a result, the FDA has placed our clinical studies of eli-cel on clinical hold, and we can make no assurances as to when the clinical hold will be lifted, if ever. These events may require us to halt or delay further clinical development of our product candidates, such as eli-cel, or to suspend or cease commercialization following marketing approval, and the commercial potential of our product candidates may be materially and negatively impacted.
We face intense competition and rapid technological change and the possibility that our competitors may develop therapies that are more advanced, safer or effective than ours, which may adversely affect our financial condition and our ability to successfully commercialize beti-cel, eli-cel, LentiGlobin for SCD, or our oncology product candidates following marketing approval, if and when obtained. If our competitors obtain orphan drug exclusivity for products that regulatory authorities determine constitute the same drug and treat the same indications as our product or any future products, we may not be able to have competing products approved by the applicable regulatory authority for a significant period of time.
We may not be successful in our efforts to identify or discover additional product candidates.
We are dependent on BMS for the successful development and commercialization of idecabtagene vicleucel (ide-cel, marketed as ABECMA®) and bb21217. If BMS does not devote sufficient resources to the commercialization of ide-cel and the development of bb21217, is unsuccessful in its efforts, or chooses to terminate its agreements with us, our business will be materially harmed.
We have incurred significant losses since our inception and anticipate that we will continue to incur significant losses for the foreseeable future.
From time to time, we will need to raise additional funding, which may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force us to delay, limit or terminate our product development efforts or other operations.


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Our business may be materially and adversely affected by the ongoing COVID-19 pandemic. The COVID-19 pandemic has had, and will likely continue to have, an impact on various aspects of our business and that of third parties on which we rely. The extent to which the COVID-19 pandemic impacts our business will depend in part on future developments, which are uncertain and unpredictable in nature.
The proposed separation of our business into two independent, publicly traded companies is subject to various risks and uncertainties and may not be completed on the terms or timeline currently contemplated, if at all, and will involve significant time, effort and expense, which could harm our business, results of operations and financial condition.


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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,
2021
As of
December 31,
2020
Assets
Current assets:
Cash and cash equivalents$353,468 $317,705 
Marketable securities486,233 833,546 
Prepaid expenses33,726 37,472 
Receivables and other current assets16,597 16,116 
Inventory13,502 10,698 
Total current assets903,526 1,215,537 
Marketable securities101,927 122,891 
Property, plant and equipment, net158,820 162,831 
Intangible assets, net16,263 10,041 
Goodwill13,128 13,128 
Operating lease right-of-use assets190,993 184,019 
Restricted cash and other non-current assets69,802 72,805 
Total assets$1,454,459 $1,781,252 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$39,294 $21,602 
Accrued expenses and other current liabilities168,035 145,406 
Operating lease liability, current portion28,669 25,024 
Deferred revenue, current portion2,687 2,320 
Collaboration research advancement, current portion9,080 9,236 
Total current liabilities247,765 203,588 
Deferred revenue, net of current portion25,762 25,762 
Collaboration research advancement, net of current portion18,547 21,581 
Operating lease liability, net of current portion169,933 167,997 
Other non-current liabilities7,891 7,268 
Total liabilities469,898 426,196 
Commitments and contingencies (Note 9)
Stockholders’ equity:
Preferred stock, $0.01 par value, 5,000 shares authorized; 0 shares issued and outstanding at June 30, 2021 and December 31, 2020
  
Common stock, $0.01 par value, 125,000 shares authorized; 67,551 and 66,432 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively
676 665 
Additional paid-in capital4,337,719 4,260,443 
Accumulated other comprehensive loss(5,777)(5,505)
Accumulated deficit(3,348,057)(2,900,547)
Total stockholders’ equity984,561 1,355,056 
Total liabilities and stockholders’ equity$1,454,459 $1,781,252 
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,
2021202020212020
Revenue:
Service revenue$5,314 $78,357 $11,232 $95,190 
Collaborative arrangement revenue1,670 109,674 3,190 111,976 
Royalty and other revenue488 10,859 5,845 13,587 
Total revenues
7,472 198,890 20,267 220,753 
Operating expenses:
Research and development
144,315 156,308 298,793 310,431 
Selling, general and administrative78,576 68,628 165,451 141,876 
Share of collaboration loss
10,071  10,071  
Cost of royalty and other revenue15,301 1,554 17,582 2,579 
Change in fair value of contingent consideration
47 (1,655)416 (4,763)
Total operating expenses
248,310 224,835 492,313 450,123 
Loss from operations
(240,838)(25,945)(472,046)(229,370)
Interest income, net
439 2,939 1,149 8,294 
Other (expense) income, net(1,087)1,551 23,669 (2,896)
Loss before income taxes
(241,486)(21,455)(447,228)(223,972)
Income tax expense(216)(10)(282)(104)
Net loss
$(241,702)$(21,465)$(447,510)$(224,076)
Net loss per share - basic and diluted:
$(3.58)$(0.36)$(6.66)$(3.86)
Weighted-average number of common shares used in computing net loss per share - basic and diluted:
67,487 60,384 67,233 57,987 
Other comprehensive (loss) income:
Other comprehensive (loss) income, net of tax benefit (expense) of $0.0 million and $(0.1) million for the three and six months ended June 30, 2021 and 2020, respectively.
