Table of ~~social media platforms presents new risks and challenges.~~Contents

Social media is increasingly being used to communicate about our clinical development programs and the diseases our product candidates are being developed to treat. We intend to utilize appropriate social media in connection with our commercialization efforts following approval of our product candidates. Social media practices in the biopharmaceutical industry continue to evolve and regulations relating to such use are not always clear. This evolution creates uncertainty and risk of noncompliance with regulations applicable to our business. For example, patients may use social media channels to report an alleged adverse event. When such disclosures occur, there is a risk that we fail to monitor and comply with applicable adverse event reporting obligations, or we may not be able to defend our business or the public’s legitimate interests in the face of the political and market pressures generated by social media due to restrictions on what we may say about our investigational products. There is also a risk of inappropriate disclosure of sensitive information or negative or inaccurate posts or comments about us on any social networking website, or a risk that a post on a social networking website by any of our employees may be construed as inappropriate promotion. If any of these events were to occur or we otherwise fail to comply with applicable regulations, we could incur liability, face regulatory actions, or incur other harm to our business.

Our computer systems, or those of our third-party collaborators, service providers, contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of our product candidates’ development programs and have a material adverse effect on our reputation, business, financial condition or results of operations.

Our computer systems and those of our current or future third-party collaborators, service providers, contractors and consultants may fail and are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. The size and complexity of our information technology systems, and those of our collaborators, service providers, contractors and consultants, and the large amounts of information stored on those systems make those systems vulnerable to service interruptions, security breaches, or other failures, resulting from inadvertent or intentional actions by our employees or those of third-party business partners, or from cyber-attacks by malicious third parties. Attacks on information technology systems are increasing in their frequency, levels of persistence, sophistication and intensity, and they are being conducted by increasingly sophisticated and organized groups and individuals with a wide range of motives and expertise. In addition to extracting sensitive information, such attacks could include the deployment of harmful malware, ransomware, denial-of-service attacks, social engineering and other means to affect service reliability and threaten the confidentiality, integrity and availability of information. The prevalent use of mobile devices also increases the risk of data security incidents. If we experience a material system failure, accident or security breach that causes interruptions in our operations or the operations of third-party collaborators, service providers, contractors and consultants, it could result in significant reputational, financial, legal, regulatory, business or operational harm. For example, the loss of clinical trial data for our product candidates could result in delays in our marketing approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach results in a loss of or damage to our data or applications or other data or applications relating to our technology or product candidates, or inappropriate disclosure of confidential or proprietary information, we could incur liabilities and the further development of our product candidates could be delayed. In addition, we rely on third-party service providers for management of the manufacture and delivery of drug product to patients in the commercial context, including for chain of identity and chain of custody. We also rely on third-party service providers for aspects of our internal control over financial reporting and such service providers may experience a material system failure or fail to carry out their obligations in other respects, which may impact our ability to produce accurate and timely financial statements, thus harming our operating results, our ability to operate our business, and our investors’ view of us. In addition, our liability insurance may not be sufficient in type or amount to cover us against claims related to material failures, security breaches, cyberattacks and other related breaches.

Any failure or perceived failure by us or any third-party collaborators, service providers, contractors or consultants to comply with our privacy, confidentiality, data security or similar obligations to third parties, or any data security incidents or other security breaches that result in the unauthorized access, release or transfer of sensitive information, including personally identifiable information, may result in governmental investigations, enforcement actions, regulatory fines, litigation or public statements against us. These events could cause third parties to lose trust in us or could result in claims by third parties asserting that we have breached our privacy, confidentiality, data security or similar obligations, any of which could have a material adverse effect on our reputation, business, financial condition or results of operations. Moreover, data security incidents and other security breaches can be difficult to detect, and any delay in identifying them may lead to increased harm. While we have implemented data security measures intended to protect our information technology systems and infrastructure, there can be no assurance that such measures will successfully prevent service interruptions or data security incidents.

Risks related to the separation of our oncology programs and portfolio

We may incur operational difficulties or be exposed to claims and liabilities as a result of the separation of 2seventy bio.

On November 4, 2021, we distributed all of the outstanding shares of 2seventy bio, Inc. ("2seventy") common stock to our stockholders in connection with the separation of our oncology programs and portfolio. In connection with the distribution, we entered into a separation agreement and various other agreements (including a tax matters agreement, an employee matters agreement, transition services agreements and an intellectual property license agreement). These agreements govern the separation and distribution and the relationship between us and 2seventy going forward, including with respect to potential tax-related losses associated with the separation and distribution. They also provide for the performance of services by each company for the benefit of the other for a period of time.

The separation agreement provides for indemnification obligations designed to make 2seventy financially responsible for many liabilities that may exist relating to its business activities, whether incurred prior to or after the distribution, including any pending or future litigation, but we cannot guarantee that 2seventy will be able to satisfy its indemnification obligations. It is also possible that a court would disregard the allocation agreed to between us and 2seventy and require us to assume responsibility for obligations allocated to 2seventy. Third parties could also seek to hold us responsible for any of these liabilities or obligations, and the indemnity rights we have under the separation agreement may not be sufficient to fully cover

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all of these liabilities and obligations. Even if we are successful in obtaining indemnification, we may have to bear costs temporarily. In addition, our indemnity obligations to 2seventy, including those related to assets or liabilities allocated to us, may be significant. These risks could negatively affect our business, financial condition or results of operations.

The separation of 2seventy continues to involve a number of additional risks, including, among other things, the potential that management’s and our employees’ attention will be significantly diverted by the provision of transitional services or that we may incur other operational challenges or difficulties as a result of the separation. Certain of the agreements described above provide for the performance of services by each company for the benefit of the other for a period of time. If 2seventy is unable to satisfy its obligations under these agreements, we could incur losses and may not have sufficient resources available for such services. These arrangements could also lead to disputes over rights to certain shared property and over the allocation of costs and revenues for products and operations. Our inability to effectively manage the transition activities and related events could adversely affect our business, financial condition or results of operations.

We may fail to realize some or all of the anticipated benefits of the separation of 2seventy.

The anticipated operational, financial, strategic and other benefits of the separation of 2seventy may not be achieved. The combined value of the common stock of the two publicly-traded companies may not be equal to or greater than what the value of our common stock would have been had the separation not occurred. The combined value of the common stock of the two companies could be lower than anticipated for a variety of reasons, including the failure of either company to operate and compete effectively as an independent company. The common stock price of each company may experience periods of extreme volatility. In addition, following the separation we are smaller and less diversified, with a narrower business focus, and may be more vulnerable to changing market conditions. The separation also presents a number of significant risks to our internal processes, including the failure to maintain an adequate control environment due to changes to our infrastructure technology systems and financial reporting processes.

Completion of the separation of 2seventy resulted in substantial changes in our board of directors and management.

Completion of the separation of 2seventy resulted in substantial changes in our board of directors and management. In particular, our former chief executive officer, Nick Leschly, resigned from that position (although Mr. Leschly continues to serve on our board of directors). In addition, Philip Gregory, our former chief scientific officer, and Chip Baird, our former chief financial officer, resigned from their positions with us to join management positions with 2seventy. Furthermore, Dan Lynch, Ramy Ibrahim, Denice Torres, William Sellers, Sarah Glickman and Marcela Maus resigned as members of our board of directors upon the completion of the separation. These senior officer and board level changes could be disruptive to our operations, present significant management challenges and could harm our business.

The separation may result in disruptions to, and harm our relationships with, our strategic business partners.

Uncertainty related to the separation may lead the suppliers, research organizations, and other parties with which we currently do business or may do business in the future to terminate or attempt to negotiate changes in our existing business relationships, or cause them to delay entering into business relationships with us or consider entering into business relationships with parties other than us. These disruptions could have a material and adverse effect on our business, prospects, financial condition and results of operations.

If the distribution of shares of 2seventy bio, together with certain related transactions, does not qualify as a transaction that is generally tax-free for U.S. federal income tax purposes, we and our stockholders could be subject to significant tax liabilities.

The completion of the distribution was conditioned upon, among other things, our receipt of a private letter ruling from the IRS, and an opinion from Goodwin Procter LLP, both satisfactory to our board of directors and both continuing to be valid, together confirming that the distribution, together with certain related transactions, generally is tax-free for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code. We have received a favorable private letter ruling from the IRS addressing one significant issue of the qualification of the distribution under Section 355 of the Code. However, the private letter ruling does not address the remaining issues that are relevant to determining whether the distribution, together with certain related transactions, qualifies as a transaction that is generally tax-free for U.S. federal income tax purposes. The IRS private letter ruling and opinion of Goodwin Procter LLP were based, among other things, on various facts and assumptions, as well as certain representations, statements and undertakings from us and 2seventy bio (including those relating to the past and future conduct of us and 2seventy bio) and were subject to certain caveats. If any of these facts, assumptions, representations, statements or undertakings is, or becomes, inaccurate or incomplete, or if we or 2seventy bio breach any of our respective covenants relating to the separation, the IRS private letter ruling and tax opinion may be invalid. Moreover, the opinion is not

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binding on the IRS or any courts. Accordingly, notwithstanding receipt of the IRS private letter ruling and an opinion of Goodwin Procter LLP, the IRS could determine that the distribution and certain related transactions should be treated as taxable transactions for U.S. federal income tax purposes.

If the distribution, together with certain related transactions, were to fail to qualify as a transaction that is generally tax-free under Sections 355 and 368(a)(1)(D) of the Code, in general, for U.S. federal income tax purposes, we would recognize taxable gain as if we have sold 2seventy bio’s distributed common stock in a taxable sale for its fair market value and our stockholders who receive shares of 2seventy bio common stock in the distribution would be subject to tax as if they had received a taxable distribution equal to the fair market value of such shares.

In connection with the distribution, we and 2seventy bio entered into a tax matters agreement pursuant to which each party is responsible for certain liabilities and obligations following the distribution. In general, under the terms of the tax matters agreement, if the distribution, together with certain related transactions, were to fail to qualify as a transaction that is generally tax-free for U.S. federal income tax purposes under Sections 355 and 368(a)(1)(D) of the Code, and if and to the extent that such failure results from a prohibited change of control in us under Section 355(e) of the Code, or an acquisition of our stock or assets or certain actions, omissions or failures to act, by us, then we will bear any resulting taxes, interest, penalties and other costs. If and to the extent that such failure results from a prohibited change of control in 2seventy bio under Section 355(e) of the Code or an acquisition of 2seventy bio stock or assets or certain actions by 2seventy bio, then 2seventy bio will be obligated to indemnify us for any resulting taxes, interest, penalties and other costs, including any reductions in our net operating loss carryforwards or other tax assets. If such failure does not result from a prohibited change of control in bluebird bio or 2seventy bio under Section 355(e) of the Code and both we and 2seventy bio are responsible for such failure, liability will be shared according to relative fault. If neither we nor 2seventy bio is responsible for such failure, we will bear any resulting taxes, interest, penalties and other costs.

Risks related to our intellectual property

If we are unable to obtain or protect intellectual property rights related to our product candidates, we may not be able to compete effectively in our markets.

We rely upon a combination of patents, trade secret protection and confidentiality agreements to protect the intellectual property related to our product candidates. The strength of patents in the biotechnology and pharmaceutical field involves complex legal and scientific questions and can be uncertain. The patent applications that we own or in-license may fail to result in issued patents with claims that cover our product candidates in the United States or in other foreign countries. There is no assurance that all of the potentially relevant prior art relating to our patents and patent applications has been found, which can invalidate a patent or prevent a patent from issuing from a pending patent application. Even if patents do successfully issue and even if such patents cover our product candidates, third parties may challenge their validity, enforceability or scope, which may result in such patents being narrowed or invalidated. Furthermore, even if they are unchallenged, our patents and patent applications may not adequately protect our intellectual property, provide exclusivity for our product candidates or prevent others from designing around our claims. Any of these outcomes could impair our ability to prevent competition from third parties, which may have an adverse impact on our business.

If the patent applications we hold or have in-licensed with respect to our programs or product candidates fail to issue, if their breadth or strength of protection is threatened, or if they fail to provide meaningful exclusivity for our product candidates, it could dissuade companies from collaborating with us to develop product candidates, and threaten our ability to commercialize, future products. Several patent applications covering our product candidates have been filed recently. We cannot offer any assurances about which, if any, patents will issue, the breadth of any such patent or whether any issued patents will be found invalid and unenforceable or will be threatened by third parties. Any successful opposition to these patents or any other patents owned by or licensed to us could deprive us of rights necessary for the successful commercialization of any product candidates that we may develop. Further, if we encounter delays in regulatory approvals, the period of time during which we could market a product candidate under patent protection could be reduced. Since patent applications in the United States and most other countries are confidential for a period of time after filing, and some remain so until issued, we cannot be certain that we were the first to file any patent application related to a product candidate. Furthermore, if third parties have filed such patent applications, an interference proceeding in the United States can be initiated by a ~~third party~~third-party to determine who was the first to invent any of the subject matter covered by the patent claims of our applications. In addition, patents have a limited lifespan. In the United States, the natural expiration of a patent is generally 20 years after it is filed. Various extensions may be available however the life of a patent, and the protection it affords, is limited. Even if patents covering our product candidates are obtained, once the patent life has expired for a product, we may be open to competition from generic medications.

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In addition to the protection afforded by patents, we rely on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable or that we elect not to patent, processes for which patents are difficult to enforce and any other elements of our product candidate discovery and development processes that involve proprietary know-how, and information or technology that is not covered by patents. However, trade secrets can be difficult to protect. We seek to protect our proprietary technology and processes, in part, by entering into confidentiality agreements with our employees, consultants, scientific advisors and contractors. We also seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining physical security of our premises and physical and electronic security of our information technology systems. While we have confidence in these individuals, organizations and systems, agreements or security measures may be breached, and we may not have adequate remedies for any breach. In addition, our trade secrets may otherwise become known or be independently discovered by competitors.

Although we expect all of our employees and consultants to assign their inventions to us, and all of our employees, consultants, advisors and any third parties who have access to our proprietary know-how, information or technology to enter into confidentiality agreements, we cannot provide any assurances that all such agreements have been duly executed or that our trade secrets and other confidential proprietary information will not be disclosed or that competitors will not otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques. Misappropriation or unauthorized disclosure of our trade secrets could impair our competitive position and may have a material adverse effect on our business. Additionally, if the steps taken to maintain our trade secrets are deemed inadequate, we may have insufficient recourse against third parties for misappropriating the trade secret. In addition, others may independently discover our trade secrets and proprietary information. For example, the FDA, as part of its Transparency Initiative, is currently considering whether to make additional information publicly available on a routine basis, including information that we may consider to be trade secrets or other proprietary information, and it is not clear at the present time how the FDA’s disclosure policies may change in the future, if at all.

Further, the laws of some foreign countries do not protect proprietary rights to the same extent or in the same manner as the laws of the United States. As a result, we may encounter significant problems in protecting and defending our intellectual

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property both in the United States and abroad. If we are unable to prevent material disclosure of the non-patented intellectual property related to our technologies to third parties, and there is no guarantee that we will have any such enforceable trade secret protection, we may not be able to establish or maintain a competitive advantage in our market, which could materially adversely affect our business, results of operations and financial condition.

Third-party claims of intellectual property infringement may prevent or delay our development and commercialization efforts.

Our commercial success depends in part on our avoiding infringement of the patents and proprietary rights of third parties. There is a substantial amount of litigation, both within and outside the United States, involving patent and other intellectual property rights in the biotechnology and pharmaceutical industries, including patent infringement lawsuits, interferences, oppositions, ex ~~part~~partee reexaminations, post-grant review, and inter partes review proceedings before the U.S. Patent and Trademark Office or ("U.S. ~~PTO,~~PTO") and corresponding foreign patent offices. Numerous U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we are pursuing development candidates. As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that our product candidates may be subject to claims of infringement of the patent rights of third parties.

Third parties have asserted and in the future may assert that we are employing their proprietary technology without authorization. There may be third-party patents or patent applications with claims to materials, formulations, methods of manufacture or methods for treatment related to the use or manufacture of our product candidates. Because patent applications can take many years to issue, there may be currently pending patent applications which may later result in issued patents that our product candidates may infringe. In addition, third parties may obtain patents in the future and claim that use of our technologies infringes upon these patents. If any third-party patents were held by a court of competent jurisdiction to cover the manufacturing process of any of our product candidates, any molecules formed during the manufacturing process or any final product itself, the holders of any such patents may be able to block our ability to commercialize such product candidate unless we obtained a license under the applicable patents, or until such patents expire. Similarly, if any third-party patents were held by a court of competent jurisdiction to cover aspects of our formulations, processes for manufacture or methods of use, including combination therapy, the holders of any such patents may be able to block our ability to develop and commercialize the applicable product candidate unless we obtained a license or until such patent expires. In either case, such a license may not be available on commercially reasonable terms or at all.

Parties making claims against us may obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize one or more of our product candidates. Defense of these claims, regardless of their merit,

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would involve substantial litigation expense and would be a substantial diversion of employee resources from our business. In the event of a successful claim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, pay royalties, redesign our infringing products or obtain one or more licenses from third parties, which may be impossible or require substantial time and monetary expenditure.

We may not be successful in obtaining or maintaining necessary rights to gene therapy product components and processes for our development pipeline through acquisitions and in-licenses.

Presently we have rights to the intellectual property, through licenses from third parties and under patents that we own, to develop our product candidates and commercialize our ~~approved product.~~potential products. Because our programs may involve additional product candidates that may require the use of proprietary rights held by third parties, the growth of our business will likely depend in part on our ability to acquire, in-license or use these proprietary rights. In addition, our product candidates may require specific formulations to work effectively and efficiently and these rights may be held by others. We may be unable to acquire or in-license any compositions, methods of use, processes or other third-party intellectual property rights from third parties that we identify. The licensing and acquisition of third-party intellectual property rights is a competitive area, and a number of more established companies are also pursuing strategies to license or acquire third-party intellectual property rights that we may consider attractive. These established companies may have a competitive advantage over us due to their size, cash resources and greater clinical development and commercialization capabilities.

For example, we sometimes collaborate with U.S. and foreign academic institutions to accelerate our preclinical research or clinical development under written agreements with these institutions. Typically, these institutions provide us with an option to negotiate a license to any of the institution’s rights in technology resulting from the collaboration. Regardless of such right of first negotiation for intellectual property, we may be unable to negotiate a license within the specified time frame or under terms that are acceptable to us. If we are unable to do so, the institution may offer the intellectual property rights to other parties, potentially blocking our ability to pursue our program.

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In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us. We also may be unable to license or acquire third-party intellectual property rights on terms that would allow us to make an appropriate return on our investment. If we are unable to successfully obtain rights to required third-party intellectual property rights, our business, financial condition and prospects for growth could suffer.

If we fail to comply with our obligations in the agreements under which we license intellectual property rights from third parties or otherwise experience disruptions to our business relationships with our licensors, we could lose license rights that are important to our business.

We are a party to a number of intellectual property license agreements that are important to our business and expect to enter into additional license agreements in the future. Our existing license agreements impose, and we expect that future license agreements will impose, various diligence, milestone payment, royalty and other obligations on us. Pursuant to an intellectual property license agreement with 2seventy, we granted sublicenses to 2seventy to certain existing license agreements. If we fail to comply with our obligations under these agreements, we or 2seventy materially breach these agreements, or we are subject to a bankruptcy, the licensor may have the right to terminate the license, in which event we would not be able to market products covered by the license.

We may need to obtain licenses from third parties to advance the development of our product candidates or allow commercialization of our ~~approved product,~~potential products, and we have done so from time to time. We may fail to obtain any of these licenses at a reasonable cost or on reasonable terms, if at all. In that event, we may be required to expend significant time and resources to develop or license replacement technology. If we are unable to do so, we may be unable to develop or commercialize the affected product candidates, which could harm our business significantly. We cannot provide any assurances that third-party patents do not exist which might be enforced against our current product candidates, approved product, or future products, resulting in either an injunction prohibiting our sales, or, with respect to our sales, an obligation on our part to pay royalties and/or other forms of compensation to third parties.

In many cases, patent prosecution of our licensed technology is controlled solely by the licensor. If our licensors fail to obtain and maintain patent or other protection for the proprietary intellectual property we license from them, we could lose our rights to the intellectual property or our exclusivity with respect to those rights, and our competitors could market competing products using the intellectual property. In certain cases, we control the prosecution of patents resulting from licensed technology. In the event we breach any of our obligations related to such prosecution, we may incur significant liability to our licensing partners. Licensing of intellectual property is of critical importance to our business and involves complex legal,

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business and scientific issues and is complicated by the rapid pace of scientific discovery in our industry. Disputes may arise regarding intellectual property subject to a licensing agreement, including:

•the scope of rights granted under the license agreement and other interpretation-related issues;

•the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement;

•the sublicensing of patent and other rights under our collaborative development relationships;

•our diligence obligations under the license agreement and what activities satisfy those diligence obligations;

•the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners; and

•the priority of invention of patented technology.

If disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements on acceptable terms, we may be unable to successfully develop and commercialize the affected approved product or product candidates.

We may be involved in lawsuits to protect or enforce our patents or the patents of our licensors, which could be expensive, time-consuming and unsuccessful.

Competitors may infringe our patents or the patents of our licensors. To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time-consuming. In addition, in an infringement proceeding, a court may decide that a patent of ours or our licensors is not valid, is unenforceable and/or is not infringed, or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question. In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including patent eligible subject matter, lack of novelty, obviousness or non-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant

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information from the U.S. PTO, or made a misleading statement, during prosecution. Third parties may also raise similar claims before administrative bodies in the United States or abroad, even outside the context of litigation. Such mechanisms include re-examination, post grant review, and equivalent proceedings in foreign jurisdictions (e.g., opposition proceedings). Such proceedings could result in revocation or amendment to our patents in such a way that they no longer cover our product candidates. The outcome following legal assertions of invalidity and unenforceability is unpredictable. With respect to the validity question, for example, we cannot be certain that there is no invalidating prior art, of which we and the patent examiner were unaware during prosecution. If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the patent protection on our ~~approved product and/or product candidates.~~potential products. Such a loss of patent protection would have a material adverse impact on our business.

Interference proceedings provoked by third parties or brought by us may be necessary to determine the priority of inventions with respect to our patents or patent applications or those of our licensors. An unfavorable outcome could require us to cease using the related technology or to attempt to license rights to it from the prevailing party. Our business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms. Our defense of litigation or interference proceedings may fail and, even if successful, may result in substantial costs and distract our management and other employees. We may not be able to prevent, alone or with our licensors, misappropriation of our intellectual property rights, particularly in countries where the laws may not protect those rights as fully as in the United States.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. There could also be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of our common stock.

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We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties or that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.

We employ individuals who were previously employed at universities or other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Although we try to ensure that our employees, consultants and independent contractors do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary information, of any of our employee’s former employer or other third parties. Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel, which could adversely impact our business. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.

We may be subject to claims challenging the inventorship or ownership of our patents and other intellectual property.

We may also be subject to claims that former employees, collaborators or other third parties have an ownership interest in our patents or other intellectual property. We have had in the past, and we may also have in the future, ownership disputes arising, for example, from conflicting obligations of consultants or others who are involved in developing our product candidates. Litigation may be necessary to defend against these and other claims challenging inventorship or ownership. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. Such an outcome could have a material adverse effect on our business. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.

Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.

Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and/or applications will be due to be paid to the U.S. PTO and various governmental patent agencies outside of the United States in several stages over the lifetime of the patents and/or applications. We have systems in place to remind us to pay these fees, and we employ an outside firm and rely on our outside counsel to pay these fees due to non-U.S. patent agencies. The U.S. PTO and various non-U.S. governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other

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similar provisions during the patent application process. We employ reputable law firms and other professionals to help us comply, and in many cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with the applicable rules. However, there are situations in which non-compliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, our competitors might be able to enter the market and this circumstance would have a material adverse effect on our business.

Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our potential products.

As is the case with other biotechnology companies, our success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing patents in the biotechnology industry involve both technological and legal complexity, and is therefore costly, time-consuming and inherently uncertain. In addition, the United States has recently enacted and is currently implementing wide-ranging patent reform legislation. Recent U.S. Supreme Court rulings have narrowed the scope of patent protection available in certain circumstances and weakened the rights of patent owners in certain situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on decisions by the U.S. Congress, the federal courts, and the U.S. PTO, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future.

We may not be able to protect our intellectual property rights throughout the world.

Filing, prosecuting and defending patents on product candidates in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States can be less extensive than those in the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States. Consequently, we may not be able to prevent third parties from

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practicing our inventions in all countries outside the United States, or from selling or importing products made using our inventions in and into the United States or other jurisdictions. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and further, may export otherwise infringing products to territories where we have patent protection, but enforcement is not as strong as that in the United States. These products may compete with our potential products and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property protection, particularly those relating to biotechnology products, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

Risks related to ownership of our common stock

The market price of our common stock may be highly volatile, and you may not be able to resell your shares at or above the price at which you purchase them.

Companies trading in the stock market in general, and The ~~NASDAQ~~Nasdaq Global Select Market in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. Broad market and biotechnology and pharmaceutical industry factors may negatively affect the market price of our common stock, regardless of our actual operating performance.

The market price of our common stock has been volatile in the past, and may continue to be ~~volatile.~~volatile for the foreseeable future. Our stock price could be subject to wide fluctuations in response to a variety of factors, including the following:

•adverse results or delays in preclinical or clinical studies;

•reports of adverse events in our product ~~product~~ candidates or other gene therapy products, or in clinical studies of such products;

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•inability to obtain additional funding;

•any delay in filing an IND ~~MAA~~ or BLA for any of our product candidates, and any adverse development or perceived adverse development with respect to the ~~FDA’s~~regulatory authority's review of that IND ~~MAA~~ or BLA;

•failure to successfully manage the commercial launch of ~~ZYNTEGLO,~~beti-cel, eli-cel, or ~~our product candidates~~lovo-cel following marketing approval, if and when obtained, including failure to manage our supply chain operations in the coordination and delivery of drug product to patients at qualified treatment centers;

•failure to obtain sufficient pricing and reimbursement for ~~ZYNTEGLO~~beti-cel, eli-cel, or ~~our product candidates~~lovo-cel from private and governmental ~~payers;~~payers following marketing approval, if and when obtained;

•failure to obtain market acceptance and adoption of ~~ZYNTEGLO~~beti-cel, eli-cel, or ~~any other potential product~~lovo-cel following marketing ~~approval;~~approval, if and when obtained;

•developments concerning the separation of our programs into two independent, publicly-traded companies;

•failure to maintain our existing strategic collaborations or enter into new collaborations;

•failure by us or our licensors and strategic collaboration partners to prosecute, maintain or enforce our intellectual property rights;

•changes in laws or regulations applicable to future products;

•inability to obtain adequate product supply for ~~ZYNTEGLO~~beti-cel, eli-cel, or ~~our product candidates~~lovo-cel, or the inability to do so at acceptable prices;

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•adverse regulatory decisions;

•announcements of clinical trial results or progress in the development of programs by our competitors, and the introduction of new products, services or technologies by our competitors;

•failure to meet or exceed financial projections we may provide to the public;

•failure to meet or exceed the financial projections of the investment community;

•the perception of the pharmaceutical industry by the public, legislatures, regulators and the investment community;

•the effects of the separation of 2seventy bio;

•announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments by us, our strategic collaboration partner or our competitors;

•disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies;

•additions or departures of key scientific or management personnel;

•significant lawsuits, including patent or stockholder litigation;

•changes in the market valuations of similar companies;

•sales of our common stock by us or our stockholders in the future; and

•trading volume of our common stock.

Actual or potential sales of our common stock by our employees, including our executive officers, pursuant to pre-arranged stock trading plans could cause our stock price to fall or prevent it from increasing for numerous reasons, and actual or potential sales by such persons could be viewed negatively by other investors.

In accordance with the guidelines specified under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, and our policies regarding stock transactions, a number of our employees, including executive officers and members of our board of directors, have adopted and may continue to adopt stock trading plans pursuant to which they have arranged to sell shares of our common stock from time to time in the future. Generally, sales under such plans by our executive officers and directors require public filings. Actual or potential sales of our common stock by such persons could cause the price of our common stock to fall or prevent it from increasing for numerous reasons.

Future sales and issuances of our common stock or rights to purchase common stock, including pursuant to our equity incentive plans, could result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to fall.

Additional capital will be needed in the future to continue our planned operations. To the extent we raise additional capital by issuing equity securities, our stockholders may experience substantial dilution. We may sell common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time. If we

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sell common stock, convertible securities or other equity securities, ~~in more than one transaction,~~ investors may be materially diluted by subsequent sales. These sales may also result in material dilution to our existing stockholders, and new investors could gain rights superior to our existing stockholders.

Pursuant to our 2013 Stock Option and Incentive Plan ~~or the 2013 Plan,~~(the "2013 Plan") our management is authorized to grant stock options and other equity-based awards to our employees, directors and consultants. The number of shares available for future grant under the 2013 Plan automatically increases each year by up to 4% of all shares of our capital stock outstanding as of December 31 of the prior calendar year, subject to the ability of our board of directors or compensation committee to take action to reduce the size of the increase in any given year. Currently, we plan to register the increased number of shares available for issuance under the 2013 Plan each year. If our board of directors or compensation committee elects to increase the number of shares available for future grant by the maximum amount each year, our stockholders may experience additional dilution, which could cause our stock price to fall. We make equity grants to certain new employees joining the company pursuant to an inducement plan, and our compensation committee may elect to increase the number of shares available for future grant without stockholder approval. We also have an Employee Stock Purchase Plan and any shares of common stock purchased pursuant to that plan will also cause dilution.

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We ~~could be~~are subject to securities class action ~~litigation.~~litigation, which may result in substantial costs and a diversion of management's attention and resources, which could harm our business.

In the past, securities class action litigation has often been brought against a company following a decline in the market price of its ~~securities.~~securities, and we are litigating class action complaints in the United States District Court for the District of Massachusetts and for the District of Delaware, filed by purported stockholders against us and certain of our directors and officers. We may face additional securities class action litigation in the future. This risk is especially relevant for us because biotechnology and pharmaceutical companies have experienced significant stock price volatility in recent ~~years. If~~years, and we ~~face such~~expect to experience continued stock price volatility. Defending against the current litigation itand any future litigation could result in substantial costs and a diversion of management’s attention and resources, which could harm our business.

Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.

Under Section 382 of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an “ownership change,” generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period, the corporation’s ability to use its pre-change net operating loss carryforwards ~~or NOLs,~~("NOLs") and other pre-change tax attributes (such as research tax credits) to offset its post-change income may be limited. We have completed several financings since our inception and prior to our initial public offering in 2013, which we believe have resulted in a change in control as defined by IRC Section 382. We completed a study through December 2020 confirming no ownership changes have occurred since our initial public offering in 2013. We may also experience ownership changes in the future as a result of subsequent shifts in our stock ownership. As a result, if we earn net taxable income, our ability to use our pre-change net operating loss carryforwards to offset U.S. federal taxable income may be subject to limitations, which could potentially result in increased future tax liability to us. In addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.

We do not intend to pay cash dividends on our common stock so any returns will be limited to the value of our stock.

We have never declared or paid any cash dividends on our common stock. We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. Any return to stockholders will therefore be limited to the appreciation of their stock.

Provisions in our amended and restated certificate of incorporation and by-laws, as well as provisions of Delaware law, could make it more difficult for a ~~third party~~third-party to acquire us or increase the cost of acquiring us, even if doing so would benefit our stockholders or remove our current management.

Our amended and restated certificate of incorporation, amended and restated by-laws and Delaware law contain provisions that may have the effect of delaying or preventing a change in control of us or changes in our management. Our amended and restated certificate of incorporation and by-laws, include provisions that:

•authorize “blank check” preferred stock, which could be issued by our board of directors without stockholder approval and may contain voting, liquidation, dividend and other rights superior to our common stock;

•create a classified board of directors whose members serve staggered three-year terms;

•specify that special meetings of our stockholders can be called only by our board of directors, the chairperson of our board of directors, our chief executive officer or our president;

•prohibit stockholder action by written consent;

•establish an advance notice procedure for stockholder approvals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to our board of directors;

•provide that our directors may be removed only for cause;

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•provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum;

•specify that no stockholder is permitted to cumulate votes at any election of directors;

•expressly authorize our board of directors to modify, alter or repeal our amended and restated by-laws; and

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•require supermajority votes of the holders of our common stock to amend specified provisions of our amended and restated certificate of incorporation and amended and restated by-laws.

These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management.

In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which limits the ability of stockholders owning in excess of 15% of our outstanding voting stock to merge or combine with us.

Any provision of our amended and restated certificate of incorporation or amended and restated by-laws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock.

Our amended and restated certificate of incorporation and amended and restated by-laws designate specific courts as the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us.

Our amended and restated certificate of incorporation and amended and restated by-laws specify that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for most legal actions involving claims brought against us by stockholders, other than suits brought to enforce any liability or duty created by the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or any other claim for which the federal courts have exclusive jurisdiction and any action that the Court of Chancery of the State of Delaware has dismissed for lack of subject matter jurisdiction, which may be brought in another state or federal court sitting in the State of Delaware. Our amended and restated by-laws also specify that, unless we consent in writing to the selection of an alternate forum, the United States District Court for the District of Massachusetts shall be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended (the “Securities Act”). Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and to have consented to the provisions of our amended and restated certificate of incorporation and amended and restated by-laws described above.

We believe these provisions benefit us by providing increased consistency in the application of Delaware law by chancellors particularly experienced in resolving corporate disputes or federal judges experienced in resolving Securities Act disputes, efficient administration of cases on a more expedited schedule relative to other forums and protection against the burdens of multi-forum litigation. However, the provision may have the effect of discouraging lawsuits against our directors, officers, employees, and agents as it may limit any stockholder’s ability to bring a claim in a judicial forum that such stockholder finds favorable for disputes with us or our directors, officers, employees, or agents and result in increased costs for stockholders to bring a claim. The enforceability of similar choice of forum provisions in other companies’ certificates of incorporation and by-laws has been challenged in legal proceedings, and it is possible that, in connection with any applicable action brought against us, a court could find the choice of forum provisions contained in our amended and restated certificate of incorporation and amended and restated by-laws to be inapplicable or unenforceable in such action. If a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation or amended and restated by-laws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business, financial condition, or results of operations.

Changes in tax law could adversely affect our business and financial condition.

The rules dealing with U.S. federal, state, and local income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Treasury Department. Changes to tax laws (which changes may have retroactive application) could adversely affect us or holders of our common stock. In recent years, many such changes have been made and changes are likely to continue to occur in the future. Future changes in tax laws could have a material adverse effect on our business, cash flow, financial condition or results of operations. We urge investors to consult with their legal and tax advisers regarding the implications of potential changes in tax laws on an investment in our common stock.

Item 1B. Unresolved Staff Comments

Not applicable.

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Item 2. Properties

Below is a summary of our material owned and leased properties as of December 31, ~~2019:~~2021:

Massachusetts

Our current corporate headquarters encompasses approximately ~~253,108~~72,988 square feet of office and laboratory space and is located at 60 Binney Street, Cambridge, Massachusetts. The lease commenced on ~~October 1, 2016~~November 3, 2021 and will continue until ~~March~~December 31, ~~2027. We have the option to extend the 60 Binney Street lease for two successive five-year terms.~~2023.

In April 2019, we entered into a sublease agreement for approximately 267,278 square feet of office space located at 50 Binney Street, Cambridge, Massachusetts. In December 2021, we entered into a sub-sublease agreement with Meta Platforms, Inc. to sublease the entirety of the 50 Binney Street premises which we have rights to under the sublease. The sub-sublease will commence when the space is available for use, which is anticipated to be in the first half of 2022, and is expected to terminate on December 31, 2030.

In November 2021, we entered into a lease agreement for approximately 61,180 square feet of office space located at 455 Grand Union Boulevard, Somerville, Massachusetts. This space will be our future corporate headquarters. The lease will commence when the space is available for use, which is anticipated to be in the ~~second~~first half of ~~2021, and is expected to terminate on December 31, 2030.~~

~~Washington~~

We lease office and laboratory space in Seattle, Washington, totaling approximately 58,314 square feet. The lease commenced on January 1, 2019 and will continue through April 2028. We have the option to extend the lease for one five-year term.

~~North Carolina~~

In November 2017, we purchased a 125,000 square foot manufacturing facility located in Durham, North Carolina to provide manufacturing capacity for lentiviral vector in support of our current and planned gene and cell therapies.

~~Switzerland~~

Our European headquarters encompasses 1,136 square meters of office space and is located in Zug, Switzerland. The lease for our European headquarters commenced on January 1, 2019 and will continue for 60 months with the option to renew for 2 successive 60 month terms.2022.

We believe that our existing facilities are adequate for our current needs.

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Item 3. 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 December 31, ~~2019,~~2021, 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 or profitability. We believe 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 senior 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.

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 4. Mine Safety Disclosures

Not applicable.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock has been traded on the Nasdaq Global Select Market under the symbol “BLUE.” On February ~~13, 2020,~~28, 2022, the last reported sale price for our common stock on the Nasdaq Global Select Market was ~~$89.50~~$6.04 per share.

Stock Performance Graph

The graph set forth below compares the cumulative total stockholder return on our common stock between December 31, ~~2014~~2016 and December 31, ~~2019,~~2021, with the cumulative total return of (a) the Nasdaq Biotechnology Index and (b) the Nasdaq Composite Index, over the same period. This graph assumes the investment of $100 on December 31, ~~2014~~2016 of our common stock, the Nasdaq Biotechnology Index and the Nasdaq Composite Index and assumes the reinvestment of dividends, if any.

The comparisons shown in the graph below are based upon historical data. We caution that the stock price performance shown in the graph below is not necessarily indicative of, nor is it intended to forecast, the potential future performance of our common stock.

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Holders

As of February ~~13, 2020,~~28, 2022, there were approximately 910 holders of record of our common stock. The actual number of stockholders is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees. This number of holders of record also does not include stockholders whose shares may be held in trust by other entities.

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Dividends

We have not paid any cash dividends on our common stock since inception and do not anticipate paying cash dividends in the foreseeable future.

Securities Authorized for Issuance Under Equity Compensation Plans

Information about our equity compensation plans is ~~incorporated herein by reference to~~provided in Item 12 of Part III of this Annual Report on Form 10-K.

Item 6. ~~Selected Financial Data~~Reserved

The following selected consolidated financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, the consolidated financial statements and related notes, and other financial information included in this Annual Report on Form 10-K.

