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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 March 31, 2022
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)

N/A
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
__________________________________________________________________
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 May 4, 2022, there were 71,453,733 shares of the registrant’s Common Stock, par value $0.01 per share, outstanding.



Table of Contents
FORWARD LOOKING STATEMENTS
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 obtain adequate financing to fund our operations and to execute on our strategy;
our ability to implement and realize expected cost savings from our comprehensive restructuring plans;
our ability to establish and scale commercial 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 marketing approvals for our product candidates;
the timing or success of commercialization of any approved products;
our ability to obtain adequate pricing and reimbursement of any approved products;
the implementation of our business model, strategic plans for our business, product candidates and technology;
estimates of our expenses, future revenues, capital requirements and our needs for additional financing;
developments relating to our competitors and our industry;
the impact of the COVID-19 pandemic;
the effects, costs, and benefits of the 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.

The FDA has placed our clinical studies of lovo-cel on partial clinical hold, and we have no assurance as to what the FDA may require, or the timing, if ever, of when the partial clinical hold may be lifted, or when we may resume enrolling pediatric patients in our clinical studies of lovo-cel.
The FDA has placed our clinical studies of eli-cel on clinical hold, and we have no assurances as to what the FDA may require, or the timing, if ever, of when this clinical hold may be lifted, or the effect this clinical hold may have on FDA's ongoing review of the Biologics License Application ("BLA") for eli-cel.
We cannot predict when or if we will obtain marketing approval to commercialize our product candidates, and the marketing approval of our product and any future products may ultimately be for more narrow indications than we expect.
We have incurred significant losses since our inception and anticipate that we will continue to incur significant losses for the foreseeable future.
There is substantial doubt regarding our ability to continue as a going concern. We will need to raise additional financing in upcoming periods, which may not be available on acceptable terms, or at all. Failure to obtain necessary capital when needed may force us to delay, limit or terminate our commercial readiness efforts, activities to support a potential commercial launch following any approval of our product candidates, or other operations.
Insertional oncogenesis is a risk of gene therapies using viral vectors that can integrate into the genome, and several patients with CALD treated with eli-cel in our clinical studies have been diagnosed with myelodysplastic syndrome likely mediated by Lenti-D lentiviral vector ("LVV") insertion. 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, if any, and the commercial potential of our product candidates may be materially and negatively impacted.
We have limited experience as a commercial company and the marketing and sale of future products may be unsuccessful or less successful than anticipated.
The commercial success of our future products will depend upon the degree of market acceptance by physicians, patients, third-party payers and others in the medical community. If we fail to obtain sufficient pricing or reimbursement approval for any future products, 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 our product candidates. The manufacture and delivery of our LVV and drug products present significant challenges for us, and we may not be able to produce our vector and drug products at the quality, quantities, locations or timing needed to support our clinical programs or potential commercialization. In addition, we may encounter challenges with engaging or coordinating with qualified treatment centers needed to support potential commercialization.
We face intense competition and rapid technological change and the possibility that our competitors may develop therapies that are more advanced or effective than ours, which may adversely affect our financial condition and our ability to successfully commercialize our product and any future products.
Our future success depends on our ability to retain key employees, consultants and advisors and to attract, retain and motivate qualified personnel.


Table of Contents
bluebird bio, Inc.
Table of Contents
Page



Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
bluebird bio, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
(in thousands, except par value amounts)
As of
March 31,
2022
As of
December 31,
2021
Assets
Current assets:
Cash and cash equivalents$106,260 $161,160 
Marketable securities105,328 138,343 
Prepaid expenses31,798 25,628 
Receivables and other current assets11,531 11,389 
Total current assets254,917 336,520 
Marketable securities55,049 97,114 
Property, plant and equipment, net11,234 9,706 
Goodwill5,646 5,646 
Operating lease right-of-use assets111,897 91,532 
Restricted cash and other non-current assets52,328 53,277 
Total assets$491,071 $593,795 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$28,350 $25,883 
Accrued expenses and other current liabilities89,032 103,958 
Operating lease liability, current portion25,510 23,152 
Total current liabilities142,892 152,993 
Operating lease liability, net of current portion84,828 66,432 
Other non-current liabilities92 93 
Total liabilities227,812 219,518 
Commitments and contingencies (Note 9)
Stockholders’ equity:
Preferred stock, $0.01 par value, 5,000 shares authorized; 0 shares issued and outstanding at March 31, 2022 and December 31, 2021
  
Common stock, $0.01 par value, 125,000 shares authorized; 71,438 and 71,115 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively
714 711 
Additional paid-in capital4,109,081 4,096,402 
Accumulated other comprehensive loss(4,459)(2,911)
Accumulated deficit(3,842,077)(3,719,925)
Total stockholders’ equity263,259 374,277 
Total liabilities and stockholders’ equity$491,071 $593,795 
See accompanying notes to unaudited condensed consolidated financial statements.
2

Table of Contents
bluebird bio, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(unaudited)
(in thousands, except per share data)
For the three months ended March 31,
20222021
Revenue:
Product revenue$1,408 $724 
Other revenue537 170 
Total revenues
1,945 894 
Operating expenses:
Research and development
77,875 82,843 
Selling, general and administrative36,106 63,569 
Cost of product revenue8,310 576 
Total operating expenses
122,291 146,988 
Loss from operations
(120,346)(146,094)
Interest income, net
106 355 
Other (expense) income, net(1,912)24,301 
Loss before income taxes
(122,152)(121,438)
Income tax (expense) benefit (66)
Net loss from continuing operations(122,152)(121,504)
Net loss from discontinued operations (84,304)
Net loss$(122,152)$(205,808)
Net loss per share from continuing operations - basic and diluted$(1.66)$(1.81)
Net loss per share from discontinued operations - basic and diluted$ $(1.26)
Net loss per share - basic and diluted$(1.66)$(3.07)
Weighted-average number of common shares used in computing net loss per share - basic and diluted:
73,688 66,976 
Other comprehensive (loss) income:
Other comprehensive (loss) income, net of tax benefit (expense) of $0.0 million for the three months ended March 31, 2022 and 2021
(1,548)56 
Total other comprehensive (loss) income(1,548)56 
Comprehensive loss
$(123,700)$(205,752)
See accompanying notes to unaudited condensed consolidated financial statements.
3

Table of Contents
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, 202171,115 $711 $4,096,402 $(2,911)$(3,719,925)$374,277 
Vesting of restricted stock units
310 3 (3)— —  
Exercise of stock options
1 — 1 — — 1 
Stock-based compensation
— — 12,681 — — 12,681 
Issuance of unrestricted stock awards to settle
    accrued employee compensation
12 — — — — — 
Other comprehensive income— — — (1,548)— (1,548)
Net loss
— — — — (122,152)(122,152)
Balances at March 31, 202271,438 $714 $4,109,081 $(4,459)$(3,842,077)$263,259 



Common stock
Additional
paid-in
capital
Accumulated
other
comprehensive
loss
Accumulated
deficit
Total
stockholders'
equity
SharesAmount
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 
4