(328)399 (272)(507)
Total other comprehensive (loss) income (328)399 (272)(507)
Comprehensive loss
$(242,030)$(21,066)$(447,782)$(224,583)
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, 202066,432 $665 $4,260,443 $(5,505)$(2,900,547)$1,355,056 
Vesting of restricted stock units
294 3 (3)— —  
Exercise of stock options
207 2 1,217 — — 1,219 
Purchase of common stock under ESPP
67 1 1,706 — — 1,707 
Stock-based compensation
— — 36,090 — — 36,090 
Issuance of unrestricted stock awards to settle
    accrued employee compensation
422 4 12,009 — — 12,013 
Other comprehensive income— — — 56 — 56 
Net loss
— — — — (205,808)(205,808)
Balances at March 31, 202167,422 $675 $4,311,462 $(5,449)$(3,106,355)$1,200,333 
Vesting of restricted stock units
127 1 (1)— —  
Exercise of stock options
2 — 36 — — 36 
Stock-based compensation
— — 26,222 — — 26,222 
Other comprehensive loss— — — (328)— (328)
Net loss
— — — — (241,702)(241,702)
Balances at June 30, 202167,551 $676 $4,337,719 $(5,777)$(3,348,057)$984,561 
Common stock
Additional
paid-in
capital
Accumulated
other
comprehensive
loss
Accumulated
deficit
Total
stockholders'
equity
SharesAmount
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)$1,682,031 
See accompanying notes to unaudited condensed consolidated financial statements.
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bluebird bio, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
For the six months ended
June 30,
20212020
Cash flows from operating activities:
Net loss$(447,510)$(224,076)
Adjustments to reconcile net loss to net cash used in operating activities:
Change in fair value of contingent consideration416 (4,763)
Depreciation and amortization11,353 9,430 
Stock-based compensation expense73,687 84,822 
(Gain) loss on equity securities(28,286)3,343 
Excess inventory reserve15,084  
Other non-cash items6,228 (1,841)
Changes in operating assets and liabilities:
Prepaid expenses and other assets13,923 (9,347)
Inventory(17,404)(4,466)
Operating lease right-of-use assets15,074 11,085 
Accounts payable7,475 (14,042)
Accrued expenses and other liabilities20,276 (14,025)
Operating lease liabilities(16,468)(10,131)
Deferred revenue367 11,412 
Collaboration research advancement(3,190)(3,779)
Net cash used in operating activities(348,975)(166,378)
Cash flows from investing activities:
Purchase of property, plant and equipment(9,204)(15,478)
Purchases of marketable securities(196,145)(101,421)
Proceeds from maturities of marketable securities557,751 580,875 
Proceeds from sales of marketable securities31,318 29,878 
Purchase of intangible assets(2,000) 
Net cash provided by investing activities381,720 493,854 
Cash flows from financing activities:
Proceeds from public offering of common stock, net of issuance costs 541,536 
Proceeds from exercise of stock options and ESPP contributions4,192 2,549 
Net cash provided by financing activities4,192 544,085 
Increase in cash, cash equivalents and restricted cash36,937 871,561 
Cash, cash equivalents and restricted cash at beginning of period373,728 381,709 
Cash, cash equivalents and restricted cash at end of period$410,665 $1,253,270 
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents$353,468 $1,198,768 
Restricted cash included in receivables and other current assets$2,687 $ 
Restricted cash included in restricted cash and other non-current assets$54,510 $54,502 
Total cash, cash equivalents and restricted cash$410,665 $1,253,270 
Supplemental cash flow disclosures from investing and financing activities:
Purchases of property, plant and equipment included in accounts payable and accrued expenses$1,508 $1,257 
Right-of-use assets obtained in exchange for operating lease liabilities$22,049 $14,663 
Issuance of unrestricted stock awards to settle accrued employee compensation$12,013 $ 
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, following marketing approval, 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 activities in Europe as well as commercial-readiness activities in the United States.
The Company’s programs in severe genetic diseases include programs for transfusion-dependent β-thalassemia, or TDT, sickle cell disease, or SCD, and cerebral adrenoleukodystrophy, or CALD. The Company’s programs in oncology are focused on developing novel engineered cell and gene therapies for cancer, including the anti-BCMA CAR T programs for multiple myeloma under the Company’s collaboration arrangement with Bristol-Myers Squibb ("BMS"). Please refer to Note 10, Collaborative arrangements, for further discussion of the Company’s collaboration with BMS.