We derived the consolidated financial data for the years ended December 31, 2019, 2018 and 2017 and as of December 31, 2019 and 2018 from our audited consolidated financial statements, which are included elsewhere in this Annual Report on Form 10-K. We derived the consolidated financial data for the years ended December 31, 2016 and 2015 and as of December 31, 2017, 2016 and 2015 from our audited consolidated financial statements that are not included elsewhere in this Annual Report on Form 10-K. Historical results are not necessarily indicative of the results to be expected in future periods.

Year ended December 31,
2019
2018⁽²⁾
2017 ^{(1) (2)}
2016^{(1) (2)}
2015^{(1) (2)}
(in thousands, except per share amounts)
Consolidated statements of operations data:
Revenue:
Collaboration revenue $ 36,469 $ 52,353 $ 22,207 $ 6,155 $ 14,079
License and royalty revenue 8,205 2,226 13,220 — —
Total revenues 44,674 54,579 35,427 6,155 14,079
Operating expenses:
Research and development 582,413 448,589 273,040 204,775 134,038
Selling, general and administrative 271,362 174,129 93,550 65,119 46,209
Cost of license and royalty revenue 2,978 885 1,527 — —
Change in fair value of contingent
consideration 2,747 2,999 (525) 4,091 2,869
Total operating expenses 859,500 626,602 367,592 273,985 183,116
Loss from operations (814,826) (572,023) (332,165) (267,830) (169,037)
Interest income (expense), net 34,761 14,624 (2,001) 3,782 1,591
Other (expense) income, net (10,088) 1,961 (1,267) (71) 723
Income tax benefit (expense) 545 (187) (210) 612 (60)
Net loss $ (789,608) $ (555,625) $ (335,643) $ (263,507) $ (166,783)
Net loss per share - basic and diluted $ (14.31) $ (10.68) $ (7.71) $ (7.07) $ (4.81)
Weighted-average number of common shares
used in computing net loss per share - basic
and diluted 55,191 52,032 43,535 37,284 34,669

⁽¹⁾~~Effective January 1, 2018, the Company adopted Accounting Standards Codification, Topic 606,~~ ~~Revenue from Contracts with Customers~~ ("Topic 606") using the modified retrospective transition method. Therefore, amounts disclosed for collaboration revenue and research and development expense in the table above pertaining to the years ended December 31, 2017, 2016, and 2015 are presented under previous accounting guidance and are therefore not comparable to the amounts disclosed for the years ended December 31, 2019 and 2018 under Topic 606.

⁽²⁾~~Effective January 1, 2019, the Company adopted Accounting Standards Codification, Topic 842,~~ ~~Leases~~ ("Topic 842") using the required modified retrospective transition method. Therefore, amounts disclosed in the table above pertaining to the years ended December 31, 2018, 2017, 2016, and 2015 are presented under previous accounting guidance and are therefore not comparable to the amounts disclosed for the year ended December 31, 2019 under Topic 842. For further information regarding the adoption of Topic 842 and the impact on our consolidated financial statements, refer to Note 2, ~~Summary of significant accounting policies and basis of presentation,~~ ~~in the Notes to Consolidated Financial Statements.~~

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As of December 31,
2019
2018 ⁽¹⁾
2017 ⁽¹⁾
2016 ⁽¹⁾
2015 ⁽¹⁾
(in thousands)
Consolidated balance sheet data:
Cash, cash equivalents and marketable
securities $ 1,237,966 $ 1,891,427 $ 1,614,302 $ 884,830 $ 865,763
Total assets 1,727,424 2,242,844 1,900,567 1,118,122 1,002,337
Total current liabilities 223,580 146,431 95,612 74,533 40,368
Total long-term liabilities 218,851 211,343 181,523 174,149 111,473
Total stockholders' equity $ 1,284,993 $ 1,885,070 $ 1,623,432 $ 869,440 $ 850,496

⁽¹⁾~~Effective January 1, 2019, the Company adopted Accounting Standards Codification, Topic 842,~~ ~~Leases~~ ("Topic 842") using the required modified retrospective transition method. Therefore, amounts disclosed in the table above pertaining to the years ended December 31, 2018, 2017, 2016, and 2015 are presented under previous accounting guidance and are therefore not comparable to the amounts disclosed for the year ended December 31, 2019 under Topic 842. For further information regarding the adoption of Topic 842 and the impact on our consolidated financial statements, refer to Note 2, ~~Summary of significant accounting policies and basis of presentation,~~ ~~in the Notes to Consolidated Financial Statements.~~

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following information should be read in conjunction with the consolidated financial statements and related notes thereto included in this Annual Report on Form 10-K.

In addition to historical information, this report contains forward-looking statements that involve risks and uncertainties which may cause our actual results to differ materially from plans and results discussed in forward-looking statements. We encourage you to review the risks and uncertainties discussed in the sections entitled Item 1A. “Risk Factors” and “Forward-Looking Statements” included at the beginning of this Annual Report on Form 10-K. The risks and uncertainties can cause actual results to differ significantly from those forecast in forward-looking statements or implied in historical results and trends.

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 and cancer.~~diseases. We have built an integrated product platform with broad therapeutic potential in a variety of indications based on our lentiviral gene addition platform, gene editing and cancer immunotherapy capabilities. We believe that gene therapy for severe genetic diseases has the potential to change the way patients living with these diseases are treated by addressing the underlying genetic defect that is the cause of their disease, rather than offering treatments that only address their symptoms.platform. Our gene therapy programs in severe genetic diseases include ~~LentiGlobin~~programs for ~~β-thalassemia; LentiGlobin for SCD;~~β-thalassemia, SCD, and ~~Lenti-D for~~ CALD. ~~Our~~We also expect to make focused investments in research and development efforts on optimizing our existing programs as well as on pipeline programs in oncology are focused on developing novel T cell-based immunotherapies, including CAR and TCR T cell therapies. bb2121 (idecabtagene vicleucel, or ide-cel), and bb21217 are CAR-T cell product candidatessevere genetic diseases. The BLA for ~~the~~beti-cel as a treatment ~~of multiple myeloma and partnered under our collaboration arrangement~~for patients with ~~Bristol-Myers Squibb, or BMS.~~

~~We are commercializing ZYNTEGLO in~~β-thalassemia who receive regular RBC transfusions was accepted for priority review by the ~~European Union and expect to begin to generate product revenue in the first half of 2020. We are engaged with the U.S. Food and Drug Administration, or~~ FDA, and the ~~European Medicines Agency, or EMA, in discussions regarding our proposed development plans~~PDUFA goal date is August 19, 2022. The BLA for ~~ZYNTEGLO in~~eli-cel as a treatment for patients less than 18 years of age with ~~TDT and a~~ ^β~~0/β~~⁰ ~~genotype. We are engaged with the FDA in discussions regarding the requirements and timing~~early CALD was accepted for providing certain information regarding various release assays for LentiGlobin for β-thalassemia, and subject to these ongoing discussions, we are currently planning to complete the BLA submission in the second half of 2020.

~~We are engaged with~~priority review by the FDA, and ~~EMA in discussions regarding our proposed development plans, and anticipate~~the PDUFA goal date is September 16, 2022. We are developing lovo-cel as a ~~potential first submission in 2022~~treatment for ~~marketing approval of LentiGlobin for the treatment of~~ patients with ~~SCD on the basis of our clinical data from our ongoing HGB-206 and HGB-210 studies.~~

SCD. Based on our discussions with the FDA, ~~and EMA,~~ we believe that we may be able to seek approval for ~~our Lenti-D product candidate for~~lovo-cel in the ~~treatment of patients with CALD~~United States on the basis of ~~our~~ clinical data from ~~our ongoing Starbeam study,~~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 ~~the ongoing ALD-103 observational study. We anticipate a potential first submission in 2020 for regulatory approval~~validation of our ~~Lenti-D product candidate~~commercial manufacturing process as the key remaining actions prior to submission of our planned BLA for lovo-cel. In December 2021, the ~~treatment~~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 anticipate continuing our clinical study activities as planned for patients ~~with CALD.~~18 and older in HGB-210, as well as follow-up activities for treated patients of all ages in all studies.

In collaboration with BMS (which acquired Celgene in November 2019), we are developing ide-cel and the bb21217 product candidates as treatments for multiple myeloma, a hematologic malignancy that develops in the bone marrow and is fatal if untreated. We are ~~co-developing and co-promoting ide-cel in the United States with BMS and we have exclusively licensed to BMS the~~focusing our development and commercialization ~~rights~~efforts in the U.S. market. We have submitted a request for ~~ide-cel outside~~the withdrawal of the ~~United States. We and BMS anticipate a potential first submission~~marketing authorization for beti-cel in the European Union, to be effective in the first half of ~~2020~~2022. As of December 31, 2021, we have withdrawn the marketing authorization for ~~regulatory approval~~eli-cel in the European Union. We are continuing the long-term follow-up of ide-cel as a treatment for relapsed and refractory multiple myeloma. We have exclusively licensed the development and commercialization rights for the bb21217 product candidate to BMS, with an option for us to elect to co-develop and co-promote bb21217patients previously enrolled within the ~~United States.~~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,~~("GMP") to conduct clinical studies of our product candidates, to provide selling, general and administrative support for these operations and to protect our intellectual property. We have not generated ~~any~~material revenue from product sales. We have funded our

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operations primarily through the sale of common stock in our public offerings, private placements of preferred stock and warrants and through collaborations.

As of December 31, ~~2019,~~2021, we had cash, cash equivalents and marketable securities of approximately ~~$1.24 billion.~~$396.6 million. We have never been profitable and have incurred net losses in each year since inception. Our net ~~losses were $789.6~~loss from continuing operations was $562.6 million for the year ended December 31, ~~2019~~2021 and our accumulated deficit was ~~$2.28~~$3.72 billion as of December 31, ~~2019.~~2021. 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. We expect~~years, as we:

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•fund activities related to the potential commercial launches of our ~~expenses will increase substantially~~late-stage product candidates in ~~connection with~~the United States;

•seek regulatory approval for our ~~ongoing and planned activities, as we:~~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 ~~SCD,~~ and ~~ALD, fund our share of the costs of clinical studies for our program in multiple myeloma in collaboration with BMS,~~SCD, and advance our preclinical programs into clinical development; and

•increase research and development-related activities for the discovery and development of product candidates and technologies in severe genetic ~~diseases and oncology;~~diseases.

•~~continue our research and development efforts internally and through our collaborations with external partners, such as with Regeneron;~~

•~~manufacture clinical study materials and establish the infrastructure necessary to support and develop large-scale manufacturing capabilities;~~

•~~seek regulatory approval for our product candidates;~~

•~~add personnel to support our product development and commercialization efforts; and~~

•~~increase activities associated with the commercial launch of ZYNTEGLO in multiple markets.~~

We do not expect to generate revenue from product sales until the first half of 2020. While we are in the process of completing construction and qualification of our internal lentiviral vector manufacturing capacity, currently all of our manufacturing activities are contracted out to third parties. Additionally, we currently utilize third-party contract research organizations, or CROs, to carry out our clinical development activities. As we seek to obtain regulatory approval for our product candidates and begin to commercialize ZYNTEGLO, we expect to incur significant commercialization expenses, in addition to our significant and increasing research and development expenses, as we prepare for product sales, marketing, manufacturing, and distribution. Accordingly, until we generate significant revenues from product sales, we will 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 products.

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

~~Financial~~We continue to experience disruptions and increased risk related to the ongoing COVID-19 pandemic in our operations ~~overview~~and those of third parties upon whom we rely, which may materially and adversely affect our business. These include disruptions and risks related to the conduct of our clinical trials, manufacturing, and commercialization efforts, as policies at various clinical sites and federal, state, local and foreign laws, rules and regulations continue to evolve, including quarantines, travel restrictions, and direction of healthcare resources toward pandemic response efforts. The effects of the COVID-19 pandemic impacted the timing of patient treatment in Europe in the commercial context, and the timing of our ongoing clinical studies, with the result of slower patient enrollment and treatment in our clinical studies and delays in post-treatment follow up visits, the impact of which has varied by clinical study and by program. It has also affected our activities with and operations at our third-party manufacturers. It is unknown how long these disruptions could continue. As a result of the demands upon healthcare regulatory authorities, review, inspection, and other activities related to review of regulatory submissions in drug development may be impacted, and may result in delays for an unknown period of time.

~~Revenue~~

~~To date,~~We continue to evaluate the impact of the COVID-19 global pandemic on patients, healthcare providers and our employees, as well as our operations and the operations of our business partners and healthcare communities. In response to the COVID-19 pandemic, we have ~~not generated~~implemented policies to mitigate the risk of exposure to COVID-19 by our personnel, including restrictions on the number of staff in any ~~revenues from~~given research and development laboratory, and a flexible work-from-home policy applicable to the majority of our personnel.

We are working with our clinical study sites to mitigate the impact of the COVID-19 pandemic on activities for our ongoing clinical studies. However, the ultimate impact of the COVID-19 pandemic on our business operations is highly uncertain and subject to change and will depend on future developments which are difficult to predict.

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 ~~products.~~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 ~~revenues~~failure to raise capital or enter into such other arrangements as and when needed would have ~~been derived~~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 ~~collaboration arrangements, out-licensing arrangements, research fees, and grant revenues. Effective January 1, 2018, we adopted Accounting Standards Codification (“ASC”), Topic 606,~~ ~~Revenue from Contracts with Customers~~ ~~(“Topic 606”), using~~ the ~~modified retrospective transition method.~~

~~To date, our collaboration revenue has been primarily generated from our collaboration arrangement with BMS. The terms~~German market because reimbursement negotiations in Germany did not result in a price for ZYNTEGLO that reflects the value of the ~~arrangement~~one-time gene therapy with ~~respect to ide-cel contain multiple promised goods or services, which include at inception: (i) research~~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 the implementation of this reduction and, ~~development services, (ii) a license to ide-cel,~~in accordance with ASC 420, Exit and ~~(iii) manufacture of vectors~~Disposal Activities, and ~~associated payload for incorporation into ide-cel under the license.~~ASC 712, As of September 2017, the collaboration also included the following promised goods or services with respect to bb21217: (i) research and development services, (ii) a license to bb21217, and (iii) manufacture of vectors and associated payload for incorporation into bb21217 under the license. In March 2018, we entered into an agreement with BMSNonretirement Postemployment

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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.

All costs associated with the April 2021 and July 2021 reductions are reflected within restructuring expenses in our condensed consolidated statements of operations and comprehensive loss. See Note 17, Reduction in Workforce, in the notes to the consolidated financial statements.

We had cash, cash equivalents and marketable securities of approximately $396.6 million as of December 31, 2021. 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 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 its 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 sublease, 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.

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 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 anticipated U.S. regulatory approvals of BLAs for beti-cel and eli-cel, and the pursuit of additional cash resources through public or private equity or debt financings. We have 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. 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 these 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").

We intend to focus on our severe genetic disease programs and 2seventy bio is expected to focus on the separated oncology programs. In collaboration with Bristol-Myers Squibb ("BMS"), 2seventy bio is commercializing idecabtagene vicleucel ("ide-cel") and developing bb21217 as treatments for multiple myeloma, a hematologic malignancy that develops in the bone marrow and is fatal if untreated. 2seventy bio is co-developing and co-promoting ide-cel as ABECMA in the United States with BMS and has exclusively licensed to BMS the development and commercialization rights for ide-cel outside of the United States. It

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has exclusively licensed the development and commercialization rights for the bb21217 product candidate to BMS, with an option for 2seventy bio to elect to co-develop and co-promote ~~ide-cel in which both parties will share equally in U.S. costs and profits. Collaboration revenue is recognized as the performance obligations are satisfied.~~

~~We analyze our collaboration arrangements to assess whether they are~~bb21217 within the ~~scope~~United States. In March 2021, BMS received marketing approval from the FDA for ide-cel, marketed as ABECMA, as a treatment of ~~ASC 808,~~ ~~Collaborative Arrangements~~ ~~(“ASC 808”) to determine whether such arrangements involve joint operating activities performed~~adult patients with relapsed or refractory multiple myeloma after four or more prior lines of therapy, including an immunomodulatory agent, a proteasome inhibitor, and an anti-CD38 monoclonal antibody. Sales of ABECMA by ~~parties that are both active participants~~BMS began in the ~~activities and exposed to significant risks and rewards dependent on~~second quarter of 2021.

In connection with the ~~commercial success~~Separation, we entered into a separation agreement with 2seventy bio, dated as of ~~such activities. This assessment is performed throughout~~November 3, 2021, that, among other things, sets forth our agreements with 2seventy bio regarding the life of the arrangement based on changes in the responsibilities of all parties in the arrangement. For collaboration arrangements within the scope of ASC 808, we first determine which elements of the collaboration are deemedprincipal actions to be ~~within~~taken in connection with the ~~scope of ASC 808~~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 ~~those that~~ are ~~more reflective of a vendor-customer relationship and therefore within the scope of Topic 606. For elements of collaboration arrangements that are accounted for pursuant~~entitled to ~~ASC 808, an appropriate recognition method is determined and applied consistently, generally by analogy~~receive certain transition services related to ~~Topic 606. Amounts that are owed to collaboration partners are recognized~~corporate functions, such as an offset to collaboration revenues as such amounts are incurred by the collaboration partner. Where amounts owed to a collaboration partner exceed our collaboration revenues in a quarterly period, such amounts in excess are classified asfinance, human resources, internal audit, research and development, ~~expense. For those elements of the arrangement that are accounted for pursuant to Topic 606, we apply the five-step model prescribed in Topic 606.~~

Nonrefundable license fees are recognized as revenue upon delivery of the license provided there are no unsatisfied performance obligations in the arrangement. License revenue has historically been generated from our out-license agreements with Novartis Pharma AG, or Novartis,financial reporting, and ~~Orchard Therapeutics Limited, or Orchard. Under our out-licensing agreements we may also recognize revenue from potential future milestone payments and royalties.~~

~~For arrangements with licenses of intellectual property that include sales-based royalties, including milestone payments based on the level of sales,~~information technology. The separation and the ~~license is deemed~~aforementioned agreements are more fully described in Note 3, Discontinued operations, to beour consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K.

Financial operations overview

Product revenue

Our revenues have primarily been derived from product revenues associated with the ~~predominant item to which the royalties relate, we recognize~~sale of ZYNTEGLO in Germany.

Other revenue ~~at the later~~

We have recognized an immaterial amount of ~~(i) when the related sales occur, or (ii) when the performance obligation to which the royalty has been allocated has been satisfied.~~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;

•~~costs of acquiring, developing, and manufacturing inventory, which includes pre-launch inventory;~~

•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 to acquire and maintain intellectual property rights pertaining to aspects of our technologies;~~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 ~~advancement of our preclinical programs into clinical development;~~

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•~~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;

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•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 increase our 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 ~~our clinical~~research and development ~~programs in β-thalassemia, SCD, CALD, and multiple myeloma (including funding our share of the costs~~activities in our collaboration with BMS), advance our preclinical programs in severe genetic diseases and oncology into clinical development, and continue the research and discovery of new product candidates in the fields of severe genetic diseases and oncology.pipeline programs. Our research and development expenses include expenses associated with the following activities:

•~~Northstar-2 Study (HGB-207) – a multi-site, international phase 3 study to examine~~for the ~~safety~~clinical studies of beti-cel, consisting of HGB-207, HGB-212, and ~~efficacy of LentiGlobin for TDT in~~ the ~~treatment of patients with TDT and a non-β0/β0 genotype.~~associated long-term follow-up protocol;

•~~Northstar-3 Study (HGB-212) – a multi-site, international phase 3 study to examine~~for the ~~safety~~clinical studies of lovo-cel, consisting of HGB-206, HGB-210, and ~~efficacy of LentiGlobin for TDT in~~ the ~~treatment of patients with TDT and a β0/β0 genotype or an IVS-I-110 mutation.~~ associated long-term follow-up protocol;

•~~HGB-206 study – a multi-site phase 1/2 study in~~for the ~~United States to study~~clinical studies of eli-cel, consisting of ALD-104, and the ~~safety and efficacy of LentiGlobin for SCD in the treatment of patients with SCD.~~associated long-term follow-up protocol;

•~~HGB-210 study –~~research and development activities for platform technology and our ~~multi-site, international phase 3 study of LentiGlobin for SCD in the treatment of patients with SCD~~preclinical pipeline programs; and ~~a history of vaso-occlusive events.~~

•~~HGB-211 study - our planned multi-site phase 3 study of LentiGlobin~~ for ~~SCD in the treatment of patients with SCD and elevated stroke risk We plan to initiate this study in 2020.~~

•~~Starbeam Study (ALD-102) – a multi-site, international phase 2/3 study to examine the safety and efficacy of our Lenti-D product candidate in the treatment of patients with CALD.~~

•ALD-104 study – our multi-site, international phase 3 study to examine the safety and efficacy of our Lenti-D product candidate in the treatment of patients with CALD after myeloablative conditioning using busulfan and fludarabine .

•~~CRB-401 study – an open label, single-arm, multi-center, phase 1 study to examine the safety and efficacy of ide-cel in the treatment of patients with relapsed and refractory multiple myeloma.~~

•~~KarMMA study – an open label, single-arm, multi-center phase 2 study to examine the efficacy and safety of ide-cel in the treatment of patients with relapsed and refractory multiple myeloma.~~

•KarMMa-2 study – a multi-cohort, open-label, multicenter phase 2 study to examine the safety and efficacy of ide-cel in the treatment of patients with relapsed and refractory multiple myeloma and in high-risk multiple myeloma.

•KarMMa-3 study – a multicenter, randomized, open-label phase 3 study comparing the efficacy and safety of ide-cel versus standard triplet regimens in patients with relapsed and refractory multiple myeloma.

•~~KarMMa-4 study –, a multi-cohort, open-label, multicenter phase 1 study intended to determine the optimal target dose and safety of ide-cel in subjects with newly-diagnosed multiple myeloma.~~

•CRB-402 study – an open label, single-arm, multicenter, phase 1 study to examine the safety and efficacy of the bb21217 product candidate in the treatment of patients with relapsed and refractory multiple myeloma.

•~~Costs related to~~ the manufacture of clinical study materials in support of our clinical studies.

•~~Support for strategic collaborations in early pipeline activities, including~~We expect that the timing of investment in our ~~severe genetic disease and oncology programs.~~ongoing clinical studies will reflect COVID-19 related delays in these studies.

•~~Support for academic collaborations in early pipeline activities, including investigator-initiated proof-of-concept clinical trials in our severe genetic disease and oncology programs.~~

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 license and other collaboration costs, ~~associated with our general discovery~~

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~~platform improvements,~~ 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:


	Year ended December 31,
	2021		2020 (2)		2019 (2)
	(in thousands)
beti-cel	$	53,292	$	66,141	$	73,896
lovo-cel (formerly LentiGlobin for SCD)	64,861		58,862		50,796
eli-cel	54,581		48,028		40,352
Preclinical programs	7,252		6,644		1,195
Total direct research and development expense	179,986		179,675		166,239
Employee- and contractor-related expenses	48,297		39,255		40,619
Stock-based compensation expense	42,989		49,766		59,378
Laboratory and related expenses(1)	5,466		8,956		12,208
License and other collaboration expenses(1)	—		40		1,984
Facility expenses	41,898		37,377		39,291
Other expenses	1,310		4,240		7,400
Total other research and development expenses	139,960		139,634		160,880
Total research and development expense	$	319,946	$	319,309	$	327,119

Year ended December 31,
2019 2018 2017
(in thousands)
LentiGlobin (including ZYNTEGLO)⁽¹⁾
$ 124,692 $ 125,058 $ 85,710
Lenti-D 40,352 38,244 16,223
Ide-cel 121,182 75,667 32,144
bb21217⁽²⁾
19,827 15,624 7,402
Preclinical programs⁽²⁾
49,700 50,115 40,167
Total direct research and development expense 355,753 304,708 181,646
Employee- and contractor-related expenses 52,617 35,697 23,698
Stock-based compensation expense 80,139 54,422 26,633
Platform-related expenses 19,229 18,187 15,414
Facility expenses 67,274 32,158 24,700
Other expenses 7,401 3,417 949
Total other research and development expenses 226,660 143,881 91,394
Total research and development expense $ 582,413 $ 448,589 $ 273,040

⁽¹⁾~~Following our receipt of conditional approval for the marketing authorization of ZYNTEGLO by the European Commission in June 2019, all manufacturing~~Prior to 2020, costs ~~associated with the production of LentiGlobin for use in the commercial sale of ZYNTEGLO in the European Union will be evaluated for capitalization~~within these categories were disclosed as ~~inventory on our consolidated balance sheets.~~"platform-related expenses."

⁽²⁾~~The costs associated with our bb21217 program were included in preclinical programs in~~Prior period amounts have been retrospectively adjusted to reflect the ~~table shown above through June 30, 2017. The costs associated with our bb21217 program are presented separately in~~effects of the ~~table above beginning in the third quarter of 2017 as we initiated the first clinical study for bb21217 in the third quarter of 2017.~~Separation.

Selling, general and administrative expenses

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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, including payroll and sales and marketing expenses, will continue to increase in the future relative to current levels as we ~~increase our headcount and continue to develop and commercialize~~perform commercial readiness activities in the United States for our product candidates.

Cost of ~~license and royalty~~product revenue

Cost of ~~license and royalty~~product revenue ~~represents expense~~includes costs associated with ~~amounts owed to third party licensors as a result~~the sale of ~~revenue recognized under our out-license arrangements~~ZYNTEGLO in Germany.

Restructuring expenses

We record costs and liabilities associated with ~~Novartis~~exit and ~~Orchard.~~

~~We anticipate that our cost~~disposal activities in accordance with ASC 420, Exit and Disposal Cost Obligations, and other costs and liabilities associated with postemployment nonretirement benefits in accordance with ASC 712, Postemployment Nonretirement Benefits. Such costs are based on the estimate of ~~license and royalty revenue will increase~~fair value in the ~~future contingent upon~~period the ~~achievement of regulatory milestones by Novartis or Orchard. Additionally, we anticipate that our cost of license~~liabilities are incurred. We evaluate and ~~royalty revenue will increase~~adjust costs as appropriate for changes in ~~the future~~circumstances as ~~we expect to continue to recognize royalty revenue related to Novartis’ commercial sale of tisagenlecleucel.~~

~~Change in fair value of contingent consideration~~

On June 30, 2014, we acquired Precision Genome Engineering, Inc., or Pregenen. The agreement provided for up to $135.0 million in future contingent cash payments by us upon the achievement of certain preclinical, clinical and commercial milestones related to the Pregenen technology.

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As of December 31, 2019, there are $120.0 million in future contingent cash payments, of which $20.1 million relates to clinical milestones and $99.9 million relates to commercial milestones. We estimate future contingent cash payments have a fair value of $8.0 million as of December 31, 2019, all of which is classified as a non-current liability on our consolidated balance sheet.

Interest income, ~~(expense),~~ net

~~For the year ended December 31, 2019, interest~~Interest income, ~~(expense),~~ net consists primarily of interest income earned on investments. ~~For the years ended December 31, 2018 and 2017, interest~~

Other income (expense), net consisted primarily of interest income earned on investments and interest expense on the financing lease obligation for our headquarters at 60 Binney Street in Cambridge, Massachusetts. Upon adoption of ASU 2016-02, ~~Leases (Topic 842)~~ (“ASU 2016-02” or “ASC 842”) on January 1, 2019, we de-recognized the financing lease obligation and, as a result, no longer recognize interest expense associated with the financing lease obligation. Please refer to Note 2, ~~Summary of significant accounting policies and basis of presentation,~~ ~~and Note 8,~~ ~~Leases, in the Notes to Consolidated Financial Statements for further information.~~

Other ~~(expense)~~ income ~~net~~

~~Other~~ (expense) ~~income,~~, net consists primarily of ~~unrealized~~ gains and losses on equity securities held by us, gains and losses on disposal of fixed assets, ~~realized gains and losses on debt securities,~~ 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 significant judgments 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 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.

While our significant accounting policies are described in more detail in the notes to our financial statements appearing elsewhere in this annual report, we believe the following accounting policies to be most critical to the judgments and estimates used in the preparation of our financial statements.

Discontinued operations

We determined that the Separation of our oncology business on November 4, 2021 and the sale of our manufacturing facility in Durham, North Carolina in July 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. Accordingly,

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the accompanying consolidated financial statements for all periods have been updated to present the assets and liabilities associated with the oncology business and the manufacturing facility separately as discontinued operations on the consolidated balance sheet and the results of all discontinued operations reported as a separate component of income in the consolidated statements of operations and comprehensive loss.

For additional information related to discontinued operations, refer to Note 3, Discontinued operations, to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K.

Revenue recognition

~~Effective January 1, 2018, we adopted Accounting Standards Codification (“ASC”),~~Under Topic 606, Revenue from Contracts with Customers, (“Topic 606”), using the modified retrospective transition method. Under this method, we have recognized the cumulative effect of the adoption as an adjustment to the opening balance of accumulated deficit in the current period consolidated balance sheet. We have not revised our consolidated financial statements for prior periods. This standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as collaboration arrangements and leases.

~~Under Topic 606,~~ an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price, including variable consideration, if any; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. We only apply the five-step model to contracts when it is probable that the entity will collect the consideration to which it is entitled in exchange for the goods or services it transfers to the customer.

Once a contract is determined to be within the scope of Topic 606, we assess the goods or services promised within each contract and determine those that are performance obligations. Arrangements that include rights to additional goods or services

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that are exercisable at a customer’s discretion are generally considered options. We assess if these options provide a material right to the customer and if so, they are considered performance obligations. The identification of material rights requires judgments related to the determination of the value of the underlying license relative to the option exercise price, including assumptions about technical feasibility and the probability of developing a candidate that would be subject to the option rights. The exercise of a material right is accounted for as a contract modification for accounting purposes.

We assess whether each promised good or service is distinct for the purpose of identifying the performance obligations in the contract. This assessment involves subjective determinations and requires management to make judgments about the individual promised goods or services and whether such are separable from the other aspects of the contractual relationship. Promised goods and services are considered distinct provided that: (i) the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (that is, the good or service is capable of being distinct) and (ii) the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (that is, the promise to transfer the good or service is distinct within the context of the contract). In assessing whether a promised good or service is distinct, we consider factors such as the research, manufacturing and commercialization capabilities of the collaboration partner and the availability of the associated expertise in the general marketplace. We also consider the intended benefit of the contract in assessing whether a promised good or service is separately identifiable from other promises in the contract. If a promised good or service is not distinct, an entity is required to combine that good or service with other promised goods or services until it identifies a bundle of goods or services that is distinct.

The transaction price is then determined and allocated to the identified performance obligations in proportion to their standalone selling prices (“SSP”) on a relative SSP basis. SSP is determined at contract inception and is not updated to reflect changes between contract inception and when the performance obligations are satisfied. Determining the SSP for performance obligations requires significant judgment. In developing the SSP for a performance obligation, we consider applicable market conditions and relevant entity-specific factors, including factors that were contemplated in negotiating the agreement with the customer and estimated costs. We validate the SSP for performance obligations by evaluating whether changes in the key assumptions used to determine the SSP will have a significant effect on the allocation of arrangement consideration between multiple performance obligations.

If the consideration promised in a contract includes a variable amount, we estimate the amount of consideration to which we will be entitled in exchange for transferring the promised goods or services to a customer. We determine the amount of variable consideration by using the expected value method or the most likely amount method. We include the unconstrained amount of estimated variable consideration in the transaction price. The amount included in the transaction price is constrained to the amount for which it is probable that a significant reversal of cumulative revenue recognized will not occur. At the end of each subsequent reporting period, we re-evaluate the estimated variable consideration included in the transaction price and any related constraint, and if necessary, adjust our estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis in the period of adjustment.

If an arrangement includes development and regulatory milestone payments, we evaluate whether the milestones are considered probable of being reached and estimate the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within our control or the licensee’s control, such as regulatory approvals, are generally not considered probable of being achieved until those approvals are received.

For arrangements with licenses of intellectual property that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, we recognize royalty revenue and sales-based milestones at the later of (i) when the related sales occur, or (ii) when the performance obligation to which the royalty has been allocated has been satisfied.

In determining the transaction price, we adjust consideration for the effects of the time value of money if the timing of payments provides us with a significant benefit of financing. We do not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the licensees and the transfer of the promised goods or services to the licensees will be one year or less. We assessed each of our revenue generating arrangements in order to determine whether a significant financing component exists and concluded that a significant financing component does not exist in any of our arrangements.

We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) each performance obligation is satisfied, either at a point in time or over time, and if over time recognition is based on the use of an output or input method.

Product revenue

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~~Collaboration revenue~~

To date, collaboration revenue has been primarily generated from our collaboration arrangement with BMS, which was originally entered into in March 2013 and was subsequently amended in June 2015, as further described in Note 11, ~~Collaborative arrangements~~ in the Notes to Consolidated Financial Statements. In August 2018, we entered into a collaboration arrangement with Regeneron, and began recognizing collaboration revenue under this arrangement in the fourth quarter of 2018.

We ~~analyze~~recognize product revenue in accordance with ASC 606, Revenue from Contracts with Customers. Product revenue represents sales of ZYNTEGLO. In 2021, we distributed ZYNTEGLO directly to hospitals in Germany. We determined that our ~~collaboration arrangements~~contracted sales with hospitals formed a single performance obligation and we recognize revenue from product sales at the point in time that we satisfy our performance obligation, which is upon transferring control of ZYNTEGLO to ~~assess whether they are within~~ the ~~scope of ASC 808,~~ ~~Collaborative Arrangements~~ (“ASC 808”) to determine whether such arrangements involve joint operating activities performed by parties that are both active participants in the activities and exposed to significant risks and rewards dependent on the commercial success of such activities. This assessment is performed throughout the lifehospital. Control of the arrangement based on changes in the responsibilities of all parties in the arrangement. For collaboration arrangements within the scope of ASC 808 that contain multiple elements, we first determine which elementsproduct generally transfers upon infusion of the ~~collaboration are deemed~~product. Costs to ~~be within~~manufacture and deliver the ~~scope of ASC 808~~product and those ~~that~~associated with administering the therapy are ~~more reflective~~included in cost of a vendor-customer relationship and therefore within the scope of Topic 606. For elements of collaboration arrangements that are accounted for pursuant to ASC 808, an appropriate recognition method is determined and applied consistently, generally by analogy to Topic 606. Amounts that are owed to collaboration partners are recognized as an offset to collaboration revenues as such amounts are incurred by the collaboration partner. Where amounts owed to a collaboration partner exceed our collaboration revenues in each quarterly period, such amounts are classified as research and development expense. For those elements of the arrangement that are accounted for pursuant to Topic 606, we apply the five-step model described above.product revenue.

The recognition of collaboration revenue (expense) requires management judgment due to the fact that the terms of our collaboration arrangements are complicated and the nature of the collaborative activities change over time. This process includes the identification of costs that we incur that relate to each particular collaboration arrangement, evaluating the nature of these costs (for example, whether the costs relate to a particular geography or territory or whether the costs relate to clinical or commercial activities), and applying the terms of the respective collaborative arrangement to determine the portion of such costs that are the responsibility of the collaboration partner, which in certain circumstances requires significant judgment.

Leases

~~Effective January 1, 2019, we adopted~~Under ASU 2016-02, Leases (Topic 842), (“ASU 2016-02” or “ASC 842”), using the required modified retrospective approach and utilizing the effective date as the date of initial application. As a result, prior periods are presented in accordance with the previous guidance in ASC 840, ~~Leases~~ ~~(“ASC 840”).~~

Atat the inception of an arrangement, we determine whether the arrangement is or contains a lease based on the unique facts and circumstances present in the arrangement. Leases with a term greater than one year are recognized on the balance sheet as right-of-use assets and short-term and long-term lease liabilities, as applicable. We do not have material financing leases.

Operating lease liabilities and their corresponding right-of-use assets are initially recorded based on the present value of lease payments over the expected remaining lease term. Certain adjustments to the right-of-use asset may be required for items such as incentives received. The interest rate implicit in lease contracts is typically not readily determinable. As a result, we utilize our incremental borrowing rate to discount lease payments, which reflects the fixed rate at which we could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term, in a similar economic environment. To estimate our incremental borrowing rate, a credit rating applicable to us is estimated using a synthetic credit rating analysis since we do not currently have a rating agency-based credit rating. Prospectively, we will adjust the right-of-use assets for straight-line rent expense or any incentives received and remeasure the lease liability at the net present value using the same incremental borrowing rate that was in effect as of the lease commencement or transition date.

We have elected not to recognize leases with an original term of one year or less on the balance sheet. We typically only ~~includes~~include an initial lease term in our assessment of a lease arrangement. Options to renew a lease are not included in our assessment unless there is reasonable certainty that we will renew.

Assumptions that we made at the commencement date are re-evaluated upon occurrence of certain events, including a lease modification. A lease modification results in a separate contract when the modification grants the lessee an additional right of use not included in the original lease and when lease payments increase commensurate with the standalone price for the additional right of use. When a lease modification results in a separate contract, it is accounted for in the same manner as a new lease.

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~~ASC 842 transition practical expedients and application of transition provisions to leases at the transition date~~

We elected the following practical expedients, which must be elected as a package and applied consistently to all of our leases at the transition date (including those for which we are a lessee or a lessor): i) we did not reassess whether any expired or existing contracts are or contain leases; ii) we did not reassess the lease classification for any expired or existing leases (that is, all existing leases that were classified as operating leases in accordance with ASC 840 are classified as operating leases, and all existing leases that were classified as capital leases in accordance with ASC 840 are classified as finance leases); and iii) we did not reassess initial direct costs for any existing leases.

For leases that existed prior to the date of initial application of ASC 842 (which were previously classified as operating leases), a lessee may elect to use either the total lease term measured at lease inception under ASC 840 or the remaining lease term as of the date of initial application of ASC 842 in determining the period for which to measure its incremental borrowing rate. In transition to ASC 842, we utilized the remaining lease term of its leases in determining the appropriate incremental borrowing rates.

~~Application of ASC 842 policy elections to leases post adoption~~

~~We have made certain policy elections to apply to our leases executed post adoption, or subsequent to January 1, 2019, as further described below.~~

In accordance with ASC 842, components of a lease should be split into three categories: lease components, non-lease components, and non-components. The fixed and in-substance fixed contract consideration (including any consideration related to non-components) must be allocated based on the respective relative fair values to the lease components and non-lease components.

Entities may elect not to separate lease and non-lease components. Rather, entities would account for each lease component and related non-lease component together as a single lease component. We have elected to account for lease and non-lease components together as a single lease component for all underlying assets and allocate all of the contract consideration to the lease component only.

ASC 842 allows for the use of judgment in determining whether the assumed lease term is for a major part of the remaining economic life of the underlying asset and whether the present value of lease payments represents substantially all of the fair value of the underlying asset. We apply the bright line thresholds referenced in ASC 842-10-55-2 to assist in evaluating leases for appropriate classification. The aforementioned bright lines are applied consistently to our entire portfolio of leases.