Table of Contents
bluebird bio, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
For the three months ended
March 31,
20222021
Cash flows from operating activities:
Net loss$(122,152)$(205,808)
Adjustments to reconcile net loss to net cash used in operating activities:
Change in fair value of contingent consideration 369 
Depreciation and amortization1,014 5,360 
Stock-based compensation expense12,390 42,527 
Loss (gain) on equity securities2,508 (28,372)
Excess inventory reserve7,519  
Other non-cash items189 2,513 
Changes in operating assets and liabilities:
Prepaid expenses and other assets(13,059)(16,082)
Operating lease right-of-use assets6,517 8,098 
Accounts payable2,467 67 
Accrued expenses and other liabilities(16,561)(2,693)
Operating lease liabilities(6,128)(9,306)
Net cash used in operating activities(125,296)(203,327)
Cash flows from investing activities:
Purchase of property, plant and equipment(857)(7,626)
Purchases of marketable securities (53,200)
Proceeds from maturities of marketable securities70,783 350,860 
Proceeds from sales of marketable securities 31,318 
Net cash provided by investing activities69,926 321,352 
Cash flows from financing activities:
Proceeds from exercise of stock options and ESPP contributions9 3,796 
Net cash provided by financing activities9 3,796 
(Decrease) increase in cash, cash equivalents and restricted cash(55,361)121,821 
Cash, cash equivalents and restricted cash at beginning of period206,693 373,728 
Cash, cash equivalents and restricted cash at end of period$151,332 $495,549 
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents$106,260 $439,714 
Restricted cash included in receivables and other current assets$1,822 $1,330 
Restricted cash included in restricted cash and other non-current assets$43,250 $54,505 
Total cash, cash equivalents and restricted cash$151,332 $495,549 
Supplemental cash flow disclosures from investing and financing activities:
Purchases of property, plant and equipment included in accounts payable and accrued expenses$2,134 $2,238 
Right-of-use assets obtained in exchange for operating lease liabilities$26,882 $22,049 
Issuance of unrestricted stock awards to settle accrued employee compensation$ $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 potentially transformative gene therapies for severe genetic diseases. 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 β-thalassemia; lovotibeglogene autotemcel ("lovo-cel", formerly "LentiGlobin for SCD") as a treatment for sickle cell disease ("SCD"); and elivaldogene autotemcel ("eli-cel", formerly "Lenti-D gene therapy") as a treatment for cerebral adrenoleukodystrophy ("CALD").
In August 2021, the Company announced its intent to focus its severe genetic disease business on the U.S. market and further invest in research and development for its core programs in β-thalassemia, SCD, and CALD. As part of the strategy to focus on the U.S. market, it began executing an orderly wind down of its European operations, which will result in a reduction of selling, general and administrative costs and had an impact on the Company's excess inventory analysis, which is based on sales forecasts and projected inventory consumption levels.
In November 2021, the Company completed the separation of its severe genetic disease and oncology programs into two separate, independent publicly traded companies, bluebird bio, Inc. and 2seventy bio, Inc. (“2seventy bio”), a Delaware corporation and wholly-owned subsidiary of the Company prior to the separation. bluebird retained its severe genetic disease programs, including programs for β-thalassemia, SCD, and CALD, with a focus on the U.S. market.
In April 2022, the Board of Directors approved a comprehensive restructuring plan intended to reduce operating expenses and enhance the Company’s focus on achieving U.S. Food and Drug Administration ("FDA") approval for its programs in the U.S. The Company intends to maintain targeted research efforts focused on in-vivo lentiviral vector ("LVV") gene therapy and to deprioritize direct investments in reduced toxicity conditioning and cryopreserved apheresis. The restructuring is anticipated to produce up to $160 million in cost savings over the next two years. As part of the restructuring, bluebird plans to reduce its workforce by approximately 30% across the second and third quarters of 2022. Refer to Note 13, Subsequent events, for more information on this restructuring.
As of March 31, 2022, the Company had cash, cash equivalents and marketable securities of approximately $266.6 million. 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 charitable foundations. As of March 31, 2022, the Company had an accumulated deficit of $3.84 billion. During the three months ended March 31, 2022, the Company incurred a loss of $122.2 million and used $125.3 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, and lovo-cel, and the achievement of a level of revenues adequate to support its cost structure.
In accordance with Accounting Standards Codification 205-40, Going Concern ("ASC 205-40"), 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 these condensed consolidated financial statements are issued. This evaluation initially does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented as of the date the financial statements are issued. When substantial doubt exists under this methodology, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company’s ability to continue as a going concern. The mitigating effect of management’s plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that these condensed consolidated
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financial statements are issued. In performing its analysis, management excluded certain elements of its operating plan that cannot be considered probable. Under ASC 205-40, the future receipt of potential funding from future equity or debt issuances, the release of restricted cash related to the Company’s 50 Binney Street lease, and the potential sale of priority review vouchers cannot be considered probable at this time because these plans are not entirely within the Company’s control nor have been approved by the Board of Directors as of the date of these condensed consolidated financial statements. The restructuring plan described above was approved by the Board of Directors in April 2022 and therefore was incorporated into the Company's assessment of its ability to continue as a going concern within one year after the date that these condensed consolidated financial statements are issued.
The Company's expectation to generate operating losses and negative operating cash flows in the future and the need for additional funding to support its planned operations raise substantial doubt regarding the Company’s ability to continue as a going concern for a period of one year after the date that these condensed consolidated financial statements are issued. Management's plans to alleviate the conditions that raise substantial doubt include implementing reduced 2022 spending, including projected savings through the move of the Company's headquarters to Assembly Row in Somerville, Massachusetts, the completion of its orderly wind down of European operations, the completion of its April 2022 restructuring plans, the potential sale of priority review vouchers that would be issued with the potential U.S. regulatory approvals of BLAs for beti-cel and/or eli-cel, and the pursuit of additional cash resources through public or private equity or debt financings. Management has concluded the likelihood that its plan to successfully obtain sufficient funding from one or more of these sources, or adequately reduce expenditures, while reasonably possible, is less than probable. In accordance with ASC 205-40, the Company has concluded that substantial doubt exists about the Company’s ability to continue as a going concern for a period of at least 12 months from the date of issuance of these condensed consolidated financial statements.
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described above.
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”). Any reference in these notes to applicable guidance is meant to refer to the authoritative United States GAAP as included in the ASC and Accounting Standards Updates (“ASUs”) 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 March 31, 2022 and 2021.
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, 2021, and the notes thereto, which are included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the Securities and Exchange Commission (the “SEC”) on March 4, 2022 (the "2021 Annual Report on Form 10-K").
Certain items in the prior year’s condensed consolidated financial statements have been reclassified to conform to the current presentation. The Company has presented its oncology business together with its manufacturing facility in Durham, North Carolina as discontinued operations in its consolidated financial statements for the three months ended March 31, 2021 (see Note 3, Discontinued operations). The historical financial statements and footnotes have been recast accordingly.
Amounts reported are computed based on thousands, except percentages, per share amounts or as otherwise noted. 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. 2seventy bio was a wholly-owned subsidiary until it became an independent publicly-traded company on November 4, 2021. All intercompany balances and transactions have been eliminated in consolidation. The Company views its operations and manages its business in one operating segment.
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Discontinued operations
The Company determined that the separation of its oncology business in November 2021 and the sale of its manufacturing facility in Durham, North Carolina in September 2021 represented multiple components of a single disposal plan that met the criteria for classification as a discontinued operation in accordance with ASC Subtopic 205-20, Discontinued Operations (“ASC 205-20”). Accordingly, the accompanying condensed consolidated financial statements for the three months ended March 31, 2021 have been updated to present the results of all discontinued operations reported as a separate component of loss in the consolidated statements of operations and comprehensive loss (see Note 3, Discontinued operations).

Significant accounting policies
The significant accounting policies used in preparation of these condensed consolidated financial statements for the three months ended March 31, 2022 are consistent with those discussed in Note 2 to the consolidated financial statements included in the Company’s 2021 Annual Report on Form 10-K, except as noted in the "Recent accounting pronouncements - Not yet adopted" section below.
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 and judgments 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, stock-based compensation expense, accrued expenses, income taxes, the assets and liabilities and losses related to discontinued operations 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.
Recent accounting pronouncements
Not yet adopted

ASU No. 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures

In March 2022, the FASB issued ASU 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”), which eliminates the recognition and measurement guidance on troubled debt restructurings for creditors that have adopted ASC 326 and requires enhanced disclosure of loan modifications for borrowers experiencing financial difficulty. ASU 2022-02 amends the guidance on vintage disclosures to require disclosure of current-period gross write-offs by year of origination. The new standard will be effective beginning January 1, 2023. The adoption of ASU 2022-02 is not expected to have a material impact on the Company's financial position or results of operations.
3. Discontinued operations
Sale of bluebird Research Triangle manufacturing facility

In November 2017, the Company acquired a manufacturing facility in Durham, North Carolina ("bRT") for the future manufacture of LVV for the Company’s therapies related to its oncology programs. In July 2021, the Company and Resilience US, Inc., an affiliate of National Resilience, Inc. ("Resilience"), signed an Asset Purchase Agreement (the “Agreement”). As part of the Agreement, and upon the closing of the transaction in September 2021, Resilience acquired the Company's LVV manufacturing facility located in Durham, North Carolina and retained staff currently employed at the site. As a result of the
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transaction, the Company disposed of $111.2 million of net assets, primarily consisting of the building and laboratory equipment associated with the Company's oncology programs. The Company recognized a loss on disposal of assets of $2.0 million during the year ended December 31, 2021. As the sale of the bRT manufacturing facility and the separation of 2seventy bio (as described below) were deemed to represent multiple components of a single disposal plan, the results of operations related to bRT have been included as a component of discontinued operations.

2seventy bio Separation

On November 4, 2021, the Company completed the previously announced separation of its oncology programs and portfolio, and the certain related assets and liabilities, into a separate, independent publicly traded company (the “Separation”). The Separation was effected by means of a distribution of all of the outstanding shares of common stock of 2seventy bio in which each bluebird stockholder received one share of common stock, par value $0.0001 per share, of 2seventy bio for every three shares of common stock, par value $0.01 per share, of bluebird held as of the close of business on October 19, 2021 (the “Distribution”).