In March 2021, BMS received marketing approval from the U.S. Food and Drug Administration for idecabtagene vicleucel (ide-cel, marketed as ABECMA®) as a treatment of adult patients with relapsed or refractory multiple myeloma after four or more prior lines of therapy, including an immunomodulatory agent, a proteasome inhibitor, and an anti-CD38 monoclonal antibody. In July 2021, the Company received marketing approval from the European Commission for elivaldogene autotemcel (eli-cel; formerly Lenti-D gene therapy) as a treatment for patients less than 18 years of age with early cerebral adrenoleukodystrophy and without a matched sibling donor. In June 2019, the Company received conditional marketing authorization from the European Commission for betibeglogene autotemcel (beti-cel; formerly LentiGlobin for β-thalassemia gene therapy) 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.
In January 2021, the Company announced its intent to separate its severe genetic disease and oncology programs into two separate, independent publicly traded companies, bluebird bio, Inc. and 2seventy bio, Inc., a newly-formed Delaware corporation and wholly-owned subsidiary of the Company prior to the separation. bluebird bio, Inc. intends to retain focus on its severe genetic disease programs, with a focus on the U.S. market. As part of this strategy, bluebird bio, Inc. plans to execute an orderly wind down of its European operations. 2seventy bio, Inc. is expected to focus on the Company's oncology programs. The spin-off transaction is expected to be completed in late 2021 and is anticipated to be tax-free, subject to receipt of a favorable Internal Revenue Service (“IRS”) ruling.
In accordance with Accounting Standards Codification (“ASC”) 205-40, Going Concern, the Company evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the date that the consolidated financial statements are issued. The Company has incurred losses since inception and to date has financed its operations primarily through the sale of equity securities and, to a lesser extent, through collaboration agreements and grants from governmental agencies and charitable foundations. As of June 30, 2021, the Company had an accumulated deficit of $3.35 billion. During the six months ended June 30, 2021, the Company incurred a loss of $447.5 million and used $349.0 million of cash in operations. The Company expects to continue to generate operating losses and negative operating cash flows for the next few years and will need additional funding to support its planned operating activities through profitability. The transition to profitability is dependent upon the successful development, approval, and commercialization of beti-cel, eli-cel, LentiGlobin for SCD, and its oncology product candidates, and the achievement of a level of revenues adequate to support its cost structure.
As of June 30, 2021, the Company had cash, cash equivalents and marketable securities of $941.6 million. The Company expects its cash, cash equivalents and marketable securities will be sufficient to fund current planned operations for at least the next twelve months from the date of issuance of these financial statements, although it intends to pursue additional cash resources through public or private equity or debt financings or by establishing additional collaborations with other companies. Management's expectations with respect to its ability to fund current planned operations is based on estimates that are subject to risks and uncertainties. If actual results are different from management's estimates, the Company may need to seek additional
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strategic or financing opportunities sooner than would otherwise be expected. However, there is no guarantee that any of these strategic or financing opportunities will be executed or executed on favorable terms, and some could be dilutive to existing stockholders. If the Company is unable to obtain additional funding on a timely basis, it may be forced to significantly curtail, delay, or discontinue one or more of its planned research or development programs or be unable to expand its operations or commercialize products following marketing approval.
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, 2021 and 2020.
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, 2020, 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 23, 2021.
Inventory in the prior year’s condensed consolidated financial statements has been reclassified to conform to the current presentation on the condensed consolidated balance sheets and condensed consolidated statements of cash flows.  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.
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, 2021 are consistent with those discussed in Note 2 to the consolidated financial statements included in the Company’s 2020 Annual Report on Form 10-K, except as noted immediately below and as noted within the "Recent accounting pronouncements - Recently adopted" section.
Collaborative arrangement revenue
The Company analyzes its collaboration arrangements to assess whether they are within the scope of ASC 808, Collaborative Arrangements ("ASC 808"), which includes determining whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on the commercial success of such activities.  This assessment is performed throughout the life of the arrangement based on changes in the responsibilities of all parties in the arrangement.  For collaboration arrangements within the scope of ASC 808 that contain multiple elements, the Company first determines which elements of the collaboration are deemed to be within the scope of ASC 808 and those that are more reflective of a vendor-customer relationship and therefore within the scope of ASC 606, Revenue from Contracts with Customers ("Topic 606" or "ASC 606"). For elements of collaboration arrangements that are accounted for pursuant to ASC 808, an appropriate recognition method is determined and applied consistently, generally by analogy to Topic 606. 
In arrangements where the Company does not deem its collaborator to be its customer, payments to and from its collaborator are presented in the condensed consolidated statements of operations based on the nature of the payments, as summarized in the table and further described below.
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Nature of PaymentStatement of Operations Presentation
The Company's share of profits in connection with commercialization of productsCollaborative arrangement revenue
The Company's share of losses in connection with commercialization of productsShare of collaboration loss
Net reimbursement of the Company's research and development expensesCollaborative arrangement revenue
Net reimbursement of the collaborator's research and development expensesResearch and development expense
Where the collaborator is the principal in the product sales, the Company recognizes its share of any profits or losses, representing net product sales less cost of goods sold and shared commercial and other expenses, in the period in which such underlying sales occur and costs are incurred by the collaborator. The Company also recognizes its share of costs arising from research and development activities performed by collaborators in the period its collaborators incur such expenses.