Accrued research and development expenses

As part of the process of preparing our financial statements, we are required to estimate our accrued expenses. This process involves reviewing open contracts and purchase orders, communicating with our personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual cost. The majority of our service providers invoice us monthly in arrears for services performed or when contractual milestones are met. We make estimates of our accrued expenses as of each balance sheet date in our financial statements based on facts and circumstances known to us at that time.

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We recognize expenses related to clinical studies based on our estimates of the services received and efforts expended pursuant to contracts with multiple CROs that conduct and manage clinical studies on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the clinical expense. Payments under some of these contracts depend on factors such as the successful enrollment of subjects and the completion of clinical study milestones. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period and adjust accordingly.

Other examples of estimated accrued research and development expenses include fees paid to:

•investigative sites in connection with clinical studies;

•vendors in connection with preclinical development activities; and

•vendors related to the development, manufacturing, and distribution of clinical trial materials.

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Stock-based compensation

We issue stock-based awards to employees and non-employees, generally in the form of stock options and restricted stock units. We account for our stock-based awards in accordance with FASB ASC Topic 718, Compensation—Stock Compensation~~, or~~ ("ASC ~~718.~~718"). ASC 718 requires all stock-based payments to employees, including grants of employee stock options and modifications to existing stock options, to be recognized in the consolidated statements of operations and comprehensive loss based on their fair values. Prior to the adoption of Accounting Standards Update (“ASU”) No. 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”), the measurement date for non-employee awards was generally the date the services are completed, resulting in financial reporting period adjustments to stock-based compensation during the vesting terms for changes in the fair value of the awards. After the adoption of ASU 2018-07, the measurement date for non-employee awards is the date of grant without changes in the fair value of the award. Stock-based compensation costs for non-employees are recognized as expense over the vesting period on a straight-line basis.

Our stock-based awards are subject to either service or performance-based vesting conditions. Compensation expense related to awards to employees, non-employees, and directors, with service-based vesting conditions is recognized on a straight-line basis based on the grant date fair value over the associated service period of the award, which is generally the vesting term. Compensation expense related to awards to employees and non-employees with performance-based vesting conditions is recognized based on the grant date fair value over the requisite service period using the accelerated attribution method to the extent achievement of the performance condition is probable. We estimate the probability that certain performance criteria will be met and do not recognize compensation expense until it is probable that the performance-based vesting condition will be achieved.

We estimate the fair value of our stock-based awards to employees, non-employees, and directors, using the Black-Scholes option pricing model, which requires the input of subjective assumptions, including (i) the expected volatility of our stock, (ii) the expected term of the award, (iii) the risk-free interest rate, and (iv) expected dividends. ~~Due to~~Effective January 1, 2020, we eliminated the ~~lack~~use of ~~company specific~~a representative peer group and use only our own historical ~~and implied~~ volatility data ~~we based~~in our estimate of expected volatility on the estimate and expected volatilities of a representative group of publicly traded companies. For these analyses, we select companies with comparable characteristics to ours including enterprise value, risk profiles, position within the industry, and with historical share price information sufficient to meet the expected life of the stock-based awards. We compute the historical volatility data using the daily closing prices for the selected companies’ shares during the equivalent period of the calculated expected term of our stock-based awards. We will continue to apply this process untilgiven that there is now a sufficient amount of historical information regarding the volatility of our own stock ~~price becomes available.~~price. We estimate the expected life of our employee stock options using the “simplified” method, whereby, the expected life equals the average of the vesting term and the original contractual term of the ~~option.~~option, unless there are more appropriate indicators of the expected life when measuring the fair value of a modified award. The risk-free interest rates for periods within the expected life of the option were based on the U.S. Treasury yield curve in effect during the period the options were granted.

Conversion and modification of equity awards outstanding at Separation date

In connection with the Separation on November 4, 2021, under the provisions of the existing plans, we adjusted our outstanding equity awards in accordance with the terms of the Employee Matters Agreement (an equitable adjustment) to preserve the intrinsic value of the awards immediately before and after the Distribution. Upon the Distribution, employees holding stock options, restricted stock units and performance restricted stock units denominated in pre-Distribution bluebird stock received a number of otherwise-similar awards either in post-Distribution bluebird stock or in a combination of post-Distribution bluebird stock and 2seventy bio stock based on conversion ratios outlined for each group of employees in the Employee Matters Agreement that we entered into in connection with the Distribution. The equity awards that were granted prior to 2021 were converted under the shareholder method, wherein employees holding outstanding equity awards received

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equity awards in both bluebird and 2seventy bio. The conversion ratio for the shareholder method took into consideration a distribution ratio of one share of 2seventy bio common stock for every three shares of bluebird common stock. For equity awards granted in 2021, the number of awards that were outstanding at the Separation were proportionately adjusted to maintain the aggregate intrinsic value of the awards at the date of the Separation. The conversion ratio was determined based on the volume weighted-average trading price for bluebird common stock for the five trading days before and after the Separation.

These modified awards otherwise retained substantially the same terms and conditions, including term and vesting provisions. Additionally, we will not incur any future compensation cost related to equity awards held by 2seventy bio employees and directors. We will incur future compensation cost related to 2seventy bio equity awards held by our employees.

Recent accounting pronouncements

See Note 2, Summary of significant accounting policies and basis of presentation, in the ~~Notes~~notes to ~~Consolidated Financial Statements~~consolidated financial statements for a description of recent accounting pronouncements applicable to our business.

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Results of Operations

Comparison of the years ended December 31, ~~2019~~2021 and ~~2018:~~2020:


	Year ended December 31,
	2021		2020		Change
	(in thousands)
Revenue:
Product revenue	$	2,850	$	—	$	2,850
Other revenue	812		—		812
Total revenues	3,662		—		3,662
Operating expenses:
Research and development	319,946		319,309		637
Selling, general and administrative	209,969		239,950		(29,981)
Cost of product revenue	38,857		—		38,857
Restructuring expense	25,801		—		25,801
Total operating expenses	594,573		559,259		35,314
Loss from operations	(590,911)		(559,259)		(31,652)
Interest income, net	879		5,770		(4,891)
Other income (expense), net	27,652		(6,881)		34,533
Loss before income taxes	(562,380)		(560,370)		(2,010)
Income tax (expense) benefit	(258)		(686)		428
Net loss from continuing operations	$	(562,638)	$	(561,056)	$	(1,582)
Net loss from discontinued operations	$	(256,740)	$	(57,639)	$	(199,101)
Net loss	$	(819,378)	$	(618,695)	$	(200,683)

Year ended December 31,
2019 2018 Change
(in thousands)
Revenue:
Collaboration revenue $ 36,469 $ 52,353 $ (15,884)
License and royalty revenue 8,205 2,226 5,979
Total revenues 44,674 54,579 (9,905)
Operating expenses:
Research and development 582,413 448,589 133,824
Selling, general and administrative 271,362 174,129 97,233
Cost of license and royalty revenue 2,978 885 2,093
Change in fair value of contingent consideration 2,747 2,999 (252)
Total operating expenses 859,500 626,602 232,898
Loss from operations (814,826) (572,023) (242,803)
Interest income (expense), net 34,761 14,624 20,137
Other (expense) income, net (10,088) 1,961 (12,049)
Loss before income taxes (790,153) (555,438) (234,715)
Income tax benefit (expense) 545 (187) 732
Net loss $ (789,608) $ (555,625) $ (233,983)

Revenue. Total revenue was ~~$44.7~~$3.7 million for the year ended December 31, ~~2019, compared to $54.6 million for~~2021 and is comprised primarily of product revenue from sales of ZYNTEGLO in Germany. For the year ended December 31, ~~2018. The decrease~~2020 we had no sales of ~~$9.9 million was primarily attributable to a decrease~~ZYNTEGLO as we had not yet obtained pricing approval in collaboration revenue recognized for the ide-cel license and manufacturing services under our agreement with BMS. This decrease was partially offset by an increase in license and royalty revenue and an increase in collaboration revenue under our agreement with Regeneron.Germany.

Research and development expenses. Research and development expenses were ~~$582.4~~$319.9 million for the year ended December 31, ~~2019,~~2021, compared to ~~$448.6~~$319.3 million for the year ended December 31, ~~2018.~~2020. The increase of ~~$133.8~~$0.6 million was primarily attributable to the following:

•$~~66.1~~13.1 million of increased information technology and facility-related costs;

•$4.8 million of increased material production fees; and

•$2.1 million of increased value-added taxes.

These increased costs were partially offset by:

•$5.5 million of decreased clinical trial costs primarily driven by the clinical hold from February 2021 to June 2021 on our studies of lovo-cel;

•$5.4 million of decreased lab expenses and platform costs;

•$3.1 million of decreased net employee compensation, benefit, and other headcount related expenses, which is primarily driven by ~~an increase in research and development headcount to support overall growth, including an increase~~a decrease of ~~$25.7~~$6.8 million in stock-based compensation ~~expense. Refer~~expense due to ~~Note 14,~~ ~~Stock-based compensation,~~ an overall decrease in the ~~Notes~~value of awards, offset by an increase due to ~~Consolidated Financial Statements for discussion of stock-based compensation expense recognized on the performance-based restricted stock units;~~our employee retention program in 2021.

•$~~34.8~~2.5 million of ~~increased IT and facility related costs, which includes the impact of adopting ASU 2016-02;~~

•~~$26.3 million of increased collaboration research funding costs;~~

•~~$13.1 million of increased laboratory expenses, material production, and other platform costs;~~

•~~$9.7 million of increased research~~decreased consulting ~~and medical research costs;~~expenses; and

•$~~3.6 million of increased clinical trial costs.~~

~~These increased costs were partially offset by $20.6~~2.2 million of decreased ~~license and milestone fees.~~medical research costs.

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Selling, general and administrative expenses. Selling, general and administrative expenses were ~~$271.4~~$210.0 million for the year ended December 31, ~~2019,~~2021, compared to ~~$174.1~~$240.0 million for the year ended December 31, ~~2018.~~2020. The ~~increase~~decrease of ~~$97.2~~$30.0 million was primarily due to the following:

•$~~65.3~~17.3 million of decreased employee compensation, benefit, and other headcount related expenses, which is primarily driven by a decrease of $17.1 million in stock-based compensation expense due to an overall decrease in the value of awards, partially offset by an increase primarily driven by our employee retention program in 2021;

•$7.4 million of decreased costs related to consultants;

•$7.2 million of decreased costs related to commercial readiness activities due to delays in commercialization as a result of the COVID-19 pandemic and our decision to focus our efforts on the U.S. market for beti-cel, eli-cel, and lovo-cel; and

•$2.6 million of decreased costs related to professional service costs.

These decreased costs were partially offset by:

•$4.6 million of increased costs related to information technology and facility-related costs.

Cost of product revenue. Cost of product revenue was $38.9 million for the year ended December 31, 2021. We did not have cost of product revenue for the year ended December 31, 2020. The increase is attributable to costs of sales associated with product sales of ZYNTEGLO in Germany as well as the reserves for excess inventory recognized during the second and third quarters of 2021 based on forecasted consumption levels due to the winddown of our European operations.

Restructuring expenses. Restructuring expenses were $25.8 million for the year ended December 31, 2021. We did not have restructuring expenses for the year ended December 31, 2020. The increase in restructuring expenses is primarily related to the costs associated with the reduction in workforce as a result of our decision to wind down our European operations.

Interest income, net. The decrease in interest income, net was primarily related to decreased interest income earned on investments due to an overall decrease in investments.

Other income (expense), net. The change in other income (expense), net was primarily related to the gain recognized on equity securities.

Comparison of the years ended December 31, 2020 and 2019:


	Year ended December 31,
	2020		2019		Change
	(in thousands)
Operating expenses:
Research and development	319,309		327,119		(7,810)
Selling, general and administrative	239,950		235,844		4,106
Total operating expenses	559,259		562,963		(3,704)
Loss from operations	(559,259)		(562,963)		3,704
Interest income, net	5,770		17,380		(11,610)
Other expense, net	(6,881)		(9,984)		3,103
Loss before income taxes	(560,370)		(555,567)		(4,803)
Income tax (expense) benefit	(686)		545		(1,231)
Net loss from continuing operations	(561,056)		(555,022)		(6,034)
Net loss from discontinued operations	(57,639)		(234,586)		176,947
Net loss	$	(618,695)	$	(789,608)	$	170,913

Research and development expenses. Research and development expenses were $319.3 million for the year ended December 31, 2020, compared to $327.1 million for the year ended December 31, 2019. The decrease of $7.8 million was primarily attributable to the following:

•$6.9 million of decreased value-added taxes;

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•$3.6 million of decreased employee compensation, benefit, and other headcount related expenses, which is primarily driven by a decrease of $9.6 million in stock-based compensation expense offset by an increase in research and development headcount to support overall growth;

•$2.2 million of decreased medical research costs;

•$2.1 million of decreased information technology and facility-related costs;

•$1.6 million of decreased lab costs; and

•$1.3 million of decreased collaboration research funding costs.

These decreased costs were partially offset by:

•$8.7 million of increased material production and non-clinical services costs; and

•$1.8 million of increased consulting costs.

Selling, general and administrative expenses. Selling, general and administrative expenses were $240.0 million for the year ended December 31, 2020, compared to $235.8 million for the year ended December 31, 2019. The increase of approximately $4.1 million was primarily due to the following:

•$8.4 million of increased information technology and facility-related costs primarily due to increased investment in software applications and technology; and

•$5.3 million of increased employee compensation, benefit, and other headcount related expenses, which is primarily driven by an increase in selling, general, and administrative headcount to support overall growth, including an increase of ~~$24.1~~$1.1 million in stock-based compensation expense. ~~Refer to Note 14,~~ ~~Stock-based compensation,~~ ~~in the Notes to~~

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~~Consolidated Financial Statements for discussion of stock-based compensation expense recognized on the performance-based restricted stock units;~~These increased costs were partially offset by:

•$~~18.4~~8.3 million of ~~increased~~decreased costs related to ~~commercial-readiness activities;~~commercial readiness activities due to delays in commercial launch activities during 2020 as a result of the COVID-19 pandemic; and

•$~~13.2~~1.6 million of ~~increased~~decreased consulting ~~fees.~~

~~Cost of license~~ and ~~royalty revenue.~~ Cost of license and royalty revenue was $3.0 million for the year ended December 31, 2019, compared to $0.9 million for the year ended December 31, 2018. The increase is attributable to increased royalty revenue in the same periods.

~~Change in fair value of contingent consideration.~~ ~~The change in fair value of contingent consideration is driven by changes in assumptions~~professional service fees primarily related to ~~estimated milestone achievement dates or probabilities of achievement.~~commercial strategy and product marketing.

Interest income, ~~(expense),~~ net. The ~~change~~decrease in interest income, ~~(expense),~~ net was primarily related to ~~increased~~decreased interest income earned on investments ~~as well as a~~due to an overall decrease in interest ~~expense incurred due to the de-recognition of the financing lease obligation associated with our corporate headquarters at 60 Binney Street related to the adoption of ASU 2016-02 on January 1, 2019.~~rates.

Other ~~(expense) income,~~expense, net. The ~~change~~decrease in other ~~(expense) income,~~expense, net was primarily related to changes in fair value on equity securities.

~~Comparison of the years ended December 31, 2018 and 2017:~~

Year ended December 31,
2018 2017 Change
(in thousands)
Revenue:
Collaboration revenue $ 52,353 $ 22,207 $ 30,146
License and royalty revenue 2,226 13,220 (10,994)
Total revenues 54,579 35,427 19,152
Operating expenses:
Research and development 448,589 273,040 175,549
Selling, general and administrative 174,129 93,550 80,579
Cost of license and royalty revenue 885 1,527 (642)
Change in fair value of contingent consideration 2,999 (525) 3,524
Total operating expenses 626,602 367,592 259,010
Loss from operations (572,023) (332,165) (239,858)
Interest income (expense), net 14,624 (2,001) 16,625
Other income (expense), net 1,961 (1,267) 3,228
Loss before income taxes (555,438) (335,433) (220,005)
Income tax benefit (expense) (187) (210) 23
Net loss $ (555,625) $ (335,643) $ (219,982)

~~Revenue.~~ Total revenue was $54.6 million for the year ended December 31, 2018, compared to $35.4 million for the year ended December 31, 2017. The increase of $19.2 million was primarily attributable to collaboration revenue recognized associated with the ide-cel license and manufacturing services under our agreement with BMS, of which $13.9 million is attributable to differences resulting from the application of Topic 606 and ASC 605 to our arrangement with BMS during the year ended December 31, 2018 and 2017, respectively, offset by a decrease in license and royalty revenue.

~~Research and development expenses.~~ Research and development expenses were $448.6 million for the year ended December 31, 2018, compared to $273.0 million for the year ended December 31, 2017. The increase of $175.5 million was primarily attributable to the following:

•~~$84.5 million of increased costs incurred for material production, laboratory expenses, and collaboration research;~~

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•$61.1 million of increased employee compensation, benefit, and other headcount related expenses, of which $27.8 million is stock based compensation expense, primarily due to an increase in headcount to support overall growth;

•~~$17.8 million of increased facility related costs and professional and consulting fees;~~

•~~$10.5 million of increased clinical trial-related costs to support the advancement of our clinical programs; and~~

•~~$1.3 million of increased license and milestone fees (exclusive of any costs recorded in cost of license and royalty revenue) and increased grants and scholarships.~~

~~Selling, general and administrative expenses.~~ Selling, general and administrative expenses were $174.1 million for the year ended December 31, 2018, compared to $93.6 million for the year ended December 31, 2017. The increase of approximately $80.6 million was primarily due to the following:

•~~$47.4 million of increased employee compensation and benefits, inclusive of $29.8 million of increased stock-based compensation expense;~~

•~~$10.1 million of increased commercial-related costs, primarily attributed to market research costs;~~

•~~$14.6 million due to increased consultant and professional services expenses;~~

•~~$5.7 million in other headcount related costs; and~~

•~~$4.3 million of increased office expenses.~~

~~These increases were offset by decreased facility-related costs of $1.7 million.~~

~~Cost of license and royalty revenue.~~ Cost of license and royalty revenue was $0.9 million for the year ended December 31, 2018, compared to $1.5 million for the year ended December 31, 2017. The decrease is attributable to decreased license and royalty revenue in the same periods.

~~Change in fair value of contingent consideration.~~ ~~The change in fair value of contingent consideration is driven by changes in assumptions related to estimated milestone achievement dates or probabilities of achievement.~~

~~Interest income (expense), net.~~ The change in interest income (expense), net was primarily related to increased interest income earned on investments due to the increase in investment in marketable securities, partially offset by interest expense on the 60 Binney financing obligation.

~~Other income (expense), net.~~ Other income, net was $2.0 million for the year ended December 31, 2018, compared to other expense, net of $1.3 million for the year ended December 31, 2017. The change is primarily related to an unrealized gain recognized on equity securities as well as fluctuations in foreign currency exchange rates.

Liquidity and Capital Resources

As of December 31, ~~2019,~~2021, we had cash, cash equivalents and marketable securities of approximately $1.24 billion. We expect cash, cash equivalents, marketable securities, anticipated collaboration payments, and payments from sales of our current and potential future product candidates to fund planned operations into the second half of 2021.$396.6 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 December 31, ~~2019,~~2021, our funds are primarily held in U.S. ~~Treasury securities, U.S.~~ government agency securities and treasuries, equity securities, ~~certificates of deposit,~~ corporate bonds, commercial paper, and money market accounts.

We have incurred losses and cumulative negative cash flows from operations since our inception in April 1992, and as of December 31, ~~2019,~~2021, we had an accumulated deficit of ~~$2.28~~$3.72 billion. We expect that ~~our~~we will continue to incur significant research and development and selling, general and administrative expenses ~~will continue to increase~~ 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.~~ 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 the Company’s ability to continue as a going concern. The

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accompanying Consolidated Financial Statements (“CFS”) 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 CFS do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

We have funded our operations principally from the sale of common stock in public offerings and through our collaborations with BMS ~~and Regeneron~~ as outlined below:

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•In ~~June 2017,~~May 2020, we entered into the First Amendment to the Amended and Restated Co-Development, Co-Promote and Profit Share Agreement (as amended, the “Amended Ide-cel CCPS”) and the Second Amended and Restated bb21217 License Agreement (“Amended bb21217 License Agreement”) with BMS (relating to our ide-cel and bb21217 programs which were assigned to 2seventy bio effective upon completion of the Separation), pursuant to which BMS modified its obligations to pay us for future ex-U.S. milestones and royalties on commercial sales by making a one-time up-front payment of $200.0 million.

•In May 2020, we sold ~~4.4~~10.5 million shares of common stock (inclusive of ~~0.6 million~~ shares ~~of common stock~~ sold ~~by us~~ pursuant to ~~the full exercise of~~ an ~~overallotment~~ option granted to the underwriters in connection with the offering) through an underwritten public offering at a price of ~~$105.00 per share for aggregate net proceeds to us of $436.8 million.~~

•In December 2017, we sold 3.2 million shares of common stock (excluding any shares sold by us pursuant to an overallotment option granted to the underwriters in connection with the offering) through an underwritten public offering at a price of $185.00 per share for aggregate net proceeds to us of $569.8 million.

•In January 2018, we sold 0.3 million shares of common stock pursuant to the partial exercise of an overallotment option granted to the underwriters in connection with the December 2017 underwritten public offering at a price of $185.00$55.00 per share for aggregate net proceeds of ~~$48.7~~$541.5 million.

•InOn July ~~2018,~~2021, we sold ~~3.9~~our bluebird Research Triangle manufacturing facility in North Carolina as part of an agreement with National Resilience, Inc ("Resilience"). In consideration, upon closing of the transaction we received $110.3 million from Resilience.

•In September 2021, we sold 2.3 million shares of common stock through ~~an underwritten public~~a private placement offering of securities at a price of ~~$162.50~~$16.50 per share ~~for aggregate net proceeds~~as well as pre-funded warrants to ~~us of $600.6 million.~~

•~~In August 2018, we sold 0.4~~purchase up to 2.3 million shares of common stock ~~to Regeneron in connection with our collaboration arrangement~~ at aan effective price of ~~$238.10~~$16.49 per share ($16.49 paid to us upon the closing of the offering and $0.01 to be paid upon exercise of such pre-funded warrants) for aggregate ~~net~~gross proceeds ~~to us~~ of ~~$100.0 million, of which $45.5 million was attributed to a prepayment of joint research activities. See Note 11,~~ ~~Collaborative arrangements,~~ ~~in the Notes to Consolidated Financial Statements for more information.~~$75.0 million.

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:

Year ended December 31,
2019 2018 2017
(in thousands)
Net cash used in operating activities $ (564,384) $ (413,426) $ (280,553)
Net cash provided by (used in) investing activities 507,807 (679,435) (316,630)
Net cash provided by financing activities 21,187 737,692 1,076,174
(Decrease) increase in cash, cash equivalents and restricted cash $ (35,390) $ (355,169) $ 478,991


	Year ended December 31,
	2021		2020		2019
	(in thousands)
Net cash used in operating activities	$	(635,639)	$	(470,351)	$	(564,384)
Net cash provided by (used in) investing activities	562,557		(84,345)		507,807
Net cash (used in) provided by financing activities	(93,954)		546,715		21,187
Decrease in cash, cash equivalents and restricted cash	$	(167,036)	$	(7,981)	$	(35,390)

Operating Activities. The net cash used in operating activities was $635.6 million for the year ended December 31, 2021 and primarily consisted of a net loss of $819.4 million adjusted for non-cash items including stock-based compensation of $127.9 million, the recognition of a reserve for excess inventories of $29.9 million and depreciation and amortization of $19.6 million, change in net working capital of $18.0 million, and other non-cash items of $17.2 million, offset by an unrealized gain on equity securities of $29.4 million.

The net cash used in operating activities was $470.4 million for the year ended December 31, 2020 and primarily consisted of a net loss of $618.7 million adjusted for non-cash items including stock-based compensation of $156.6 million and depreciation and amortization of $19.4 million, as well as the change in our net working capital.

The net cash used in operating activities was $564.4 million for the year ended December 31, 2019 and primarily consisted of a net loss of $789.6 million adjusted for non-cash items including stock-based compensation of $160.6 million and depreciation and amortization of $17.4 million, as well as the change in our net working capital.

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~~The~~Discontinued operations contributed net losses of $256.7 million, $57.6 million and $234.6 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Investing Activities. Net cash ~~used in operating~~provided by investing activities ~~was $413.4 million~~ for the year ended December 31, ~~2018 and primarily consisted of a net loss of $555.6 million adjusted for non-cash items including stock-based compensation of $110.8~~2021 was $562.6 million and ~~depreciation~~was primarily due to proceeds from the maturities of available-for-sale marketable securities of $895.3 million, proceeds from the sale of the Durham, North Carolina manufacturing facility of $110.3 million, and ~~amortization~~proceeds from sales of ~~$17.2~~marketable securities of $31.3 million, ~~as well as~~offset by the ~~change in our net working capital.~~purchase of $451.4 million of available-for-sale marketable securities and the purchase of $14.5 million of property, plant and equipment.

~~The net~~Net cash used in ~~operating~~investing activities ~~was $280.6 million~~ for the year ended December 31, ~~2017 and primarily consisted of a net loss of $335.6 million adjusted for non-cash items including stock-based compensation of $53.3~~2020 was $84.3 million and ~~depreciation~~was primarily due to the purchase of $1.00 billion of marketable securities and ~~amortization~~the purchase of ~~$13.5~~$29.0 million ~~as well as~~of property, plant and equipment offset by proceeds from the ~~change in our net working capital.~~maturities of available-for-sale marketable securities of $918.3 million and proceeds from sales of marketable securities of $29.9 million.

~~Investing Activities.~~ Net cash provided by investing activities for the year ended December 31, 2019 was $507.8 million and was primarily due to proceeds from the maturities of available-for-sale marketable securities of $1.34 billion offset by the purchase of $756.6 million of marketable securities and the purchase of $71.0 million of property, plant and equipment.

Financing Activities: Net cash used in ~~investing~~financing activities for the year ended December 31, ~~2018~~2021 was ~~$679.4~~$94.0 million and was primarily due to net cash of $174.3 million transferred to 2seventy bio in connection with the ~~purchase of $1.52 billion of marketable securities and the purchase of $55.7 million of property, plant and equipment~~Separation offset by net cash proceeds from ~~the maturities~~our issuance of ~~available-for-sale marketable securities~~common stock and warrants of ~~$894.3~~$75.0 million.

Net cash ~~used in investing~~provided by financing activities for the year ended December 31, ~~2017~~2020 was ~~$316.6~~$546.7 million and was primarily due to ~~the purchase of $686.2 million of available-for-sale marketable securities and the purchase of $62.2 million of property, plant and equipment offset by~~net cash proceeds from ~~the maturities of available-for-sale marketable securities of $431.8 million.~~our May 2020 common stock offering.

~~Financing Activities:~~ Net cash provided by financing activities for the year ended December 31, 2019 was $21.2 million and was ~~primarily~~ due to net cash proceeds from employee option exercises and ESPP contributions.

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Net cash provided by financing activities for the year ended December 31, 2018 was $737.7 million and was primarily due to net cash proceeds from our January 2018 and July 2018 common stock offerings, as well as our issuance of common stock to Regeneron.

~~Net cash provided by financing activities for the year ended December 31, 2017 was $1.1 billion and was primarily due to net cash proceeds from our June 2017 and December 2017 common stock offerings.~~

Contractual Obligations and Commitments

~~The following table summarizes our contractual obligations at December 31, 2019, which excludes potential milestone payments.~~

Total 2020
2021
through
2022
2023
through
2024
2025
and
after
(in thousands)
Operating leases $ 251,553 $ 33,257 $ 66,868 $ 63,092 $ 88,336
Contract manufacturing 247,947 129,950 46,907 71,090 —
Total contractual obligations⁽¹⁾
$ 499,500 $ 163,207 $ 113,775 $ 134,182 $ 88,336

⁽¹⁾We are subject to several in-licenses that include annual license maintenance fee payments and minimum royalties. The future obligations related to maintenance fee payments and minimum royalties in license agreements are not considered material and are not included in the table above.

~~Operating leases~~Lease commitments

60 Binney Street ~~lease~~sublease

~~On September 21, 2015,~~

In October 2021, we entered into a consent to assignment and amendment to our lease agreement for our 60 Binney Street lease (the "Assignment"). The Assignment transfers our interest in the lease to 2seventy bio and releases us from our obligation to maintain the $13.8 million collateralized letter of credit required under the original 60 Binney Street lease. Although the lease was legally transferred to 2seventy bio, the lessor required that we remain secondarily liable as a guarantor for payment obligations accruing under the 60 Binney Street lease from the date of Assignment until (i) we have completely vacated the premises and (ii) 2seventy bio has reached a market capitalization of $900 million. Upon Separation, the lease assignment was accounted for as the termination of the original lease and we de-recognized the right-of-use asset and lease liability related to the 60 Binney Street lease and recognized the fair value of the guarantee pursuant to ASC 405, Liabilities. The fair value of the guarantee was not material.

Concurrent with the Assignment of the 60 Binney Street lease, we entered into a sublease agreement with 2seventy bio for office, laboratory and ~~laboratory~~storage space located at 60 Binney Street ~~Cambridge, Massachusetts.~~(the "60 Binney Street Sublease") while we construct and outfit our new office and laboratory space. Under the terms of the 60 Binney Street Sublease, we will lease ~~starting on October 1, 2016, we leased approximately 253,108~~72,988 square feet ~~of office and laboratory space at $72.50 per square foot per year, or $18.4~~for $0.5 million per ~~year~~month in base rent ~~which is subject to scheduled annual~~for the period beginning from the Assignment through March 2022 and 58,004 square feet for $0.4 million per month in base rent ~~increases~~for the period from April 2022 through March 2024. We will also pay monthly fees for use of ~~1.75% plus certain~~the facilities and support personnel, calculated based on our pro-rata share of operating ~~expenses~~costs during the term of the 60 Binney Street Sublease.We accounted for the 60 Binney Street Sublease as a new lease under ASC 842, and ~~taxes. The Company currently maintains~~in November 2021, we recognized a ~~$13.8 million collateralized letter of credit~~right-of-use asset and ~~subject~~lease liability related to the terms of the lease and certain reduction requirements specified therein, including market capitalization requirements, this amount may decrease to $9.2 million over time. The lease will continue until March 31, 2027. Pursuant to a work letter entered into in connection with the lease, the landlord contributed an aggregate of $42.4 million toward the cost of construction and tenant improvements for the building.60 Binney Street Sublease.

50 Binney Street sublease

In April 2019, we entered into a sublease agreement for office space located at 50 Binney Street in Cambridge, Massachusetts (the ~~“50~~"50 Binney Street ~~Sublease”~~Sublease") to supplement our corporate headquarters located at 60 Binney Street in Cambridge, Massachusetts. Under the terms of the 50 Binney Street Sublease, we will lease 267,278 square feet of office space for $99.95 per square foot, or $26.7 million per year in base rent subject to certain operating expenses, taxes and annual rent increases of approximately 3%. The lease will commence when the space is available for use, which is anticipated to be in the ~~second~~

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first half of ~~2021,~~2022, which reflects the sublessor's exercise of its option to postpone the commencement date of the sublease, and end on December 31, 2030, unless ~~we earlier occupy the premises or~~ other conditions specified in the 50 Binney Street Sublease occur. ~~The sublessor has the right to postpone the commencement date until January 1, 2022 by providing us not less than nine months’ prior written notice.~~ Upon signing the 50 Binney Street Sublease, we executed a $40.1 million cash-collateralized letter of credit, which may be reduced in the future subject to the terms of the 50 Binney Street Sublease and certain reduction requirements specified therein. The $40.1 million of cash collateralizing the letter of credit is classified as restricted cash and other non-current assets on our consolidated balance sheets. Payments will commence at the earlier of (i) the date which is 90 days following the commencement date and (ii) the date we take occupancy of all or any portion of the premises. In connection with the execution of the 50 Binney Street Sublease, we also entered into a ~~Purchase Agreement~~purchase agreement for furniture and equipment (the “Furniture Purchase Agreement”) located on the premises upon lease commencement. Upon execution of the Furniture Purchase Agreement, we made an upfront payment of $7.5 million, all of which was recorded within restricted cash and other non-current assets on our consolidated balance sheets and assessed for recoverability on a recurring basis.

In December 2021, we entered into a sub-sublease agreement with Meta Platforms. Inc. ("Meta"). Under the terms of the sub-sublease, we are subleasing the entirety of the 50 Binney Street premises which we have rights to under the sublease. We are sub-subleasing the premises for $28.0 million in the first year with 3% annual increases in each subsequent year. Meta will receive access to 50 Binney Street at the lease commencement date, which is the same point that we would receive access under the sublease. We remain liable under the sublease, including for the maintenance of the $40.1 million collateralized letter of credit. As a result of the execution of the sub-sublease, we assessed the $7.5 million deposit related to the Furniture Purchase Agreement for recoverability and determined that the amount was not recoverable. As a result, we recorded $7.5 million in our consolidated statements of operations and comprehensive loss as ofselling, general and administrative expense during the year ended December 31, ~~2019.~~2021.

~~Seattle, Washington leases~~

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Assembly Row lease

In ~~July 2018,~~November 2021, we entered into a lease agreement with Assembly Row 5B, LLC (the "Landlord") for office ~~and laboratory~~ space located at 455 Grand Union Boulevard in ~~a portion~~Somerville, Massachusetts to serve as our future headquarters. Under the terms of ~~a building in Seattle, Washington. The~~the arrangement, we will lease ~~was amended in October 2018 to increase the total rentable space to~~ approximately ~~36,126~~61,180 square feet starting at ~~$54.00~~an annual rate of $45 per square foot, in base rent per year, which is subject to scheduled annual rent increases of 2.5% plus certain operating expenses and taxes. The lease commenced on January 1, 2019 and the lease term will continue through January 31, 2027. The Company moved into the facility in June 2019. The lease allowed for a tenant improvement allowance of up to $215.00 per square foot, or approximately $8.0 million. We utilized the $8.0 million tenant improvement allowance and it has been fully reimbursed by the landlord as of December 31, 2019.

In September 2019, we entered into a second amendment to the lease (the “Second Amendment”). The Second Amendment added approximately 22,188 square feet to the existing space and extended the lease term of the entire premises by 16 months, or until April 2028. Fixed monthly rent for the expanded space will be incurred at a rate of $62.80 per square foot per year beginning in January 2021, subject to annual increases of 2.5%., plus operating expenses and taxes. In addition, we will be eligible for a tenant work allowance of $160 per rentable square foot of the premises. The ~~Second Amendment includes a five-year option~~lease will commence on the date on which the Landlord tenders possession of the premises to ~~extend~~us with any tenant work required to be performed by the ~~term.~~Landlord substantially completed, which is anticipated to occur in the first half of 2022.

Embedded leases

OnIn June 3, 2016, we entered into a manufacturing agreement for the future commercial production of our ~~Lenti-D~~beti-cel and ~~LentiGlobin product candidates~~eli-cel drug products with a contract manufacturing organization. Under this ~~12 year~~12-year agreement, the contract manufacturing organization will complete the design, construction, validation and process validation of the leased suites prior to anticipated commercial launch of the product candidates. During construction, we ~~were required to pay $12.5~~paid $12.0 million upon the achievement of certain contractual ~~milestones, and may pay up to $8.0 million in additional contractual milestones if we elect our option to lease additional suites.~~milestones. We paid $5.0 million for the achievement of the first and second contractual milestones during 2016 and paid $5.5 million for the third and fourth contractual milestones achieved during 2017. In March 2018, $1.5 million of the possible $2.0 million related to the fifth contractual milestone was achieved and was paid in the second quarter of 2018. ~~Given that construction~~Construction was completed in March 2018, and beginning in April 2018 we ~~will pay~~paid $5.1 million per year in fixed suite fees as well as certain fixed labor, raw materials, testing and shipping costs for manufacturing ~~services, and may pay additional suite fees if it elects its option to reserve or lease additional suites.~~

services. We may terminate this agreement at any time upon payment of a one-time termination fee and up to 24 months of fixed suite and labor fees. We concluded that this agreement contains an embedded lease as the suites are designated for our exclusive use during the term of the agreement. We concluded that we are not the deemed owner during construction nor is it a capital lease under ASC 840-10, Leases – Overall. As a result, in prior periods we accounted for the agreement as an operating lease under ASC 840 and recognized straight-line rent expense over the non-cancellable term of the embedded lease. As part of our adoption of ASC 842, effective January 1, 2019, we carried forward the existing lease classification under ASC 840. Additionally, we recorded a right-of-use asset and lease liability for this operating lease on the effective date and are recognizing rent expense on a straight-line basis throughout the remaining term of the embedded lease.

~~Contingent Consideration Related~~In November 2016, we entered into an agreement for clinical and commercial production of our beti-cel, lovo-cel, and eli-cel drug products with a contract manufacturing organization at an existing facility. We concluded that this agreement contains an embedded operating lease as the clean rooms are designated for our exclusive use during the term of the agreement. The term of the agreement is five years with subsequent three-year renewals at the mutual option of each party. As a result, we recorded a right-of-use asset and lease liability for this operating lease on the effective date of ASC 842, and are recognizing rent expense on a straight-line basis throughout the estimated remaining term of the embedded lease. In March 2020, we amended this agreement with the contract manufacturing organization, resulting in a lease modification. Under the terms of the

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amended arrangement, we may be required to ~~Business Combinations~~

pay annual maintenance and production fees of up to €16.5 million, depending on its production needs, and may terminate this agreement with twelve months’ notice and a one-time termination fee. The amendment also provides for an option to reserve an additional clean room for a one-time option fee plus annual maintenance fees. As a result, we increased the right-of-use asset and lease liability related to this embedded operating lease during the first quarter of 2020. In September 2021, we reassessed the term of this lease in light of the planned orderly wind down of its operations in Europe. As a result, we reduced the right-of-use asset and related lease liability to reflect a shortened expected term of the agreement. In November 2021, we exercised our right to terminate the lease agreement, and such termination will be effective in November 2022. Per the terms of the amended agreement, we were obligated to pay a one-time termination fee of €1.0 million upon termination, which was paid in December 2021. In connection with this termination, we will pay for services properly rendered through the ~~Pregenen acquisition, we agreed to make contingent cash payments~~date of termination in accordance with the contract manufacturing agreement, based on work completed and expenses incurred prior to the ~~former equity holders~~date of ~~Pregenen.~~ termination.