In connection with the Separation, bluebird entered into a separation agreement (the “Separation Agreement”) with 2seventy bio, dated as of November 3, 2021, that, among other things, set forth bluebird’s agreements with 2seventy bio regarding the principal actions to be taken in connection with the Separation, including the Distribution. The effective time of the Distribution was 12:01 a.m. on November 4, 2021. The Separation Agreement identified assets transferred to, liabilities assumed by and contracts assigned to 2seventy bio as part of the Separation, and it provided for when and how these transfers, assumptions and assignments occurred. The purpose of the Separation Agreement was to provide 2seventy bio and bluebird with assets to operate their respective businesses and retain or assume liabilities related to those assets. Each of 2seventy bio and bluebird agreed to releases, with respect to pre-Separation claims, and cross indemnities, with respect to post-Separation claims, that were principally designed to place financial responsibility for the obligations and liabilities allocated to 2seventy bio under the Separation Agreement with 2seventy bio and financial responsibility for the obligations and liabilities allocated to bluebird under the Separation Agreement with bluebird. bluebird and 2seventy bio are also each subject to mutual 12-month employee non-solicit and non-hire restrictions, subject to certain customary exceptions.

bluebird and 2seventy bio also entered into a tax matters agreement, an employee matters agreement and an intellectual property agreement. Additionally, bluebird entered into two transition services agreements with 2seventy bio, whose President is a member of the Company’s Board of Directors. Pursuant to the transition service agreements, bluebird is obligated to provide and is entitled to receive certain transition services related to corporate functions, such as finance, human resources, internal audit, research and development, financial reporting, and information technology. Services provided by bluebird to 2seventy bio will continue for an initial term of up to two years, unless earlier terminated or extended according to the terms of the transition services agreement. Services received and performed are paid at a mutually agreed upon rate. Amounts received for services provided to 2seventy bio are recorded as other income and amounts paid for services provided by 2seventy bio are recorded as selling, general and administrative expense and research and development expense, as applicable. In addition, the Company entered into a sublease agreement with 2seventy bio for office, laboratory and storage space located at 60 Binney Street (the "60 Binney Street Sublease") while it constructs and outfits its new office and laboratory space.

During the three months ended March 31, 2022, the Company incurred $3.1 million of net expense for transactions with 2seventy bio within research and development and selling, general and administrative expense in the condensed consolidated statements of operations and comprehensive loss, including $1.1 million of net expense related to the 60 Binney Street Sublease. As of March 31, 2022, the Company had $3.0 million of accounts receivable due from and $5.3 million of accounts payable due to 2seventy bio. As of December 31, 2021, the Company had an immaterial amount of accounts receivable and accounts payable due from and due to 2seventy bio.

Discontinued operations

In connection with the Separation, the Company determined its oncology business, together with the bRT manufacturing facility, qualified for discontinued operations accounting treatment in accordance with ASC 205-20. The following table summarizes revenue and expenses of the discontinued operations for the three months ended March 31, 2021 (in thousands):

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Three months ended March 31, 2021
Revenue:
Service revenue$5,918 
Collaborative arrangement revenue1,519 
Royalty and other revenue4,463 
Total revenues11,900 
Operating expenses:
Research and development71,635 
Selling, general and administrative23,305 
Cost of royalty and other revenue1,705 
Change in fair value of contingent consideration369 
Total operating expenses97,014 
Loss from operations(85,114)
Interest income, net355 
Other income, net455 
Loss before income taxes(84,304)
Income tax benefit (expense) 
Net loss$(84,304)

There were no revenue and expenses of the discontinued operations for the three months ended March 31, 2022, as all operations were transferred to 2seventy bio upon the Separation. There were no assets and liabilities related to discontinued operations as of March 31, 2022 or December 31, 2021, as all balances were transferred to 2seventy bio upon the Separation.

The following table summarizes the significant non-cash items and capital expenditures of the discontinued operations that are included in the condensed consolidated statements of cash flows for the three months ended March 31, 2021 (in thousands):

Three months ended March 31, 2021
Operating activities:
Change in fair value of contingent consideration$369 
Depreciation and amortization3,800 
Stock-based compensation expense11,181 
Investing activities:
Purchase of property, plant and equipment$(6,173)
Supplemental cash flow disclosures:
Purchases of property, plant and equipment included in accounts payable and accrued expenses$1,954 
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4. Marketable securities
The following table summarizes the marketable securities held at March 31, 2022 and December 31, 2021 (in thousands):
Description
Amortized
cost / Cost
Unrealized
gains
Unrealized
losses
Fair
value
March 31, 2022
U.S. government agency securities and treasuries
$117,730 $ $(2,025)$115,705 
Corporate bonds
33,802  (135)33,667 
Commercial paper
9,823   9,823 
Equity securities
4,305  (3,123)1,182 
Total
$165,660 $ $(5,283)$160,377 
December 31, 2021
U.S. government agency securities and treasuries$128,902 $ $(509)$128,393 
Corporate bonds
49,366  (59)49,307 
Commercial paper
54,065   54,065 
Equity securities
4,305  (614)3,691 
Total
$236,638 $ $(1,182)$235,456 
No available-for-sale debt securities held as of March 31, 2022 or December 31, 2021 had remaining maturities greater than five years.
5. 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 March 31, 2022 and December 31, 2021 (in thousands):
Description
Total
Quoted
prices in
active
markets
(Level 1)
Significant
other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
March 31, 2022
Assets:
Cash and cash equivalents$106,260 $106,260 $ $ 
Marketable securities:
U.S. government agency securities and treasuries115,705  115,705  
Corporate bonds33,667  33,667  
Commercial paper9,823  9,823  
Equity securities1,182 1,182   
Total$266,637 $107,442 $159,195 $ 
December 31, 2021
Assets:
Cash and cash equivalents$161,160 $161,146 $14 $ 
Marketable securities:
U.S. government agency securities and treasuries128,393  128,393  
Corporate bonds49,308  49,308  
Commercial paper54,065  54,065  
Equity securities3,691 3,691   
Total$396,617 $164,837 $231,780 $ 
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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 March 31, 2022 and December 31, 2021, 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 earliest call date for premiums or to maturity for discounts. At March 31, 2022 and December 31, 2021, the balance in the Company’s accumulated other comprehensive loss was composed primarily of activity related to the Company’s available-for-sale debt securities. There were no material realized gains or losses recognized on the sale or maturity of available-for-sale debt securities during the three months ended March 31, 2022 or 2021.
Accrued interest receivable on the Company's available-for-sale debt securities totaled $0.3 million and $0.3 million as of March 31, 2022 and December 31, 2021, respectively. No accrued interest receivable was written off during the three months ended March 31, 2022 or 2021.
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 March 31, 2022 and December 31, 2021 (in thousands):
Less than 12 months12 months or greaterTotal
DescriptionFair valueUnrealized lossesFair valueUnrealized lossesFair valueUnrealized losses
March 31, 2022
U.S. government agency securities
   and treasuries
$113,225 $(2,005)$2,480 $(20)$115,705 $(2,025)
Corporate bonds30,417 (135)  30,417 (135)
Total$143,642 $(2,140)$2,480 $(20)$146,122 $(2,160)
December 31, 2021
U.S. government agency securities
   and treasuries
$108,695 $(505)$2,496 $(4)$111,191 $(509)
Corporate bonds45,042 (56)3,896 (2)48,938 (58)
Total$153,737 $(561)$6,392 $(6)$160,129 $(567)
The Company determined that there was no material change in the credit risk of the above investments during the three months ended March 31, 2022. As such, an allowance for credit losses was not recognized. As of March 31, 2022, the Company does not intend to sell such securities, however, the Company determined that it is more likely than not that the Company will be required to sell certain securities before recovery of their amortized cost bases. The Company determined that the impact of this assessment was immaterial. Subsequently, in April 2022, the Company sold securities with a carrying value of $29.7 million and realized net aggregate losses of $0.4 million.
The Company held equity securities with an aggregate fair value of $1.2 million and $3.7 million as of March 31, 2022 and December 31, 2021, respectively, within current 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 March 31, 2022 and 2021, the Company recorded a loss of $2.5 million and a gain of $28.4 million, respectively, related to its equity securities. Gains and losses related to equity securities are included in other (expense) income, net in the condensed consolidated statements of operations and comprehensive loss.
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Please refer to Note 9, Commitments and contingencies, for further information.
6. Property, plant and equipment, net
Property, plant and equipment, net, consists of the following (in thousands):
As of March 31, 2022As of December 31, 2021
Laboratory equipment$28,939 $29,061 
Computer equipment and software421 421 
Office equipment117 117 
Leasehold improvements12 12 
Construction-in-progress
2,957 501 
Total property, plant and equipment
32,446 30,112 
Less accumulated depreciation and amortization
(21,212)(20,406)
Property, plant and equipment, net
$11,234 $9,706 
7. Accrued expenses and other current liabilities
Accrued expenses and other current liabilities consist of the following (in thousands):
As of March 31, 2022As of December 31, 2021
Accrued manufacturing costs$30,806 $15,722 
Accrued goods and services19,119 24,273 
Accrued clinical and contract research organization costs18,628 17,769 
Accrued employee compensation15,744 41,095 
Accrued professional fees1,674 1,665 
Deferred revenue, current portion1,822 2,282 
Other1,239 1,152 
Total accrued expenses and other current liabilities$89,032 $103,958 