Royalty and other revenue
During the first half of 2021, the Company recognized an immaterial amount of product revenue related to the sale of beti-cel (marketed as ZYNTEGLO) in the European Union and the related cost of goods sold, which is included within royalty and other revenue and cost of royalty and other revenue, respectively.
Inventory
Inventories are stated at the lower of cost or net realizable value under the first-expired, first-out (FEFO) methodology. Given human gene therapy products are a new and novel category of therapeutics and future economic benefit is not probable until regulatory approval for the product has been obtained, the Company has only considered inventory for capitalization upon regulatory approval. Manufacturing costs incurred prior to regulatory approval for pre-launch inventory that did not qualify for capitalization and clinical manufacturing costs are charged to research and development expense in the Company’s condensed consolidated statements of operations and comprehensive loss as costs are incurred. Additionally, inventory that initially qualifies for capitalization but that may ultimately be used for the production of clinical drug product is expensed as research and development expense when it has been designated for the manufacture of clinical drug product.
Inventory consists of cell banks, plasmids, lentiviral vectors, other materials and compounds sourced from third party suppliers and utilized in the manufacturing process, and drug product, which has been produced for the treatment of specific patients, that are owned by the Company.
Management periodically reviews inventories for excess or obsolescence, considering factors such as sales forecasts compared to quantities on hand and firm purchase commitments as well as remaining shelf life of on hand inventories. The Company writes-down its inventory that is obsolete or otherwise unmarketable to its estimated net realizable value in the period in which the impairment is first identified. Any such adjustments are included as a component of cost of goods sold within cost of royalty and other revenue on the Company’s condensed consolidated statements of operations.
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 recognition, income taxes, inventory capitalization, excess inventory analyses, 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. 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 was effective beginning January 1, 2021. The adoption of ASU 2019-12 did not have a material impact on the Company's financial position or results of operations upon adoption.
ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity
In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). ASU 2020-06 simplifies the complexity associated with applying U.S. GAAP for certain financial instruments with characteristics of liabilities and equity. More specifically, the amendments focus on the guidance for convertible instruments and derivative scope exception for contracts in an entity's own equity. The Company early adopted the new standard, effective January 1, 2021. The adoption of ASU 2020-06 did not have an impact on the Company's financial position or results of operations upon adoption.
ASU No. 2020-08, Codification Improvements to Subtopic 310-20, Receivables - Nonrefundable Fees and Other Costs
In October 2020, the FASB issued ASU 2020-08, Codification Improvements to Subtopic 310-20, Receivables - Nonrefundable Fees and Other Costs (“ASU 2020-08”) to provide further clarification and update the previously issued guidance in ASU 2017-08, Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20: Premium Amortization on Purchased Callable Debt Securities) (“ASU 2017-08”). ASU 2017-08 shortened the amortization period for certain callable debt securities purchased at a premium by requiring that the premium be amortized to the earliest call date. ASU 2020-08 requires that at each reporting period, to the extent that the amortized cost of an individual callable debt security exceeds the amount repayable by the issuer at the next call date, the excess premium shall be amortized to the next call date. The new standard was effective beginning January 1, 2021. The adoption of ASU 2020-08 did not have a material impact on the Company's financial position or results of operations upon adoption.
ASU No. 2020-10, Codification Improvements
In October 2020, the FASB issued ASU 2020-10, Codification Improvements ("ASU 2020-10"). The amendments in this ASU represent changes to clarify the ASC, correct unintended application of the guidance, or make minor improvements to the ASC that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. This new standard was effective beginning January 1, 2021. The adoption of ASU 2020-10 did not have a material impact on the Company's financial position or results of operations upon adoption.
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3. Marketable securities
The following table summarizes the marketable securities held at June 30, 2021 and December 31, 2020 (in thousands):
Description
Amortized
cost / Cost
Unrealized
gains
Unrealized
losses
Fair
value
June 30, 2021
U.S. government agency securities and treasuries
$346,331 $138 $(13)$346,456 
Corporate bonds
136,133 41 (27)136,147 
Commercial paper
102,937   102,937 
Equity securities
4,305 (1,685)2,620 
Total
$589,706 $179 $(1,725)$588,160 
December 31, 2020
U.S. government agency securities and treasuries$675,043 $302 $(74)$675,271 
Corporate bonds
197,171 432 (40)197,563 
Commercial paper
77,949 1  77,950 
Equity securities
20,017  (14,364)5,653 
Total
$970,180 $735 $(14,478)$956,437 
No available-for-sale debt securities held as of June 30, 2021 or December 31, 2020 had remaining maturities greater than five years.