In ~~accordance~~July 2020, we entered into an agreement reserving manufacturing capacity with ~~accounting guidance~~a contract manufacturing organization. We concluded that this agreement contains an embedded lease as a controlled environment room at the facility is designated for ~~business combinations, these contingent cash payments are recorded as contingent consideration liabilities on~~ our ~~consolidated balance sheets at fair value. During~~exclusive use during the ~~second quarter~~term of ~~2017,~~the agreement, with the option to sublease the space if we provide notice that we will not utilize it for a ~~$5.0~~specified duration of time. Under the terms of the agreement, we will be required to pay up to $5.4 million ~~preclinical milestone was achieved, which resulted~~per year in ~~a $5.0 million payment~~maintenance fees in addition to the ~~former equityholders~~cost of ~~Pregenen~~any services provided and may terminate this agreement with eighteen months' notice. The term of the agreement is five years, with the option to extend, and the agreement commenced in March 2021. We classified the embedded lease as an operating lease and recognized a right-of-use asset and lease liability upon lease commencement in March 2021 and are recognizing rent expense on a straight-line basis throughout the remaining term of the embedded lease.

In February 2021, we entered into another agreement reserving manufacturing capacity with a contract manufacturing organization. We concluded that this agreement contains an embedded lease as a controlled environment room at the facility is designated for our exclusive use during the ~~third quarter~~term of ~~2017. The aggregate remaining undiscounted~~the agreement. We also have the option to sublease the space if we provide notice that we will not utilize it for a specified duration of time. Under the terms of the agreement, we are required to pay up to $4.2 million per year in maintenance fees and an immaterial amount of ~~contingent consideration potentially payable~~other annual fees as well as per-batch fees for the cost of any services provided. Either party may terminate this agreement with eighteen months’ notice at any time or with eight months’ notice after stage 5 has commenced. The term of the agreement is ~~$120.0 million.~~five years, with the option to extend. The agreement commenced in November 2021 and upon commencement we classified the embedded lease as an operating lease and recognized a right-of-use asset and lease liability. We ~~have not included these payments in~~recognize rent expense on a straight-line basis throughout the ~~table above because~~remaining term of the achievement and timing of these milestones is not fixed and determinable. As of December 31, 2019, and 2018, $8.0 million and $5.2 million, respectively, is reflected as a non-current liability in the consolidated balance sheet, which represents the fair value of our contingent consideration obligations as of this date.embedded lease.

Contingent Milestone and Royalty Payments

We also have obligations to make future payments to third parties that become due and payable on the achievement of certain development, regulatory and commercial milestones (such as the start of a clinical trial, filing of a BLA, approval by the FDA or product launch). We ~~have~~do not ~~included~~recognize these commitments onin our ~~balance sheet~~financial statements until they become payable or ~~in the table above because the achievement and timing of these milestones is not fixed and determinable.~~have been paid.

Based on our development plans as of December 31, ~~2019,~~2021, we may be obligated to make future development, regulatory and commercial milestone payments and royalty payments on future sales of specified products associated with our

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collaboration and license agreements. Payments under these agreements generally become due and payable upon achievement of such milestones or sales. Because the achievement of these milestones or sales had not occurred as of December 31, ~~2019,~~2021, such contingencies have not been recorded in our financial statements. Amounts related to contingent milestone payments and sales-based royalties are not yet considered contractual obligations as they are contingent upon success.

•Under a license agreement with Inserm-Transfert pursuant to which we license certain patents and know-how for use in adrenoleukodystrophy therapy, we will be required to make payments based upon development, regulatory and commercial milestones for any products covered by the in-licensed intellectual property. The maximum aggregate payments we may be obligated to pay for each of these milestone categories per product is €0.3, €0.2 and €1.6 million, respectively. We will also be required to pay a royalty on net sales of products covered by the in-licensed intellectual property in the low single digits. The royalty is subject to reduction for any third-party payments required to be made, with a minimum floor in the low single digits.

•Under a license agreement with Institut Pasteur pursuant to which we license certain patents for use in ex vivo gene therapy, we will be required to make payments per product covered by the in-licensed intellectual property upon the achievement of development and regulatory milestones, depending on the indication and the method of treatment. The maximum aggregate payments we may be obligated to pay for each of these milestone categories per product is €1.5 and €2.0 million, respectively. We will also be required to pay a royalty on net sales of products covered by the ~~in-licensed~~in-

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licensed intellectual property in the low single digits, which varies slightly depending on the indication of the product. We have the right to sublicense our rights under this agreement, and we will be required to pay a percentage of such license income varying from the low single digits to mid-range double digits depending on the nature of the sublicense and stage of development. We are required to make an annual maintenance payment, which is creditable against royalty payments on a year-by-year basis. On April 1, 2015, we amended this license agreement with Institut Pasteur, which resulted in a payment of €3.0 million that was paid during the second quarter of 2015. ~~During the year ended December 31, 2019 we paid Institut Pasteur €0.5 million in connection with amounts owed to us by sublicensees and €0.5 million for milestones reached.~~

•Under a license agreement with the Board of Trustees of the Leland Stanford Junior University ~~or Stanford,~~("Stanford") pursuant to which we license the HEK293T cell line for use in gene therapy products, we are required to pay a royalty on net sales of products covered by the in-licensed intellectual property in the low single digits that varies with net sales. The royalty is reduced for each third-party license that requires payments by us with respect to a licensed product, provided that the royalty to Stanford is not less than a specified percentage that is less than one percent. We have been paying Stanford an annual maintenance fee, which will be creditable against our royalty payments.

•Under a license agreement with the Massachusetts Institute of Technology ~~or MIT,~~("MIT") pursuant to which we license various patents, we will be required to make a payment of $0.1 million based upon a regulatory filing milestone. We will also be required to pay a royalty on net sales of products covered by the in-licensed intellectual property by us or our sublicensees. The royalty is in the low single digits and is reduced for royalties payable to third parties, provided that the royalty to MIT is not less than a specified percentage that is less than one percent. We have the right to sublicense our rights under this agreement, and we will be required to pay a percentage of such license income varying from the mid-single digits to low double digits. We are required to pay MIT an annual maintenance fee based on net sales of licensed products, which is creditable against our royalty payments.

•Under a license agreement with Research Development Foundation pursuant to which we license patents that involve ~~lentiviral vectors,~~LVV, we will be required to make payments of $1.0 million based upon a regulatory milestone for each product covered by the in-licensed intellectual property. We will also be required to pay a royalty on net sales of products covered by the in-licensed intellectual property in the low single digits, which is reduced by half if during the ten years following first marketing approval the last valid claim within the licensed patent that covers the licensed product expires or ends. ~~During the year ended December 31, 2019 we paid Research Development Foundation $1.0 million upon receiving milestones reached for a product covered by in-licensed intellectual property.~~

•Under a license agreement with Biogen Inc., pursuant to which we license certain patents and patent applications related to our ide-cel and bb21217 product candidates, we will be required to make certain payments related to certain development milestone obligations and must report on our progress in achieving these milestones on a periodic basis. We may be obligated to pay up to $23.0 million in the aggregate for each licensed product upon the achievement of remaining milestones. Upon commercialization of our products covered by the in-licensed intellectual property, we will be obligated to pay a percentage of net sales as a royalty in the low single digits.

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•Under a license agreement with the National Institutes of Health, or NIH, pursuant to which we license certain patent applications related to our ide-cel and bb21217 product candidates, we have agreed to certain development and regulatory milestone obligations and must report on our progress in achieving these milestones on a periodic basis. We may be obligated to pay up to $9.7 million in the aggregate for a licensed product upon the achievement of these milestones. Upon commercialization of our products covered by the in-licensed intellectual property, we will be obligated to pay NIH a percentage of net sales as a royalty in the low single digits. The royalties payable under this license agreement are subject to reduction for any third party payments required to be made, with a minimum floor in the low single digits. During the year ended December 31, 2019 we paid NIH $0.9 million upon milestones reached for a product covered by in-licensed intellectual property.

•Under a license agreement with SIRION Biotech GmbH ~~or Sirion,~~("Sirion") pursuant to which we license certain patents directed to manufacturing related to our LentiGlobin product candidate, we will be required to make certain payments related to certain development milestone obligations and must report on our progress in achieving these milestones on a periodic basis. We may be obligated to pay up to $13.4 million in the aggregate for each product covered by the in-licensed intellectual property. Upon commercialization of our products covered by the in-licensed intellectual property, we will be obligated to pay Sirion a percentage of net sales as a royalty in the low single digits. The royalties payable under this license agreement are subject to reduction for any ~~third party~~third-party payments required to be made, with a minimum floor in the low single digits. ~~During the year ended December 31, 2019 we paid Sirion $4.0 million upon milestones reached for a product covered by in-licensed intellectual property.~~

Other Funding Commitments

We enter into contracts in the normal course of business with CROs for preclinical research studies and clinical trials, research supplies and other services and products for operating purposes. We have also entered into multi-year agreements with a manufacturing ~~partners~~partner in the United States (Henogen, previously Novasep, and ~~Europe (Brammer Bio,~~ now part of Thermo Fisher Scientific, Inc.~~, Novasep and SAFC Carlsbad, Inc., or SAFC, a subsidiary of MilliporeSigma)~~), which ~~are~~is partnering with us on production of ~~lentiviral vector across all of our programs.~~LVV for lovo-cel. In addition, we have entered into a multi-year ~~agreements~~agreement with Lonza Houston, Inc. ~~and apceth Biopharma, or apceth,~~ to produce drug product for ~~Lenti-D, LentiGlobin~~beti-cel and ~~bb21217.~~eli-cel. Currently, SAFC Carlsbad, Inc. ("SAFC", a subsidiary of MilliporeSigma), is the sole manufacturer of the ~~lentiviral vector~~LVV for eli-cel and ~~apceth is the sole manufacturer of the drug product to support commercialization of ZYNTEGLO in Europe for the treatment of TDT.~~beti-cel. In our manufacturing agreement with SAFC, we are required to provide rolling forecasts for products on a quarterly basis, a portion of which will be considered a binding, firm order, subject to a purchase commitment. In our manufacturing agreement with apceth,Minaris, we reserve production capacity for the manufacture of our drug product. ~~BMS manufactures drug product for ide-cel.~~Our total non-cancelable contractual obligations arising from these manufacturing agreements is $53.8 million, with $43.9 million of these obligations due within the next twelve months. We believe our team of technical personnel has extensive manufacturing, analytical and quality experience as well as strong project management discipline to effectively oversee these contract manufacturing and testing activities, and to compile manufacturing and quality information for our regulatory submissions and potential commercial launch. We are engaging with apheresis and infusion centers, which we refer to as qualified treatment centers, that will be the centers for collection of HSCs from the patient and for infusion of drug product to the patient. For the treatment of patients with our drug product in the commercial setting, we are entering into agreements with participating qualified treatment centers in the jurisdictions where we plan to commercialize our products. These contracts generally provide for termination on notice. Wherever contracts include stipulated commitment payments, we have included such payments in the table of contractual obligations and commitments.

~~Off-Balance Sheet Arrangements~~

~~As of December 31, 2019, we did not have any off-balance sheet arrangements as defined in the rules and regulations of the SEC.~~

Table of Contents

Item 7A. Quantitative and Qualitative Disclosures About Market Risks

We are exposed to market risk related to changes in interest rates. As of December 31, ~~2019~~2021 and ~~2018,~~2020, we had cash, cash equivalents and marketable securities of ~~$1.24 billion~~$396.6 million and ~~$1.89 billion,~~$741.7 million, respectively, primarily invested in U.S. ~~Treasury securities, U.S.~~ government agency securities and treasuries, equity securities, ~~federally insured certificates of deposit,~~ corporate bonds, commercial paper 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~~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 December 31, ~~2019,~~2021, the net fair value of our interest-sensitive marketable securities would have resulted in a hypothetical decline of ~~$4.0~~$1.8 million.

Item 8. Financial Statements and Supplementary Data

The financial statements required to be filed pursuant to this Item 8 are appended to this report. An index of those financial statements is found in Item 15.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. 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 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 13(a)- 15(e) and 15(d)- 15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this Annual Report on Form 10-K. 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.~~effective at the reasonable assurance level.

Management’s Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial ~~reporting. Internal control over financial~~ reporting, as such term is defined in Rules 13(a)-15(f) and 15(d)-15(f) ~~promulgated~~ under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

•~~Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;~~

•Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

•~~Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.~~Act.

Under the supervision and with the participation of management, including our principal executive and financial officers, we assessed our internal control over financial reporting as of December 31, ~~2019,~~2021, based on criteria for effective internal control over financial reporting established in Internal Control — Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Our management’s assessment of the effectiveness of our internal control over financial reporting included testing and evaluating the design and operating effectiveness of our internal controls. In our management’s opinion, we have maintained effective internal control over financial reporting as of December 31, ~~2019,~~2021, based on criteria established in the COSO 2013 framework.

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~~Table of Contents~~

The effectiveness of our internal control over financial reporting as of December 31, ~~2019~~2021 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is included herein.

~~Inherent Limitations~~

Table of ~~Internal Controls~~Contents

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting, as such term is defined in Rules 13(a)-15(f) and 15(d)-15(f) promulgated under the Securities Exchange Act of 1934, during the fourth quarter of ~~2019~~2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of bluebird bio, Inc.

Opinion on Internal Control over Financial Reporting

We have audited bluebird bio, Inc.’s internal control over financial reporting as of December 31, ~~2019,~~2021, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, bluebird bio, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, ~~2019,~~2021, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, ~~2019~~2021 and ~~2018,~~2020, the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for each of the three years in the period ended December 31, ~~2019,~~2021, and the related notes and our report dated ~~February 18, 2020~~March 4, 2022 expressed an unqualified opinion ~~thereon.~~thereon that included an explanatory paragraph regarding the Company’s ability to continue as a going concern.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Boston, Massachusetts

~~February 18, 2020~~

March 4, 2022

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Item 9B. Other Information

Our policy governing transactions in our securities by our directors, officers, and employees permits our officers, directors and certain other persons to enter into trading plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. We have been advised that none of our ~~Chief Business Officer, Joanne Smith-Farrell, has~~officers have entered into a trading ~~plan~~plans covering periods after the date of this annual report on Form 10-K in accordance with Rule 10b5-1 and our policy governing transactions in our securities. Generally, under these trading plans, the individual relinquishes control over the transactions once the trading plan is put into place. Accordingly, sales under these plans may occur at any time, including possibly before, simultaneously with, or immediately after significant events involving our company. We do not undertake to report Rule 10b5-1 trading plans that may be adopted by any officers or directors in the future, or to report any modifications or termination of any publicly announced trading plan, except to the extent required by law.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance

Incorporated by reference from the information in our Proxy Statement for our ~~2020~~2022 Annual Meeting of Stockholders, which we will file with the SEC within 120 days of the end of the fiscal year to which this Annual Report on Form 10-K relates.

Item 11. Executive Compensation

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 13. Certain Relationships and Related Transactions and Director Independence

Item 14. Principal Accountant Fees and Services

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PART IV

Item 15. Exhibits and Financial Statement Schedules

(a)(1) Financial Statements.

The response to this portion of Item 15 is set forth under Item 8 above.

(a)(2) Financial Statement Schedules.

All schedules have been omitted because they are not required or because the required information is given in the Consolidated Financial Statements or Notes thereto set forth under Item 8 above.

(a)(3) Exhibits.

See the Exhibit Index immediately before the signature page of this Annual Report on Form 10-K. The exhibits listed in the Exhibit Index are filed or incorporated by reference as part of this Annual Report on Form 10-K.

Item 16. Form 10-K Summary

Not applicable.

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bluebird bio, Inc.

Index to Consolidated Financial Statements


			Pages

Report of Independent Registered Public Accounting Firm (PCAOB ID: 42)			F-2

Consolidated Balance Sheets			F-54

Consolidated Statements of Operations and Comprehensive Loss			F-65

Consolidated Statements of Stockholders’ Equity			F-76

Consolidated Statements of Cash Flows			F-87

Notes to Consolidated Financial Statements			F-98

F-1

Table of Contents

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of bluebird bio, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of bluebird bio, Inc. (the Company) as of December 31, ~~2019~~2021 and ~~2018,~~2020, the related consolidated statements of operations and comprehensive loss, stockholders’ equity and cash flows for each of the three years in the period ended December 31, ~~2019,~~2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, ~~2019~~2021 and ~~2018,~~2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, ~~2019,~~2021, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, ~~2019,~~2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated ~~February 18, 2020~~March 4, 2022 expressed an unqualified opinion thereon.

~~Adoption of ASU No. 2016-02~~The Company's Ability to Continue as a Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 21 to the ~~consolidated~~ financial statements, the Company ~~changed its method~~has suffered recurring losses from operations and has stated that substantial doubt exists about the Company’s ability to continue as a going concern. Management's evaluation of ~~accounting for leases in 2019 due to~~ the ~~adoption of Accounting Standards Update (ASU) No. 2016-02,~~ ~~Leases~~ ~~(Topic 842),~~events and ~~the related amendments.~~

~~Adoption of ASU No. 2014-09~~

~~As discussed~~conditions and management’s plans regarding these matters are also described in Note ~~2 to the~~1. The consolidated financial statements do not include any adjustments that might result from the ~~Company changed its method~~outcome of ~~accounting for revenue in 2018 due to the adoption of ASU No. 2014-09,~~ ~~Revenue from Contracts with Customers~~ ~~(Topic 606), and the related amendments.~~this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit ~~matters~~matter communicated below ~~are matters~~is a matter arising from the current period audit of the financial statements that ~~were~~was communicated or required to be communicated to the audit committee and that: (1) ~~relate~~relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit ~~matters~~matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit ~~matters~~matter below, providing a separate ~~opinions~~opinion on the critical audit ~~matters~~matter or on the ~~accounts~~account or ~~disclosures~~disclosure to which ~~they relate.~~it relates.

F-2

Table of Contents


						~~Collaboration Arrangements~~
~~Description of the Matter~~						As discussed in Notes 2 and 11 to the consolidated financial statements, the Company recognizes amounts received pursuant to collaboration arrangements in which both parties are active participants in the activities and exposed to significant risks and rewards dependent on the commercial success of those activities as a component of collaboration revenue, with an offset for amounts owed to the collaboration partner. Where amounts owed to a collaboration partner exceed the Company’s collaboration revenues from the collaboration partner in a quarterly period, such amounts are classified as research and development expense. The process of recognizing collaboration revenue (expense) includes the identification of costs incurred by the Company that relate to a particular collaboration arrangement, evaluating the nature of such costs, and applying the terms of the respective collaborative arrangement to determine the portion of such costs that are the responsibility of the collaboration partner. The process also includes an assessment of the costs incurred and reported by the collaboration partner, as well as the determination of the appropriate financial statement presentation in each quarterly reporting period. The Company recorded collaboration revenue of $5.7 million, net of collaborative partner amounts, and collaboration expense (included as a component of research and development expense) of $32.4 million, net of collaboration revenue, for the year ended December 31, 2019. Auditing collaboration revenue (expense) is especially complex due to the fact that the contractual terms of the Company’s collaboration arrangements are complicated, the information necessary to determine collaboration revenue (expense) is accumulated from multiple sources and, in certain circumstances, the determination of (i) whether amounts incurred are eligible to be included in the determination of collaboration revenue (expense) or (ii) the portion of costs incurred that are the responsibility of the collaboration partner requires judgment.
~~How We Addressed the Matter in Our Audit~~						We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls that addressed the information used in and the identified risks related to the Company’s process for recording collaboration revenue (expense). To test the Company’s collaboration revenue (expense), our procedures included, among others, inspecting the Company’s collaboration agreements, comparing the Company’s computations of collaboration revenue (expense) to the contractual terms of its collaboration arrangements, testing the accuracy and completeness of the underlying data used in the computation of collaboration revenue (expense), and evaluating the costs included in the computation of collaboration revenue (expense) based on the nature of the costs and the relevant contractual terms. We also obtained information directly from certain of the Company’s collaboration partners regarding the costs incurred by the collaboration partner during the period and agreed those amounts to the Company’s computation of collaboration revenue (expense).
						Accrued Clinical and Contract Research Organization Costs and Manufacturing Costs
Description of the Matter						As discussed in ~~Notes~~Note 2 ~~and 7~~ to the consolidated financial statements, the Company records costs for clinical trial activities and manufacturing activities based upon estimates of costs incurred through the balance sheet date that have yet to be invoiced by the contract research organizations, clinical study sites, laboratories, consultants, contract manufacturing organizations or other vendors. The ~~Company's~~Company’s accruals for clinical and contract research organization costs and manufacturing costs totaled ~~$39.9~~$33.5 million at December 31, ~~2019.~~2021. Auditing the Company’s accruals for clinical and contract research organization costs and manufacturing costs is especially complex due to the fact that information necessary to estimate the accruals is accumulated from multiple sources. In addition, in certain circumstances, the determination of the nature and level of services that have been received during the reporting period requires judgment because the timing and pattern of vendor invoicing does not correspond to the level of services provided and there may be delays in invoicing from clinical study sites and other vendors.

~~F-3~~

~~Table of Contents~~


How We Addressed the Matter in Our Audit						We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls that addressed the information used in and the identified risks related to the Company’s process for recording accrued clinical and contract research organization costs and manufacturing costs. To test the completeness and valuation of the accruals for clinical and contract research organization costs and manufacturing costs, we performed audit procedures that included, among others, reading certain contracts with contract research organizations, contract manufacturing organizations, and clinical study sites to evaluate financial and certain other contractual terms, and testing the accuracy and completeness of the underlying data used in the accrual computations. We also compared the progress of clinical trials and the progress of manufacturing completed through the balance sheet date with information provided by the Company’s operations personnel that oversee the clinical trials and manufacturing activities. Additionally, we obtained information ~~directly~~ from certain clinical study sites and contract manufacturing organizations which indicated the progress of clinical trials and the progress of manufacturing completed through the balance sheet date and compared that to the Company’s accrual computations.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2012.

Boston, Massachusetts

~~February 18, 2020~~

March 4, 2022

~~F-4~~F-3

Table of Contents

bluebird bio, Inc.

Consolidated Balance Sheets

(in thousands, except per share amounts)

As of December 31,
2019 2018
Assets
Current assets:
Cash and cash equivalents $ 327,214 $ 402,579
Marketable securities 779,246 982,725
Prepaid expenses 32,888 19,762
Receivables and other current assets 12,826 13,931
Total current assets 1,152,174 1,418,997
Marketable securities 131,506 506,123
Property, plant and equipment, net 151,176 246,622
Intangible assets, net 14,326 13,169
Goodwill 13,128 13,128
Operating lease right-of-use assets 185,885 —
Restricted cash and other non-current assets 79,229 44,805
Total assets $ 1,727,424 $ 2,242,844
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 42,995 $ 17,831
Accrued expenses and other current liabilities 141,556 99,393
Operating lease liability, current portion 20,175 —
Deferred revenue, current portion 8,474 18,602
Collaboration research advancement, current portion 10,380 10,605
Total current liabilities 223,580 146,431
Deferred revenue, net of current portion 9,791 16,338
Collaboration research advancement, net of current portion 27,834 33,349
Contingent consideration 7,977 5,230
Operating lease liability, net of current portion 170,812 —
Financing lease obligation, net of current portion — 153,319
Other non-current liabilities 2,437 3,107
Total liabilities $ 442,431 $ 357,774
Commitments and contingencies Note 9
Stockholders' equity:
Preferred stock, $0.01 par value, 5,000 shares authorized; 0 shares issued and
outstanding at December 31, 2019 and December 31, 2018
$ — $ —
Common stock, $0.01 par value, 125,000 shares authorized; 55,368 and 54,738 shares
issued and outstanding at December 31, 2019 and December 31, 2018, respectively
554 547
Additional paid-in capital 3,568,184 3,386,958
Accumulated other comprehensive loss (1,893) (3,627)
Accumulated deficit (2,281,852) (1,498,808)
Total stockholders' equity 1,284,993 1,885,070
Total liabilities and stockholders' equity $ 1,727,424 $ 2,242,844


	As of December 31,
	2021		2020
Assets
Current assets:
Cash and cash equivalents	$	161,160	$	260,629
Marketable securities	138,343		419,599
Prepaid expenses	25,628		25,718
Inventory	—		10,698
Receivables and other current assets	11,389		3,872
Current assets of discontinued operations	—		495,021
Total current assets	336,520		1,215,537
Marketable securities	97,114		61,445
Property, plant and equipment, net	9,706		17,373
Intangible assets, net	—		4,397
Goodwill	5,646		5,646
Operating lease right-of-use assets	91,532		67,563
Restricted cash and other non-current assets	53,277		65,727
Non-current assets of discontinued operations	—		343,564
Total assets	$	593,795	$	1,781,252
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	25,883	$	13,811
Accrued expenses and other current liabilities	103,958		98,190
Operating lease liability, current portion	23,152		9,711
Current liabilities of discontinued operations	—		81,876
Total current liabilities	152,993		203,588
Operating lease liability, net of current portion	66,432		55,707
Other non-current liabilities	93		5,759
Non-current liabilities of discontinued operations	—		161,142
Total liabilities	$	219,518	$	426,196
Commitments and contingencies Note 11	0		0
Stockholders' equity:
Preferred stock, $0.01 par value, 5,000 shares authorized; 0 shares issued and outstanding at December 31, 2021 and December 31, 2020	$	—	$	—
Common stock, $0.01 par value, 125,000 shares authorized; 71,115 and 66,432 shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively	711		665
Additional paid-in capital	4,096,402		4,260,443
Accumulated other comprehensive loss	(2,911)		(5,505)
Accumulated deficit	(3,719,925)		(2,900,547)
Total stockholders' equity	374,277		1,355,056
Total liabilities and stockholders' equity	$	593,795	$	1,781,252

See accompanying notes to consolidated financial statements.

F-4

~~F-5~~

Table of Contents

bluebird bio, Inc.

Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except per share amounts)

Year ended December 31,
2019 2018 2017
Revenue:
Collaboration revenue $ 36,469 $ 52,353 $ 22,207
License and royalty revenue 8,205 2,226 13,220
Total revenues 44,674 54,579 35,427
Operating expenses:
Research and development 582,413 448,589 273,040
Selling, general and administrative 271,362 174,129 93,550
Cost of license and royalty revenue 2,978 885 1,527
Change in fair value of contingent consideration 2,747 2,999 (525)
Total operating expenses 859,500 626,602 367,592
Loss from operations (814,826) (572,023) (332,165)
Interest income (expense), net 34,761 14,624 (2,001)
Other (expense) income, net (10,088) 1,961 (1,267)
Loss before income taxes (790,153) (555,438) (335,433)
Income tax benefit (expense) 545 (187) (210)
Net loss (789,608) $ (555,625) $ (335,643)
Net loss per share - basic and diluted (14.31) $ (10.68) $ (7.71)
Weighted-average number of common shares used in computing net loss per
   share - basic and diluted
55,191 52,032 43,535
Other comprehensive income (loss):
Other comprehensive income (loss), net of tax expense of $1.2,
  $0.4 and $0.0 million for the years ended December 31, 2019,
  2018 and 2017, respectively
1,734 578 (3,056)
Total other comprehensive income (loss) 1,734 578 (3,056)
Comprehensive loss $ (787,874) $ (555,047) $ (338,699)


	Year ended December 31,
	2021		2020		2019
Revenue:
Product revenue	$	2,850	$	—	$	—
Other revenue	812		—		—
Total revenues	3,662		—		—
Operating expenses:
Research and development	319,946		319,309		327,119
Selling, general and administrative	209,969		239,950		235,844
Cost of product revenue	38,857		—		—
Restructuring expense	25,801		—		—
Total operating expenses	594,573		559,259		562,963
Loss from operations	(590,911)		(559,259)		(562,963)
Interest income, net	879		5,770		17,380
Other income (expense), net	27,652		(6,881)		(9,984)
Loss before income taxes	(562,380)		(560,370)		(555,567)
Income tax (expense) benefit	(258)		(686)		545
Net loss from continuing operations	(562,638)		(561,056)		(555,022)
Net loss from discontinued operations	(256,740)		(57,639)		(234,586)
Net loss	$	(819,378)	$	(618,695)	$	(789,608)
Net loss per share from continuing operations—basic and diluted	$	(8.16)	$	(9.02)	$	(10.06)
Net loss per share from discontinued operations—basic and diluted	$	(3.73)	$	(0.93)	$	(4.25)
Net loss per share—basic and diluted	$	(11.89)	$	(9.95)	$	(14.31)
Weighted-average number of common shares used in computing net loss per share—basic and diluted	68,910		62,178		55,191
Other comprehensive income (loss):
Other comprehensive income (loss), net of tax benefit (expense) of $0.0 million, $0.0 million and $(1.2) million for the years ended December 31, 2021, 2020 and 2019, respectively	2,364		(3,612)		1,734
Total other comprehensive income (loss)	2,364		(3,612)		1,734
Comprehensive loss	$	(817,014)	$	(622,307)	$	(787,874)

See accompanying notes to consolidated financial statements.

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bluebird bio, Inc.

Consolidated Statements of Stockholders’ Equity

(in thousands)

Common stock Additional
paid-in
capital Accumulated
other
comprehensive
loss Accumulated
deficit Total
stockholders'
equity
Shares Amount
Balances at December 31, 2016 40,691 $ 407 $ 1,447,856 $ (1,149) $ (577,674) $ 869,440
Retroactive adjustment to beginning
accumulated deficit and additional
paid-in capital resulting from
adoption of ASU 2016-09 — — 491 — (491) —
Vesting of restricted stock units 88 1 (1) — — —
Issuance of common stock upon
   public offering, net of issuance
   costs of $53,487
7,625 76 1,006,494 — — 1,006,570
Exercise of stock options 981 10 31,676 — — 31,686
Purchase of common stock under
ESPP 21 — 1,153 — — 1,153
Stock-based compensation — — 53,282 — — 53,282
Other comprehensive loss — — — (3,056) — (3,056)
Net loss — — — — (335,643) (335,643)
Balances at December 31, 2017 49,406 $ 494 $ 2,540,951 $ (4,205) $ (913,808) $ 1,623,432
Adjustment to beginning
accumulated deficit from adoption
of ASU 2014-09 — — — — (29,375) (29,375)
Vesting of restricted stock units 152 2 (2) — — —
Issuance of common stock upon
   public offering, net of issuance
   costs of $34,588
4,169 42 649,326 — — 649,368
Issuance of common stock to
Regeneron 420 4 54,480 — — 54,484
Exercise of stock options 575 5 29,763 — — 29,768
Purchase of common stock under
ESPP 16 — 1,604 — — 1,604
Stock-based compensation — — 110,836 — — 110,836
Other comprehensive income — — — 578 — 578
Net loss — — — — (555,625) (555,625)
Balances at December 31, 2018 54,738 $ 547 $ 3,386,958 $ (3,627) $ (1,498,808) $ 1,885,070
Adjustment to beginning
accumulated deficit from adoption
of ASU 2016-02 — — — — 6,564 6,564
Vesting of restricted stock units 251 3 (3) — — —
Exercise of stock options 354 4 17,834 — — 17,838
Purchase of common stock under
ESPP 25 — 2,766 — — 2,766
Stock-based compensation — — 160,629 — — 160,629
Other comprehensive income — — — 1,734 — 1,734
Net loss — — — — (789,608) (789,608)
Balances at December 31, 2019 55,368 $ 554 $ 3,568,184 $ (1,893) $ (2,281,852) $ 1,284,993


	Common stock			Additional paid-in capital		Accumulated other comprehensive loss		Accumulated deficit		Total stockholders' equity
	Shares	Amount
Balances at December 31, 2018	54,738	$	547	$	3,386,958	$	(3,627)	$	(1,498,808)	$	1,885,070
Adjustment to beginning accumulated deficit from adoption of ASU 2016-02	—	—		—		—		6,564		6,564
Vesting of restricted stock units	251	3		(3)		—		—		—
Exercise of stock options	354	4		17,834		—		—		17,838
Purchase of common stock under ESPP	25	—		2,766		—		—		2,766
Stock-based compensation	—	—		160,629		—		—		160,629
Other comprehensive income	—	—		—		1,734		—		1,734
Net loss	—	—		—		—		(789,608)		(789,608)
Balances at December 31, 2019	55,368	554		3,568,184		(1,893)		(2,281,852)		1,284,993
Issuance of common stock upon public offering, net of issuance costs of $33,645	10,455	105		541,431		—		—		541,536
Vesting of restricted stock units	434	4		(4)		—		—		—
Exercise of stock options	95	1		1,846		—		—		1,847
Purchase of common stock under ESPP	80	1		3,774		—		—		3,775
Stock-based compensation	—	—		145,212		—		—		145,212
Other comprehensive loss	—	—		—		(3,612)		—		(3,612)
Net loss	—	—		—		—		(618,695)		(618,695)
Balances at December 31, 2020	66,432	665		4,260,443		(5,505)		(2,900,547)		1,355,056
Vesting of restricted stock units	534	5		(5)		—		—		—
Exercise of stock options	218	2		1,486		—		—		1,488
Purchase of common stock under ESPP	120	1		2,580		—		—		2,581
Issuance of common stock for private equity placement	2,273	23		37,477		—		—		37,500
Issuance of pre-funded warrants	—	—		37,477		—		—		37,477
Issuance of unrestricted stock awards to settle accrued employee compensation	1,538	15		25,059		—		—		25,074
Stock-based compensation	—	—		110,260		—		—		110,260
Distribution of 2seventy bio	—	—		(378,375)		230		—		(378,145)
Other comprehensive income	—	—		—		2,364		—		2,364
Net loss	—	—		—		—		(819,378)		(819,378)
Balances at December 31, 2021	71,115	$	711	$	4,096,402	$	(2,911)	$	(3,719,925)	$	374,277

See accompanying notes to consolidated financial statements.

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bluebird bio, Inc.

Consolidated Statements of Cash Flows

(in thousands)

Year ended December 31,
2019 2018 2017
Cash flows from operating activities:
Net loss $ (789,608) $ (555,625) $ (335,643)
Adjustments to reconcile net loss to net cash used in operating
activities:
Change in fair value of contingent consideration 2,747 2,999 (2,189)
Depreciation and amortization 17,434 17,158 13,538
Stock-based compensation expense 160,629 110,836 53,282
Unrealized loss (gain) on equity securities 9,297 (2,154) —
Other non-cash items (11,000) (5,880) 3,153
Changes in operating assets and liabilities:
Prepaid expenses and other assets (13,913) (24,288) (20,092)
Operating lease right-of-use assets 22,496 — —
Accounts payable 23,600 3,614 526
Accrued expenses and other liabilities 46,291 37,832 5,848
Operating lease liabilities (9,944) — —
Deferred revenue (16,674) (41,872) 1,024
Collaboration research advancement (5,739) 43,954 —
Net cash used in operating activities (564,384) (413,426) (280,553)
Cash flows from investing activities:
Purchase of property, plant and equipment (71,028) (55,737) (62,242)
Purchases of marketable securities (756,570) (1,517,982) (686,204)
Proceeds from maturities of marketable securities 1,340,629 894,284 431,816
Purchase of intangible assets (5,224) — —
Net cash provided by (used in) investing activities 507,807 (679,435) (316,630)
Cash flows from financing activities:
Cash paid for contingent purchase price consideration — — (1,074)
Reimbursement of assets under financing lease obligation — 3,098 38,021
Payments on financing lease obligation — (1,017) (574)
Proceeds from public offering of common stock, net of issuance costs — 649,368 1,006,570
Proceeds from exercise of stock options and ESPP contributions 21,187 31,759 33,231
Proceeds from issuance of common stock to Regeneron — 54,484 —
Net cash provided by financing activities 21,187 737,692 1,076,174
(Decrease) increase in cash, cash equivalents and restricted cash (35,390) (355,169) 478,991
Cash, cash equivalents and restricted cash at beginning of year 417,099 772,268 293,277
Cash, cash equivalents and restricted cash at end of year $ 381,709 $ 417,099 $ 772,268
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents $ 327,214 $ 402,579 $ 758,505
Restricted cash included in receivables and other current assets $ — $ 364 $ —
Restricted cash included in restricted cash and other non-current assets $ 54,495 $ 14,156 $ 13,763
Total cash, cash equivalents and restricted cash $ 381,709 $ 417,099 $ 772,268
Supplemental cash flow disclosures:
Assets acquired under financing lease obligation $ — $ — $ 3,271
Purchases of property, plant and equipment included in accounts
payable and accrued expenses
$ 5,286 $ 7,449 $ 2,566
Right-of-use assets obtained in exchange for operating lease liabilities $ 23,939 $ — $ —
Cash paid during the period for interest $ — $ 15,494 $ 11,411
Cash paid during the period for income taxes $ 637 $ 358 $ 91


	Year ended December 31,
	2021		2020		2019
Cash flows from operating activities:
Net loss	$	(819,378)	$	(618,695)	$	(789,608)
Adjustments to reconcile net loss to net cash used in operating activities:
Change in fair value of contingent consideration	387		(6,468)		2,747
Depreciation and amortization	19,649		19,356		17,434
Stock-based compensation expense	127,915		156,631		160,629
Unrealized loss (gain) on equity securities	(29,356)		7,217		9,297
Excess inventory reserve	29,924		—		—
Other non-cash items	17,235		458		(11,000)
Changes in operating assets and liabilities:
Prepaid expenses and other assets	(5,289)		(10,089)		(13,913)
Inventory	(18,447)		—		—
Operating lease right-of-use assets	30,148		21,281		22,496
Accounts payable	9,286		(20,100)		23,600
Accrued expenses and other liabilities	40,025		4,835		29,617
Operating lease liabilities	(32,142)		(17,380)		(9,944)

Collaboration research advancement	(5,596)		(7,397)		(5,739)
Net cash used in operating activities	(635,639)		(470,351)		(564,384)
Cash flows from investing activities:
Purchase of property, plant and equipment	(14,503)		(28,986)		(71,028)
Purchases of marketable securities	(451,391)		(1,003,525)		(756,570)
Proceeds from maturities of marketable securities	895,333		918,288		1,340,629
Proceeds from sales of marketable securities	31,318		29,878		—
Proceeds from sale of Durham, North Carolina manufacturing facility	110,300		—		—
Purchase of intangible assets	(8,500)		—		(5,224)
Net cash provided by (used in) investing activities	562,557		(84,345)		507,807
Cash flows from financing activities:
Net cash transferred to 2seventy bio at separation	(174,284)		—		—
Proceeds from public offering of common stock, net of issuance costs	—		541,536		—
Proceeds from issuance of common stock and warrants	74,975		—		—
Proceeds from exercise of stock options and ESPP contributions	5,355		5,179		21,187
Net cash provided by (used in) financing activities	(93,954)		546,715		21,187
Decrease in cash, cash equivalents and restricted cash	(167,036)		(7,981)		(35,390)
Cash, cash equivalents and restricted cash at beginning of year	373,728		381,709		417,099
Cash, cash equivalents and restricted cash at end of year	$	206,692	$	373,728	$	381,709
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	161,160	$	317,705	$	327,214
Restricted cash included in receivables and other current assets	$	2,282	$	1,500	$	—
Restricted cash included in restricted cash and other non-current assets	$	43,250	$	54,523	$	54,495
Total cash, cash equivalents and restricted cash	$	206,692	$	373,728	$	381,709
Supplemental cash flow disclosures:
Purchases of property, plant and equipment included in accounts payable and accrued expenses	$	411	$	2,854	$	5,286
Right-of-use assets obtained in exchange for operating lease liabilities	$	202,221	$	19,414	$	23,939
Reduction of right of use asset and associated lease liability due to lease reassessment	$	(9,004)	$	—	$	—
Issuance of unrestricted stock awards to settle accrued employee compensation	$	25,074	$	—	$	—
Cash paid during the period for interest	$	—	$	—	$	—
Cash paid during the period for income taxes	$	617	$	361	$	637

See accompanying notes to consolidated financial statements.