Accrued employee compensation as of December 31, 2021 includes severance costs associated with the Company's orderly wind down of its European operations. As of March 31, 2022, the Company did not have any significant accrued expenses related to these restructuring costs.
8. Leases
The Company leases certain office and laboratory space, primarily located in Cambridge, Massachusetts and Somerville, Massachusetts. Additionally, the Company has embedded leases through its agreements with 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 10 to the consolidated financial statements included in the Company's 2021 Annual Report on Form 10-K.
Assembly Row lease
In November 2021, the Company entered into a lease agreement with Assembly Row 5B, LLC ("Landlord") for office space located at 455 Grand Union Boulevard in Somerville, Massachusetts to serve as the Company's future corporate headquarters (the “Assembly Row Lease”). Upon signing the Assembly Row Lease, the Company executed a $2.8 million letter of credit for the Landlord’s benefit, which is classified as restricted cash and other non-current assets on the Company’s condensed consolidated balance sheets. In March 2022, the Assembly Row Lease commenced upon the Landlord granting the Company control of the leased premises. The Assembly Row Lease will continue until December 31, 2032, with an option to extend for two additional five-year terms. The Company classified the Assembly Row Lease as an operating lease and recognized a right-of-use asset and lease liability upon lease commencement. The Company will recognize rent expense on a straight-line basis throughout the remaining term of the Assembly Row Lease.
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50 Binney Street lease & sublease
In April 2019, the Company entered into an agreement to lease office space located at 50 Binney Street in Cambridge, Massachusetts (the “50 Binney Street Lease”). In December 2021, the Company entered into an agreement to sublease the entire office space to Meta Platforms, Inc. (“Meta”) (the "Sublease"). In April 2022, both the 50 Binney Street Lease and the Sublease commenced upon the landlord granting access to the leased premises. In connection with the execution of the 50 Binney Street Lease, the Company also entered into a purchase agreement with the landlord for furniture and equipment (the “Furniture Purchase Agreement”) located on the premises upon lease commencement. Upon execution of the Furniture Purchase Agreement, the Company made an upfront payment of $7.5 million. Upon lease commencement, the Company paid the remaining $7.25 million due under the Furniture Purchase Agreement. The Company is currently assessing the lease classification of the 50 Binney Street Lease.
The Sublease will continue until December 31, 2030. The Company will earn rental income through its role as a lessor throughout the term of the Sublease.
9. Commitments and contingencies
Other funding commitments
The Company is party to various agreements, principally relating to licensed technology, that require future payments relating to milestones that may be met in subsequent periods or royalties on future sales of specified products.
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.
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. As compared to the contractual obligations and commitments as disclosed in the Company's 2021 Annual Report on Form 10-K, the Company's future minimum purchase commitments as of the period ended March 31, 2022 decreased by $14.4 million.
Based on the Company’s development plans as of March 31, 2022, 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.
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, including securities class action litigation. 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 generally 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 officers and directors 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 in accordance with its certificate of incorporation and by-laws. The term of the indemnification period lasts as long as such officer or director may be subject to any proceeding arising out of acts or omissions of such officer or director 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.
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10. Stock-based compensation
In January 2022 and 2021, the number of shares of common stock available for issuance under the 2013 Stock Option and Incentive Plan (“2013 Plan”) was increased by approximately 2.8 million and 2.7 million shares, respectively, as a result of the automatic increase provision of the 2013 Plan. As of March 31, 2022, the total number of shares of common stock available for issuance under the 2013 Plan was approximately 4.1 million.
Stock-based compensation expense
The Company recognized stock-based compensation expense totaling $12.4 million and $31.3 million during the three months ended March 31, 2022 and 2021, respectively. Stock-based compensation expense recognized by award type is included within the condensed consolidated statements of operations and comprehensive loss was as follows (in thousands):
For the three months ended March 31,

2022
2021(1)
Stock options
$5,260 $16,426 
Restricted stock units
7,034 10,217 
Employee stock purchase plan and other96 4,651 
$12,390 $31,294 
(1) Prior period amounts have been retrospectively adjusted to reflect the effects of the Separation.
Stock-based compensation expense by classification included within the condensed consolidated statements of operations and comprehensive loss was as follows (in thousands): 
For the three months ended March 31,
2022
2021(1)
Research and development$6,555 $12,390 
Selling, general and administrative5,835 18,904 
$12,390 $31,294 
(1) Prior period amounts have been retrospectively adjusted to reflect the effects of the Separation.
As of March 31, 2022, the Company had approximately $97.5 million of unrecognized stock-based compensation expense related to unvested stock options and restricted stock units (exclusive of those with service and performance conditions that have not yet been achieved), which is expected to be recognized over a weighted-average period of approximately 2.2 years.
Stock options
The following table summarizes the stock option activity under the Company’s equity award plans:
Shares
(in thousands)
Weighted-
average
exercise price
per share
Outstanding at December 31, 20213,586 $39.23 
Granted
890 $7.79 
Exercised
(1)$1.04 
Canceled or forfeited(735)$58.27 
Outstanding at March 31, 20223,740 $29.14 
Exercisable at March 31, 20221,406 $52.80 
Vested and expected to vest at March 31, 20223,740 $29.14 
During the three months ended March 31, 2022, less than 0.1 million stock options were exercised, resulting in total proceeds to the Company of less than $0.1 million.
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Restricted stock units
The following table summarizes the restricted stock unit activity under the Company’s equity award plans:
Shares
(in thousands)
Weighted-
average
grant date
fair value
Unvested at December 31, 20213,193 $16.21 
Granted
1,291 $7.85 
Vested
(238)$26.67 
Forfeited
(340)$14.79 
Unvested at March 31, 20223,906 $12.96 
Employee stock purchase plan
In June 2013, the Company adopted its 2013 Employee Stock Purchase Plan (“2013 ESPP”), which authorized the initial issuance of up to a total of 0.2 million shares of the Company’s common stock to participating employees. In June 2021, the Company amended the 2013 ESPP to authorize an additional 1.4 million shares of the Company’s common stock available to participating employees. During the three months ended March 31, 2022 and 2021, no shares and less than 0.1 million shares, respectively, of common stock were issued under the 2013 ESPP.
11. Income taxes
Deferred tax assets and deferred tax liabilities are recognized based on temporary differences between the financial reporting and tax basis of assets and liabilities using statutory rates. A valuation allowance is recorded against deferred tax assets if it is more likely than not that some or all of the deferred tax assets will not be realized. Due to the uncertainty surrounding the realization of the favorable tax attributes in future tax returns, the Company has recorded a full valuation allowance against the Company’s otherwise recognizable net deferred tax assets. The tax expense recognized during the three months ended March 31, 2022 is immaterial due to the wind down of our operations in Europe.
In March 2021, the American Rescue Plan Act (“ARPA”) was enacted and contained extenders to the refundable employee retention credit and provided further limitations to executive compensation effective for tax years beginning after 2026. The Company has concluded that the provisions in the CARES Act, Consolidated Appropriations Act, and ARPA have an immaterial impact on the Company’s income tax expense due to its cumulative losses and full valuation allowance position.
12. Net loss per share
The following common stock equivalents were excluded from the calculation of diluted net loss per share for the periods indicated because including them would have had an anti-dilutive effect (in thousands):
For the three months ended March 31,
20222021
Outstanding stock options (1)
5,645 6,458 
Restricted stock units (1)
4,053 2,073 
ESPP shares and other264 884 
9,962 9,415 
(1) Outstanding stock options and restricted stock units include awards outstanding to employees of 2seventy bio for shares of the Company's common stock.
13. Subsequent events
April 2022 reduction in workforce
In April 2022, the Board of Directors of the Company approved a comprehensive restructuring plan intended to reduce operating expenses. The Company intends to maintain targeted research efforts focused on in-vivo LVV gene therapy and to deprioritize direct investments in reduced toxicity conditioning and cryopreserved apheresis. The restructuring is anticipated to produce up to $160 million in cost savings over the next two years.
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As part of the restructuring, the Company plans to reduce its workforce by 30% across the second and third quarters of 2022. The Company estimates that it will incur approximately $10 million in costs to implement the restructuring, comprised primarily of severance payments and continuing health care coverage over the severance period. The restructuring actions associated with these charges commenced in April 2022 and be substantially completed by the end of 2022.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following information should be read in conjunction with the unaudited financial information and the notes thereto included in this Quarterly Report on Form 10-Q and the audited financial information and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the Securities and Exchange Commission, or the SEC, on March 4, 2022 (the "2021 Annual Report on Form 10-K").
Except for the historical information contained herein, the matters discussed in this Quarterly Report on Form 10-Q may be deemed to be forward-looking statements that involve risks and uncertainties. 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. In this Quarterly Report on Form 10-Q, words such as “may,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” and similar expressions (as well as other words or expressions referencing future events, conditions or circumstances) are intended to identify forward-looking statements.
Our actual results and the timing of certain events may differ materially from the results discussed, projected, anticipated, or indicated in any forward-looking statements. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from the forward-looking statements contained in this Quarterly Report. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate are consistent with the forward-looking statements contained in this Quarterly Report, they may not be predictive of results or developments in future periods.
The following information and any forward-looking statements should be considered in light of factors discussed elsewhere in this Quarterly Report on Form 10-Q, including those risks identified under Part II, Item 1A. Risk Factors.
We caution readers not to place undue reliance on any forward-looking statements made by us, which speak only as of the date they are made. We disclaim any obligation, except as specifically required by law and the rules of the SEC, to publicly update or revise any such statements to reflect any change in our expectations or in events, conditions or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.
Overview