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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, 2021 and December 31, 2020 (in thousands):
Description
Total
Quoted
prices in
active
markets
(Level 1)
Significant
other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
June 30, 2021
Assets:
Cash and cash equivalents$353,468 $310,833 $42,635 $ 
Marketable securities:
U.S. government agency securities and treasuries346,456  346,456  
Corporate bonds136,147  136,147  
Commercial paper102,937  102,937  
Equity securities2,620 2,620   
Total$941,628 $313,453 $628,175 $ 
Liabilities:
Contingent consideration$1,925 $ $ $1,925 
Total$1,925 $ $ $1,925 
December 31, 2020
Assets:
Cash and cash equivalents$317,705 $317,705 $ $ 
Marketable securities:
U.S. government agency securities and treasuries675,271  675,271  
Corporate bonds197,563  197,563  
Commercial paper77,950  77,950  
Equity securities5,653 5,653   
Total$1,274,142 $323,358 $950,784 $ 
Liabilities:
Contingent consideration$1,509 $ $ $1,509 
Total$1,509 $ $ $1,509 
Cash and cash equivalents
The Company considers all highly liquid securities with original final maturities of 90 days or less from the date of purchase to be cash equivalents. As of June 30, 2021, cash and cash equivalents comprise funds in cash, money market accounts, U.S. government agency securities and treasuries, corporate bonds, and commercial paper. As of December 31, 2020, cash and cash equivalents comprise funds in cash and money market accounts.
Marketable securities
Marketable securities classified as Level 2 within the valuation hierarchy generally consist of U.S. government agency securities and treasuries, corporate bonds, and commercial paper. The Company estimates the fair values of these marketable securities by taking into consideration valuations obtained from third-party pricing sources. These pricing sources utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include market pricing based on real-time trade data for the same or similar securities, issuer credit spreads, benchmark yields, and other observable inputs. The Company validates the prices provided by its third-party pricing sources by understanding the models used, obtaining market values from other pricing sources and analyzing pricing data in certain instances.
The amortized cost of available-for-sale debt securities is adjusted for amortization of premiums and accretion of discounts to the next call date for premiums or to maturity for discounts. At June 30, 2021 and December 31, 2020, the balance in the Company’s accumulated other comprehensive loss includes activity related to the Company’s available-for-sale debt securities.
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There were no material realized gains or losses recognized on the sale or maturity of available-for-sale debt securities during the three and six months ended June 30, 2021 or 2020.
Accrued interest receivable on the Company's available-for-sale debt securities totaled $1.9 million and $3.1 million as of June 30, 2021 and December 31, 2020, respectively. No accrued interest receivable was written off during the three and six months ended June 30, 2021 or 2020.
The following table summarizes available-for-sale debt securities in a continuous unrealized loss position for less than and greater than twelve months, and for which an allowance for credit losses has not been recorded at June 30, 2021 and December 31, 2020 (in thousands):
Less than 12 months12 months or greaterTotal
DescriptionFair valueUnrealized lossesFair valueUnrealized lossesFair valueUnrealized losses
June 30, 2021
U.S. government agency securities
   and treasuries
$25,988 $(13)$ $ $25,988 $(13)
Corporate bonds85,129 (27)  85,129 (27)
Total$111,117 $(40)$ $ $111,117 $(40)
December 31, 2020
U.S. government agency securities
   and treasuries
$211,384 $(74)$ $ $211,384 $(74)
Corporate bonds76,598 (40)1,205  77,803 (40)
Total$287,982 $(114)$1,205 $ $289,187 $(114)
The Company determined that there was no material change in the credit risk of the above investments during the six months ended June 30, 2021. As such, an allowance for credit losses was not recognized. As of June 30, 2021, the Company does not intend to sell such securities and it is not more likely than not that the Company will be required to sell the securities before recovery of their amortized cost bases.
The Company held equity securities with an aggregate fair value of $2.6 million and $5.7 million as of June 30, 2021 and December 31, 2020, respectively, within short-term marketable securities on its condensed consolidated balance sheets. In January 2021, the Company sold a portion of its equity securities for proceeds of $31.3 million. During the three months ended June 30, 2021 and 2020, the Company recorded losses of $0.1 million and gains of $1.2 million, respectively, related to its equity securities. During the six months ended June 30, 2021 and 2020, the Company recorded gains of $28.3 million and losses of $3.3 million, respectively, related to its equity securities. Gains and losses related to equity securities are included in other (expense) income, net on the condensed consolidated statements of operations and comprehensive loss.
Contingent consideration
In connection with its prior acquisition of Precision Genome Engineering, Inc. (“Pregenen”), the Company may be required to pay future consideration that is contingent upon the achievement of specified development, regulatory approvals or sales-based milestone events. Contingent consideration is measured at fair value and is based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The valuation of contingent consideration uses assumptions the Company believes would be made by a market participant. The Company assesses these estimates on an on-going basis as additional data impacting the assumptions is obtained. Future changes in the fair value of contingent consideration related to updated assumptions and estimates are recognized within the condensed consolidated statements of operations and comprehensive loss. In the absence of new information, changes in fair value will reflect changing discount rates and the passage of time. Contingent consideration is included in accrued expenses and other current liabilities and other non-current liabilities on the condensed consolidated balance sheets.