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bluebird bio, Inc.

Notes to Consolidated Financial Statements

For the Years Ended December 31, ~~2019, 2018~~2021, 2020 and ~~2017~~2019

1. Description of the business

bluebird bio, Inc. (the “Company” or “bluebird”) was incorporated in Delaware on April 16, 1992, and is headquartered in Cambridge, Massachusetts. The Company is a biotechnology company committed to researching, developing and commercializing potentially transformative gene therapies for severe genetic ~~diseases and cancer.~~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.

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, sickle cell disease ("SCD"), and cerebral adrenoleukodystrophy ("CALD") in that market. 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 forecasted consumption levels driven by sales forecasts.

In November 2021, the Company completed the separation of its severe genetic disease and oncology programs into 2 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 intends to retain its severe genetic disease programs, with a focus on the U.S. market. The Company’s programs in severe genetic diseases include ~~its~~programs for β-thalassemia, SCD, and CALD. The Company also expects to make focused investments in research and development efforts on optimizing our existing programs as well as on pipeline programs in ~~β-thalassemia (TDT), sickle cell disease (SCD), and cerebral adrenoleukodystrophy (CALD).~~ severe genetic diseases.

The Company’s programs in oncology are focused on developing novel T cell-based immunotherapies, including chimeric antigen receptor (CAR) and T cell receptor (TCR) T cell therapies. Idecabtagene vicleucel, or ide-cel, and bb21217, which are product candidates in oncology under the Company’s collaboration arrangement with Bristol-Myers Squibbsevere genetic diseases include betibeglogene autotemcel ("~~BMS")~~beti-cel", formerly ~~Celgene Corporation (prior to its acquisition by BMS in November 2019)~~"LentiGlobin for β-thalassemia gene therapy") as a treatment for β-thalassemia; lovotibeglogene autotemcel ("lovo-cel") as a treatment for SCD; and elivaldogene autotemcel ("eli-cel", ~~are CAR T cell product candidates~~formerly "Lenti-D gene therapy") as a treatment for ~~the treatment~~CALD.

As of ~~multiple myeloma. Please refer to Note 11,~~ ~~Collaborative arrangements,~~ ~~for further discussion of the Company’s collaboration with BMS.~~

~~In June 2019, the Company received conditional marketing authorization from the European Commission for ZYNTEGLO~~^TM ~~gene therapy (autologous CD34+ cells encoding β~~^A-T87Q~~-globin gene), also referred to as LentiGlobin for TDT, for the treatment of patients 12 years and older with TDT who do not have a β~~⁰/β⁰ genotype, for whom hematopoietic stem cell (HSC) transplantation is appropriate but a human leukocyte-matched related HSC donor is not available. Since receiving conditional marketing authorization for ZYNTEGLO, the Company has continued to advance its commercial readiness activities. Through December 31, ~~2019,~~2021, the Company had ~~not generated any revenue from product sales.~~

~~In accordance with Accounting Standards Codification ("ASC") 205-40,~~ ~~Going Concern, the Company evaluated whether there are conditions~~cash, cash equivalents and ~~events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the date that the consolidated financial statements are issued.~~marketable securities of $396.6 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 ~~governmental agencies and~~ charitable foundations. As of December 31, ~~2019,~~2021, the Company had an accumulated deficit of ~~$2.28~~$3.72 billion. During the ~~year~~twelve months ended December 31, ~~2019,~~2021, the Company incurred a loss from continuing operations of ~~$789.6~~$562.6 million and used ~~$564.4~~$635.6 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 ~~the Company’s products~~beti-cel, eli-cel, and ~~product candidates~~lovo-cel, and the achievement of a level of revenues adequate to support its cost structure.

~~As of December 31, 2019,~~In accordance with Accounting Standards Codification (“ASC”) 205-40, Going Concern, the Company ~~had cash, cash equivalents~~evaluated whether there are conditions and ~~marketable securities~~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 consolidated financial statements are issued. This evaluation initially does not take into consideration the potential mitigating effect of ~~$1.24 billion.~~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 ~~Company expects its cash, cash equivalents and marketable securities~~mitigating effect of management’s plans, however, is only considered if both (1) it is probable that the plans will be ~~sufficient~~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 ~~fund current planned operations for~~continue as a going concern within one year after the date that these consolidated 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 sublease, and the potential sale of priority review vouchers cannot be considered probable at ~~least~~this time because these plans are not entirely within the ~~next twelve months from~~Company’s control nor have been approved by the Board of Directors as of the date of ~~issuance~~these consolidated financial statements.

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

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going concern for a period of one year after the date that these consolidated financial statements ~~though it may pursue~~are issued. Management's plans to alleviate the conditions that raise substantial doubt include 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 anticipated U.S. regulatory approvals of BLAs for beti-cel and eli-cel, and the pursuit of additional cash resources through public or private equity or debt ~~financings or by establishing additional collaborations with other companies. Management's expectations with respect~~financings. Management has concluded the likelihood that its plan to ~~its ability to fund current planned operations is based on estimates that are subject to risks and uncertainties. If actual results are different~~successfully obtain sufficient funding from management's estimates, the Company may need to seek additional strategic or financing opportunities sooner than would otherwise be expected. However, there is no guarantee that any of these strategic or financing opportunities will be executed or executed on favorable terms, and some could be dilutive to existing stockholders. If the Company is unable to obtain additional funding on a timely basis, it may be forced to significantly curtail, delay, or discontinue one or more of ~~its planned research~~these sources, or ~~development programs~~adequately reduce expenditures, while reasonably possible, is less than probable. Accordingly, 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 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 ~~be unable to expand its operations or otherwise capitalize on its commercialization~~the amounts and classification of ~~its product candidates.~~liabilities that might result from the outcome of the uncertainties described above.

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2. Summary of significant accounting policies and basis of presentation

Basis of presentation

The accompanying consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States (“GAAP”) ~~as found in the ASC and Accounting Standards Updates (“ASUs”) of the Financial Accounting Standards Board (“FASB”)~~. Any reference in these notes to applicable guidance is meant to refer to the authoritative United States GAAP as ~~found~~included in the ASC and ~~ASUs~~the Accounting Standards Updates (“ASUs”) of the ~~FASB.~~Financial Accounting Standards Board (“FASB”).

Certain items in the prior year’s consolidated financial statements have been reclassified to conform to the current presentation. ~~No subtotals~~The Company has presented its oncology business together with its manufacturing facility in ~~the prior year~~Durham, North Carolina as discontinued operations in its consolidated financial statements ~~were impacted by these reclassifications.~~for all periods presented (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.

Principles of consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. 2seventy bio, Inc. ("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.

Discontinued operations

The Company ~~continually assesses whether it is~~determined that the ~~primary beneficiary~~separation of its oncology business in November 2021 and the sale of its manufacturing facility in Durham, North Carolina in July 2021 represented multiple components of a ~~variable interest entity~~single disposal plan that met the criteria for classification as ~~changes~~a discontinued operation in accordance with ASC Subtopic 205-20, Discontinued Operations (“ASC 205-20”). Accordingly, the accompanying consolidated financial statements for all periods presented have been updated to ~~existing relationships or future transactions may result~~present the assets and liabilities associated with the oncology business and the manufacturing facility separately as discontinued operations on the consolidated balance sheets and the results of all discontinued operations reported as a separate component of loss in ~~consolidation or deconsolidation~~the consolidated statements of one or more collaborators or partners. In determining whether it is the primary beneficiary of an entity in which the Company has a variable interest, management applies a qualitative approach that determines whether the Company has both (1) the power to direct the economically significant activities of the entityoperations and ~~(2) the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to that entity.~~comprehensive loss (see Note 3, Discontinued operations).

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes. Actual results could materially differ from those estimates. Management considers many factors in selecting appropriate financial accounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of these financial statements. Management must apply significant judgment in this process. In addition, other factors may affect estimates, including: expected business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes and management must select an amount that falls within that range of reasonable estimates. This process may result in actual results differing materially from those estimated amounts used in the preparation of the financial statements.

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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, ~~contingent consideration,~~ stock-based compensation expense, accrued expenses, income taxes, the assets and liabilities and losses related to discontinued operationsand 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. In addition, estimates and judgments are used in the Company’s accounting for its revenue-generating arrangements, in particular as it relates to determining the standalone selling price of performance obligations, evaluating whether an option to acquire additional goods and services represents a material right, estimating the total transaction price, including estimating variable consideration and the probability of achieving future potential development and regulatory milestones, and the period of performance over which revenue may be recognized.

Foreign currency translation

The financial statements of the Company’s subsidiaries with functional currencies other than the U.S. dollar are translated into U.S. dollars using period-end exchange rates for assets and liabilities, historical exchange rates for stockholders’ equity and weighted average exchange rates for operating results. Translation gains and losses are included in accumulated other comprehensive income (loss) in stockholders’ equity. Foreign currency transaction gains and losses are included in other income (expense), net in the results of operations.

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Segment information

The Company operates in a single segment, focusing on researching, developing and commercializing potentially transformative gene therapies for severe genetic ~~diseases and cancer.~~diseases. Consistent with its operational structure, its chief operating decision maker manages and allocates resources at a global, consolidated level. Therefore, results of the Company's operations are reported on a consolidated basis for purposes of segment reporting. All material long-lived assets of the Company reside in the United States.

Cash and cash equivalents

The Company considers all highly liquid investments purchased with original final maturities of 90 days or less from the date of purchase to be cash equivalents. Cash ~~and cash~~ equivalents comprise marketable securities with maturities of less than 90 days when purchased. Cash equivalents are reported at fair value.

Marketable securities

The Company classifies marketable securities with a remaining maturity when purchased of greater than three months as available-for-sale. Marketable securities with a remaining maturity date greater than one year are classified as non-current. The Company’s marketable securities are maintained by investment managers and consist of U.S. ~~Treasury securities, U.S.~~ government agency securities and treasuries, equity securities, ~~certificates of deposit,~~ corporate bonds and commercial paper. Debt securities are carried at fair value with the unrealized gains and losses included in other comprehensive income (loss) as a component of stockholders’ equity until realized. Any premium arising at purchase is amortized to the earliest call date and any discount arising at purchase is accreted to maturity. Amortization and accretion of premiums and discounts are recorded in interest income, ~~and/or expense.~~net. Equity securities with readily determinable fair values are also carried at fair value with unrealized gains and losses included in other income (expense) ~~income,~~, net. Realized gains and losses on both debt and equity securities are determined using the specific identification method and are included in other income (expense), net.

The Company classifies equity securities with readily determinable fair values, which would be available for use in its current operations, as current assets even though the Company may not dispose of such marketable securities within the next 12 months. Equity securities are included in the balance of marketable securities on the Company's consolidated balance ~~sheet.~~sheets. The Company classifies marketable securities with a remaining maturity when purchased of greater than three months as available-for-sale. Marketable securities with a remaining maturity date greater than one year are classified as non-current assets.

IfEffective January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Statements (“ASU 2016-13” or “ASC 326”), using the effective date method. As the Company had never recorded any ~~adjustment~~other-than-temporary-impairment adjustments to its available-for-sale debt securities prior to the effective date, no transition provisions are applicable to the Company.

The Company assesses its available-for-sale debt securities under the available-for-sale debt security impairment model in ASC 326 as of each reporting date in order to determine if a portion of any decline in fair value ~~reflects~~below carrying value recognized on its available-for-sale debt securities is the result of a ~~decline~~credit loss. The Company records credit losses in ~~value of~~ the investment, the Company considers all available evidence to evaluate the extent to which the decline is “other-than-temporary” and, if so, marks the investment to market through a charge to the Company’s statementconsolidated statements of operations and comprehensive ~~loss.~~loss as credit loss expense within other income (expense), net, which is limited to the difference between the fair value and the amortized cost of the security. To date, the Company has not recorded any credit losses on its available-for-sale debt securities.

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Accrued interest receivable related to the Company's available-for-sale debt securities is presented within receivables and other current assets on the Company's consolidated balance sheets. The Company has elected the practical expedient available to exclude accrued interest receivable from both the fair value and the amortized cost basis of available-for-sale debt securities for the purposes of identifying and measuring any impairment. The Company writes off accrued interest receivable once it has determined that the asset is not realizable. Any write offs of accrued interest receivable are recorded by reversing interest income, recognizing credit loss expense, or a combination of both. To date, the Company has not written off any accrued interest receivables associated with its marketable securities.

Concentrations of credit risk and off-balance sheet risk

Financial instruments that subject the Company to credit risk primarily consist of cash and cash equivalents and available-for-sale securities. The Company maintains its cash and cash equivalent balances with high-quality financial institutions and, consequently, the Company believes that such funds are subject to minimal credit risk. The Company’s marketable securities, which primarily consist of U.S. ~~Treasury securities, U.S.~~ government agency securities ~~certificates of deposit,~~and treasuries, equity securities, corporate bonds and commercial paper, ~~and~~ potentially subject the Company to concentrations of credit risk. The Company has adopted an investment policy that limits the amounts the Company may invest in any one type of investment and requires all investments held by the Company to be at least AA+/Aa1 rated, thereby reducing credit risk exposure.

Fair value of financial instruments

The Company has certain financial assets and liabilities recorded at fair value which have been classified as Level 1, 2 or 3 within the fair value hierarchy as described in the accounting standards for fair value ~~measurements~~measurements:

Level 1—Fair values are determined utilizing quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2—Fair values are determined utilizing quoted prices for identical or similar assets or liabilities in active markets or other market observable inputs such as interest rates, yield curves and foreign currency spot rates.

Level 3—Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in

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determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Items measured at fair value on a recurring basis include marketable securities (see Note 3,4, Marketable securities, and Note 4, ~~Fair value measurements) and contingent consideration (see Note 4,~~5, Fair value measurements). The carrying amounts of accounts payable and accrued expenses approximate their fair values due to their short-term nature.

Business combinations

Business combinations are accounted for using the acquisition method of accounting. Using this method, the tangible and intangible assets acquired and the liabilities assumed are recorded as of the acquisition date at their respective fair values. The Company evaluates a business as an integrated set of activities and assets that is capable of being managed for the purpose of providing a return in the form of dividends, lower costs or other economic benefits and consists of inputs and processes that provide or have the ability to provide outputs. In an acquisition of a business, the excess of the fair value of the consideration transferred over the fair value of the net assets acquired is recorded as goodwill. In an acquisition of net assets that does not constitute a business, no goodwill is recognized.

~~The consolidated financial statements include the results of operations of an acquired business after the completion of the acquisition. See Note 4,~~ ~~Fair value measurements,~~ ~~for additional information.~~

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net assets acquired when accounted for using the acquisition method of accounting for business combinations. Goodwill is not amortized but is evaluated for impairment within the Company’s single reporting unit on an annual basis, during the fourth quarter, or more frequently if an event occurs or circumstances change that would more-likely-than-not reduce the fair value of the Company’s reporting unit below its carrying amount. ~~During the fourth quarter of 2019, the~~The Company ~~early adopted ASU 2017-04, which removes the second step of the goodwill impairment test. Under this ASU, the Company will now perform~~performs a one-step quantitative test and ~~record~~records the amount of goodwill impairment, if any, as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The Company has 0tnot recognized any impairment charges related to goodwill to date.

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Upon disposal of a portion of a reporting unit that constitutes a business, goodwill is assigned based on the relative fair values of the portion of the reporting unit being disposed and the portion of the reporting unit remaining. This approach requires a determination of the fair value of both the business to be disposed of and the business (or businesses) within the reporting unit that will be retained. As a result of the separation of the Company's oncology business and the sale of the Company's manufacturing facility in Durham, North Carolina, the Company assigned goodwill based on the relative fair value of the business to be disposed of, and such goodwill has been reclassified to discontinued operations.

Intangible assets, net

Intangible assets, net consist of ~~acquired core technology and~~ in-licensed rights with finite lives, net of accumulated amortization. The Company amortizes its intangible assets using the straight-line method over their estimated economic lives and periodically reviews for impairment.

~~Contingent consideration~~

~~Each reporting period,~~ During the third quarter of 2021, the Company ~~revalues~~recognized impairment charges related to intangible assets. In accordance with FASB ASC Topic 350, General Intangibles Other than Goodwill (“ASC 350”), the contingent consideration obligations associated with business combinations to their fair value and records within operating expenses increases in their fair value as contingent consideration expense and decreasesCompany reviewed its intangible assets for recoverability. During the third quarter of 2021, the Company determined that the intangible assets were impaired, resulting in the ~~fair value as contingent consideration income. Changes in contingent consideration result from changes in~~impairment of the ~~assumptions regarding probabilities of successful achievement of related milestones, the estimated timing in which the milestones may be achieved, and the discount rate used to estimate the fair~~remaining carrying value of the liability. Contingent consideration may change significantly as development of the Company’s programs in certain indications progress and additional data are obtained, impacting the Company’s assumptions. The assumptions used in estimating fair value require significant judgment. The use of different assumptions and judgments could result in a materially different estimate of fair value. See Note 4, ~~Fair value measurements,~~ ~~for additional information.~~intangible assets.

Property, plant and equipment

Property, plant and equipment is stated at cost. Maintenance and repairs that do not improve or extend the lives of the respective assets are expensed to operations as incurred. Depreciation and amortization is calculated using the straight-line method over the estimated useful lives of the assets, which are as follows:

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Asset						Estimated useful life
Building						40 years
Computer equipment and software						3 years
Furniture and fixtures						2-5 years
Laboratory equipment						2-5 years
Leasehold improvements						Shorter of the useful life or remaining lease term

~~Prior to the adoption of ASU 2016-02,~~ ~~Leases (Topic 842)~~ (“ASU 2016-02” or “ASC 842”), on January 1, 2019 (discussed further below), the Company recorded certain costs incurred and reported by a landlord as a building asset and corresponding financing lease obligation on the consolidated balance sheets. See Note 8, ~~Leases, for additional information.~~

Impairment of long-lived assets

The Company reviews long-lived assets when events or changes in circumstances indicate the carrying value of the assets may not be recoverable. Recoverability is measured by comparison of the book values of the assets to future net undiscounted cash flows that the assets are expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the book value of the assets exceed their fair value, which is measured based on the projected discounted future net cash flows arising from the assets.

Leases

Effective January 1, 2019, the Company adopted ASC 842 using the required modified retrospective approach and utilizing the effective date as its date of initial application. ~~As a result, prior periods are presented in accordance with the previous guidance in ASC 840, Leases (“ASC 840”).~~

At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present in the arrangement. Leases with a term greater than one year are recognized on the balance sheet as right-of-use assets and ~~short-term~~current and ~~long-term~~non-current lease liabilities, as applicable. ~~The Company does not have material financing leases.~~

Operating lease liabilities and their corresponding right-of-use assets are initially recorded based on the present value of lease payments over the expected remaining lease term. Certain adjustments to the right-of-use asset may be required for items such as incentives received. The interest rate implicit in lease contracts is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rate to discount lease payments, which reflects the fixed rate at which the Company could borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term, in a similar economic environment. To estimate its incremental borrowing rate, a credit rating applicable to the Company is estimated using a synthetic credit rating analysis since the Company does not currently have a rating agency-based credit rating. Prospectively, the Company will adjust the right-of-use assets for straight-line rent expense or any incentives received and remeasure the lease liability at the net present value using the same incremental borrowing rate that was in effect as of the lease commencement or transition date.

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The Company has elected not to recognize leases with an original term of one year or less on the balance sheet. The Company typically only includes an initial lease term in its assessment of a lease arrangement. Options to renew a lease are not included in the Company’s assessment unless there is reasonable certainty that the Company will renew.

Assumptions made by the Company at the commencement date are re-evaluated upon occurrence of certain events, including a lease modification. A lease modification results in a separate contract when the modification grants the lessee an additional right of use not included in the original lease and when lease payments increase commensurate with the standalone price for the additional right of use. When a lease modification results in a separate contract, it is accounted for in the same manner as a new lease.

~~ASC 842 transition practical expedients and application of transition provisions to leases at the transition date~~

The Company elected the following practical expedients, which must be elected as a package and applied consistently to all of its leases at the transition date (including those for which the entity is a lessee or a lessor): i) the Company did not reassess whether any expired or existing contracts are or contain leases; ii) the Company did not reassess the lease classification for any expired or existing leases (that is, all existing leases that were classified as operating leases in accordance with ASC 840 are

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classified as operating leases, and all existing leases that were classified as capital leases in accordance with ASC 840 are classified as finance leases); and iii) the Company did not reassess initial direct costs for any existing leases.

For leases that existed prior to the date of initial application of ASC 842 (which were previously classified as operating leases), a lessee may elect to use either the total lease term measured at lease inception under ASC 840 or the remaining lease term as of the date of initial application of ASC 842 in determining the period for which to measure its incremental borrowing rate. In transition to ASC 842, the Company utilized the remaining lease term of its leases in determining the appropriate incremental borrowing rates.

~~Application of ASC 842 policy elections to leases post adoption~~

~~The Company has made certain policy elections to apply to its leases executed post adoption, or subsequent to January 1, 2019, as further described below.~~

Entities may elect not to separate lease and non-lease components. Rather, entities would account for each lease component and related non-lease component together as a single lease component. The Company has elected to account for lease and non-lease components together as a single lease component for all underlying assets and allocate all of the contract consideration to the lease component only.

ASC 842 allows for the use of judgment in determining whether the assumed lease term is for a major part of the remaining economic life of the underlying asset and whether the present value of lease payments represents substantially all of the fair value of the underlying asset. The Company applies the bright line thresholds referenced in ASC 842-10-55-2 to assist in evaluating leases for appropriate classification. The aforementioned bright lines are applied consistently to the Company’s entire portfolio of leases.

Common stock warrants

The Company's common stock warrants are evaluated pursuant to ASC 480, Distinguishing Liabilities from Equity ("ASC 480"), and ASC 815, Derivatives and Hedging ("ASC 815"). Management classifies its freestanding warrants as (i) liabilities, if the warrant terms allow settlement of the warrant exercise in cash, or (ii) equity, if the warrant terms only allow settlement in shares of common stock.

Inventory

Inventories are stated at the lower of cost or net realizable value under the first-expired, first-out ("FEFO") methodology. Given human gene therapy products are a new and novel category of therapeutics and future economic benefit is not probable until regulatory approval for the product has been obtained, the Company has only considered inventory for capitalization upon regulatory approval. Manufacturing costs incurred prior to regulatory approval for pre-launch inventory that did not qualify for capitalization and clinical manufacturing costs are charged to research and development expense in the Company’s consolidated statements of operations and comprehensive loss as costs are incurred. Additionally, inventory that initially qualifies for capitalization but that may ultimately be used for the production of clinical drug product is expensed as research and development expense when it has been designated for the manufacture of clinical drug product.

Inventory consists of cell banks, plasmids, LVV, other materials and compounds sourced from third party suppliers and utilized in the manufacturing process, and drug product, which has been produced for the treatment of specific patients, that are owned by the Company.

Management periodically reviews inventories for excess or obsolescence, considering factors such as sales forecasts compared to quantities on hand and firm purchase commitments as well as remaining shelf life of on hand inventories. The Company writes-down its inventory that is obsolete or otherwise unmarketable to its estimated net realizable value in the period in which the impairment is first identified. Any such adjustments are included as a component of cost of goods sold within cost of product revenue on the Company’s consolidated statements of operations and comprehensive loss.

Revenue recognition

~~Effective January 1, 2018, the Company adopted~~Under ASC Topic 606, Revenue from Contracts with Customers (“Topic 606”), using the modified retrospective transition method. Under this method, the Company has recognized the cumulative effect of the adoption as an adjustment to the opening balance of accumulated deficit in the current period consolidated balance sheet. The Company has not revised its consolidated financial statements for prior periods. This standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as collaboration arrangements and leases.

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are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price, including variable consideration, if any; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration to which it is entitled in exchange for the goods or services it transfers to the customer.

Once a contract is determined to be within the scope of Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations. Arrangements that include rights to additional goods or services that are exercisable at a customer’s discretion are generally considered options. The Company assesses if these options provide a material right to the customer and if so, they are considered performance obligations. The identification of material rights requires judgments related to the determination of the value of the underlying license relative to the option exercise price, including assumptions about technical feasibility and the probability of developing a candidate that would be subject to the option rights. The exercise of a material right is accounted for as a contract modification for accounting purposes.

The Company assesses whether each promised good or service is distinct for the purpose of identifying the performance obligations in the contract. This assessment involves subjective determinations and requires management to make judgments about the individual promised goods or services and whether such are separable from the other aspects of the contractual

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relationship. Promised goods and services are considered distinct provided that: (i) the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer (that is, the good or service is capable of being distinct) and (ii) the entity’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract (that is, the promise to transfer the good or service is distinct within the context of the contract). In assessing whether a promised good or service is distinct, the Company considers factors such as the research, manufacturing and commercialization capabilities of the collaboration partner and the availability of the associated expertise in the general marketplace. The Company also considers the intended benefit of the contract in assessing whether a promised good or service is separately identifiable from other promises in the contract. If a promised good or service is not distinct, an entity is required to combine that good or service with other promised goods or services until it identifies a bundle of goods or services that is distinct.

The transaction price is then determined and allocated to the identified performance obligations in proportion to their standalone selling prices (“SSP”) on a relative SSP basis. SSP is determined at contract inception and is not updated to reflect changes between contract inception and when the performance obligations are satisfied. Determining the SSP for performance obligations requires significant judgment. In developing the SSP for a performance obligation, the Company considers applicable market conditions and relevant entity-specific factors, including factors that were contemplated in negotiating the agreement with the customer and estimated costs. The Company validates the SSP for performance obligations by evaluating whether changes in the key assumptions used to determine the SSP will have a significant effect on the allocation of arrangement consideration between multiple performance obligations.

If the consideration promised in a contract includes a variable amount, the Company estimates the amount of consideration to which it will be entitled in exchange for transferring the promised goods or services to a customer. The Company determines the amount of variable consideration by using the expected value method or the most likely amount method. The Company includes the unconstrained amount of estimated variable consideration in the transaction price. The amount included in the transaction price is constrained to the amount for which it is probable that a significant reversal of cumulative revenue recognized will not occur. At the end of each subsequent reporting period, the Company re-evaluates the estimated variable consideration included in the transaction price and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis in the period of adjustment.

If an arrangement includes development and regulatory milestone payments, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the Company’s control or the licensee’s control, such as regulatory approvals, are generally not considered probable of being achieved until those approvals are received.

For arrangements with licenses of intellectual property that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the predominant item to which the royalties relate, the Company recognizes royalty revenue and sales-based milestones at the later of (i) when the related sales occur, or (ii) when the performance obligation to which the royalty has been allocated has been satisfied.

In determining the transaction price, the Company adjusts consideration for the effects of the time value of money if the timing of payments provides the Company with a significant benefit of financing. The Company does not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the licensees and the transfer of the promised goods or services to the licensees will be one year or less. The Company assessed each of its revenue generating arrangements in order to determine whether a significant financing component exists and concluded that a significant financing component does not exist in any of its arrangements.

The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) each performance obligation is satisfied, either at a point in time or over time, and if over time recognition is based on the use of an output or input method.

~~Collaboration~~The Company recognizes revenue within the following financial statement captions:

Product revenue

~~To date, the Company’s collaboration revenue has been generated from its collaboration arrangements with BMS and Regeneron Pharmaceuticals, Inc. (“Regeneron”), as further described in Note 11,~~ ~~Collaborative arrangements~~.

The Company ~~analyzes its collaboration arrangements~~recognizes product revenue in accordance with Topic 606. Product revenue represents sales of ZYNTEGLO. In 2021, the Company distributed ZYNTEGLO directly to ~~assess whether they are within~~hospitals in Germany. The Company determined that contracted sales with hospitals formed a single performance obligation and it recognizes revenue from product sales at the ~~scope~~point in time it satisfies the performance obligation, which is upon transferring control of ~~ASC 808,~~ ~~Collaborative Arrangements~~ ~~(“ASC 808”)~~ZYNTEGLO to ~~determine whether such arrangements involve joint operating activities performed by parties that are both active participants in~~ the ~~activities and exposed to significant risks and rewards dependent on~~hospital. Control of the product generally transfers upon infusion of the product.

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commercial success of such activities. This assessment is performed throughout the life of the arrangement based on changes in the responsibilities of all parties in the arrangement. For collaboration arrangements within the scope of ASC 808 that contain multiple elements,Other revenue

In 2021, the Company ~~first determines which elements of~~entered into a grant agreement with the ~~collaboration are deemed to be within the scope of~~Bill and Melinda Gates Foundation. The Company recognizes grant revenue in accordance with ASC 808 and those that are more reflective of a vendor-customer relationship and therefore within the scope of Topic 606. For elements of collaboration arrangements that are accounted for pursuant to ASC 808, an appropriate recognition method is determined and applied consistently, generally by analogy to Topic 606. Amounts that are owed to collaboration partners are recognized as an offset to collaboration revenues as such amounts958-605, Revenue Recognition Not-for-Profit Entities, when qualifying costs are incurred ~~by the collaboration partner. Where amounts owed~~and barriers to ~~a collaboration partner exceed the Company’s collaboration revenues in each quarterly period, such amounts~~restriction have been overcome. When grant funds are ~~classified as research and development expense. For those elements of the arrangement that are accounted for pursuant to Topic 606,~~received after costs have been incurred, the Company ~~applies the five-step model described above.~~

~~License~~records revenue and ~~royalty~~a corresponding grant receivable. Cash received from grants in advance of incurring qualifying costs is recorded as deferred revenue

The Company enters into out-licensing agreements that are within the scope of Topic 606. The Company does not have any material license arrangements that contain more than one performance obligation. The terms of such out-license agreements include the license of functional intellectual property, given the functionality of the intellectual property is not expected to change substantially as a result of the licensor’s ongoing activities, and typically include payment of one or more of the following: non-refundable up-front license fees; development and regulatory milestone payments and milestone payments based on the level of sales; and royalties on net sales of licensed products. Nonrefundable up-front license fees are recognized as revenue ~~at a point in time~~ when qualifying costs are incurred. In addition, the ~~licensed intellectual property is made available for the customer’s use~~Company entered into strategic collaborations and ~~benefit, which is generally at the inception~~recognized an immaterial amount of ~~the arrangement. Development and regulatory milestone fees, which are a type of variable consideration, are recognized as~~ revenue to the extent that it is probable that a significant reversal will not occur. The Company recognizes royalty revenue and sales-based milestones at the later of (i) when the related sales occur, or (ii) when the performance obligation to which the royalty has been allocated has been satisfied.

~~For a complete discussion of accounting for~~associated with those collaboration ~~and other revenue-generating arrangements, see Note 11,~~ ~~Collaborative arrangements,~~ ~~and Note 12,~~ ~~License and royalty revenue~~.agreements.

Research and development expenses

Research and development costs are charged to expense as costs are incurred in performing research and development activities, including salaries and benefits, facilities costs, overhead costs, clinical study and related clinical manufacturing costs, license and milestone fees, contract services, manufacturing costs for pre-launch inventory that did not qualify for capitalization, and other related costs. Up-front fees and milestones paid to third parties in connection with technologies which have not reached technological feasibility and do not have an alternative future use are expensed as research and development expense as incurred. In circumstances where amounts have been paid in excess of costs incurred, the Company records a prepaid expense. The Company accrues costs for clinical trial activities based upon estimates of the services received and related expenses incurred that have yet to be invoiced by the contract research organizations, clinical study sites, laboratories, consultants, or other clinical trial vendors that perform the activities. ~~The Company recognizes~~Where amounts owed to a collaboration partner exceed the ~~reimbursement associated with~~Company’s collaborative ~~activities to its collaborative partners~~arrangement revenues in each quarterly period, such amounts are classified as research and development ~~expense in the period the services are provided.~~expense.

Cost of ~~license~~product revenue

Costs to manufacture and ~~royalty revenue~~

~~Cost of license~~deliver the product and ~~royalty revenue represents expense~~those associated with ~~amounts owed to third parties as a result~~administering the therapy are included in cost of product revenue ~~recognized under~~which are associated with the ~~Company’s out-license arrangements.~~sale of ZYNTEGLO in Germany. Reserves for excess inventories are also included in cost of product revenue.

Stock-based compensation

The Company’s share-based compensation programs grant awards that have included stock options, restricted stock units, restricted stock awards, unrestricted stock awards and shares issued under its employee stock purchase plan. Grants are awarded to employees and non-employees, including the Company's board of directors.

The Company accounts for its stock-based compensation awards in accordance with FASB ASC Topic 718, Compensation—Stock Compensation (“ASC 718”). ASC 718 requires all stock-based payments, including grants of stock options and restricted stock units and modifications to existing stock options, to be recognized in the consolidated statements of operations and comprehensive loss based on their fair values.

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The Company’s stock-based awards are subject to either service or performance-based vesting conditions. Compensation expense related to awards with service-based vesting conditions is recognized on a straight-line basis based on the grant date fair value over the associated service period of the award, which is generally the vesting term. Compensation expense related to awards with performance-based vesting conditions is recognized based on the grant date fair value over the requisite service period using the accelerated attribution method to the extent achievement of the performance condition is probable.

The Company estimates the fair value of its option awards using the Black-Scholes option pricing model, which requires the input of subjective assumptions, including (i) the expected stock price volatility, (ii) the calculation of expected term of the award, (iii) the risk-free interest rate, and (iv) expected dividends. ~~Due to~~Effective January 1, 2020, the ~~lack~~Company eliminated the use of ~~complete company-specific~~a representative peer group and uses only its own historical ~~and implied~~ volatility data ~~for the full expected term of the stock-based awards, the Company bases~~in its estimate of expected volatility on a representative group of publicly traded companies in addition to its own volatility data. For these analyses, the Company selected companies with comparable characteristics to its own, including enterprise value, risk profiles, position within the industry, and with historical share price information sufficient to meet the expected life of the stock-based awards. The Company computes historical volatility data using the daily closing prices for the selected companies’ shares during the equivalent period of the calculated expected term of the stock-based awards. The Company will continue to apply this process untilgiven that there is now a sufficient amount of historical information regarding the volatility of its own stock ~~price becomes available.~~price. For both employee and non-employee awards, the measurement date is the date of grant. The Company has estimated the expected term of its employee stock options using the “simplified” method, whereby, the expected term equals the arithmetic average of the vesting term and the original contractual term of the option due to its lack of sufficient historical data. The risk-free interest rates for periods within the expected term of the option are based on the U.S. Treasury securities with a maturity date commensurate with the expected term of the associated award. The Company has never paid, and does not expect to pay, dividends in the foreseeable future.

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The Company accounts for forfeitures as they occur. Stock-based compensation expense recognized in the financial statements is based on awards for which performance or service conditions are expected to be satisfied.

~~Prior~~Conversion and modification of equity awards outstanding at date of separation of 2seventy bio

In connection with the separation of 2seventy bio on November 4, 2021, under the provisions of the existing plans, the Company adjusted its outstanding equity awards in accordance with the terms of the Employee Matters Agreement (an equitable adjustment) to preserve the intrinsic value of the awards immediately before and after the separation. These modified awards otherwise retained substantially the same terms and conditions, including term and vesting provisions. The Company will recognize future expense for awards denominated in bluebird stock and 2seventy bio stock granted to the ~~adoption~~Company's employees as a result of ~~ASU No. 2018-07,~~ ~~Compensation - Stock Compensation (Topic 718): Improvements~~the separation of 2seventy bio. Expense related to ~~Nonemployee Share-Based Payment Accounting~~ ~~(“ASU 2018-07”),~~awards denominated in bluebird stock granted to 2seventy bio employees will be incurred by 2seventy bio.

Stock-based compensation expense related to modified awards is measured based on the ~~measurement date~~fair value for ~~non-employee~~the awards ~~was generally~~as of the ~~date the services are completed, resulting in financial reporting period adjustments to~~modification date. Any incremental stock-based compensation ~~during~~expense arising from the ~~vesting terms for changes in~~excess of the fair value of the ~~awards. After adoption of ASU 2018-07,~~awards on the ~~measurement~~modification date ~~for non-employee awards is the date of grant without changes in~~compared to the fair value of the ~~award.~~awards immediately before the modification date is recognized at the modification date or ratably over the requisite remaining service period, as appropriate.

Interest income, ~~(expense),~~ net

Interest income, ~~(expense),~~ net consists primarily of interest income earned on investments, net of amortization of premium and accretion of discount. Interest income was approximately $34.8 million, $30.1 million, and $9.5 million for the years ended December 31, 2019, 2018, and 2017, respectively. Interest expense was $0.0 million, $15.5 million, and $11.4 million for the years ended December 31, 2019, 2018, and 2017, respectively. Please refer to Note 8, ~~Leases,~~ ~~for further discussion of interest expense incurred on the 60 Binney Street lease.~~

Other income (expense) ~~income,~~, net

Other income (expense) ~~income,~~, net consists primarily of ~~unrealized~~ gains and losses on equity securities held by the Company, gains and losses on ~~the~~ disposal of ~~fixed~~ assets, ~~realized gains and losses on debt securities,~~ and gains and losses on foreign ~~currency transactions.~~currency.

Net loss per share

Basic net loss per share is calculated by dividing net loss from continuing operations attributable to common stockholders, net loss from discontinued operations attributable to common stockholders and net loss attributable to common stockholders by the weighted average number of common shares outstanding during the ~~period.~~period, including the shares of common stock issuable upon the exercise of warrants that are exercisable for little or no consideration. Diluted net ~~income~~loss per share is calculated by dividing the net ~~income~~loss from continuing operations attributable to common stockholders, net loss from discontinued operations attributable to common stockholders and net loss attributable to common stockholders by the weighted-average number of common equivalent shares outstanding for the period, including the shares of common stock issuable upon the exercise of warrants that are exercisable for little or no consideration as well as any dilutive effect from outstanding stock options, unvested restricted stock, restricted stock units, and employee stock purchase plan stock using the treasury stock method. Given that the Company recorded a net loss for each of the periods presented, there is no difference between basic and diluted net loss per share since the effect of common stock equivalents would be anti-dilutive and are, therefore, excluded from the diluted net loss per share calculation.