We are a biotechnology company committed to researching, developing, and commercializing potentially transformative gene therapies for severe genetic diseases. We have built an integrated product platform with broad therapeutic potential in a variety of indications based on our lentiviral gene addition platform. Our gene therapy programs in severe genetic diseases include programs for β-thalassemia, SCD, and CALD. The BLA for beti-cel as a treatment for patients with β-thalassemia who receive regular RBC transfusions was accepted for priority review by the FDA, and the Prescription Drug User Fee Act ("PDUFA") goal date is August 19, 2022. The BLA for eli-cel as a treatment for patients less than 18 years of age with early CALD was accepted for priority review by the FDA, and the PDUFA goal date is September 16, 2022. We are developing lovo-cel as a treatment for patients with SCD.

Based on our discussions with the FDA, we believe that we may be able to seek approval for lovo-cel in the United States on the basis of clinical data from HGB-206 Group C, with supporting data from HGB-210. We have treated all of the patients who will form the primary basis of efficacy for approval, with the demonstration of analytical comparability and validation of our commercial manufacturing process as the key remaining actions prior to submission of our planned BLA for lovo-cel. In December 2021, the FDA placed a partial clinical hold on our clinical program for lovo-cel for enrolling patients under the age of 18. During the partial clinical hold, we are continuing our clinical study activities as planned for patients 18 and older in HGB-210, as well as follow-up activities for treated patients of all ages in all studies.

We are focusing our development and commercialization efforts in the U.S. market, and we have withdrawn the marketing authorizations for beti-cel and eli-cel in European markets. We are continuing the long-term follow-up of patients previously enrolled within the clinical trial programs in Europe as planned but do not intend to initiate any new clinical trials in Europe for β-thalassemia, CALD or SCD. As a result, we anticipate a reduction of selling, general and administrative costs and an impact on our excess inventory analysis as future lots are produced, which is based on forecasted consumption levels driven by sales forecasts.
Since our inception in 1992, we have devoted substantially all of our resources to our development efforts relating to our product candidates, including activities to manufacture product candidates in compliance with good manufacturing practices, or GMP, to conduct clinical studies of our product candidates, to provide selling, general and administrative support for these
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operations and to protect our intellectual property. We have not generated material revenue from product sales. We have funded our operations primarily through the sale of common stock in our public offerings, private placements of preferred stock and warrants, and through collaborations.
As of March 31, 2022, we had cash, cash equivalents and marketable securities of approximately $266.6 million. We have never been profitable and have incurred net losses in each year since inception. Our net loss was $122.2 million for the three months ended March 31, 2022, and our accumulated deficit was $3.84 billion as of March 31, 2022. Substantially all of our net losses resulted from costs incurred in connection with our research and development programs and from selling, general and administrative costs associated with our operations. We expect to continue to incur significant expenses and operating losses for at least the next several years, as we:
fund activities related to the potential commercial launches of our late-stage product candidates in the United States;
seek regulatory approval for our product candidates;
scale our manufacturing capabilities in support of potential commercialization following any regulatory approvals;
conduct clinical studies for our clinical programs in β-thalassemia and SCD; and
potentially increase research and development-related activities for the discovery and development of new product candidates and technologies in severe genetic diseases.
Because of the numerous risks and uncertainties associated with product development and commercialization, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Even if we are able to generate revenues from the sale of our products, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce our operations.
Business update
In March 2021, we placed a portion of our internal LVV manufacturing facility into service, while still completing qualification of the remaining portion. In September 2021, we completed the sale of this LVV manufacturing facility to National Resilience, Inc. Currently all of our manufacturing activities are contracted out to third parties and we utilize third-party contract research organizations ("CROs") to carry out our clinical development activities. As we seek to obtain regulatory approval for our product candidates and begin commercialization following marketing approval, if obtained, we expect to incur significant commercialization expenses as we prepare for and begin product sales, marketing, commercial manufacturing, and distribution at such time. Accordingly, until we generate significant revenues from product sales at such time, we will continue to seek to fund our operations through public or private equity or debt financings, strategic collaborations, or other sources. However, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. Our failure to raise capital or enter into such other arrangements as and when needed would have a negative impact on our financial condition and our ability to develop our product candidates.

In April 2021, we announced our decision to withdraw ZYNTEGLO from the German market because reimbursement negotiations in Germany did not result in a price for ZYNTEGLO that reflects the value of the one-time gene therapy with potential life-long benefit for people living with transfusion dependent β-thalassemia. A total of approximately 50 employees were impacted by this reduction. During the three months ended June 30, 2021, we substantially completed this reduction and, in accordance with ASC 420, Exit and Disposal Activities, and ASC 712, Nonretirement Postemployment Benefits, recorded approximately $4.6 million of costs including severance, the portion of the employees' 2021 retention bonuses to be paid in cash, and the pro rata portion of the employees' 2021 performance bonus.

In July 2021, we made the decision to focus our efforts on the U.S. market for beti-cel, eli-cel, and lovo-cel and are executing an orderly wind down of our European operations. A total of approximately 90 employees were impacted by the reduction in workforce associated with this decision. We recorded $21.2 million of expense, in accordance with the related accounting standards mentioned above, for the affected employees. No costs associated with the April 2021 and July 2021 reductions were incurred during the three months ended March 31, 2022 and 2021.

In April 2022, we announced that we were initiating a comprehensive restructuring plan to deliver cost savings over the next two years. As part of the restructuring, we plan to reduce our workforce by approximately 30% in 2022. See Note 13, Subsequent events, to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q for more information on this restructuring plan.

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We had cash, cash equivalents and marketable securities of approximately $266.6 million as of March 31, 2022. In accordance with Accounting Standards Codification (“ASC”) 205-40, Going Concern, we evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date that the condensed consolidated financial statements are issued. This evaluation initially does not take into consideration the potential mitigating effect of our plans that have not been fully implemented as of the date the financial statements are issued. When substantial doubt exists under this methodology, we evaluate whether the mitigating effect of our plans sufficiently alleviates substantial doubt about our ability to continue as a going concern. The mitigating effect of our plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about our ability to continue as a going concern within one year after the date that the financial statements are issued. In performing this analysis, we excluded certain elements of our operating plan that cannot be considered probable. Under ASC 205-40, the future receipt of potential funding from future equity or debt issuances, the release of restricted cash related to the Company’s 50 Binney Street lease, and the potential sale of priority review vouchers, if received, cannot be considered probable at this time because none of the plans are entirely within the Company’s control or have been approved by the Board of Directors as of the date of the financial statements. The restructuring plan described above was approved by the Board of Directors in April 2022 and therefore was incorporated into our assessment of our ability to continue as a going concern within one year after the date of these condensed consolidated financial statements are issued.

Our expectation to generate operating losses and negative operating cash flows in the future and the need for additional funding to support our planned operations raise substantial doubt regarding our ability to continue as a going concern for a period of one year after the date that the financial statements are issued. Our plan to alleviate the conditions that raise substantial doubt include implementing reduced 2022 spending, including projected savings through the move of the Company's headquarters to Assembly Row in Somerville, Massachusetts, the orderly wind down of European operations, the potential sale of priority review vouchers that would be issued with potential U.S. regulatory approvals of BLAs for beti-cel and/or eli-cel, and the pursuit of additional cash resources through public or private equity or debt financings. We have concluded the likelihood that our plan to successfully obtain sufficient funding from one or more of these sources or adequately reduce expenditures, while reasonably possible, is less than probable. Accordingly, we have concluded that substantial doubt exists about our ability to continue as a going concern for a period of at least 12 months from the date of issuance of the condensed consolidated financial statements.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described above.
Our legacy business

On November 4, 2021, we completed the separation of our severe genetic disease and oncology programs into two separate, publicly traded companies: bluebird bio, Inc. and 2seventy bio, Inc. ("2seventy bio"), a Delaware corporation and wholly-owned subsidiary prior to the separation (the "Separation"). The Separation was effected by means of a distribution of all of the outstanding shares of common stock of 2seventy bio in which each bluebird stockholder received one share of common stock, par value $0.0001 per share, of 2seventy bio for every three shares of common stock, par value $0.01 per share, of bluebird held as of the close of business on October 19, 2021 (the "Distribution").