Please refer to Note 9, Commitments and contingencies, for further information.
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5. Inventory
Inventory consists of the following (in thousands):
As of June 30, 2021As of December 31, 2020
Raw materials$12,290 $8,967 
Finished goods1,212 1,731 
Inventory$13,502 $10,698 
During the six months ended June 30, 2021, the Company recorded a reserve for excess inventories of $15.1 million, which is included within cost of royalty and other revenue within the condensed consolidated statements of operations.
6. Property, plant and equipment, net
Property, plant and equipment, net, consists of the following (in thousands):
As of June 30, 2021As of December 31, 2020
Land
$1,210 $1,210 
Building
88,942 15,745 
Computer equipment and software
6,919 6,950 
Office equipment
7,335 7,665 
Laboratory equipment
67,313 55,521 
Leasehold improvements
31,259 34,286 
Construction-in-progress
14,803 92,514 
Total property, plant and equipment
217,781 213,891 
Less accumulated depreciation and amortization
(58,961)(51,060)
Property, plant and equipment, net
$158,820 $162,831 
North Carolina manufacturing facility
In November 2017, the Company acquired a manufacturing facility in Durham, North Carolina for the future manufacture of lentiviral vector for the Company’s gene therapies. As of June 30, 2021, the majority of the facility has been placed into service. The remainder of the facility is still in process of qualification, which is required for the facility to be ready for its intended use. Construction-in-progress as of June 30, 2021 and December 31, 2020 includes $14.1 million and $91.1 million, respectively, related to the North Carolina manufacturing facility.
7. Accrued expenses and other current liabilities
Accrued expenses and other current liabilities consist of the following (in thousands):
As of June 30, 2021As of December 31, 2020
Employee compensation$71,749 $55,802 
Manufacturing costs24,186 22,571 
Clinical and contract research organization costs19,865 23,766 
Collaboration costs20,974 20,004 
Property, plant and equipment1,201 789 
License and milestone fees183 278 
Professional fees1,982 1,541 
Other27,895 20,655 
Accrued expenses and other current liabilities$168,035 $145,406 

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8. Leases
The Company leases certain office and laboratory space, primarily located in Cambridge, Massachusetts and Seattle, Washington.  Additionally, the Company has embedded leases at various contract manufacturing organizations in both the United States and internationally. Except as described below, there have been no material changes in lease obligations from those disclosed in Note 8 to the consolidated financial statements included in the Company's 2020 Annual Report on Form 10-K.
Embedded operating leases
In July 2020, the Company entered into an agreement reserving manufacturing capacity with a contract manufacturing organization. The Company concluded that this agreement contains an embedded operating lease as a controlled environment room at the facility is designated for the Company's exclusive use during the term of the agreement, with the option to sublease the space if the Company provides notice that it will not utilize it for a specified duration of time. Under the terms of the agreement, the Company will be required to pay up to $5.4 million per year in maintenance fees in addition to the cost of any services provided and may terminate this agreement with eighteen months' notice. The term of the agreement is five years, with the option to extend. The Company recorded a right-of-use asset and lease liability for this operating lease upon lease commencement in March 2021 and is recognizing rent expense on a straight-line basis throughout the remaining term of the embedded lease.
9. Commitments and contingencies
Contingent consideration related to business combinations
In June 2014, the Company acquired Pregenen. The Company may be required to make up to $99.9 million in remaining future contingent cash payments to the former equity holders of Pregenen upon the achievement of certain commercial milestones related to the Pregenen technology. In accordance with accounting guidance for business combinations, contingent consideration liabilities are required to be recognized on the condensed consolidated balance sheets at fair value. Estimating the fair value of contingent consideration requires the use of significant assumptions primarily relating to probabilities of successful achievement of certain clinical and commercial milestones, the expected timing in which these milestones will be achieved, and discount rates. The use of different assumptions could result in materially different estimates of fair value.
Other funding commitments
The Company may be obligated to make future development, regulatory, and commercial milestone payments, and royalty payments on future sales of specified products associated with its collaboration and license agreements. Payments under these agreements generally become due and payable upon achievement of such milestones or sales. When the achievement of these milestones or sales have occurred, the corresponding amounts are recognized in the Company’s financial statements. Please refer to Note 10, Collaborative arrangements, for further information on the Company's collaboration agreements and to Note 11, Royalty and other revenue, for further information on the Company's license agreements.
Additionally, the Company is party to various contracts with contract research organizations and contract manufacturers that generally provide for termination on notice, with the exact amounts in the event of termination to be based on the timing of the termination and the terms of the agreement. There have been no material changes in future minimum purchase commitments from those disclosed in Note 9 to the consolidated financial statements included in the Company's 2020 Annual Report on Form 10-K.