The Company follows the two-class method when computing net loss per share in periods when issued shares that meet the definition of participating securities are outstanding. The two-class method determines net loss per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available to common stockholders for the period to be allocated between common and participating securities based upon their respective rights to ~~received~~receive dividends as if all income for the period had

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been distributed. Accordingly, in periods in which the Company reports a net loss attributable to common stockholders when participating securities are outstanding, losses are not allocated to the participating securities.

Income taxes

Income taxes are recorded in accordance with FASB ASC Topic 740, Income Taxes (“ASC 740”), which provides for deferred taxes using an asset and liability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided, if

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based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit will more likely than not be realized. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. The Company accrues for potential interest and penalties related to unrecognized tax benefits in income tax expense.

Comprehensive loss

Comprehensive loss is composed of net loss and other comprehensive income (loss). Other comprehensive income (loss) consists of unrealized gains and losses on debt securities, foreign currency translation adjustments and other items.

Restructuring expenses

The Company records costs and liabilities associated with exit and disposal activities in accordance with FASB ASC Topic 420, Exit or Disposal Cost Obligations ("ASC 420"). Such costs are based on estimates of fair value in the period liabilities are incurred. The Company evaluates and adjusts these costs as appropriate for changes in circumstances as additional information becomes available. Refer to Note 18, Reduction in workforce, for more information.

Recent accounting pronouncements

Recently adopted

ASU No. 2016-02, Leases (Topic 842), ASU No. 2018-10 Codification Improvements to Topic 842, Leases, ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, and ASU No. 2019-01 Leases (Topic 842): Codification Improvements

In February 2016, the FASB issued ASU 2016-02, as amended, which superseded the lease accounting requirements in ASC 840 and created ASC 842. ASC 842 requires a lessee to recognize assets and liabilities on the balance sheet for most leases and changes many key definitions, including the definition of a lease. The new standard includes a short-term lease exception for leases with a term of one year or less, as part of which a lessee can make an accounting policy election not to recognize lease assets and lease liabilities for those leases. Lessees will continue to differentiate between finance leases (previously referred to as capital leases) and operating leases using classification criteria that are substantially similar to the previous guidance.

Effective January 1, 2019, the Company adopted ASU 2016-02, using the required modified retrospective approach and utilizing the effective date as its date of initial application. As a result, prior periods are presented in accordance with the previous guidance in ASC 840.

The adoption of this standard resulted in the recognition of operating lease right-of-use assets and operating lease liabilities of $184.4 million and $177.0 million, respectively, on the Company’s consolidated balance sheet at adoption relating to its leases for its corporate headquarters at 60 Binney Street in Cambridge, Massachusetts (the “60 Binney Street Lease”), its office and laboratory space in Seattle, Washington, its office space in Zug, Switzerland, and its embedded leases associated with certain of the Company’s contract manufacturing agreements. The application of the standard’s transition guidance required the de-recognition of the 60 Binney Street Lease building asset, financing lease obligation, current portion, and financing lease obligation, net of current portion in the amounts of $149.3 million, $1.4 million, and $153.3 million, respectively, as well as certain other adjustments to related account balances. In adopting ASU 2016-02, the Company recorded a total one-time adjustment of $6.6 million to the opening balance of accumulated deficit as of January 1, 2019 primarily relating to the de-recognition of the 60 Binney Street Lease building asset and related finance lease obligation.

As a result of adopting ASU 2016-02, the Company recorded an increase to deferred tax assets and deferred tax liabilities of $5.3 million and $7.1 million, respectively. The $1.8 million net increase to deferred tax liabilities and an offsetting valuation allowance adjustment was recorded through the accumulated deficit as of January 1, 2019, such that there was no tax impact on the Company’s consolidated financial statements as a result of adoption.

~~ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment~~

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~~In January 2017, the FASB issued ASU 2017-04,~~ ~~Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment~~ ("ASU 2017-04"). To address concerns over the cost and complexity of the two-step goodwill impairment test, the amendments in this ASU remove the second step of the test. An entity will instead apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit's carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The new guidance does not amend the optional qualitative assessment of goodwill impairment. The new standard will be effective beginning January 1, 2020 and the Company early adopted the provisions of this ASU for purposes of performing its annual goodwill impairment test for 2019 during the fourth quarter of 2019. The adoption of this standard did not have a material impact on the Company’s financial position or results of operations upon adoption.

~~ASU No. 2017-08, Receivables – Nonrefundable Fees and Other Costs (Topic 310-20): Premium Amortization on Purchased Callable Debt Securities~~

~~In April 2017, the FASB issued ASU 2017-08,~~ ~~Receivables – Nonrefundable Fees and Other Costs (Topic 310-20): Premium Amortization on Purchased Callable Debt Securities~~ (“Subtopic 310-20”). The new standard amends the amortization period for certain purchased callable debt securities held at a premium by shortening the amortization period for the premium to the earliest call date. Subtopic 310-20 calls for a modified retrospective application under which a cumulative-effect adjustment will be made to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. ~~The Company adopted this standard on January 1, 2019 and it did not~~ ~~have a material impact on the Company’s financial position or results of operations upon adoption.~~

~~ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income~~

~~In February 2018, the FASB issued ASU 2018-02,~~ ~~Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The new standard allows for a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act.~~ ~~The Company adopted this standard on January 1, 2019 and it did~~ ~~not have a material impact on the Company’s~~ ~~financial position and results of operations~~ ~~upon adoption.~~

~~ASU No. 2019-07, Codification Updates to SEC Sections – Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases~~

~~In July 2019, the FASB issued ASU 2019-07,~~ ~~Codification Updates to SEC Sections~~, which clarifies or improves the disclosure and presentation requirements of a variety of codification topics by aligning them with the SEC’s regulations, thereby eliminating redundancies and making the codification easier to apply. The Company prospectively adopted this update upon issuance, and it did not have a material impact on its financial position and results of operations.

~~Not yet adopted~~

ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 362): Measurement of Credit Losses on Financial Statements, ASU No. 2019-05 Financial Instruments – Credit Losses (Topic 326): Targeted Transition Relief, ASU No. 2019-11, Codification Improvements to Topic 326, Financial Instruments - Credit Losses

~~In June 2016, the FASB issued ASU 2016-13,~~ ~~Financial Instruments – Credit Losses (Topic 362): Measurement of Credit Losses on Financial Statements~~ ("ASU 2016-13"). The new standard requires that expected credit losses relating to financial assets measured on an amortized cost basis and available-for-sale debt securities be recorded through an allowance for credit losses. It also limits the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value and also requires the reversal of previously recognized credit losses if fair value increases. The targeted transition relief standard allows filers an option to irrevocably elect the fair value option of ASC 825-10, Financial Instruments-Overall, applied on an instrument-by-instrument basis for eligible instruments. The new standard will be effective beginning January 1, 2020. The Company is currently evaluating the potential impact ASU 2016-13, and related updates, will have on its financial position and results of operations upon adoption.

~~ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement~~

~~In August 2018, the FASB issued ASU 2018-13,~~ ~~Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement~~ ~~(“ASU 2018-13”)~~. ~~The new standard removes certain disclosures,~~

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modifies certain disclosures and adds additional disclosures related to fair value measurement. The new standard will be effective beginning January 1, 2020. The adoption of ASU 2018-13 is not expected to have a material impact on the Company's financial position or results of operations upon adoption.

ASU No. 2018-15, Intangibles-Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract

~~In August 2018, the FASB issued ASU 2018-15,~~ ~~Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract~~ (“ASU 2018-15”). The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments in this update. The new standard will be effective beginning January 1, 2020. The amendments in this update should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is currently evaluating the potential impact ASU 2018-15 may have on its financial position and results of operations upon adoption.

~~ASU No. 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606~~

~~In November 2018, the FASB issued ASU 2018-18,~~ ~~Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606~~ (“ASU 2018-18”). The amendments in this update clarify that certain transactions between collaborative arrangement participants should be accounted for as revenue when the collaborative arrangement participant is a customer in the context of a unit of account and precludes recognizing as revenue consideration received from a collaborative arrangement participant if the participant is not a customer. The new standard will be effective beginning January 1, 2020. The Company is currently evaluating the potential impact ASU 2018-18 may have on its financial position and results of operations upon adoption.

~~ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments~~

~~In April 2019, the FASB issued ASU 2019-04,~~ ~~Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments~~ ~~(“ASU 2019-04”)~~. This update provides clarifications for three topics related to financial instruments accounting, some of which apply to the Company. The amendments in this update will be effective beginning January 1, 2020. The adoption of ASU 2019-04 is not expected to have a material impact on the Company’s financial position or results of operations upon adoption.

ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("“ASU ~~2019-12"~~2019-12”), which is intended to simplify the accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. The new standard ~~will be~~was effective beginning January 1, 2021. The ~~Company is currently evaluating the potential impact~~adoption of ASU 2019-12 ~~may~~did not have a material impact on ~~its~~the Company's financial position or results of operations upon adoption.

ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). ASU 2020-06 simplifies the complexity associated with applying U.S. GAAP for certain financial instruments with characteristics of liabilities and equity. More specifically, the amendments focus on the guidance for convertible instruments and derivative scope exception for contracts in an entity's own equity. The Company early adopted the new standard, effective January 1, 2021. The adoption of ASU 2020-06 did not have an impact on the Company's financial position or results of operations upon adoption.

ASU No. 2020-08, Codification Improvements to Subtopic 310-20, Receivables - Nonrefundable Fees and Other Costs

In October 2020, the FASB issued ASU 2020-08, Codification Improvements to Subtopic 310-20, Receivables - Nonrefundable Fees and Other Costs (“ASU 2020-08”) to provide further clarification and update the previously issued guidance in ASU 2017-08, Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20: Premium Amortization on Purchased Callable Debt Securities) (“ASU 2017-08”). ASU 2017-08 shortened the amortization period for certain callable debt securities purchased at a premium by requiring that the premium be amortized to the earliest call date. ASU 2020-08 requires that at each reporting period, to the extent that the amortized cost of an individual callable debt security exceeds the amount repayable by the issuer at the next call date, the excess premium shall be amortized to the next call date. The new standard was effective beginning January 1, 2021. The adoption of ASU 2020-08 did not have a material impact on the Company's financial position or results of operations upon adoption.

ASU No. 2020-10, Codification Improvements

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In October 2020, the FASB issued ASU 2020-10, Codification Improvements ("ASU 2020-10"). The amendments in this ASU represent changes to clarify the ASC, correct unintended application of the guidance, or make minor improvements to the ASC that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. This new standard was effective beginning January 1, 2021. The adoption of ASU 2020-10 did not have a material impact on the Company's financial position or results of operations upon adoption.

3. ~~Marketable securities~~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 which occurred 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 transaction, the Company disposed of $111.2 million of net assets, primarily consisting of the building and laboratory equipment, that were associated with the Company's oncology programs. The Company recognized a loss on disposal of assets of $2.0 million. 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 assets, liabilities and 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.

The transfer of assets and liabilities to 2seventy bio was effected through a contribution in accordance with the Separation Agreement, as summarized below (in thousands):

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	As of November 4, 2021
Assets
Current assets:
Cash and cash equivalents	$	174,284
Marketable securities	160,447
Prepaid expenses	8,732
Receivables and other current assets	21,637
Total current assets	365,100
Marketable securities	106,826
Property, plant and equipment, net	33,972
Intangible assets, net	10,664
Goodwill	6,410
Operating lease right-of-use assets	255,556
Restricted cash and other non-current assets	5,650
Total assets	$	784,178
Liabilities
Current liabilities:
Accounts payable	$	2,982
Accrued expenses and other current liabilities	85,659
Operating lease liability, current portion	6,938
Collaboration research advancement, current portion	8,957
Total current liabilities	104,536
Deferred revenue, net of current portion	25,762
Collaboration research advancement, net of current portion	16,264
Operating lease liability, net of current portion	257,575
Other non-current liabilities	1,896
Total liabilities	$	406,033
Net assets transferred to 2seventy bio	$	378,145

bluebird and 2seventy bio also entered into a tax matters agreement, dated as of November 3, 2021, governing bluebird’s and 2seventy bio's respective rights, responsibilities and obligations with respect to taxes (including taxes arising in the ordinary course of business and taxes, if any, incurred as a result of any failure of the distribution and certain related transactions to qualify as tax-free for U.S. federal income tax purposes), tax attributes, the preparation and filing of tax returns, the control of audits and other tax proceedings, and assistance and cooperation in respect of tax matters.

In connection with the Separation, bluebird also entered into an employee matters agreement with 2seventy bio, dated as of November 3, 2021. The employee matters agreement allocates assets, liabilities and responsibilities relating to the employment, compensation and employee benefits of bluebird and 2seventy bio employees, and other related matters, in connection with the Separation, including the treatment of outstanding bluebird incentive equity awards and certain retirement and welfare benefit obligations. The employee matters agreement generally provides that, unless otherwise specified, 2seventy bio is responsible for liabilities associated with employees who transfer to 2seventy bio and employees whose employment terminated prior to the distribution but who primarily supported the 2seventy bio business, and bluebird is responsible for liabilities associated with other employees, including employees retained by bluebird. Pursuant to the employee matters agreement, the outstanding bluebird equity awards held by 2seventy bio and bluebird employees were adjusted immediately prior to the distribution, with the intent to maintain, immediately following the distribution, the economic value of the awards immediately before the distribution date.

bluebird and 2seventy bio also entered into an intellectual property license agreement on November 3, 2021, pursuant to which each party granted a license to certain intellectual property and technology to the other. bluebird granted 2seventy bio a perpetual, worldwide, non-exclusive, royalty-free, fully paid-up license (or, as the case may be, sublicense) to certain intellectual property to allow 2seventy bio to use such intellectual property in connection with 2seventy bio's ongoing and future research and development activities and product candidates. 2seventy bio granted bluebird a perpetual, worldwide, non-

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exclusive, royalty-free, fully paid-up license (or, as the case may be, sublicense) to certain intellectual property for use in bluebird’s existing products and product candidates. Such licenses between the parties generally allow current or future uses of the intellectual property in connection with each party's respective fields.

Additionally, bluebird entered into 2 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. During the year ended December 31, 2021, the Company incurred $0.7 million of net expense for services provided by 2seventy bio within Research and development and Selling, general and administrative expense in the Consolidated Statements of Operations and Comprehensive Loss. As of December 31, 2021, the Company had an immaterial amount of accounts receivable and accounts payable due from and 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 years ended December 31, 2021, 2020 and 2019 (in thousands):


	Year ended December 31,
	2021		2020		2019
Revenue:
Service revenue	$	18,130	$	114,064	$	30,729
Collaborative arrangement revenue	18,602		115,594		5,740
Royalty and other revenue	5,762		21,076		8,205
Total revenues	42,494		250,734		44,674
Operating expenses:
Research and development	204,287		268,647		255,294
Selling, general and administrative	82,078		46,945		35,518
Share of collaboration loss	10,071		—		—
Cost of royalty and other revenue	2,292		5,396		2,978
Change in fair value of contingent consideration	387		(6,468)		2,747
Total operating expenses	299,115		314,520		296,537
Loss from operations	(256,621)		(63,786)		(251,863)
Interest income, net	791		5,770		17,380
Other income (expense), net	(910)		377		(103)
Loss before income taxes	(256,740)		(57,639)		(234,586)
Net loss	$	(256,740)	$	(57,639)	$	(234,586)

There were no assets and liabilities related to discontinued operations as of December 31, 2021, as all balances were transferred to 2seventy bio upon Separation. The following table summarizes the ~~marketable securities held at~~assets and liabilities of the discontinued operations as of December 31, ~~2019 and 2018~~2020 (in thousands):

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Amortized cost / cost Unrealized gains Unrealized losses Fair value
December 31, 2019
U.S. government agency securities and treasuries $ 633,970 $ 2,014 $ (48) $ 635,936
Certificates of deposit 960 — — 960
Corporate bonds 185,827 824 (43) 186,608
Commercial paper 74,378 — — 74,378
Equity securities 20,017 — (7,147) 12,870
Total $ 915,152 $ 2,838 $ (7,238) $ 910,752
December 31, 2018
U.S. government agency securities and treasuries $ 1,459,649 $ 963 $ (3,011) $ 1,457,601
Certificates of deposit 9,080 — — 9,080
Equity securities 20,017 2,150 — 22,167
Total $ 1,488,746 $ 3,113 $ (3,011) $ 1,488,848


	As of December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	57,076
Marketable securities	413,947
Prepaid expenses	11,754
Receivables and other current assets	12,244
Total current assets of discontinued operations	495,021
Marketable securities	61,446
Property, plant and equipment, net	145,458
Intangible assets, net	5,644
Goodwill	7,482
Operating lease right-of-use assets	116,456
Restricted cash and other non-current assets	7,078
Total non-current assets of discontinued operations	343,564
Total assets of discontinued operations	$	838,585
Liabilities
Current liabilities:
Accounts payable	$	7,791
Accrued expenses and other current liabilities	48,716
Operating lease liability, current portion	15,313
Collaboration research advancement, current portion	9,236
Deferred revenue, current portion	820
Total current liabilities of discontinued operations	81,876
Deferred revenue, net of current portion	25,762
Collaboration research advancement, net of current portion	21,581
Operating lease liability, net of current portion	112,290
Other non-current liabilities	1,509
Total non-current liabilities of discontinued operations	161,142
Total liabilities of discontinued operations	$	243,018

~~NaN~~

The following table summarizes the significant non-cash items and capital expenditures of the discontinued operations that are included in the consolidated statements of cash flows for the years ended December 31, 2021, 2020 and 2019 (in thousands):

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	Year ended December 31,
	2021		2020		2019
Operating activities:
Change in fair value of contingent consideration	$	387	$	(6,468)	$	2,747
Depreciation and amortization	14,195		13,730		12,995
Stock-based compensation expense	29,175		34,036		29,545
Loss on fixed assets disposal	569		146		108
Loss on sale of Durham, North Carolina manufacturing facility	1,986		—		—

Investing activities:
Purchase of property, plant and equipment	$	(11,256)	$	(23,159)	$	(57,196)
Proceeds from sale of Durham, North Carolina manufacturing facility	110,300		—		—
Purchase of intangible assets	(8,500)		—		—

Supplemental cash flow disclosures:
Purchases of property, plant and equipment included in accounts payable and accrued expenses	$	778	$	2,039	$	3,064
Right-of-use assets obtained in exchange for operating lease liabilities	151,520		4,989		9,745

4. Marketable securities

The following table summarizes the marketable securities held at December 31, 2021 and 2020 (in thousands):


	Amortized cost / cost		Unrealized gains		Unrealized losses		Fair value
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
December 31, 2020 (1)
U.S. government agency securities and treasuries	$	337,521	$	151	$	(37)	$	337,635
Corporate bonds	98,585		216		(20)		98,781
Commercial paper	38,975		—		—		38,975
Equity securities	20,017		—		(14,364)		5,653
Total	$	495,098	$	367	$	(14,421)	$	481,044

(1) Prior period amounts have been retrospectively adjusted to reflect the effects of the Separation.

No available-for-sale debt securities held as of December 31, ~~2019~~2021 or ~~2018~~2020 had remaining maturities greater than ~~three~~five years.

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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 December 31, ~~2019~~2021 and ~~2018~~2020 (in thousands):


	Total		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
December 31, 2021
Assets:
Cash and cash equivalents	$	161,160	$	161,146	$	14	$	—
Marketable securities:
U.S. government agency securities and treasuries	128,393		—		128,393		—
Corporate bonds	49,308		—		49,308		—
Commercial paper	54,065		—		54,065		—
Equity securities	3,691		3,691		—		—
Total assets	$	396,617	$	164,837	$	231,780	$	—
December 31, 2020 (1)
Assets:
Cash and cash equivalents	$	260,629	$	260,629	$	—	$	—
Marketable securities:
U.S. government agency securities and treasuries	337,635		—		337,635		—
Corporate bonds	98,781		—		98,781		—
Commercial paper	38,975		—		38,975		—
Equity securities	5,653		5,653		—		—
Total assets	$	741,673	$	266,282	$	475,391	$	—

Total Quoted
prices in
active
markets
(Level 1) Significant
other
observable
inputs
(Level 2) Significant
unobservable
inputs
(Level 3)
December 31, 2019
Assets:
Cash and cash equivalents $ 327,214 $ 311,245 $ 15,969 $ —
Marketable securities:
U.S. government agency securities and treasuries 635,936 — 635,936 —
Certificates of deposit 960 — 960 —
Commercial paper 74,378 — 74,378 —
Corporate bonds 186,608 — 186,608 —
Equity securities 12,870 12,870 — —
Total assets $ 1,237,966 $ 324,115 $ 913,851 $ —
Liabilities:
Contingent consideration $ 7,977 $ — $ — $ 7,977
Total liabilities $ 7,977 $ — $ — $ 7,977
December 31, 2018
Assets:
Cash and cash equivalents $ 402,579 $ 348,638 $ 53,941 $ —
Marketable securities:
U.S. government agency securities 1,457,601 — 1,457,601 —
Certificates of deposit 9,080 — 9,080 —
Equity securities 22,167 22,167 — —
Total assets $ 1,891,427 $ 370,805 $ 1,520,622 $ —
Liabilities:
Contingent consideration $ 5,230 $ — $ — $ 5,230
Total liabilities $ 5,230 $ — $ — $ 5,230

~~F-21~~

~~Table~~(1) Prior period amounts have been retrospectively adjusted to reflect the effects of ~~Contents~~the Separation.

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 December 31, ~~2019,~~2021, cash and cash equivalents comprise funds in cash ~~commercial paper,~~ and money market accounts. As of December 31, ~~2018,~~2020, cash and cash equivalents comprise funds in cash ~~U.S. Treasury securities, U.S. government agency securities,~~ and money market accounts.

Marketable securities

Marketable securities classified as Level 2 within the valuation hierarchy generally consist of ~~certificates of deposit,~~ U.S. ~~Treasury~~government agency securities and ~~government agency securities,~~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 December 31, ~~2019~~2021 and ~~2018,~~2020, 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 securities during the ~~year~~years ended December 31, ~~2019~~2021 or ~~2018, and as a result,~~2020.

Accrued interest receivable on the ~~Company did not reclassify any amounts out of accumulated other comprehensive loss for the same periods.~~

~~The aggregate fair value of~~Company's available-for-sale debt securities ~~held by~~totaled $0.3 million and $1.5 million as of December 31, 2021 and 2020, respectively. No accrued interest receivable was written off during the ~~Company~~twelve months ended December 31, 2021 or 2020.

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The following table summarizes available-for-sale debt securities in ana continuous unrealized loss position for less than and greater than twelve months, ~~as of~~and for which an allowance for credit losses has not been recorded at December 31, ~~2019~~2021 and ~~2018~~2020 (in thousands):


	Less than 12 months				12 months or greater				Total
Description	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
December 31, 2021
U.S. government agency securities and treasuries	$	108,695	$	(505)	$	2,496	$	(4)	$	111,191	$	(509)
Corporate bonds	45,042		(56)		3,896		(2)		48,938		(58)
Total	$	153,737	$	(561)	$	6,392	$	(6)	$	160,129	$	(567)
December 31, 2020 (1)
U.S. government agency securities and treasuries	$	105,692	$	(37)	$	—	$	—	$	105,692	$	(37)
Corporate bonds	38,299		(20)		603		—		38,902		(20)
Total	$	143,991	$	(57)	$	603	$	—	$	144,594	$	(57)

(1) Prior period amounts have been retrospectively adjusted to reflect the effects of the Separation.

The Company determined that there was ~~$67.2 million and $787.5 million, respectively.~~no material change in the credit risk of the above investments during the twelve months ended December 31, 2021. As such, an allowance for credit losses was not recognized. As of December 31, ~~2019, and 2018, there were $79.6 million and $315.3 million in securities held by~~2021, the Company in an unrealized loss position for more than twelve months, respectively. The aggregate unrealized loss on securities held by the Company for less than twelve months as of December 31, 2019 and 2018 was less than $0.1 million and $0.9 million, respectively. The aggregate unrealized loss on securities held by the Company for more than twelve months as of December 31, 2019 and 2018 was less than $0.1 million and $2.1 million, respectively. The Company has the intentdoes not intend to ~~hold~~sell such securities ~~until recovery~~ and it is not more likely than not that the Company will be required to sell the securities before recovery of their amortized costs bases, which may be maturity. The Company determined that there was no material change in the credit risk of the above investments. As a result, the Company determined it did 0t hold any investments with an other-than-temporary impairment as of December 31, 2019 and 2018.cost bases.

The Company holds equity securities with an aggregate fair value of ~~$12.9~~$3.7 million and ~~$22.2~~$5.7 million at December 31, ~~2019~~2021 and ~~2018,~~2020, respectively, within ~~short-term~~current marketable securities on its consolidated balance ~~sheet.~~sheets. In January 2021, the Company sold a portion of its equity securities for proceeds of $31.3 million. The Company recorded agains of $29.4 million and losses of $7.2 million and $9.3 million ~~unrealized loss and a $2.2 million unrealized gain during the year ended December 31, 2019 and 2018, respectively,~~ related to its equity securities ~~which is~~during the years ended December 31, 2021, 2020 and 2019, respectively. Gains and losses related to equity securities are included in other ~~(expense)~~ income (expense), net onin the consolidated statements of operations and comprehensive loss.

~~Contingent consideration~~

~~In connection with its prior acquisition~~6. Inventory

Inventory consists of ~~Precision Genome Engineering, Inc. (“Pregenen”),~~the following (in thousands):


	As of December 31, 2021		As of December 31, 2020
Raw materials	$	—	$	8,967
Finished goods	—		1,731
Inventory	$	—	$	10,698

During the year ended December 31, 2021, the Company ~~may be required to pay future consideration that~~recorded a reserve for excess inventories of $29.9 million, which is ~~contingent upon the achievement~~included within cost of ~~specified development, regulatory approvals or sales-based milestone events. Contingent consideration is measured at fair value and is based on significant inputs not observable~~product revenue in the market, which represents a Level 3 measurement within the fair value hierarchy. The valuation of contingent consideration uses assumptions the Company believes would be made by a market participant. The Company assesses these estimates on an on-going basis as additional data impacting the assumptions is obtained. Future changes in the fair value of contingent consideration related to updated assumptions and estimates are recognized within the consolidated statements of operations and comprehensive loss. During the year ended December 31, 2020, the Company did not record a reserve for excess inventories.

Contingent consideration may change significantly as development progresses and additional data are obtained, impacting the Company’s assumptions regarding probabilities of successful achievement of related milestones used to estimate the fair value of the liability and the timing in which they are expected to be achieved. In evaluating the fair value information, considerable judgment is required to interpret the market data used to develop the estimates. The estimates of fair value may not

~~F-22~~F-24

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be indicative of the amounts that could be realized in a current market exchange. Accordingly, the use of different market assumptions and/or different valuation techniques could result in materially different fair value estimates.

The significant unobservable inputs used in the measurement of fair value of the Company’s contingent consideration are probabilities of successful achievement of clinical and commercial milestones, the period in which these milestones are expected to be achieved ranging from 2021 to 2028 and discount rates ranging from 12.7% to 14.3%. Significant increases or decreases in any of these inputs would result in a significantly higher or lower fair value measurement.

~~The table below provides a roll-forward of fair value of the Company’s contingent consideration obligations which include Level 3 inputs (in thousands):~~

Year ended December 31,
2019 2018
Beginning balance $ 5,230 $ 2,231
Additions — —
Changes in fair value 2,747 2,999
Payments — —
Ending balance $ 7,977 $ 5,230

~~Please refer to Note 9,~~ ~~Commitments and contingencies,~~ ~~for further information.~~

5.7. Property, plant and equipment, net

Property, plant and equipment, net, consists of the following (in thousands):


	As of December 31,
	2021		2020 (1)
Laboratory equipment	$	29,061	$	27,146
Computer equipment and software	421		447
Office equipment	117		1,077
Leasehold improvements	12		5,949
Construction-in-progress	501		895
Total property, plant and equipment	30,112		35,514
Less accumulated depreciation and amortization	(20,406)		(18,141)
Property, plant and equipment, net	$	9,706	$	17,373

As of December 31,
2019 2018
Land $ 1,210 $ 1,210
Building 15,664 180,094
Computer equipment and software 6,947 6,365
Office equipment 7,599 5,584
Laboratory equipment 44,560 35,693
Leasehold improvements 33,788 183
Construction-in-progress 77,981 46,669
Total property, plant and equipment 187,749 275,798
Less accumulated depreciation and amortization (36,573) (29,176)
Property, plant and equipment, net $ 151,176 $ 246,622
(1) Prior period amounts have been retrospectively adjusted to reflect the effects of the Separation.

Depreciation and amortization expense related to property, plant and equipment was ~~$13.4~~$4.9 million, ~~$13.4~~$5.1 million, and ~~$9.8~~$4.1 million for the years ended December 31, ~~2019, 2018,~~2021, 2020, and ~~2017,~~2019, respectively.

~~North Carolina manufacturing facility~~

~~In November 2017, the Company acquired a manufacturing facility in Durham, North Carolina for the future manufacture of lentiviral vector for the Company’s gene therapies.~~ 8. Restricted cash

As of December 31, ~~2019, a portion of the facility has been placed into service~~2021 and the remainder of the facility is still in process of construction. Construction-in-progress as of December 31, 2019, and 2018, includes $74.2 million and $40.4 million, respectively, related to the North Carolina manufacturing facility.

~~60 Binney Street Lease~~

As a result of the adoption of ASU 2016-02, the Company de-recognized $156.0 million of the building asset and $6.7 million of accumulated depreciation related to its corporate headquarters at 60 Binney Street. Prior to the adoption of ASU 2016-02, the Company classified leasehold improvements associated with the 60 Binney Street building as building assets. Subsequent to the adoption of ASU 2016-02, the leasehold improvements owned by the Company associated with the 60 Binney Street building are classified as leasehold improvements. Please refer to Note 2, ~~Summary of significant accounting policies and basis of presentation,~~ ~~and Note 8,~~ ~~Leases,~~ ~~for further information.~~

~~F-23~~

~~Table of Contents~~

~~6. Restricted cash~~

~~As of December 31, 2019, and 2018,~~2020, the Company maintained letters of credit of ~~$54.5~~$43.2 million and ~~$14.5~~$54.5 million, respectively, which are collateralized with a bank ~~account~~accounts at a financial ~~institution~~institutions in accordance with the ~~agreement~~agreements. Total restricted cash as of December 31, 2021 and 2020 consisted of the following (in thousands):

As of December 31,
2019 2018
60 Binney Street lease $ 13,763 $ 13,763
50 Binney Street sublease 40,072 —
Other leases 660 757
Total restricted cash $ 54,495 $ 14,520


	As of December 31,
	2021		2020
50 Binney Street lease	$	40,072	$	40,072
Assembly Row lease	2,753		—
60 Binney Street lease	—		13,763
Other	2,675		2,188
Total restricted cash	$	45,500	$	56,023

Refer to Note 8,10, Leases, for further information on the Company's letters of credit.

7.9. Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consist of the following (in thousands):

As of December 31,
2019 2018
Employee compensation $ 44,679 $ 28,567
Manufacturing costs 23,126 21,618
Clinical and contract research organization costs 16,799 11,891
Collaboration research costs 27,142 3,358
Property, plant, and equipment 2,354 5,451
License and milestone fees 300 7,739
Professional fees 1,827 1,830
Financing lease obligation, current portion — 1,424
Other 25,329 17,515
Total accrued expenses and other current liabilities $ 141,556 $ 99,393


	As of December 31,
	2021		2020 (1)
Employee compensation	$	41,095	$	41,192
Accrued goods and services	24,273		14,855
Accrued clinical and contract research organization costs	17,769		20,912
Accrued manufacturing costs	15,722		15,763
Accrued professional fees	1,665		1,541
Deferred revenue, current portion	2,282		1,500
Other	1,152		2,427
Total accrued expenses and other current liabilities	$	103,958	$	98,190

(1) Prior period amounts have been retrospectively adjusted to reflect the effects of the Separation.

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Accrued employee compensation includes severance costs associated with the Company's orderly wind down of its European operations. As of December 31, 2021, the Company had accrued expenses of $4.7 million related to these restructuring costs. Please refer to Note 17, Reduction in workforce, for further discussion.

8.10. Leases

The Company leases certain office and laboratory space. Additionally, the Company has embedded leases atthrough its agreements with contract manufacturing organizations.

60 Binney Street lease & sublease

~~On September 21, 2015,~~In October 2021, the Company entered into a consent to assignment and amendment to its lease agreement for its 60 Binney Street lease (the "Assignment"). The Assignment transfers the Company's interest in the lease to 2seventy bio and releases the Company from its obligation to maintain the $13.8 million collateralized letter of credit required under the original 60 Binney Street lease. Although the lease was legally transferred to 2seventy bio, the lessor required that the Company remain secondarily liable as a guarantor for payment obligations accruing under the 60 Binney Street lease from the date of Assignment until (i) the Company has completely vacated the premises and (ii) 2seventy bio has reached a market capitalization of $900 million. Upon Separation, the lease assignment was accounted for as the termination of the original lease and the Company de-recognized the right-of-use asset and lease liability related to the 60 Binney Street lease and recognized the fair value of the guarantee pursuant to ASC 405, Liabilities. The fair value of the guarantee was not material.

Concurrent with the Assignment of the 60 Binney Street Lease, the Company entered into a sublease agreement with 2seventy bio for office, laboratory and ~~laboratory~~storage space located ~~in a building (the “Building”)~~ at 60 Binney Street ~~Cambridge, Massachusetts~~ (the ~~“60~~"60 Binney Street ~~Lease”~~Sublease")~~, which is now the Company’s corporate headquarters.~~ while it constructs and outfits its new office and laboratory space. Under the terms of the 60 Binney Street ~~Lease, starting on October 1, 2016,~~Sublease, the Company ~~leases approximately 253,108~~will lease 72,988 square feet ~~of office and laboratory space at $72.50 per square foot per year, or $18.4~~for $0.5 million per ~~year~~month in base rent ~~which is subject to scheduled annual~~for the period beginning from the Assignment through March 2022 and 58,004 square feet for $0.4 million per month in base rent ~~increases of 1.75% plus certain operating expenses and taxes.~~for the period from April 2022 through March 2024. The Company currently maintains a $13.8 million collateralized letter of credit and, subject to the terms of the lease and certain reduction requirements specified therein, including market capitalization requirements, this amount may decrease to $9.2 million over time. Pursuant to a work letter entered into in connection withaccounted for the 60 Binney Street ~~Lease, the landlord contributed an aggregate of $42.4 million toward the cost of construction~~Sublease as a new lease under ASC 842, and ~~tenant improvements for the Building.~~

~~The Company occupied the Building beginning on March 27, 2017~~in November 2021, recognized a right-of-use asset and lease liability related to the 60 Binney Street ~~Lease will continue until March 31, 2027. The Company has the option to extend the 60 Binney Street Lease for 2 successive~~ ~~five-year terms.~~

Due to the Company’s involvement in the construction project, including having responsibility to pay for a portion of the costs of finish work and mechanical, electrical, and plumbing elements of the Building, among other items, the Company was deemed for accounting purposes to be the owner of the Building during the construction period, per ASC 840. Accordingly, under ASC 840, construction costs that were incurred by the landlord directly or indirectly through reimbursement to the

~~F-24~~

~~Table of Contents~~

~~Company as part of its tenant improvement allowance were recorded as an asset in property, plant and equipment, net on the Company’s consolidated balance sheets.~~

The Company evaluated the 60 Binney Street Lease upon occupancy on March 27, 2017 and determined that the 60 Binney Street Lease did not meet the criteria for “sale-leaseback” treatment under ASC 840. This determination was based on, among other things, the Company's continuing involvement with the property in the form of non-recourse financing to the lessor. Accordingly, upon occupancy, the Company commenced depreciating the portion of the building in service over a useful life of 40 years and incurred interest expense related to the financing obligation.

As part of its adoption of ASC 842, the Company de-recognized the building asset and corresponding financing obligation recorded on the Company’s consolidated balance sheets as of December 31, 2018, in accordance with the ASC 842 transition guidance. In applying the ASC 842 transition guidance, the Company classified this lease as an operating lease and recorded a right-of-use asset of $127.3 million and lease liability of $125.8 million on the effective date. The Company is recognizing rent expense on a straight-line basis throughout the remaining term of the lease.Sublease.

50 Binney Street sublease & sub-sublease

In April 2019, the Company entered into a sublease agreement for office space located at 50 Binney Street in Cambridge, Massachusetts (the “50 Binney Street Sublease”) to supplement the Company’s corporate headquarters located at 60 Binney Street in Cambridge, Massachusetts. Under the terms of the 50 Binney Street Sublease, the Company will lease 267,278 square feet of office space for $99.95 per square foot, or $26.7 million per year in base rent subject to certain operating expenses, taxes and annual rent increases of approximately 3%. The lease will commence when the space is available for use by the Company, which is anticipated to be in the ~~second~~first half of ~~2021, and~~2022, which reflects the sublessor's exercise of its option to postpone the commencement date of the sublease. The lease term will end on December 31, 2030, unless ~~the Company earlier occupies the premises or~~ other ~~conditions~~specific circumstances specified in the 50 Binney Street Sublease occur. The ~~sublessor has~~Company will assess the ~~right to postpone~~lease classification of the 50 Binney Street Sublease and commence recognition of the associated rent expense at the lease commencement ~~date until January 1, 2022 by providing not less than nine months’ prior written notice to the Company.~~ date.

Upon signing the 50 Binney Street Sublease, the Company executed a $40.1 million cash-collateralized letter of credit, which may be reduced in the future subject to the terms of the 50 Binney Street Sublease and certain reduction requirements specified therein. The $40.1 million of cash collateralizing the letter of credit is classified as restricted cash and other non-current assets on the Company’s consolidated balance sheets. Payments will commence at the earlier of (i) the date which is 90 days following the commencement date and (ii) the date the Company takes occupancy of all or any portion of the premises.

In connection with the execution of the 50 Binney Street Sublease, the Company also entered into a ~~Purchase Agreement~~purchase agreement 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, all of which was recorded within restricted cash and other non-current assets on the Company’s consolidated balance sheets ~~as of December 31, 2019.~~

and assessed for recoverability on a recurring basis. The Company will ~~assess~~be required to make another $7.5 million payment under the Furniture Purchase Agreement upon lease ~~classification~~commencement.