In connection with the Separation, we entered into a separation agreement with 2seventy bio, dated as of November 3, 2021, that, among other things, sets forth our agreements with 2seventy bio regarding the principal actions to be taken in connection with the Separation, including the Distribution. In connection with the Separation, we also entered into certain other agreements with 2seventy bio, including transition services agreements. Pursuant to the transition services agreements, we are obligated to provide and are entitled to receive certain transition services related to corporate functions, such as finance, human resources, internal audit, research and development, financial reporting, and information technology. The separation and the aforementioned agreements are more fully described in Note 3, Discontinued operations, to our consolidated financial statements appearing in our 2021 Annual Report on Form 10-K, and in Note 3, Discontinued operations, to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.
Financial operations overview
Product revenue
Our revenues have primarily been derived from product revenues associated with the sale of ZYNTEGLO in Germany.
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Other revenue
We have recognized an immaterial amount of revenue associated with grants and collaboration agreements.
Research and development expenses
Research and development expenses consist primarily of costs incurred for the development of our product candidates, which include:
employee-related expenses, including salaries, benefits, travel and stock-based compensation expense;
expenses incurred under agreements with CROs and clinical sites that conduct our clinical studies;
reimbursable costs to our partners for collaborative activities;
facilities, depreciation, and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, information technology, insurance, and other supplies in support of research and development activities;
costs associated with our research platform and preclinical activities;
milestones and upfront license payments;
costs associated with our regulatory, quality assurance and quality control operations; and
amortization of certain intangible assets.
Research and development costs are expensed as incurred. Costs for certain development activities are recognized based on an evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors and our clinical sites. We cannot determine with certainty the duration and completion costs of the current or future clinical studies of our product candidates or if, when, or to what extent we will generate revenues from the commercialization and sale of any of our product candidates that obtain regulatory approval. We may not succeed in achieving regulatory approval for all of our product candidates. The duration, costs, and timing of clinical studies and development of our product candidates will depend on a variety of factors, any of which could mean a significant change in the costs and timing associated with the development of our product candidates, including:
the scope, rate of progress, and expense of our ongoing as well as any additional clinical studies and other research and development activities we undertake;
future clinical study results;
uncertainties in clinical study enrollment rates;
new manufacturing processes or protocols that we may choose to or be required to implement in the manufacture of our LVV or drug product;
regulatory feedback on requirements for regulatory approval, as well as changing standards for regulatory approval; and
the timing and receipt of any regulatory approvals.  
We plan to continue to incur research and development expenses for the foreseeable future as we continue to advance the development of beti-cel, eli-cel, and lovo-cel, and conduct research activities for our platform technology. Our research and development expenses include expenses associated with the following activities:
for the clinical studies of beti-cel, consisting of HGB-207, HGB-212, and the associated long-term follow-up protocol;
for the clinical studies of lovo-cel, consisting of HGB-206, HGB-210 study, and the associated long-term follow-up protocol;
for the clinical study of eli-cel, consisting of ALD-104, and the associated long-term follow-up protocol;
research and development activities for our platform technology; and
for the manufacture of clinical study materials in support of our clinical studies.
Our direct research and development expenses consist principally of external costs, such as fees paid to investigators, consultants, central laboratories and CROs in connection with our clinical studies, and costs related to acquiring and manufacturing clinical study materials. We allocate salary and benefit costs directly related to specific programs. We do not allocate personnel-related discretionary bonus or stock-based compensation costs, laboratory and related expenses, certain
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license and other collaboration costs, depreciation or other indirect costs that are deployed across multiple projects under development and, as such, the costs are separately classified as other research and development expenses in the table below:
For the
three months ended March 31,
2022
2021(1)
(in thousands)
beti-cel$11,470 $13,706 
lovo-cel (formerly LentiGlobin for SCD)25,676 13,162 
eli-cel10,917 13,311 
Preclinical programs4,902 1,530 
Total direct research and development expense52,965 41,709 
Employee-and contractor-related expenses9,929 13,758 
Stock-based compensation expense6,555 12,390 
Laboratory and related expenses732 2,207 
Facility expenses7,485 12,141 
Other expenses209 638 
Total other research and development expenses24,910 41,134 
Total research and development expense$77,875 $82,843 
(1)Prior period amounts have been retrospectively adjusted to reflect the effects of the Separation.
Selling, general and administrative expenses
Selling, general and administrative expenses consist primarily of salaries and related costs for personnel, including stock-based compensation and travel expenses for our employees in executive, operational, finance, legal, business development, commercial, information technology, and human resource functions. Other selling, general and administrative expenses include facility-related costs, professional fees for accounting, tax, legal and consulting services, directors’ fees and expenses associated with obtaining and maintaining patents.
We anticipate that our selling, general and administrative expenses will decrease in the future as we implement our restructuring plans and reduce headcount in these functions.
Cost of product revenue
Cost of product revenue includes costs associated with the sale of ZYNTEGLO in Germany.
Interest income, net
Interest income, net consists primarily of interest income earned on investments.
Other (expense) income, net
Other (expense) income, net consists primarily of gains and losses on equity securities held by us, gains and losses on disposal of fixed assets, and gains and losses on foreign currency transactions.
Discontinued operations
Net loss from discontinued operations consists of the results of our oncology business and our manufacturing facility in Durham, North Carolina and is reported as a separate component of income.
Critical accounting policies and estimates
Our management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with generally accepted accounting principles in the U.S. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, and expenses and the disclosure of contingent assets and liabilities in our financial statements. On an ongoing basis, we evaluate our estimates and judgments, 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. We base our estimates on historical experience, known trends and events and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of
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assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. In making estimates and judgments, management employs critical accounting policies. During the three months ended March 31, 2022, there were no material changes to our critical accounting policies as reported in our 2021 Annual Report on Form 10-K, except as otherwise described in Note 2, Basis of presentation, principles of consolidation and significant accounting policies, in the Notes to Condensed Consolidated Financial Statements appearing elsewhere in this Quarterly Report on Form 10-Q.
Results of Operations
Comparison of the three months ended March 31, 2022 and 2021:
For the three months ended
March 31,
20222021
Change
(in thousands)
Revenue:
Product revenue$1,408 $724 $684 
Other revenue537 170 367 
Total revenues1,945 894 1,051 
Operating expenses:
Research and development77,875 82,843 (4,968)
Selling, general and administrative36,106 63,569 (27,463)
Cost of product revenue8,310 576 7,734 
Total operating expenses122,291 146,988 (24,697)
Loss from operations(120,346)(146,094)25,748 
Interest income, net106 355 (249)
Other (expense) income, net(1,912)24,301 (26,213)
Loss before income taxes(122,152)(121,438)(714)
Income tax (expense) benefit— (66)66 
Net loss from continuing operations(122,152)(121,504)(648)
Net loss from discontinued operations— (84,304)84,304 
Net loss$(122,152)$(205,808)$83,656 

Revenues. Total revenue was $1.9 million for the three months ended March 31, 2022, compared to $0.9 million for the three months ended March 31, 2021. The increase of $1.1 million was primarily attributable to sales of ZYNTEGLO in Germany.
Research and development expenses. Research and development expenses were $77.9 million for the three months ended March 31, 2022, compared to $82.8 million for the three months ended March 31, 2021. The net decrease of $4.9 million was primarily attributable to the following:
$12.4 million of decreased net employee compensation, benefit, and other headcount-related expenses, which is primarily driven by a decrease of $5.8 million in stock-based compensation expense due to an overall decrease in the value of awards and by stock-based compensation expense incurred related to our employee retention program in 2021;
$3.7 million of decreased clinical trial costs primarily driven by the completion of clinical trials in late 2021;
$3.0 million of decreased information technology and facility-related costs; and
$2.5 million of decreased lab expenses and platform costs;
These decreased costs were partially offset by $15.6 million of increased material production fees.
Selling, general and administrative expenses. Selling, general and administrative expenses were $36.1 million for the three months ended March 31, 2022, compared to $63.6 million for the three months ended March 31, 2021. The decrease of $27.5 million was primarily due to the following:
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$25.8 million of decreased employee compensation, benefit, and other headcount-related expenses, which is primarily driven by a decrease of $13.1 million in stock-based compensation expense due to an overall decrease in the value of awards and by stock-based compensation expense incurred related to our employee retention program in 2021; and
$1.6 million of decreased costs related to commercial readiness activities due to our decision to focus our efforts on the U.S. market for beti-cel, eli-cel, and lovo-cel.
Cost of product revenue. Cost of product revenue was $8.3 million for the three months ended March 31, 2022, compared to $0.6 million for the three months ended March 31, 2021. The increase is primarily attributable to reserves for excess inventory recognized during the first quarter of 2022 based on forecasted consumption levels as of March 31, 2022.
Interest income, net. The decrease in interest income, net was primarily related to lower interest income earned on investments due to an overall decrease in investments.
Other (expense) income, net. The decrease in other (expense) income, net was primarily related to changes in fair value of equity securities. During the three months ended March 31, 2021, we recognized a gain on the sale of equity securities.
Liquidity and Capital Resources
As of March 31, 2022, we had cash, cash equivalents and marketable securities of approximately $266.6 million. Cash in excess of immediate requirements is invested in accordance with our investment policy, primarily with a view to liquidity and capital preservation. As of March 31, 2022, our funds are primarily held in U.S. government agency securities and treasuries, corporate bonds, commercial paper, equity securities, and money market accounts.