While there are no material legal proceedings the Company is aware of, the Company may become party to various claims and complaints arising in the ordinary course of business. The Company enters into standard indemnification agreements in the ordinary course of business. Pursuant to the agreements, the Company indemnifies, holds harmless, and agrees to reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally the Company’s business partners. The term of these indemnification agreements is generally perpetual any time after execution of the agreement. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited. Management does not believe that any ultimate liability resulting from any of these claims will have a material adverse effect on its results of operations, financial position, or liquidity. However, management cannot give any assurance regarding the ultimate outcome of any claims, and their resolution could be material to operating results for any particular period.
The Company also indemnifies each of its directors and officers for certain events or occurrences, subject to certain limits, while the officer or director is or was serving at the Company's request in such capacity, as permitted under Delaware law and
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in accordance with its certificate of incorporation and by-laws. The term of the indemnification period lasts as long as a director may be subject to any proceeding arising out of acts or omissions of such director or officer in such capacity. The maximum amount of potential future indemnification is unlimited; however, the Company currently holds director and officer liability insurance. This insurance allows the transfer of risk associated with the Company's exposure and may enable it to recover a portion of any future amounts paid. The Company believes that the fair value of these indemnification obligations is minimal. Accordingly, it has not recognized any liabilities relating to these obligations.
10. Collaborative arrangements
To date, the Company’s revenue has been primarily generated from its collaboration arrangements with BMS and Regeneron Pharmaceuticals, Inc. ("Regeneron"), each as further described below.
Bristol-Myers Squibb
In March 2013, the Company entered into a collaboration agreement with BMS. The details of the collaboration agreements and the payments the Company has received, and is entitled to receive, are further described in Note 11, Collaborative arrangements, to the Company’s consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2020. During the second quarter of 2021, there have been no changes to the terms of the Company’s collaboration agreement with BMS.
Ide-cel
Under the Company’s collaboration agreement with BMS, the Company shares equally in the profit and loss related to the development and commercialization of ide-cel in the United States. The Company has no remaining financial rights with respect to the development or commercialization of ide-cel outside of the United States. The Company accounts for its collaborative arrangement efforts with BMS in the United States within the scope of ASC 808 given that both parties are active participants in the activities and both parties are exposed to significant risks and rewards dependent on the commercial success of the activities. The Company recognizes revenue related to the combined unit of accounting for the ex-U.S. license and lentiviral vector manufacturing services under Topic 606.
Ide-cel U.S. Share of Collaboration Profit or Loss
In March 2021, BMS received marketing approval from the U.S. Food and Drug Administration for ide-cel as a treatment for adult patients with relapsed or refractory multiple myeloma after four or more prior lines of therapy, including an immunomodulatory agent, a proteasome inhibitor, and an anti-CD38 monoclonal antibody. BMS is primarily responsible for the commercialization of ide-cel and they are the principal for commercial activity. On a quarterly basis, the Company determines its share of collaboration profit or loss for commercial activities. The Company’s share of any collaboration profit for commercial activities is recognized as collaborative arrangement revenue and its share of any collaboration loss for commercial activity is recognized as an operating expense and classified as share of collaboration loss on the Company's condensed consolidated statement of operations. The Company also is responsible for equally sharing in the ongoing ide-cel research and development activities being conducted by BMS in the United States. The net amount owed to BMS for research and development activities is classified as research and development expense on the condensed consolidated statement of operations. If BMS is obligated to reimburse the Company because the Company’s research and development costs exceeds BMS’ research and development costs, the net amount is recorded as collaborative arrangement revenue.
During the three and six months ended June 30, 2021, the Company recognized $10.1 million, included as a component of share of collaboration loss on the condensed consolidated statement of operations, related to its share of collaboration loss associated with ide-cel commercial activities. This amount includes the Company’s share of BMS’ ide-cel product revenue, cost of goods sold, and selling costs, offset by any reimbursement of commercial costs incurred by the Company during the three and six month periods.
The following table summarizes the amounts associated with the research activities under the collaboration included in research and development expense or recognized as collaborative arrangement revenue for the three and six months ended June 30, 2021, and 2020 (in thousands):
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For the three months ended June 30,For the six months ended June 30,
2021202020212020
ASC 808 ide-cel research and development revenue - U.S. (1)(2)$ $108,196 $ $108,196 
ASC 808 ide-cel research and development expense - U.S. (1)
$(9,193)$ $(26,018)$(5,080)
(1)    As noted above, the calculation of collaborative arrangement activity to be recognized for joint ide-cel efforts in the United States is performed on a quarterly basis. The calculation is independent of previous activity, which may result in fluctuations between revenue and expense recognition period over period, depending on the varying extent of effort performed by each party during the period.
(2)    In the second quarter of 2020, the Company recognized $169.2 million as a cumulative catch-up adjustment to revenue recorded in connection with the May 2020 First Amendment to the Amended and Restated Co-Development, Co-Promote and Profit Share Agreement (“Amended Ide-cel CCPS”), a portion of which was recognized as ASC 808 research and development collaboration revenue. Refer to Note 11, Collaborative arrangements, of the Company’s Annual Report on Form 10-K for further discussion on the Amended Ide-cel CCPS.