In December 2021, the Company entered into a sub-sublease agreement (the "Sub-Sublease") with Meta Platforms, Inc. (“Meta”). Under the terms of the Sub-Sublease, the Company is subleasing the entirety of the 50 Binney Street premises which it has rights to under the 50 Binney Street Sublease. The Company is sub-subleasing the premises for $28.0 million in the first year with 3% annual increases in each subsequent year. Meta will receive access to 50 Binney Street at the lease commencement date, which is the same point that the Company would receive access under the 50 Binney Street Sublease. The Company remains liable under the 50 Binney Street Sublease, ~~and commence recognition~~including for maintenance of the ~~associated rent expense upon lease commencement.~~

~~Seattle, Washington leases~~

In July 2018, the Company entered into a lease agreement for office and laboratory space located in a portion of a building in Seattle, Washington. The lease was amended in October 2018 to increase the total rentable space to approximately 36,126 square feet at $54.00 per square foot in base rent per year, which is subject to scheduled annual rent increases of 2.5% plus certain operating expenses and taxes. The lease commenced on January 1, 2019 and the lease term will continue through January 31, 2027 ("the Initial Term"). The Company moved into the facility in June 2019. The lease allowed for a tenant improvement (“TI”) allowance of up to $215.00 per square foot, or approximately $8.0 million. The Company utilized the $8.0$40.1 million ~~TI allowance and it has been fully reimbursed by the landlord as of December 31, 2019.~~

The Company determined the classification of this lease to be an operating lease and recorded a right-of-use asset and lease liability at lease commencement. The Company was determined to be the owner of the tenant improvements and as such recorded the building improvements as property, plant, and equipment, net, and began to depreciate the building improvements over the remaining lease term at such time the assets were placed into service.

In September 2019, the Company entered into a second amendment to the lease (the “Second Amendment”). The Second Amendment added approximately 22,188 square feet to the existing space and extended the lease term of the entire premises by 16 months, or until April 2028. Fixed monthly rent for the expanded space will be incurred at a rate of $62.80 per square foot per year beginning in January 2021, subject to annual increases of 2.5%. The Second Amendment includes a ~~five-year option to~~collateralized

~~F-25~~F-26

Table of Contents

~~extend the term. The Company is recognizing rent expense on~~letter of credit. As a ~~straight-line basis through the remaining extended term~~result of ~~the lease.~~

~~Upon~~ the execution of the ~~Second Amendment, which was deemed to be a lease modification,~~Sub-Sublease, the Company ~~re-evaluated~~assessed the assumptions made at the original lease commencement date. The Company determined the Second Amendment consists of 2 separate contracts under ASC 842. One contract is related to a new right-of-use for the expanded 22,188 square feet of space, which is to be accounted for as a new lease, and the other is$7.5 million deposit related to the ~~modification~~Furniture Purchase Agreement for recoverability and determined that the amount was not recoverable. As a result, the Company recorded $7.5 million in the Company's consolidated statements of ~~term~~operations and comprehensive loss as selling, general and administrative expense during the year ended December 31, 2021.

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 ~~original 36,126~~Company's future corporate headquarters. Under the terms of the arrangement, the Company will lease approximately 61,180 square feet starting at an annual rate of ~~space. The~~$45 per square foot, subject to annual increases of 2.5%, plus operating expenses and taxes. In addition, the Company ~~recorded an additional right-of-use asset and lease liability upon lease commencement~~will be eligible for a tenant work allowance of $160 per rentable square foot of the ~~expanded space.~~premises. The lease will commence on the date on which the Landlord tenders possession of the premises to the Company with any tenant work required to be performed by the Landlord substantially completed, which is anticipated to occur in the first half of 2022.

Embedded leases

OnIn June 3, 2016, the Company entered into a manufacturing agreement for the future commercial production of the Company’s ~~LentiGlobin~~beti-cel and ~~Lenti-D~~eli-cel drug products with a contract manufacturing organization. Under this 12-year agreement, the contract manufacturing organization will complete the design, construction, validation and process validation of the leased suites prior to anticipated commercial launch of the product candidates. During construction, the Company paid $12.0 million upon the achievement of certain contractual ~~milestones, and may pay up to $8.0 million in additional contractual milestones if the Company elects its option to lease additional suites.~~milestones. Construction was completed in March 2018 and beginning in April 2018, the Company pays $5.1 million per year, subject to annual inflationary adjustments, in fixed suite fees, as well as certain fixed labor, raw materials, testing and shipping costs for manufacturing ~~services, and may pay additional suite fees if it elects its option to reserve or lease additional suites.~~

services. The Company may terminate this agreement at any time upon payment of a one-time termination fee and up to 24 months of fixed suite and labor fees. The Company concluded in prior periods that this agreement contained an embedded lease ~~under ASC 840~~ as the suites are designated for the Company’s exclusive use during the term of the agreement. The Company ~~concluded that it was not the deemed owner during construction nor was it~~recorded a ~~capital~~right-of-use asset and lease ~~under ASC 840. As a result, in prior periods the Company accounted~~liability for ~~the agreement as an~~this operating lease ~~under~~on the effective date of ASC ~~840~~842 and ~~recognized straight-line~~is recognizing rent expense ~~over~~on a straight-line basis throughout the ~~non-cancellable~~remaining term of the embedded lease. ~~As part of its adoption of ASC 842, effective January 1, 2019,~~

In November 2016, the Company ~~carried forward its~~entered into an agreement for clinical and commercial production of the Company’s beti-cel, lovo-cel, and eli-cel drug products with a contract manufacturing organization at an existing facility. The Company concluded that this agreement contains an embedded operating lease ~~classification under ASC 840. Additionally,~~as the clean rooms are designated for the Company’s exclusive use during the term of the agreement. The term of the agreement is five years with subsequent three-year renewals at the mutual option of each party. As a result, the Company recorded a right-of-use asset and lease liability for this operating lease on the effective date of ASC 842, and is recognizing rent expense on a straight-line basis throughout the estimated remaining term of the embedded lease. In March 2020, the Company amended its agreement with the contract manufacturing organization, resulting in a lease modification. Under the terms of the amended agreement, the Company may be required to pay annual maintenance and production fees of up to €16.5 million, depending on its production needs, and may terminate this agreement with twelve months’ notice and a one-time termination fee. In September 2021, the Company reassessed the term of this lease in light of the planned orderly wind down of its operations in Europe. As a result, the Company reduced the right-of-use asset and related lease liability to reflect a shortened expected term of the agreement. In November 2021, the Company exercised its right to terminate the lease agreement, and such termination will be effective in November 2022. Per the terms of the amended agreement, the Company was obligated to pay a one-time termination fee of €1.0 million upon termination, which was paid in December 2021. In connection with this termination, the Company will pay for services properly rendered through the date of termination in accordance with the contract manufacturing agreement, based on work completed and expenses incurred prior to the date of termination.

In July 2020, the Company entered into an agreement reserving manufacturing capacity with a contract manufacturing organization. The Company concluded that this agreement contains an embedded lease as a controlled environment room at the facility is designated for the Company's exclusive use during the term of the agreement, with the option to sublease the space if the Company provides notice that it will not utilize it for a specified duration of time. Under the terms of the agreement, the Company will be required to pay up to $5.4 million per year in maintenance fees in addition to the cost of any services provided and may terminate this agreement with eighteen months' notice. The agreement commenced in March 2021, and it has a term of five years with the option to extend. The Company classified the embedded lease as an operating lease and recognized a right-of-use asset and lease liability upon lease commencement in March 2021 and is recognizing rent expense on a straight-line basis throughout the remaining term of the embedded lease.

In February 2021, the Company entered into another agreement reserving manufacturing capacity with a contract manufacturing organization. The ~~Company’s~~Company concluded that this agreement contains an embedded lease as a controlled

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environment room at the facility is designated for the Company's exclusive use during the term of the agreement, with the option to sublease the space if the Company provides notice that it will not utilize it for a specified duration of time. Under the terms of the agreement, the Company will be required to pay up to $4.2 million per year in maintenance fees and an immaterial amount of other annual fees as well as per-batch fees for the cost of any services provided. Either party may terminate this agreement with eighteen months’ notice at any time or with eight months’ notice after stage 5 has commenced. The term of the agreement is five years, with the option to extend, and it commenced in November 2021. The Company classified the embedded ~~leases are not material to~~lease as an operating lease and recognized a right-of-use asset and lease liability upon lease commencement in November 2021 and is recognizing rent expense on a straight-line basis throughout the ~~consolidated financial statements.~~remaining term of the embedded lease.

Summary of all lease costs recognized under ASC 842

The following table contains a summary of the lease costs recognized under ASC 842 and other information pertaining to the Company’s operating leases for the ~~year~~years ended December 31, ~~2019~~2021 and 2020 (in thousands):


	~~For the~~ ~~year ended~~ ~~December 31, 2019~~

~~Lease cost~~ ⁽¹⁾
~~Operating lease cost~~	$	~~35,346~~
~~Total lease cost~~	$	~~35,346~~

~~Other information~~
~~Operating cash flows used for operating leases~~	$	~~31,026~~
~~Weighted average remaining lease term~~	~~7.4 years~~
~~Weighted average discount rate~~	~~6.70~~		%


	For the year ended December 31,
	2021			2020 (2)			2019 (2)
Lease cost (1)
Operating lease cost	$	25,067		$	18,660		$	20,005
Total lease cost	$	25,067		$	18,660		$	20,005

Other information
Operating cash flows used for operating leases	$	22,805		$	17,780		$	17,205
Weighted average remaining lease term	4.7 years			6.3 years			7.3 years
Weighted average discount rate	5.02		%	5.98		%	6.66		%

(1)

⁽¹⁾ Short-term lease costs and variable lease costs incurred by the Company for the twelve months ended December 31, 2021, 2020 and 2019 were immaterial.

(2) Prior period amounts have been retrospectively adjusted to reflect the effects of the Separation.

Rent expense is calculated on a straight-line basis over the term of the lease. Rent expense recognized under all leases, including additional charges for utilities, parking, maintenance, and real estate taxes, was ~~$45.3~~$36.2 million, ~~$9.8~~$24.2 million, and ~~$9.0~~$23.3 million for the years ended December 31, 2021, 2020 and 2019, ~~2018 and 2017,~~ respectively. ~~Note that the Company adopted ASC 842~~

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effective January 1, 2019 using the required modified retrospective approach and utilizing the effective date as its date of initial application. Therefore, amounts disclosed pertaining to the years ended December 31, 2018 and 2017 are presented under previous accounting guidance and are therefore not comparable to the amounts recorded in the current period under ASC 842.

As of December 31, ~~2019,~~2021, future minimum commitments under ASC 842 under the Company’s operating leases were as follows (in thousands):

As of
Maturity of lease liabilities December 31, 2019
2020 $ 33,257
2021 35,816
2022 31,052
2023 31,540
2024 31,552
2025 and thereafter 88,336
Total lease payments 251,553
Less: imputed interest (60,566)
Total operating lease liabilities $ 190,987


	As of
Maturity of lease liabilities	December 31, 2021
2022	$	27,037
2023	21,460
2024	18,009
2025	14,639
2026	8,598
2027 and thereafter	12,356
Total lease payments	102,099
Less: imputed interest	(12,515)
Total operating lease liabilities	$	89,584

The above table excludes legally binding minimum lease payments for leases executed but not yet commenced as of December 31, ~~2019.~~2021.

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11. Commitments and contingencies

Lease commitments

The Company leases certain office and laboratory space and has embedded leases at contract manufacturing organizations. Refer to Note 8,10, Leases, for further information on the terms of these lease agreements.

~~Contingent consideration related to business combinations~~

On June 30, 2014, the Company acquired Pregenen. The Company may be required to make up to an additional $120.0 million in remaining future contingent cash payments to the former equityholders of Pregenen upon the achievement of certain clinical and commercial milestones related to the Pregenen technology, of which $20.1 million relates to clinical milestones and $99.9 million relates to commercial milestones. In accordance with accounting guidance for business combinations, contingent consideration liabilities are required to be recognized on the consolidated balance sheets at fair value. Estimating the fair value of contingent consideration requires the use of significant assumptions primarily relating to probabilities of successful achievement of certain clinical and commercial milestones, the expected timing in which these milestones will be achieved and discount rates. The use of different assumptions could result in materially different estimates of fair value. See Note 4, ~~Fair value measurements,~~ ~~for additional information.~~

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, which includes the collaboration agreement entered into with Regeneron in August 2018.~~ products.

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. ~~Please refer to Note 11,~~ ~~Collaborative arrangements,~~ ~~for further information on the collaboration agreement with Regeneron.~~

Based on our development plans as of December 31, ~~2019, we~~2021, 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 the Company's 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 not occurred, such contingencies are not recorded in the Company’s financial ~~statements and are excluded from the table below.~~statements.

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The Company has various manufacturing development and license agreements to support clinical and commercial product needs. The following table presents non-cancelable contractual obligations arising from these arrangements:


Years ended December 31,	Purchase commitment
2022	$	43,903
2023	9,918
2024 and thereafter	—
Total purchase commitments	$	53,821

Years ended December 31, Purchase
commitment
2020 $ 129,950
2021 22,597
2022 24,310
2023 25,040
2024 46,050
2025 and thereafter —
Total purchase commitments $ 247,947
Litigation

From time to time, the Company is party to various claims and complaints arising in the ordinary course of business, including securities class action litigation. The Company enters into ~~agreements containing~~ standard indemnification ~~provisions~~agreements in the ordinary course of business. Pursuant to ~~such terms,~~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 ~~has never incurred costs~~also indemnifies each of its officers and directors for certain events or occurrences, subject to ~~defend lawsuits~~certain limits, while the officer or ~~settle claims related to these indemnification agreements.~~

~~In January 2020,~~director is or was serving at the ~~Company executed an amendment to an existing contract manufacturing arrangement, which extended 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 ~~contract by one year, through December 31, 2021, which increases~~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 ~~contractual~~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 ~~by an additional $24.7 million~~is minimal. Accordingly, it has not recognized any liabilities relating to ~~the table above.~~these obligations.

~~10. Common stock and preferred stock~~12. Equity

The Company is authorized to issue 125.0 million shares of common stock. Holders of common stock are entitled to 1 vote per share. Holders of common stock are entitled to receive dividends, if and when declared by the Company’s board of directors, and to share ratably in the Company’s assets legally available for distribution to the Company’s shareholders in the

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event of liquidation. Holders of common stock have no preemptive, subscription, redemption or conversion rights. As of December 31, ~~2019,~~2021 and ~~2018,~~2020, the Company had ~~55.4~~71.1 million and ~~54.7~~66.4 million shares of common stock issued and outstanding, respectively.

In ~~January 2018,~~September 2021, the Company ~~sold 0.3~~entered into an equity purchase agreement with certain investors, pursuant to which the Company agreed to sell and issue, in a private placement offering of securities, an aggregate of (i) 2.3 million shares of the Company’s common stock at a purchase price per share of $16.50 and (ii) pre-funded warrants to purchase up to 2.3 million shares of common stock (the “Pre-Funded Warrants”) at an effective price of $16.49 per share ($16.49 paid to the Company upon the closing of the offering and $0.01 to be paid upon exercise of such Pre-Funded Warrants). This resulted in aggregate gross proceeds to the Company of approximately $75.0 million. The Pre-Funded Warrants can be exercised at any time or times on or after September 7, 2021, until exercised in full. The Pre-Funded Warrants have been evaluated to determine the appropriate accounting and classification pursuant to ASC 480 and ASC 815. Based on the ~~partial exercise~~terms of ~~an overallotment option granted to~~ the ~~underwriters in connection~~Pre-Funded Warrants, management concluded that they should be classified within stockholders' equity on its consolidated balance sheets, with no subsequent remeasurement as long as the December 2017 underwritten public offering at a price of $185.00 per share for aggregate net proceeds of $48.7 million. In July 2018, the Company sold 3.9 million shares of common stock (excluding any shares sold pursuant to an overallotment option granted to the underwriters in connection with the offering) through an underwritten public offering at a price of $162.50 per share for aggregate net proceeds of $600.6 million. In August 2018, the Company sold 0.4 million shares of common stock to Regeneron in connection with a collaboration arrangement at a price of $238.10 per share for aggregate net proceeds of $100.0 million, of which $45.5 million was attributed to a prepayment of joint research activities.underlying warrant agreements are not modified or amended.

The Company is authorized to issue 5.0 million shares of preferred stock in one or more series and to fix the powers, designations, preferences and relative participating option or other rights thereof, including dividend rights, conversion rights, voting rights, redemption terms, liquidation preferences and the number of shares constituting any series, without any further vote or action by the Company’s shareholders. As of December 31, ~~2019~~2021 and ~~2018,~~2020, the Company had 0no shares of preferred stock issued or outstanding.

Reserved for future issuance

The Company has reserved for future issuance the following number of shares of common stock (in thousands):

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		As of December 31,				As of December 31,
		2019	2018		2021	2020
Options to purchase common stock(1)	Options to purchase common stock(1)	5,483	4,643	Options to purchase common stock(1)	5,534	6,262
Restricted stock units(1)	Restricted stock units(1)	1,127	931	Restricted stock units(1)	3,427	1,495
2013 Stock Option and Incentive Plan	2013 Stock Option and Incentive Plan	2,007	1,458	2013 Stock Option and Incentive Plan	2,250	2,545
Pre-funded warrants				Pre-funded warrants	2,273	—
2013 Employee Stock Purchase Plan	2013 Employee Stock Purchase Plan	147	172	2013 Employee Stock Purchase Plan	1,347	67
		8,764	7,204		14,831	10,369

~~11. Collaborative arrangements~~

~~To date, the Company’s collaboration revenue has been primarily generated from its collaboration arrangements with Bristol-Myers Squibb ("BMS"), formerly Celgene Corporation ("Celgene") prior~~(1) Stock options and restricted stock units that are reserved for future issuance include awards outstanding to ~~its acquisition by BMS in November 2019, and Regeneron, each as further described below.~~

~~Bristol-Myers Squibb~~

~~BMS Original Collaboration Agreement~~

~~On March 19, 2013, the Company entered into a Master Collaboration Agreement (the "BMS Collaboration Agreement”) with Celgene (now BMS following its acquisition~~employees of Celgene in November 2019) to discover, develop and commercialize potentially disease-altering gene therapies in oncology. The collaboration is focused on applying gene therapy technology to genetically modify a patient’s own T cells, known as chimeric antigen receptor, or CAR T cells, to target and destroy cancer cells. Additionally, on March 19, 2013, the Company entered into a Platform Technology Sublicense Agreement (the “Sublicense Agreement”) with BMS pursuant to which the Company obtained a sublicense to certain intellectual property from BMS, originating under BMS’s license from Baylor College of Medicine, for use in the collaboration.

Under the terms of the BMS Collaboration Agreement, the Company received a $75.0 million up-front, non-refundable cash payment. The Company was responsible for conducting discovery, research and development activities through completion of phase 1 clinical studies, if any, during the initial term of the BMS Collaboration Agreement, or three years. The collaboration is governed by a joint steering committee (“JSC”) formed by an equal number of representatives from the Company and BMS. The JSC, among other activities, reviews the collaboration program, reviews and evaluates product candidates and approves regulatory plans. In addition to the JSC, the BMS Collaboration Agreement provides that the Company and BMS each appoint representatives to a patent committee, which is responsible for managing the intellectual property developed and used during the collaboration.

~~BMS Amended Collaboration Agreement~~

On June 3, 2015, the Company and BMS amended and restated the BMS Collaboration Agreement (the “Amended BMS Collaboration Agreement”). Under the Amended BMS Collaboration Agreement, the parties narrowed the focus of the collaboration to exclusively work on anti- B-cell maturation antigen (“BCMA”) product candidates for a new ~~three~~2seventy bio.-year term. In connection with the Amended BMS Collaboration Agreement, the Company received an up-front, one-time, non-refundable, non-creditable payment of $25.0 million to fund research and development under the collaboration. The collaboration is governed by the JSC. Under the terms of the Amended BMS Collaboration Agreement, for up to 2 product candidates selected for development under the collaboration, the Company was responsible for conducting and funding all research and development activities performed up through completion of the initial phase 1 clinical study of such product candidates.

On a product candidate-by-product candidate basis, up through a specified period following enrollment of the first patient in an initial phase 1 clinical study for such product candidate (the “Option Period”), the Company had granted BMS an option to obtain an exclusive worldwide license to develop and commercialize such product. Following BMS’s license of each product candidate, the Company is entitled to elect to co-develop and co-promote each product candidate in the U.S.

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~~BMS Ide-cel License Agreement~~

On February 10, 2016, BMS exercised its option to obtain an exclusive worldwide license to develop and commercialize ide-cel, the first product candidate under the Amended BMS Collaboration Agreement, pursuant to an executed license agreement (“Ide-cel License Agreement”) entered into by the parties on February 16, 2016 and paid to the Company the associated $10.0 million option fee. Pursuant to the Ide-cel License Agreement, BMS was responsible for development and related funding of ide-cel after the substantial completion of the phase 1 clinical trial. The Company was responsible for the manufacture of vector and associated payload throughout development and upon BMS’s request, throughout commercialization, the costs of which were reimbursable by BMS in accordance with the terms of the Amended and Restated Co-Development, Co-Promote and Profit Share Agreement, as further described below. BMS was responsible for the manufacture of drug product throughout development and commercialization.

~~BMS Ide-cel Co-Development, Co-Promote and Profit Share Agreement~~

On March 28, 2018, the Company elected to co-develop and co-promote ide-cel within the U.S. pursuant to the execution of the Amended and Restated Co-Development, Co-Promote and Profit Share Agreement (“Ide-cel CCPS”), which replaced the Ide-cel License Agreement. The responsibilities of the parties remain unchanged from those under the Ide-cel License Agreement, however, the Company will share equally in all profits and losses relating to developing, commercializing and manufacturing ide-cel within the U.S. and has the right to participate in the development and promotion of ide-cel in the U.S. BMS is responsible for the costs incurred to manufacture vector and associated payload for use outside of the U.S., plus a markup. Under the Ide-cel CCPS, the Company may receive up to a total of $70.0 million in development milestone payments for the first indication to be addressed by ide-cel, with the ability to obtain additional milestone payments for a second indication and modified licensed products. In the second quarter of 2019, a $10.0 million development milestone was achieved such that as of December 31, 2019, the total remaining potential development milestones on the first indication of ide-cel is $60.0 million. In addition, to the extent ide-cel is commercialized, the Company is entitled to receive tiered royalty payments ranging from the mid-single digits to low-teens based on a percentage of net sales generated outside of the U.S., subject to certain reductions.

~~BMS bb21217 License Agreement~~

On September 22, 2017, BMS exercised its option to obtain an exclusive worldwide license to develop and commercialize bb21217, the second product candidate under the Amended BMS Collaboration Agreement, pursuant to an executed license agreement (“bb21217 License Agreement”) entered into by the parties on September 28, 2017 and paid the Company an option fee of $15.0 million. Pursuant to the bb21217 License Agreement, BMS is responsible for development and related funding of bb21217 after the substantial completion of the ongoing phase 1 clinical trial. In 2019, the parties amended the protocol for the ongoing phase 1 clinical trial to enroll additional patients. The Company is responsible for the manufacture of vector and associated payload throughout development and upon BMS’s request, throughout commercialization. Expenses incurred by the Company associated with these activities are fully reimbursable by BMS at cost plus a mark-up. Throughout both development and commercialization, BMS is responsible for the manufacture of drug product.

The Company currently expects it will exercise its option to co-develop and co-promote bb21217 within the U.S. The Company’s election to co-develop and co-promote bb21217 must be made by the substantial completion of the on-going phase 1 clinical trial of bb21217. If elected, the Company expects the responsibilities of the parties to remain largely unchanged, however, the Company expects it will share equally in all profits and losses relating to developing, commercializing and manufacturing bb21217 within the U.S. and to have the right to participate in the development and promotion of bb21217 in the U.S. BMS would be responsible for the costs incurred to manufacture vector and associated payload for use outside of the U.S., plus a markup. Under this scenario, the Company expects to receive, per product, up to $70.0 million in development milestone payments for the first indication to be addressed by the bb21217 product candidate, with the ability to obtain additional milestone payments for a second indication and modified licensed products. In addition, to the extent bb21217 is commercialized, the Company would be entitled to receive tiered royalty payments ranging from the mid-single digits to low-teens based on a percentage of net sales generated outside of the U.S., subject to certain reductions.

In the event the Company does not exercise its option to co-develop and co-promote bb21217, the Company will receive an additional fee in the amount of $10.0 million. Under this scenario, the Company may be eligible to receive up to $10.0 million in clinical milestone payments, up to $117.0 million in regulatory milestone payments, and up to $78.0 million in commercial milestone payments. In addition, to the extent bb21217 is commercialized, the Company would be entitled to receive tiered royalty payments ranging from the mid-single digits to low-teens based on a percentage of net sales, subject to certain reductions.

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~~Accounting Analysis – Ide-cel~~

~~ASC Topic 606,~~ ~~Revenue from Contracts With Customers ("Topic 606"),~~ allows entities to reflect the aggregate effect of all contract modifications when identifying the satisfied and unsatisfied performance obligations for contracts that were modified prior to Topic 606 adoption. BMS’s option to in-license the first product candidate, ide-cel, under the arrangement was considered a material right at the time the Amended BMS Collaboration Agreement was executed in June 2015 given the product candidate had been formally nominated by the JSC and that substantially all investigational new drug application, or IND, enabling activities had been completed by that time. In making this determination, the Company also considered the option price relative to the value of the underlying license. BMS’s exercise of this material right in February 2016 was determined to represent a contract modification and represents the last contract modification prior to the adoption of Topic 606. As a result, the BMS Collaboration Agreement, Amended BMS Collaboration Agreement, and Ide-cel CCPS are combined for accounting purposes and treated as a single arrangement. As of February 2016, BMS’s option to license an additional product candidate under the collaboration did not represent a material right due primarily to the significant uncertainty regarding whether any additional product candidates would be identified under the Amended BMS Collaboration Agreement. Therefore, the license to the Company’s second product candidate, bb21217, which was executed in September 2017, is accounted for as a separate contract. Refer below for discussion of the bb21217 accounting analysis.

As of the February 2016 contract modification date, the Company concluded the arrangement contained the following promised goods and services: (i) research and development services, (ii) a license to ide-cel, and (iii) manufacture of vectors and associated payload for incorporation into ide-cel through development. The Company determined that the manufacture of commercial vector represented an option to acquire additional goods and services that is not representative of a material right. In addition, as of the February 2016 contract modification date, BMS had not exercised its option to purchase any commercial vector. Accordingly, the manufacture of commercial vector was not considered to be a performance obligation at that time.

The Company concluded that the research and development services are distinct from the other promised goods and services under the arrangement given that BMS can benefit from the research and development services on their own and such services are distinct within the context of the contract. Thus, such services are considered to be a separate performance obligation. The Company concluded that the license to ide-cel is not distinct from the vector manufacturing services because the manufacturing is essential to the use of the license. Accordingly, these two promised goods and services are considered a single combined performance obligation.

~~Ide-cel transaction price~~

The following tables summarize the total transaction price, the allocation of the total transaction price to the identified performance obligations under the arrangement, and the amount of the transaction price unsatisfied as of December 31, 2019 (in thousands):


	~~Ide-cel transaction price as of December 31, 2019~~
~~Up-front non-refundable payment - BMS Collaboration Agreement~~	$	~~75,000~~
~~Up-front non-refundable payment - Amended BMS Collaboration Agreement~~	~~25,000~~
~~Ide-cel license fee - Ide-cel License Agreement~~	~~10,000~~
~~Ide-cel development milestone~~	~~10,000~~
~~Estimated variable consideration~~	~~87,189~~
	$	~~207,189~~

Allocation of
transaction
price to
performance
obligations Transaction price unsatisfied as of December 31, 2019
Ide-cel research and development services $ 40,912 $ —
Ide-cel license and manufacturing services 166,277 17,815
$ 207,189 $ 17,815

The estimated variable consideration of $87.2 million relates to the estimated reimbursement from BMS for the manufacture of vectors and associated payload through development. The total transaction price has been allocated to the

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performance obligations identified based on a relative standalone selling price ("SSP") basis. The Company estimated the SSP of the license after considering potential future cash flows under the license. The Company then discounted these probability-weighted cash flows to their present value. The Company estimated the SSP of each of the research and development services and manufacturing services to be provided based on the Company’s estimated cost of providing the services plus an applicable profit margin commensurate with observable market data for similar services.

All of the clinical and regulatory milestones which have not been met as of period end are fully constrained and are excluded from the transaction price. As part of its evaluation of the constraint, the Company considered numerous factors, including the fact that achievement of the milestones is outside the control of the Company and contingent upon the future success of clinical trials, the licensee’s efforts, or the receipt of regulatory approval. Any consideration related to sales-based milestones (including royalties) will be recognized when the related sales occur as these amounts have been determined to relate predominantly to the license granted to BMS and therefore are recognized at the later of when the performance obligation is satisfied, or the related sales occur. The Company re-evaluates the transaction price, including its estimated variable consideration included in the transaction price and all constrained amounts, at each reporting period and as uncertain events are resolved or other changes in circumstances occur.

~~Ide-cel research and development services~~

The Company allocated $40.9 million of the transaction price to the research and development services. The Company satisfied this performance obligation as the research and development services were performed. The Company determined that the period of performance of the research and development services was three years through projected initial phase 1 clinical study substantial completion, or through May 2018. The Company recognized revenue related to research and development services performed using an input method by calculating costs incurred at each period end relative to total costs expected to be incurred. Although the Company fully satisfied this performance obligation during the second quarter of 2018, any changes to the total transaction price following the completion of this performance obligation in May 2018 will be allocated to the performance obligations under the arrangement based on a relative SSP basis and therefore the allocation of any changes to the total transaction price may impact the revenue recognized for this performance obligation in the period of change.

The following table summarizes the revenue recognized, or revenue adjustment recorded, related to the ide-cel research and development services for the years ended December 31, 2019, 2018, and 2017 (in thousands):

For the years ended December 31,
2019 2018
2017 ⁽¹⁾
Ide-cel research and development services revenue $ 2,264 $ 5,751 $ 6,208
$ 2,264 $ 5,751 $ 6,208

⁽¹⁾The Company adopted Topic 606 effective January 1, 2018 using the modified retrospective transition method. Therefore, amounts disclosed in the table above pertaining to the year ended December 31, 2017 are presented under previous accounting guidance and are therefore not comparable to the amounts recorded in the current period under Topic 606.

~~Ide-cel license and manufacturing services~~

The Company allocated $166.3 million of the transaction price to the combined unit of accounting which consists of the license and manufacture of vectors and associated payload for incorporation into ide-cel.

The Company accounts for its vector manufacturing services for development in the U.S. and BMS’s U.S. development efforts within the scope of ASC 808 given that both parties are active participants in the activities and both parties are exposed to significant risks and rewards dependent on the commercial success of the activities. The Company recognizes collaboration revenue for its U.S. manufacturing services by analogy to Topic 606. The portion of BMS’s U.S. development costs that the Company is responsible for are recognized as a reduction to its collaboration revenues, or, if in excess of such revenues in a given quarter, the excess is recorded as research and development expense.

Revenue recognition for the combined unit of accounting commenced during the first quarter of 2017. The Company recognizes revenue associated with the combined unit of accounting using the proportional performance method, as the Company will satisfy this performance obligation as the manufacturing services are performed through development. In using this method, the Company estimated its development plan for ide-cel, including expected demand from BMS, and the costs associated with the manufacture of vectors and associated payload for incorporation into ide-cel. On a quarterly basis, the Company determines the proportion of effort incurred as a percentage of total effort it expects to expend. This ratio is applied to the transaction price, which includes variable consideration, allocated to the combined performance obligation consisting of the ide-cel license and manufacturing services. Management has applied significant judgment in the process of developing its

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~~budget estimates and any changes to these estimates will be recognized in the period in which they change as a cumulative catch up.~~

The following table summarizes the net collaboration revenue recognized or expense incurred for the joint ide-cel development efforts in the U.S. under ASC 808, including revenue or expense related to the combined performance obligation for the license and vector manufacturing of ide-cel in the U.S. for the years ended December 31, 2019, 2018, and 2017 (in thousands):

For the years ended December 31,
2019 2018
2017 ⁽²⁾
ASC 808 ide-cel revenue - U.S. ⁽¹⁾
$ — $ 6,255 $ 4,905
ASC 808 ide-cel research and development expense - U.S. ⁽¹⁾
$ 32,415 $ 8,689 $ 3,037

⁽¹⁾As noted above, the calculation of collaboration revenue or research and development expense to be recognized for joint ide-cel development efforts in the U.S. is performed on a quarterly basis. The calculation is independent of previous activity, which may result in fluctuations between revenue and expense recognition period over period, depending on the varying extent of effort performed by each party during the period.

⁽²⁾The Company adopted Topic 606 effective January 1, 2018 using the modified retrospective transition method. Therefore, amounts disclosed in the table above pertaining to the year ended December 31, 2017 are presented under previous accounting guidance and are therefore not comparable to the amounts recorded in the current period under Topic 606.

Revenue related to the combined unit of accounting for the non-US license and vector manufacturing services is accounted for in accordance with Topic 606. The following table summarizes the revenue recognized related to the combined unit of accounting for the ide-cel non-US license and vector manufacturing services for the years ended December 31, 2019, 2018, and 2017 (in thousands):

For the years ended December 31
2019 2018
2017 ⁽¹⁾
ASC 606 ide-cel license and manufacturing revenue - outside of U.S. $ 25,522 $ 35,900 $ 10,372

As of December 31, 2019, the aggregate amount of the transaction price allocated to the combined performance obligation, which consists of the ide-cel license and manufacturing services, that is unsatisfied, or partially unsatisfied, is $17.8 million, which the Company expects to recognize as revenue as manufacturing services are provided through the remaining development period which is estimated to be through 2020. As of December 31, 2019 and 2018, the Company had $8.5 million and $23.0 million, respectively, of deferred revenue associated with the combined performance obligation consisting of the ide-cel license and manufacturing services.

~~Accounting Analysis – bb21217~~

On September 22, 2017, BMS exercised its option to obtain an exclusive worldwide license to develop and commercialize bb21217, the second optioned product candidate, pursuant to the bb21217 License Agreement entered into by the parties on September 28, 2017. The bb21217 License Agreement is considered a separate contract for accounting purposes as the option to obtain an exclusive worldwide license to develop and commercialize bb21217, or any other product candidate, was not considered a material right to BMS at the time the practical expedient was applied. The Company made this evaluation after considering the significant uncertainty at that time regarding whether any additional product candidates would be identified under the Amended BMS Collaboration Agreement. In particular, the Company considered that bb21217 had not been formally nominated as a product candidate under the collaboration at that time, primarily due to a lack of preclinical data as well as uncertainty surrounding the ability to successfully complete various IND-enabling activities.

At contract inception, the Company concluded that the arrangement contained the following promised goods and services: (i) research and development services, (ii) a license to the second product candidate, bb21217, and (iii) manufacture of vectors and associated payload for incorporation into bb21217 through development. The Company determined that the manufacture of commercial vector represents an option to acquire additional goods and services that is not representative of a material right. In addition, at this time BMS has not exercised its option to purchase any commercial vector. Accordingly, the manufacture of commercial vector is not considered to be a performance obligation at this time.

The Company concluded that the research and development services for the phase 1 clinical trial as originally contemplated by the parties are distinct from the other promised goods and services under the arrangement given that BMS can benefit from

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the research and development services on their own and such services are distinct within the context of the contract. Thus, such services are considered to be a separate performance obligation. Similar to ide-cel, the Company concluded that the license to bb21217 is not distinct from the vector manufacturing services because the manufacturing is essential to the use of the license. Accordingly, these two promised goods and services are considered a single combined performance obligation.

The agreement to expand the bb21217 phase 1 trial is treated as a contract modification for accounting purposes because the trial expansion is the addition of a promised good or service that is distinct and the associated consideration reflects the standalone selling price of the additional promised good or service. It will be accounted for prospectively as a separate contract from the bb21217 License Agreement. The transaction price associated with these additional patients consists of variable consideration and is based upon an agreed-upon amount per patient which will be recognized as revenue as the patients are treated. The related performance obligation remained partially unsatisfied as of December 31, 2019.

~~bb21217 License Agreement transaction price~~


	~~bb21217 transaction price as of December 31, 2019~~
~~bb21217 license fee - bb21217 License Agreement~~	$	~~15,000~~
~~Estimated variable consideration~~	~~26,687~~
	$	~~41,687~~

Allocation of transaction
price to performance
obligations Transaction price unsatisfied as of December 31, 2019
bb21217 research and development services $ 5,444 $ —
bb21217 license and manufacturing services 36,243 36,243
$ 41,687 $ 36,243

The estimated variable consideration of $26.7 million relates to reimbursement from BMS for the manufacturing services during development. The total transaction price has been allocated to the performance obligations identified based on a relative SSP basis. The Company estimated the SSP of the license after considering potential future cash flows under the license. The Company then discounted these probability-weighted cash flows to their present value. The Company estimated the SSP of each of the research and development services and manufacturing services to be provided based on the Company’s estimated cost of providing the services plus an applicable profit margin commensurate with observable market data for similar services.

All of the clinical and regulatory milestones are fully constrained and are excluded from the transaction price. As part of its evaluation of the constraint, the Company considered numerous factors, including the fact that achievement of the milestones is outside the control of the Company and contingent upon the future success of its clinical trials, the licensee’s efforts, or the receipt of regulatory approval. Any consideration related to sales-based milestones (including royalties) will be recognized when the related sales occur as these amounts have been determined to relate predominantly to the license granted to BMS and therefore are recognized at the later of when the performance obligation is satisfied, or the related sales occur. The Company re-evaluates the transaction price, including its estimated variable consideration included in the transaction price and all constrained amounts, each reporting period and as uncertain events are resolved or other changes in circumstances occur.

~~bb21217 research and development services~~

The Company allocated $5.4 million of the transaction price to the research and development services under the phase 1 trial as originally contemplated. The Company satisfied this performance obligation as the research and development services were performed. The Company determined that the period of performance of the research and development services was two years through projected initial phase 1 clinical study substantial completion for these patients, or through September 2019. The Company recognized revenue related to research and development services performed using an input method by calculating costs incurred at each period end relative to total costs expected to be incurred.

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Although the Company fully satisfied this performance obligation during the third quarter of 2019, any changes to the total transaction price following the completion of this performance obligation in September 2019 will be allocated to the performance obligations under the arrangement based on a relative SSP basis and therefore the allocation of any changes to the total transaction price may impact the revenue recognized for this performance obligation in the period of change.