We have incurred losses and cumulative negative cash flows from operations since our inception in April 1992, and as of March 31, 2022 we had an accumulated deficit of $3.84 billion. We expect that we will continue to incur significant research and development and selling, general and administrative expenses and, as a result, we will need additional capital to fund our operations within the next twelve months, which we may raise through public or private equity or debt financings, strategic collaborations, or other sources which are not entirely within our control nor have been approved by our Board of Directors as of the date of this filing. Potential additional funding from other sources includes the sale of priority review vouchers, if received.

The likelihood of our long-term success must be considered in light of the expenses, difficulties, and potential delays to be encountered in the development and commercialization of new pharmaceutical products, competitive factors in the marketplace and the complex regulatory environment in which we operate. We may never achieve significant revenue or profitable operations. These factors create substantial doubt about our ability to continue as a going concern. The accompanying Condensed Consolidated Financial Statements were prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Condensed Consolidated Financial Statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.
Sources of Liquidity

The discussion of our cash flows that follows does not include the impact of any adjustments to remove discontinued operations, unless otherwise noted, and is stated on a total company consolidated basis. The separation of our oncology business may have a negative impact on our cash flows in future periods.
Cash Flows
The following table summarizes our cash flow activity:
For the three months ended March 31,
20222021
(in thousands)
Net cash used in operating activities
$(125,296)$(203,327)
Net cash provided by investing activities69,926 321,352 
Net cash provided by financing activities
3,796 
Net (decrease) increase in cash, cash equivalents and restricted cash$(55,361)$121,821 

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Operating Activities. The $78.0 million decrease in cash used in operating activities for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 was primarily due to the decrease in net loss during this period of $83.7 million, which was driven primarily by the separation of our oncology business in November 2021 and the sale of our manufacturing facility in Durham, North Carolina in September 2021. Cash used in operating activities was also driven by changes in operating assets and liabilities.