Ide-cel ex-U.S. Service Revenue
The following table summarizes the revenue recognized related to ide-cel ex-U.S. activities for the three and six months ended June 30, 2021, and 2020 (in thousands):
For the three months ended June 30,For the six months ended June 30,
2021202020212020
ASC 606 ide-cel license and manufacturing revenue -
ex-U.S. (1)
$4,280 $73,850 $9,384 $87,820 
(1)    In the second quarter of 2020, the Company recognized $169.2 million as a cumulative catch-up adjustment to revenue recorded in connection with the May 2020 First Amendment to the Amended and Restated Co-Development, Co-Promote and Profit Share Agreement (“Amended Ide-cel CCPS”), a portion of which was recognized as ASC 606 license and manufacturing revenue. Refer to Note 11, Collaborative arrangements, of the Company’s Annual Report on Form 10-K for further discussion on the Amended Ide-cel CCPS.
bb21217
In addition to the activities related to ide-cel, BMS previously exercised its option to obtain an exclusive worldwide license to develop and commercialize bb21217, the second product candidate under the collaboration arrangement with BMS which is further described in Note 11, Collaborative arrangements, to the Company’s consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2020.
Under the collaboration arrangement with BMS, the Company has an option to co-develop and co-promote bb21217 within the United States. The Company currently expects it will exercise its option to co-develop and co-promote bb21217 within the United States. The Company’s election to co-develop and co-promote bb21217 within the United States must be made by the substantial completion of CRB-402, the on-going phase 1 clinical trial of bb21217. If elected, the Company expects the responsibilities of the parties to remain largely unchanged, however, the Company expects it will share equally in all profits and losses relating to developing, commercializing and manufacturing bb21217 within the United States and to have the right to participate in the development and promotion of bb21217 within the United States. Under this scenario, the U.S. milestones and royalties payable would be adjusted and the Company would be eligible to receive a $10.0 million development milestone payment related to the development of bb21217 within the United States. The Company would not be eligible for royalties on U.S. sales of bb21217 under this scenario.
In the event the Company does not exercise its option to co-develop and co-promote bb21217, the Company will receive an additional fee in the amount of $10.0 million. Under this scenario, the Company is eligible to receive U.S. milestones of up to $85.0 million for the first indication to be addressed by bb21217 and royalties for U.S. sales of bb21217.
All of the remaining development, regulatory, and commercial milestones related to U.S. development, regulatory and commercialization activities are fully constrained and are therefore excluded from the transaction price. As part of its evaluation of the constraint, the Company considered numerous factors, including the fact that achievement of the milestones is outside the
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control of the Company and contingent upon the future success of its clinical trials, the licensee’s efforts, or the receipt of regulatory approval. Any consideration related to U.S. sales-based milestones (including royalties) will be recognized when the related sales occur as these amounts have been determined to relate predominantly to the license granted to BMS and therefore are recognized at the later of when the performance obligation is satisfied or the related sales occur.
The transaction price associated with the collaboration arrangement consists of $31.0 million of upfront payments and option payments received from BMS and $1.8 million in variable consideration which represents reimbursement to be received from BMS for manufacturing vector and associated payloads through development. The Company has identified two performance obligations with respect to the arrangement with BMS. The initial performance obligation was for research and development services substantially completed in September 2019, associated with the initial phase 1 clinical trial. The Company allocated $5.4 million of consideration to the research and development services performance obligation and fully recognized the consideration through September 2019. The other performance obligation relates to a combined performance obligation for the bb21217 license and vector manufacturing services through development, and the remaining $27.3 million in consideration was allocated to this combined performance obligation. The Company will satisfy this combined performance obligation as the bb21217 manufacturing services are performed. As of June 30, 2021, the Company has not commenced manufacturing and the full amount of the allocated transaction price remains unsatisfied.
The Company re-evaluates the transaction price, including the estimated variable consideration included in the transaction price and all constrained amounts, each reporting period and as uncertain events are resolved or other changes in circumstances occur.
Contract assets and liabilities – ide-cel and bb21217
The Company receives payments from its collaborative partners based on billing schedules established in each contract. Up-front payments and fees are recorded as deferred revenue upon receipt or when due until such time as the Company satisfies its performance obligations under these arrangements. A contract asset is a conditional right to consideration in exchange for goods or services that the Company has transferred to a customer.  Amounts are recorded as accounts receivable when the Company’s right to consideration is unconditional.
The following table presents changes in the balances of the Company’s BMS receivables and contract liabilities during the six months ended June 30, 2021 (in thousands):

Balance at December 31,
2020
Additions
Deductions
Balance at
June 30, 2021
Receivables
$400 $ $(400)$ 
Contract liabilities:
Deferred revenue
$26,582 $ $(820)$25,762 
The decrease in the receivables balance for the six months ended June 30, 2021 is driven by amounts collected from BMS in the period.
The decrease in deferred revenue during the six months ended June 30, 2021 is driven by the release of the remaining $