Discontinued operations contributed a net loss of $84.3 million for the three months ended March 31, 2021.
Investing Activities. The $251.4 million decrease in cash provided by investing activities for the three months ended March 31, 2022 was primarily due to a decrease in proceeds from maturities of marketable securities of $280.1 million and a decrease in proceeds from sales of marketable securities of $31.3 million, partially offset by a decrease in cash used to purchase marketable securities of $53.2 million compared to the three months ended March 31, 2021.
Financing Activities. The $3.8 million decrease in cash provided by financing activities was primarily driven by a decrease in proceeds from exercise of stock options of $3.8 million during the three months ended March 31, 2022 compared to the three months ended March 31, 2021.
Contractual Obligations and Commitments
Except as discussed in Note 8, Leases, and Note 9, Commitments and contingencies, in the Notes to Condensed Consolidated Financial Statements appearing elsewhere in this Quarterly Report on Form 10-Q, there have been no material changes to our contractual obligations and commitments as included in our 2021 Annual Report on Form 10-K.
Item 3. Quantitative and Qualitative Disclosures About Market Risks
We are exposed to market risk related to changes in interest rates. As of March 31, 2022 and December 31, 2021, we had cash, cash equivalents and marketable securities of $266.6 million and $396.6 million, respectively, primarily invested in U.S. government agency securities and treasuries, corporate bonds, commercial paper, equity securities, and money market accounts. Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates, particularly because our investments are in short-term securities. Our available-for-sale securities are subject to interest rate risk and will fall in value if market interest rates increase. If market interest rates were to increase immediately and uniformly by 100 basis points, or one percentage point, from levels at March 31, 2022, the net fair value of our interest-sensitive marketable securities would have resulted in a hypothetical decline of approximately $1.3 million.
Item 4. Controls and Procedures
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating our disclosure controls and procedures our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Evaluation of our Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, our principal executive officer and principal financial officer have concluded that as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
During the quarter ended March 31, 2022, there were no changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15(d)-15(f) promulgated under the Securities Exchange Act of 1934, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
In the ordinary course of business, we are from time to time involved in lawsuits, claims, investigations, proceedings, and threats of litigation relating to intellectual property, commercial arrangements, employment and other matters. While the outcome of these proceedings and claims cannot be predicted with certainty, as of March 31, 2022, we were not party to any legal or arbitration proceedings that may have, or have had in the recent past, significant effects on our financial position. No governmental proceedings are pending or, to our knowledge, contemplated against us. We are not a party to any material proceedings in which any director, member of executive management or affiliate of ours is either a party adverse to us or our subsidiaries or has a material interest adverse to us or our subsidiaries.
On February 12, 2021, a class action complaint was filed in the United States District Court for the Eastern District of New York, Leung v. bluebird bio, Inc., et. al., Case No. 1:21-cv-00777, by a purported stockholder against us and certain of our officers. The complaint alleges violations of Section 10(b) of the Securities Exchange Act and Rule 10b-5 promulgated thereunder against all defendants and violations of Section 20(a) of the Exchange Act against the officers and seeks unspecified damages. The allegations relate to our disclosure on November 4, 2020 that we were adjusting the expected timing of submission of a BLA to the FDA for LentiGlobin for sickle cell disease to late 2022. This case was subsequently transferred to the United States District Court of Massachusetts on February 26, 2021. We filed a Motion to Dismiss the complaint in its entirety September 7, 2021, which the Court granted April 21, 2022. Plaintiff Leung has 30 days to appeal. To date, an appeal has not been filed.
On October 21, 2021, Errant Gene Therapeutics, LLC filed a complaint against us in the United States District Court for the District of Delaware for alleged infringement of U.S. Patents 7,541,179 and 8,058,061. The allegations relate to our use of the BB305 lentiviral vector in the beti-cel program and seeks injunctive relief and money damages. On February 21, 2022, the parties stipulated to amend the case caption, in light of the Plaintiff’s name change, from Errant Gene Therapeutics, LLC to San Rocco Therapeutics, LLC. The Court granted this stipulation and, accordingly, the case is now captioned, San Rocco Therapeutics, LLC v. bluebird bio, Inc. and Third Rock Ventures, LLC, C.A. No. 21-1478-RGA.
Item 1A. Risk Factors
An investment in shares of our common stock involves a high degree of risk. You should carefully consider the following information about these risks, together with the other information appearing elsewhere in this Quarterly Report on Form 10-Q, including our financial statements and related notes hereto, before deciding to invest in our common stock. The occurrence of any of the following risks could have a material adverse effect on our business, financial condition, results of operations and future growth prospects. In these circumstances, the market price of our common stock could decline, and you may lose all or part of your investment.
Those risk factors below denoted with a “*” are newly added or have been materially updated from our 2021 Annual Report on Form 10-K.
*We have incurred significant losses since our inception and anticipate that we will continue to incur significant losses for the foreseeable future.
We have incurred net losses in each year since our inception in 1992, including net losses from continuing operations of $122.2 million for the three months ended March 31, 2022. As of March 31, 2022, we had an accumulated deficit of $3.84 billion. The amount of our future net losses will depend, in part, on the rate of our future expenditures and our ability to generate revenues. We have devoted significant financial resources to research and development, including our clinical and preclinical development activities, which we expect to continue for the foreseeable future. To date, we have financed our operations primarily through the sale of equity securities and, to a lesser extent, through collaboration agreements and grants from governmental agencies and charitable foundations. We have not generated material revenues from the sale of beti-cel in the European Union, and we do not expect to generate meaningful product revenues in the foreseeable future until we obtain marketing approval for products in the United States and following any potential commercial launch. Following marketing approval, our future revenues will depend upon the size of any markets in which our potential products have received approval, and our ability to achieve sufficient market acceptance, reimbursement from third-party payers and adequate market share for our potential products in those markets.
We expect to continue to incur significant expenses and operating losses for the foreseeable future as we:
continue our research and clinical development of our product candidates;
obtain manufacturing capacity at third-party manufacturers;
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establish capabilities to support our commercialization efforts, including establishing a sales, marketing and distribution infrastructure in the United States, and to commercialize products for which we may obtain marketing approval;
maintain, protect and expand our intellectual property portfolio;
attract and retain skilled personnel; and
experience any delays or encounter issues with any of the above.
We may also in the foreseeable future undertake additional activities that may substantially increase our expenses, such as:
build and expand manufacturing capacity, including capacity at third-party manufacturers;
initiate additional research, preclinical, clinical or other programs as we seek to identify and validate additional product candidates; or
acquire or in-license other product candidates and technologies.
The net losses we incur may fluctuate significantly from quarter to quarter and year to year, such that a period-to-period comparison of our results of operations may not be a good indication of our future performance. In any particular quarter or quarters, our operating results could be below the expectations of securities analysts or investors, which could cause our stock price to decline.
*There is substantial doubt regarding our ability to continue as a going concern. 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.
We are currently advancing our late-stage programs in severe genetic diseases through clinical development. Developing and commercializing gene therapy products is expensive, and we do not expect to generate meaningful product revenues in the foreseeable future until we obtain marketing approval for products in the United States and following any potential commercial launch.
As of March 31, 2022, we had restricted cash, cash and cash equivalents, and marketable securities of approximately $266.6 million. As of December 31, 2021, our cash, cash equivalents and marketable securities were $396.6 million. Based on our current business plan as of the date of our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q, there is substantial doubt regarding our ability to continue as a going concern for a period of one year after such date.
In April 2022, we announced a comprehensive restructuring plan intended to reduce operating expenses. We may not realize expected cost savings from the implementation of these plans at the levels we expect; we may encounter additional delays in the development of our programs, including the imposition of new clinical holds or delays in resolving existing clinical holds, that may impact our ability to meet our expected time lines and increase our costs; the internal and external costs required for our ongoing and planned activities, and the resulting impact on expense and use of cash, may be higher than expected which may cause us to use cash more quickly than we expect or change or curtail some of our plans or both; our expectations as to expenses, cash usage and cash needs may prove not to be correct for other reasons such as changes in plans or actual events being different than our assumptions. We will need to raise additional funding in order to execute on our current business plans and strategy.
Our efforts to raise additional funding or reduce expenses may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our potential products following marketing approval if and when obtained. In addition, we cannot guarantee that financing will be available in sufficient amounts or on terms acceptable to us, if at all. Moreover, the terms of any financing may adversely affect the holdings or the rights of our stockholders and the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our shares to decline. The sale of additional equity or convertible securities would dilute all of our stockholders. The incurrence of indebtedness would result in increased fixed payment obligations and we may be required to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. We could also be required to seek funds through arrangements with collaborative partners or otherwise at an earlier stage than otherwise would be desirable and we may be required to relinquish rights to some of our technologies or product candidates or otherwise agree to terms unfavorable to us, any of which may have a material adverse effect on our business, operating results and prospects.
If we are unable to obtain funding on a timely basis, or if revenues from collaboration arrangements or product sales are less than we have projected, we may be required to further revise our business plan and strategy, which may result in us
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significantly curtailing, delaying or discontinuing one or more of our research or development programs or the commercialization of any product candidates or may result in our being unable to expand our operations or otherwise capitalize on our business opportunities. As a result, our business, financial condition and results of operations could be materially affected.
*Insertional oncogenesis is a risk of gene therapies using viral vectors that can integrate into the genome, and several patients with CALD treated with eli-cel in our clinical studies have been diagnosed with MDS likely mediated by Lenti-D LVV insertion. 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.
A potentially significant risk in any gene therapy product using viral vectors that can integrate into the genome is that the vector will insert in or near cancer-causing genes, leading to the proliferation of certain cellular clones that can cause cancer in the patient, known as insertional oncogenesis. Several patients with CALD treated with eli-cel in our clinical studies have been diagnosed with MDS likely mediated by Lenti-D LVV insertion, and as a result, the FDA placed our clinical studies of eli-cel on clinical hold. In light of the FDA's requests for additional information about safety events and monitoring in the eli-cel clinical program, we have no assurances as to whether we will successfully resolve the clinical hold. In addition, we cannot make assurances that additional patients treated with eli-cel, beti-cel or lovo-cel in the clinical or commercial setting will not be diagnosed with MDS, leukemia or lymphoma. Patients treated with our therapies, including lovo-cel, have exhibited persistent oligoclonality, in which a portion of their hematopoietic system is comprised of cells containing at least one insertion site, as measured by integration site analysis. Based on our pharmacovigilance protocols, we increase our monitoring of patients who exhibit persistent oligoclonality. It is not clear at this time whether persistent oligoclonality represents an increased risk of developing MDS, leukemia, or lymphoma in the future, but it is a criteria used by the FDA to evaluate the safety of gene therapies over time.There is also the potential risk of other delayed adverse events following exposure to gene therapy products due to persistent biological activity of the genetic material or other components of products used to carry the genetic material. The FDA has stated that LVV possess characteristics that may pose high risks of delayed adverse events. If any such adverse events occur, further advancement of our clinical studies could be halted or delayed, we may not receive marketing approval for our product candidates, and we may be unable to commercialize any approved product. It is possible that upon occurrence or recurrence of any of these events, the FDA may place one or more of our programs on hold, impose requirements that result in delays for regulatory approval for one or more of our programs, require risk evaluation or mitigation strategies as a condition for regulatory approval, or may cause us to cease commercialization following the receipt of any marketing approval. If any of these were to occur, the commercial potential of our programs may be materially and negatively impacted.
Furthermore, treatment with our potential products involve chemotherapy or myeloablative treatments which can cause side effects or adverse events that may impact the perception of the potential benefits of our potential products. For instance, MDS leading to acute myeloid leukemia is a known risk of certain myeloablative regimens. Additionally, beti-cel, eli-cel, or lovo-cel, the procedures associated with their administration, or with the collection of patients' cells, could potentially cause other adverse events that have not yet been predicted. The inclusion of patients with significant underlying medical problems in our clinical studies may result in deaths, or other adverse medical events, due to other therapies or medications that such patients may be using, or the progression of their disease. For instance, it is possible that the events of MDS and acute myeloid leukemia previously reported in our HGB-206 clinical study were caused by lovo-cel, in combination with underlying SCD, transplant procedure, and stress on the bone marrow following drug product infusion. Even if a product such as lovo-cel, eli-cel or beti-cel is ultimately approved, such safety events may result in the product being removed from the market or its market opportunity being significantly reduced. Other patients receiving our product candidates may develop leukemia, lymphoma, or MDS in the future, which may negatively impact the commercial prospects of our product candidates. Any of these events could impair our ability to develop or commercialize our product candidates, and their commercial potential may be materially and negatively impacted.
Risks related to commercialization
*We have limited experience as a commercial company and the marketing and sale of beti-cel, eli-cel, and lovo-cel following marketing approval, if and when obtained, may be unsuccessful or less successful than anticipated.
We have limited experience as a commercial company. To-date, our experience as a commercial company has been limited to commercializing beti-cel in Europe, and we have wound up our European commercial operations in order to focus in the near-term on the U.S. market. Consequently, there is limited information about our ability to overcome many of the risks and uncertainties encountered by companies commercializing products in the biopharmaceutical industry in the U.S. To execute our business plan, we will need to successfully:
gain regulatory approval to commercialize beti-cel, eli-cel, and lovo-cel in the United States;
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obtain adequate pricing and reimbursement for beti-cel, eli-cel, and lovo-cel across payers in the United States;
establish and maintain, in the regions where we hope to treat patients, relationships with qualified treatment centers who will be treating the patients who receive beti-cel, eli-cel, and lovo-cel;
manage our spending as we seek marketing approvals, and engage in commercialization efforts, including for any extension of marketing approval of beti-cel, eli-cel, and lovo-cel; and
initiate, develop and maintain successful strategic alliances.
If we are not successful in accomplishing these objectives, we may not be able to develop and commercialize beti-cel, eli-cel, or lovo-cel, raise capital, expand our business, or continue our operations.
*The commercial success of beti-cel, eli-cel, and lovo-cel following marketing approval, if and when obtained, will depend upon the degree of market acceptance by physicians, patients, payers and other stakeholders.
The commercial success of beti-cel, eli-cel, and lovo-cel following marketing approval, if and when obtained, will depend in part on the medical community, patients, and third-party or governmental payers accepting gene therapy products in general, and beti-cel, eli-cel, and lovo-cel, in particular, as medically useful, cost-effective, and safe. Beti-cel, eli-cel, and lovo-cel that we may bring to the market may not gain market acceptance by physicians, patients, payers and other stakeholders. If these products do not achieve an adequate level of acceptance, we may not generate significant product revenue and may not become profitable. The degree of market acceptance of beti-cel, eli-cel, and lovo-cel following marketing approval, if and when obtained, will depend on a number of factors, including:
the potential efficacy and potential advantages over alternative treatments;
the prevalence and severity of any side effects, including any limitations or warnings contained in a product’s approved labeling;
the prevalence and severity of any side effects resulting from the chemotherapy and myeloablative treatments associated with the procedure by which our potential products are administered;
relative convenience and ease of administration;
the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;
the strength of marketing and distribution support and timing of market introduction of competitive products;
the pricing of our potential products;