~~The following table summarizes the revenue recognized related to the bb21217 research and development services for the years ended December 31, 2019, 2018, and 2017 (in thousands):~~

For the years ended December 31,
2019 2018
2017 ⁽¹⁾
bb21217 research and development services revenue $ 2,163 $ 2,884 $ 721
$ 2,163 $ 2,884 $ 721

~~bb21217 license and manufacturing services~~

The Company will satisfy its performance obligation related to the manufacture of vectors and associated payload for incorporation into bb21217 through development as the bb21217 manufacturing services are performed. As of December 31, 2019, the manufacturing services for bb21217 had not yet commenced. Therefore, 0 amounts have been recognized for the combined performance obligation in the consolidated statements of operations for the years ended December 31, 2019, 2018, and 2017.

The aggregate amount of the transaction price allocated to the combined performance obligation, which consists of the bb21217 license and manufacturing services, is $36.2 million. The Company does not expect that recognition will begin in the next twelve months and has therefore classified deferred revenue associated with the combined performance obligation as deferred revenue, net of current portion on its consolidated balance sheet. The Company had $9.8 million of remaining deferred revenue as of December 31, 2019 and 2018 associated with the combined performance obligation consisting of the bb21217 license and manufacturing services.

~~Contract assets and liabilities – ide-cel and bb21217~~

The Company receives payments from its collaborative partners based on billing schedules established in each contract. Up-front payments and fees are recorded as deferred revenue upon receipt or when due until such time as the Company satisfies its performance obligations under these arrangements. A contract asset is a conditional right to consideration in exchange for goods or services that the Company has transferred to a customer. Amounts are recorded as accounts receivable when the Company’s right to consideration is unconditional.

~~The following table presents changes in the balances of the Company’s BMS receivables and contract liabilities during the twelve months ended December 31, 2019 (in thousands):~~

Balance at
December 31, 2018
Additions Deductions
Balance at
December 31, 2019
Receivables $ 6,528 $ 11,250 $ (17,378) $ 400
Contract liabilities:
Deferred revenue $ 34,939 $ 10,000 $ (26,674) $ 18,265

The change in the receivables balance for the year ended December 31, 2019 is primarily driven by amounts collected from BMS in the period, offset by amounts owed to the Company for a development milestone that was achieved in the second quarter of 2019.

The decrease in deferred revenue during the year ended December 31, 2019 is primarily driven by amounts recognized for the combined performance obligation consisting of the ide-cel license and manufacturing services. During the year ended December 31, 2019, $17.6 million of the deferred revenue balance at the beginning of the period was released from deferred revenue.

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~~Regeneron~~

~~Regeneron Collaboration Agreement~~

On August 3, 2018, the Company entered into a Collaboration Agreement (the “Regeneron Collaboration Agreement”) with Regeneron pursuant to which the parties will apply their respective technology platforms to the discovery, development, and commercialization of novel immune cell therapies for cancer. On August 24, 2018, following the completion of required regulatory reviews, the Regeneron Collaboration Agreement became effective. Under the terms of the agreement, the parties will leverage Regeneron’s proprietary platform technologies for the discovery and characterization of fully human antibodies, as well as T cell receptors directed against tumor-specific proteins and peptides and the Company will contribute its field-leading expertise in gene therapy.

In accordance with the Regeneron Collaboration Agreement, the parties jointly selected 6 initial targets and intend to equally share the costs of research up to the point of submitting an IND application for a potential gene therapy product directed to a particular target. Additional targets may be selected to add to or replace any of the initial targets during the ~~five-year research collaboration term as agreed to by the parties.~~

Regeneron will accrue a certain number of option rights exercisable against targets as the parties reach certain milestones under the terms of the agreement. Upon the acceptance of an IND for the first product candidate directed to a target, Regeneron will have the right to exercise an option for co-development/co-commercialization of product candidates directed to such target on a worldwide or applicable opt-in territory basis, with certain exceptions. Where Regeneron chooses to opt-in, the parties will share equally in the costs of development and commercialization, and will share equally in any profits or losses therefrom in applicable opt-in territories. Outside of the applicable opt-in territories, the target becomes a licensed target and Regeneron would be eligible to receive, with respect to any resulting product, milestone payments of up to $130.0 million per product and royalties on net sales outside of the applicable opt-in territories at a rate ranging from the mid-single digits to low-double digits. A target would also become a licensed target in the event Regeneron does not have an option to such target, or Regeneron does not exercise its option with respect to such target.

Either party may terminate a given research program directed to a particular target for convenience, and the other party may elect to continue such research program at its expense, receiving applicable cross-licenses. The terminating party will receive licensed product royalties and milestone payments on the potential applicable gene therapy products. Where the Company terminates a given research program for convenience, and Regeneron elects to continue such research program, the parties will enter into a transitional services agreement. Under certain conditions, following its opt-in, Regeneron may terminate a given collaboration program and the Company may elect to continue the development and commercialization of the applicable potential gene therapy products as licensed products.

~~Regeneron Share Purchase Agreement~~

A Share Purchase Agreement (“SPA”) was entered into by the parties on August 3, 2018. On August 24, 2018, the closing date of the transaction, the Company issued Regeneron 0.4 million shares of the Company’s common stock, subject to certain restrictions, for $238.10 per share, or $100.0 million in the aggregate. The purchase price represents $63.0 million worth of common stock plus a $37.0 million premium, which represents a collaboration research advancement, or credit to be applied to Regeneron’s initial 50 percent funding obligation for collaboration research, after which the collaborators will continue to fund ongoing research equally. The collaboration research advancement only applies to pre-IND research activities and is not refundable or creditable against post-IND research activities for any programs where Regeneron exercises their opt-in rights.

~~Accounting analysis – Regeneron~~

~~At the commencement of the arrangement, two units of accounting were identified, which are the issuance of 0.4 million shares of the Company’s common stock and joint research activities during the~~ ~~five~~ year research collaboration term. The Company determined the total transaction price to be $100.0 million, which comprises $54.5 million attributed to the equity sold to Regeneron and $45.5 million attributed to the joint research activities. In determining the fair value of the common stock at closing, the Company considered the closing price of the common stock on the closing date of the transaction and included a lack of marketability discount because Regeneron received shares subject to certain restrictions.

The Company analyzed the joint research activities to assess whether they fall within the scope of ASC 808, and will reassess this throughout the life of the arrangement based on changes in the roles and responsibilities of the parties. Based on the terms of the arrangement as outlined above, for the collaboration research performed prior to submission of an IND application for a potential gene therapy product, both parties are deemed to be active participants in the collaboration. Both

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parties are performing research and development activities and will share equally in these costs through IND. Additionally, Regeneron and the Company are exposed to significant risks and rewards dependent on the commercial success of any product candidates that may result from the collaboration. As such, the collaboration arrangement is deemed to be within the scope of ASC 808.

The $45.5 million attributed to the joint research activities includes the $37.0 million creditable against amounts owed to the Company by Regeneron. The collaboration research advancement will be reduced over time for amounts due to the Company by Regeneron as a result of the parties agreeing to share in the costs of collaboration research equally. The remainder of the amount attributed to the joint research activities will be recognized over the ~~five-year research collaboration term.~~

Consistent with its collaboration accounting policy, the Company will recognize collaboration revenue or research and development expense related to the joint research activities in future periods depending on the amounts incurred by each party in a given reporting period. That is, if the Company’s research costs incurred exceed those research costs incurred by Regeneron in a given quarter, the Company will record collaboration revenue and reduce the original $37.0 million advance by the amount due from Regeneron until such advancement is fully utilized, after which the Company would record an amount due from Regeneron. If Regeneron’s research costs incurred exceed those research costs incurred by the Company in a given quarter, the Company will record research and development expense and record a liability for the amount due to Regeneron. As of December 31, 2019 and 2018, the Company has $38.2 million and $44.0 million, respectively, of the amount attributed to the joint research activities remaining to be recognized which is classified as collaboration research advancement, current portion and collaboration research advancement, net of current portion on the consolidated balance sheet.

The Company recognized $5.7 million of collaboration revenue from the Regeneron Collaboration Agreement during the year ended December 31, 2019. The Company recognized $1.6 million of collaboration revenue from the Regeneron Collaboration Agreement during the year ended December 31, 2018.

~~12. License and royalty revenue~~

~~Novartis Pharma AG~~

On April 26, 2017, the Company entered into a worldwide license agreement with Novartis. Under the terms of the agreement, Novartis non-exclusively licensed certain patent rights related to lentiviral vector technology to develop and commercialize CAR T cell therapies for oncology, including Kymriah (formerly known as CTL19), Novartis’s anti-CD19 CAR T therapy. At contract inception, financial terms of the agreement included a $7.5 million payment upon execution, $7.5 million of potential future milestone payments associated with regulatory approvals, and $1.1 million of payments for each subsequently licensed product, as well as low single digit royalty payments on net sales of covered products. In August 2017, Novartis received FDA approval for Kymriah and paid the Company $2.5 million as a result of the achievement of a related milestone.

Under Topic 606, the Company identified only 1 performance obligation, consisting of the license, which was satisfied at contract inception. Accordingly, the nonrefundable license fee of $7.5 million was recognized as revenue upon contract execution in the second quarter of 2017 and a $2.5 million regulatory milestone was recognized as revenue upon milestone achievement, also in the second quarter of 2017, given there were no other unsatisfied performance obligations in the arrangement. Regulatory approvals are not within the Company’s control or the licensee’s control and are generally not considered probable of being achieved until those approvals are received. As such, these milestones are constrained until such time as regulatory approvals are received. Because the single performance obligation was previously satisfied, all regulatory milestones will be recognized as revenue in full in the period in which the associated milestone is achieved.

The Company began recognizing royalty revenue from sales of Kymriah in the fourth quarter of 2017. As the license was deemed to be the predominant item to which the royalties relate, the Company recognizes royalties from the sales of Kymriah when the related sales occur. For the year ended December 31, 2019, the Company recognized royalty revenue of $8.2 million and the cost of license and royalty revenue was $3.0 million. During the year ended December 31, 2018, the Company recognized royalty revenue of $2.2 million and the cost of license and royalty revenue was $0.9 million.

~~Orchard Therapeutics Limited (assigned by GlaxoSmithKline Intellectual Property Development Limited)~~

On April 28, 2017, the Company entered into a worldwide license agreement with GlaxoSmithKline Intellectual Property Development Limited (“GSK”). Under the terms of the agreement, GSK non-exclusively licensed certain patent rights related to lentiviral vector technology to develop and commercialize gene therapies for Wiscott-Aldrich syndrome and metachromatic leukodystrophy, two rare genetic diseases. Financial terms of the agreement include a nonrefundable upfront payment of $3.0

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million as well as $1.3 million of potential milestone payments for each marketing authorization for each indication in any country as well as low single digit royalties on net sales of covered products. This license agreement was assigned by GSK to Orchard Therapeutics Limited, effective as of April 11, 2018.

Under Topic 606, the Company identified only 1 performance obligation, consisting of the license, which was satisfied at contract inception. Accordingly, the entire nonrefundable license fee of $3.0 million was recognized as revenue upon contract execution in the second quarter of 2017 given there were 0 other unsatisfied performance obligations in the arrangement. Regulatory approvals are not within the Company’s control or the licensee’s control and are generally not considered probable of being achieved until those approvals are received. As such, these milestones are constrained until such time as regulatory approvals are received. There was 0 revenue recognized under this arrangement in the years ended December 31, 2019 and 2018. Because the single performance obligation was previously satisfied, all regulatory milestones will be recognized as revenue in full in the period in which the associated milestone is achieved.

~~Given there was 0 revenue recognized under this arrangement in the years ended December 31, 2019 and 2018, there was 0 associated cost of license and royalty revenue.~~

The Company adopted Topic 606 effective January 1, 2018 using the modified retrospective transition method. Therefore, amounts disclosed pertaining to prior periods are presented under previous accounting guidance.

13. Intangible assets

Intangible assets, net of accumulated amortization, are summarized as follows (in thousands):


	As of December 31, 2021
	Cost		Accumulated amortization		Impairment		Net
In-licensed rights	$	5,224	(1,219)		(4,005)		—
Total	$	5,224	$	(1,219)	$	(4,005)	$	—

As of December 31, As of December 31,
2019 2018
Cost Accumulated amortization Net Cost Accumulated amortization Net
Developed technology $ 30,100 $ (20,694) $ 9,406 $ 30,100 $ (16,931) $ 13,169
In-licensed rights 5,224 (304) 4,920 — — —
Total $ 35,324 $ (20,998) $ 14,326 $ 30,100 $ (16,931) $ 13,169

~~Amortization expense for intangible assets was $4.1 million, $3.8 million, and $3.8 million for each of the years ended December 31, 2019, 2018 and 2017, respectively.~~

~~Developed technology~~

The Company's developed technology was obtained through its acquisition of Pregenen, a privately-held biotechnology company. As a result, the Company obtained gene editing and cell signaling technology with a broad range of potential therapeutic applications. The Company considered the intangible asset acquired to be developed technology, as at the date of the acquisition it could be used the way it was intended to be used in certain ongoing research and development activities. The gene editing platform intangible asset is being amortized on a straight-line basis over its expected useful life of approximately eight years from the date of the acquisition. Please refer to Note 4, ~~Fair value measurements, and Note 9,~~ ~~Commitments and contingencies, for further information.~~

~~In-licensed rights~~

In-licensed rights consist of capitalized milestone payments made to third parties upon receiving regulatory approval of ZYNTEGLO in the EU. The in-licensed rights are being amortized on a straight-line basis over the remaining life of the related patents of approximately ten years, as the life of the related patents reflects the expected time period that the Company will benefit from the in-licensed rights.

~~The following table summarizes the estimated future amortization for intangible assets for the next five years (in thousands):~~


	As of December 31, 2020(1)
	Cost		Accumulated amortization		Impairment		Net
In-licensed rights	$	5,224	(827)		—		4,397
Total	$	5,224	$	(827)	$	—	$	4,397

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As of December 31, 2019
2020 $ 4,285
2021 4,285
2022 2,404
2023 522
2024 522
Total $ 12,018
(1) Prior period amounts have been retrospectively adjusted to reflect the effects of the Separation.

Amortization expense for intangible assets was $0.4 million, $0.5 million, and $0.3 million for the years ended December 31, 2021, 2020 and 2019, respectively.

In August 2021, the Company announced its decision to focus its efforts on the U.S. market and to execute an orderly wind down of its European operations. In connection with this, in September 2021, the Company recognized an impairment loss of $4.0 million for the remaining unamortized balance of the intangible asset associated with in-licensed rights for the ZYNTEGLO product, which is reflected within cost of product revenue in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2021.

14. Stock-based compensation

OnIn June 3, 2013, the Company’s board of directors adopted its 2013 Stock Option and Incentive Plan (“2013 Plan”), which was subsequently approved by its stockholders and became effective upon the closing of the Company’s ~~IPO on June 24, 2013.~~IPO. The 2013 Plan replaces the 2010 Stock Option and Grant Plan (“2010 Plan”).

The 2013 Plan allows for the granting of incentive stock options, non-qualified stock options, restricted stock units and restricted stock awards to the Company’s employees, members of the board of directors, and consultants of the Company. The Company initially reserved 1.0 million shares of its common stock for the issuance of awards under the 2013 Plan. The 2013 Plan provides that the number of shares reserved and available for issuance under the 2013 Plan will automatically increase each January 1, beginning on January 1, 2014, by 4 percent of the outstanding number of shares of common stock on the immediately preceding December 31 or such lesser number of shares as determined by the Company’s compensation committee. In January ~~2019~~2021 and January ~~2020,~~2022, the number of common stock available for issuance under the 2013 Plan was increased by approximately ~~2.2~~2.7 million and ~~2.2~~2.8 million shares, respectively, as a result of this automatic increase provision.

Any options or awards outstanding under the Company’s previous stock option plans, including both the 2010 Plan and the Second Amended and Restated 2002 Employee, Director and Consultant Stock Plan (“2002 Plan”), at the time of adoption of the 2013 Plan remain outstanding and effective. The shares of common stock underlying any awards that are forfeited, canceled, repurchased, expired or are otherwise terminated (other than by exercise) under the 2002 Plan and 2010 Plan are added to the shares of common stock available for issuance under the 2013 Plan. As of December 31, ~~2019,~~2021, the total number of common stock that may be issued under all plans is ~~2.2~~3.2 million.

The Company does not currently hold any treasury shares. Upon stock option exercise, the Company issues new shares and delivers them to the participant.

Conversion and modification of equity awards outstanding at the Separation

In connection with the Separation on November 4, 2021, under the provisions of the existing plans, the Company adjusted its outstanding equity awards in accordance with the terms of the Employee Matters Agreement (an equitable adjustment) to preserve the intrinsic value of the awards immediately before and after the Distribution. Upon the Distribution, employees holding stock options, restricted stock units (“RSUs”) and performance restricted stock units (“PRSUs”) denominated in pre-Distribution bluebird stock received a number of otherwise-similar awards either in post-Distribution bluebird stock or in a combination of post-Distribution bluebird stock and 2seventy bio stock based on conversion ratios outlined for each group of employees in the Employee Matters Agreement that the Company entered into in connection with the Distribution. The equity awards that were granted prior to 2021 were converted under the shareholder method, wherein employees holding outstanding equity awards received equity awards in both bluebird and 2seventy bio. The conversion ratio for the shareholder method took into consideration a distribution ratio of one share of 2seventy bio common stock for every three shares of bluebird common stock. For equity awards granted in 2021, the number of awards that were outstanding at the Separation were proportionately adjusted to maintain the aggregate intrinsic value of the awards at the date of the Separation. The conversion ratio was determined based on the volume weighted-average trading price for bluebird common stock for the five trading days before and after the Separation.

These modified awards otherwise retained substantially the same terms and conditions, including term and vesting provisions. Due to the modification of the equity awards as a result of the Distribution, the Company compared the fair value of the outstanding equity awards immediately before and after the Distribution. The modification resulted in an incremental fair value of $20.3 million, of which $4.5 million was immediately recognized as of the Distribution date.

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Additionally, bluebird will not incur any future compensation cost related to equity awards held by 2seventy bio employees and directors. The Company will incur future compensation cost related to 2seventy bio equity awards held by bluebird employees.

Stock-based compensation expense

The Company recognized stock-based compensation expense totaling ~~$160.6~~$98.7 million, ~~$110.8~~$122.6 million, and ~~$53.3~~$131.1 million during the years ended December 31, ~~2019, 2018~~2021, 2020 and ~~2017,~~2019, respectively. Stock-based compensation expense recognized by award type is as follows (in thousands):


	Year ended December 31,
	2021		2020		2019
Stock options	$	54,660	$	75,837	$	79,912
Restricted stock units	30,767		38,123		50,158
Employee stock purchase plan and other	13,313		8,636		1,013
	$	98,740	$	122,596	$	131,083

Year Ended December 31,
2019 2018 2017
Stock options $ 95,668 $ 83,449 $ 42,262
Restricted stock units 63,580 26,628 10,495
Employee stock purchase plan 1,381 759 525
$ 160,629 $ 110,836 $ 53,282

Stock-based compensation expense by classification included within the consolidated statements of operations and comprehensive loss was as follows (in thousands):


	Year ended December 31,
	2021		2020		2019
Research and development	$	42,989	$	49,766	$	59,378
Selling, general and administrative	55,751		72,830		71,705
	$	98,740	$	122,596	$	131,083

Year Ended December 31,
2019 2018 2017
Research and development $ 80,139 $ 54,422 $ 26,633
Selling, general and administrative 80,490 56,414 26,649
$ 160,629 $ 110,836 $ 53,282
Stock-based compensation of $1.0 million was capitalized into inventory during the year ended December 31, 2021. Stock-based compensation of $0.5 million was capitalized into inventory during the year ended December 31, 2020.

Unrestricted stock awards

~~F-39~~

~~Table~~During the first quarter of ~~Contents~~

~~In February 2018,~~2021, the Company ~~issued restricted~~granted 0.4 million unrestricted stock ~~units with service and performance conditions~~awards to employees ~~approximately 0.2 million~~as part of ~~which~~its 2020 annual incentive program. In addition, the Company implemented a retention program designed to incentivize and retain employees through the separation of its severe genetic disease and oncology programs. Under the retention program, employees are ~~outstanding as~~entitled to a one-time bonus payment, consisting of both a cash payment and unrestricted stock awards, with the condition that the employee remains employed at the end of 2021. For the twelve months ended December 31, ~~2019. Vesting of these awards is contingent on~~2021, the occurrence of a certain regulatory milestone event which was achieved in June 2019 and fulfillment of any remaining service condition. The Company began recognizing expense for these awards in the second quarter of 2019 when achievement of the regulatory milestone was deemed probable. The Company recognized ~~$20.1~~$21.2 million ofin expense related to ~~these awards~~this program, which includes $10.6 million in ~~the second quarter of 2019 and will continue to recognize stock-based~~stock compensation expense related to ~~these~~the anticipated grants of stock. During the third quarter of 2021, the Company granted 0.1 million unrestricted stock awards, ~~through June 2021 when~~related to the ~~final tranche~~retention program, to those employees impacted by the orderly wind down of the Company's operations in Europe. During the fourth quarter of 2021, the Company granted 1.0 million unrestricted stock awards ~~vest.~~to employees as part of its retention program.

As of December 31, ~~2019,~~2021, the Company had ~~$208.1 million, $105.8~~$34.2 million and ~~less than $0.1~~$54.3 million of unrecognized compensation expense related to unvested stock options and restricted stock units (exclusive of those with service and ~~the employee stock purchase plan,~~performance conditions that have not yet been achieved), respectively, that is expected to be recognized over a weighted-average period of ~~2.5 years, 2.6~~2.19 years and ~~0.1~~2.26 years, respectively.

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Stock options

The fair value of each option issued to employees was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:


	Year ended December 31,
	2021		2020		2019
Expected volatility	66.7	%	69.5	%	70.7	%
Expected term (in years)	6.0		6.0		6.0
Risk-free interest rate	0.8	%	1.4	%	2.3	%
Expected dividend yield	0.0	%	0.0	%	0.0	%

Year Ended December 31,
2019 2018 2017
Expected volatility 70.7 % 75.5 % 78.1 %
Expected term (in years) 6.0 6.0 6.0
Risk-free interest rate 2.3 % 2.7 % 2.1 %
Expected dividend yield 0.0 % 0.0 % 0.0 %

The following table summarizes the stock option activity under the Company’s equity awards plans:

Shares
(in thousands) Weighted-
average
exercise price
per share Weighted-
average
contractual
life
(in years) Aggregate
intrinsic
value (a)
(in thousands)
Outstanding at December 31, 2018 4,643 $ 108.56
Granted 1,594 $ 129.76
Exercised (354) $ 50.36
Canceled or forfeited (400) $ 138.61
Outstanding at December 31, 2019 5,483 $ 116.30 7.3 $ 68,511
Exercisable at December 31, 2019 2,853 $ 94.77 6.0 $ 64,899
Vested and expected to vest at December 31, 2019 5,483 $ 116.30 7.3 $ 68,511


	Shares (in thousands)	Weighted- average exercise price per share		Weighted- average contractual life (in years)	Aggregate intrinsic value (a) (in thousands)
Outstanding at December 31, 2020	6,262	$	105.02
Granted	1,238	$	27.19
Exercised	(218)	$	6.82
Canceled or forfeited	(2,357)	$	81.20
Conversion and modification of awards	(1,339)	$	42.90
Outstanding at December 31, 2021	3,586	$	39.23	6.8	$	631
Exercisable at December 31, 2021	1,835	$	57.09	5.5	$	380
Vested and expected to vest at December 31, 2021	3,586	$	39.23	6.8	$	631

(a)The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair value of the common stock for the options that were in the money at December 31, ~~2019.~~2021.

(b)Pursuant to the terms of Employee Matters Agreement, the company granted 4,375 option conversion awards to bluebird employees which are reflected within the "Conversion and modification of awards" above. The weighted-average exercise price per share reflected above is related to these awards, rather than the number of awards reflected in the table.

The weighted-average fair values of options granted during the years ended December 31, 2021, 2020 and 2019 ~~2018~~was $16.32, $43.24, and ~~2017 was~~ $83.44, ~~$125.12, and $62.03,~~ respectively. The intrinsic value of options exercised during the years ended December 31, 2021, 2020 and 2019 ~~2018, and 2017,~~ was ~~$29.0~~$5.1 million, ~~$73.1~~$4.0 million and ~~$91.0~~$29.0 million, respectively.

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 balance at December 31, 2020	1,495	$	102.34
Granted	3,359	26.43
Vested	(526)	112.21
Forfeited	(987)	53.58
Conversion and modification of awards	(148)	16.84
Unvested balance at December 31, 2021	3,193	$	16.21

(a)Pursuant to the terms of Employee Matters Agreement, the company granted 3,327 restricted stock unit conversion awards to bluebird employees which are reflected within the "Conversion and modification of awards" above. The weighted-average exercise price per share reflected above is related to these awards, rather than the number of awards reflected in the table.

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Shares
(in thousands) Weighted-average
grant date
fair value
Unvested balance at December 31, 2018 931 $ 155.99
Granted 570 128.87
Vested (251) 138.93
Forfeited (123) 155.68
Unvested balance at December 31, 2019 1,127 $ 146.10

The intrinsic value of restricted stock units vested during the years ended December 31, 2021, 2020 and 2019 ~~2018, and 2017~~ was ~~$28.4~~$44.0 million, ~~$25.5~~$30.9 million and ~~$8.1~~$28.4 million, respectively.

Employee Stock Purchase Plan

OnIn June 3, 2013, the Company’s board of directors adopted its 2013 Employee Stock Purchase Plan (“2013 ESPP”), which was subsequently approved by its stockholders and became effective upon the closing of the Company’s ~~IPO on June 24, 2013.~~IPO. The 2013 ESPP authorizes 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 each of the years ended December 31, ~~2019~~2021 and ~~2018, less than~~2020, approximately 0.1 million shares of common stock were issued under the 2013 ~~ESPP, respectively.~~ESPP.

15. 401(k) Savings plan

In 1997, the Company established a defined-contribution savings plan under Section 401(k) of the Internal Revenue Code ~~(“the 401(k) Plan”~~(the "401(k) Plan"). The 401(k) Plan covers all employees who meet defined minimum age and service requirements, and allows participants to defer a portion of their annual compensation on a pretax basis. In March ~~2020,~~2022, the Company expects to make matching contributions of approximately ~~$4.6~~$2.8 million related to employee contributions made during ~~2019.~~2021. At the same time, the Company anticipates making matching contributions to 2seventy bio employees of $2.0 million for their contributions under the 401(k) Plan during 2021 through the Separation. In ~~February 2019,~~March 2021, the Company made ~~$2.4~~$6.0 million of matching contributions related to employee contributions made during ~~2018.~~2020. The match contribution is included in accrued expenses and other current liabilities as of December 31, ~~2019~~2021 and ~~2018.~~2020. Expense related to the 401(k) Plan from continuing operations totaled ~~$4.6~~$2.8 million, ~~$2.4~~$3.0 million, ~~$1.5~~$2.9 million for the years ended December 31, ~~2019, 2018,~~2021, 2020, and ~~2017,~~2019, respectively.

16. Income taxes

The components of loss before income taxes were as follows (in thousands):


	Year ended December 31,
	2021		2020		2019
U.S.	$	(487,404)	$	(431,452)	$	(414,586)
Foreign	(74,976)		(128,918)		(140,981)
Total	$	(562,380)	$	(560,370)	$	(555,567)

Year ended December 31,
2019 2018 2017
U.S. $ (649,172) $ (440,473) $ (266,236)
Foreign (140,981) (114,965) (69,197)
Total $ (790,153) $ (555,438) $ (335,433)

The provision for (benefit from) income taxes were as follows (in thousands):

Year ended December 31,
2019 2018 2017
Current:
Federal $ — $ — $ —
State 7 324 115
Foreign 612 222 95
Deferred:
Federal (966) (307) —
State (198) (52) —
Foreign — — —
Total income tax (benefit) expense $ (545) $ 187 $ 210


	Year ended December 31,
	2021		2020		2019
Current:
Federal	$	—	$	—	$	—
State	—		2		7
Foreign	258		684		612
Deferred:
Federal	—		—		(966)
State	—		—		(198)
Foreign	—		—		—
Total income tax expense (benefit)	$	258	$	686	$	(545)

~~F-41~~F-34

Table of Contents

A reconciliation of income tax ~~provision~~expense (benefit) computed at the statutory federal income tax rate to the Company’s effective income tax rate ~~(provision) benefit~~ as reflected in the financial statements is as follows:


	Year ended December 31,
	2021		2020		2019
Federal income tax expense at statutory rate	21.0	%	21.0	%	21.0	%
State income tax, net of federal benefit	3.9	%	3.1	%	3.7	%
Permanent differences	(0.6)	%	(0.6)	%	(0.8)	%
Stock-based compensation	(3.1)	%	(2.4)	%	(0.7)	%
Research and development credit	4.3	%	6.0	%	5.4	%
Foreign differential	(1.9)	%	(4.6)	%	(3.7)	%
Other	—	%	(0.3)	%	0.8	%
Change in valuation allowance	(23.6)	%	(22.3)	%	(25.6)	%
Effective income tax rate (expense) benefit	—	%	(0.1)	%	0.1	%

Year ended December 31,
2019 2018 2017
Federal income tax expense at statutory rate 21.0 % 21.0 % 34.0 %
State income tax, net of federal benefit 3.7 % 5.1 % 4.3 %
Permanent differences (1.1) % 0.9 % 2.7 %
Research and development credit 5.4 % 6.5 % 12.8 %
Foreign differential (3.7) % (4.4) % (6.9) %
Federal tax rate change — % 0.1 % (31.6) %
Other 0.4 % (0.1) % (0.8) %
Change in valuation allowance (25.6) % (29.1) % (14.6) %
Effective income tax rate benefit (expense) 0.1 % — % (0.1) %

For the years ended December 31, ~~2019, 2018~~2021, 2020 and ~~2017,~~2019, the Company recognized an income tax expense (benefit) ~~expense~~ of $0.3 million or 0.0%, $0.7 million or (0.1)%, and $(0.5) million or 0.1%~~, $0.2 million or 0.0%, and $0.2 million or (0.1)%~~, respectively. The Company did not recognize any significant tax expense for the years ended December 31, ~~2019, 2018,~~2021, 2020, or ~~2017~~2019 as the Company was subject to a full valuation allowance.

Tax expense associated with the sale of bRT and the Separation, accounted for as discontinued operations and discussed in Note 3, is $0 for the years ended December 31, 2021, 2020, or 2019 due to the full valuation allowance. Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes. The significant components of the Company’s deferred tax assets and liabilities are composed of the following (in thousands):

Year ended December 31,
2019 2018
Deferred tax assets:
U.S. net operating loss carryforwards (federal and state) $ 439,839 $ 298,701
Tax credit carryforwards (federal and state) 213,810 167,517
Capitalized license fees and research and development expenses 16,295 18,083
60 Binney Street lease — 42,059
Deferred revenue 15,119 21,442
Stock-based compensation 46,111 31,858
Lease liabilities 52,631 —
Accruals and other 15,432 8,886
Total deferred tax assets 799,237 588,546
Intangible assets (2,518) (3,579)
Right-of-use assets (49,480) —
Fixed assets (2,670) (41,472)
Less valuation allowance (744,569) (543,495)
Net deferred taxes $ — $ —


	Year ended December 31,
	2021		2020 (1)
Deferred tax assets:
U.S. net operating loss carryforwards (federal and state)	$	703,125	$	546,098
Tax credit carryforwards (federal and state)	281,687		246,742
Capitalized license fees and research and development expenses	2,237		1,558
Deferred revenue	604		398
Stock-based compensation	25,181		37,164
Lease liabilities	22,916		14,787
Accruals and other	15,598		12,894
Total deferred tax assets	1,051,348		859,641
Right-of-use assets	(23,053)		(15,044)
Fixed assets	(1,546)		(1,212)
Less valuation allowance	(1,026,749)		(843,385)
Net deferred taxes	$	—	$	—

(1) Prior period amounts have been retrospectively adjusted to reflect the effects of the Separation.

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 valuation allowance increased on a net basis by approximately ~~$201.1~~$183.4 million during the year ended December 31, ~~2019~~2021 due primarily to net operating losses, tax credit carryforwards, and stock-based ~~compensation.~~compensation, offset by the sale of bRT and the Separation. Effective January 1, ~~2019,~~2021, the Company adopted ASU ~~2016-02,~~2019-12, which ~~resulted in~~simplifies accounting for income taxes. There was no material impact on the ~~de-recognition~~Company's financial position or results of ~~the 60 Binney Street lease and related fixed assets and the recognition of lease liabilities and right-of-use assets. The Company adjusted its deferred tax balances as a result of the~~operations upon adoption. ~~Please refer to Note 2,~~ ~~Summary of significant accounting policies and basis of presentation, and Note 8,~~ ~~Leases, for further information.~~

As of December 31, ~~2019, 2018~~2021, 2020 and ~~2017,~~2019, the Company had U.S. federal net operating loss carryforwards of approximately ~~$1.62~~$2.63 billion, ~~$1.10~~$2.03 billion, and ~~$716.1 million,~~$1.62 billion, respectively, which may be available to offset future income tax

~~F-42~~

~~Table of Contents~~

liabilities. Of the amount as of December 31, ~~2019, $913.8 million~~2021, $1.92 billion will carryforward indefinitely while $711.0 million will expire at various dates through 2037. As of December 31, ~~2019, 2018~~2021, 2020 and ~~2017,~~2019, the Company also had U.S. state net operating loss

F-35

Table of Contents

carryforwards of approximately ~~$1.56~~$2.39 billion, ~~$1.08~~$1.89 billion, and ~~$692.9 million,~~$1.56 billion, respectively, which may be available to offset future income tax liabilities and expire at various dates through 2039. At December 31, 2016, $195.4 million and $195.4 million of federal and state net operating losses, respectively, related to excess equity-based compensation tax deductions, the benefits for which will be recorded to additional paid-in capital when recognized through a reduction of cash taxes paid. As a result of adopting FASB ASU 2016-09 in the first quarter of 2017, the Company recorded a cumulative-effect adjustment to retained earnings of $76.7 million to record a net deferred tax asset relative to these tax attribute carryforwards. The deferred tax asset was offset by a corresponding adjustment to the valuation allowance.2041.

As of December 31, ~~2019, 2018~~2021, 2020 and ~~2017,~~2019, the Company had federal research and development and orphan drug tax credit carryforwards of approximately ~~$203.1~~$268.3 million, ~~$156.2~~$235.3 million, and ~~$124.1~~$203.1 million, respectively, available to reduce future tax liabilities which expire at various dates through ~~2039.~~2041. As of December 31, ~~2019, 2018~~2021, 2020 and ~~2017,~~2019, the Company had state credit carryforwards of approximately ~~$13.6~~$16.9 million, ~~$14.3~~$14.5 million, and ~~$9.1~~$13.6 million, respectively, available to reduce future tax liabilities which expire at various dates through ~~2034.~~2036. During the fourth quarter of 2018, the Company completed an analysis of prior year estimates of U.S. research and development and orphan drug tax credits for the years 2013 through 2017. The analysis resulted in an immaterial adjustment to the Company's income tax benefit, which was offset by an adjustment to the valuation allowance. An analysis of the U.S. research and development and orphan drug credits has not yet been completed for ~~2018~~2019, 2020, or 2021.

In March 2020, the Coronavirus Aid, Relief and ~~2019.~~Economic Security Act (“CARES Act”) was enacted. This law temporarily suspends and adjusts certain law changes enacted in the Tax Cuts and Jobs Act in 2017. In December 2020, the Consolidated Appropriations Act was enacted. This law modified the employee retention credit under the CARES Act and created credit extenders for certain credits. 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.

Under the provisions of the Internal Revenue Code, the net operating loss and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. Net operating loss and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a ~~three-year~~three-year period in excess of 50 percent, as defined under Sections 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. The Company has completed several financings since its inception, which it believes has resulted in a change in control as defined by Sections 382 and 383 of the Internal Revenue Code. The Company completed a study through December 2020 confirming no additional ownership changes; any ownership shifts occurring after December 2020 could result in an ownership change under Section 382.

The Company ~~or one of its subsidiaries~~ files Federal income tax returns in the United States, and various state and foreign jurisdictions. The federal, state and foreign income tax returns are generally subject to tax examinations for the tax years ended December 31, ~~2016~~2018 through December 31, ~~2018.~~2020. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service, or state or foreign tax authorities to the extent utilized in a future period.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):


	Unrecognized tax benefits
Balance as of December 31, ~~2017~~2019	$	—15,945
Increases (decreases) for tax positions related to current period	~~3,370~~3,149
Increases (decreases) for tax positions related to prior periods	~~8,725~~ (100)
Balance as of December 31, ~~2018~~2020	~~12,095~~18,994
Increases (decreases) for tax positions related to current period	~~3,554~~2,949
Increases (decreases) for tax positions related to prior periods	~~296~~17
Balance as of December 31, ~~2019~~2021	~~15,945~~21,960

The unrecognized tax benefits at December 31, ~~2019,~~2021, if recognized, would not affect the Company’s effective tax rate due to its full valuation allowance position. The Company does not anticipate that the amount of existing unrecognized tax benefits will significantly increase or decrease within the next 12 months. The Company has elected to include interest and penalties related to uncertain tax positions as a component of its provision for income taxes. For the years ended December 31, ~~2019, 2018~~2021, 2020 and ~~2017,~~2019, the Company’s accrued interest and penalties related to uncertain tax positions were 0tnot material.

F-36

Table of Contents

17. Reduction in workforce

In April 2021, the Company announced its 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 β-thalassemia requiring regular transfusions. A total of approximately 50 employees were impacted by this reduction. During the three months ended June 30, 2021, the Company substantially completed the implementation of 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, the Company made the decision to focus its efforts on the U.S. market for beti-cel, eli-cel, and lovo-cel and is executing an orderly wind down of its European operations. A total of approximately 90 employees were impacted by the reduction in workforce associated with this decision. The Company recorded $21.2 million of expense, in accordance with the related accounting standards mentioned above, for the affected employees. This amount includes expense for severance, the pro rata portion of the employees' 2021 performance bonus, the portion of the European employees' 2021 retention bonuses to be paid in cash, and the portion of retention bonuses to be paid in unrestricted stock awards, which were granted on September 30, 2021. As described in Note 14, Stock-based compensation, the Company recorded $2.5 million of costs associated with the grant of unrestricted stock awards to affected employees as a one-time payment. All costs associated with the April 2021 and July 2021 reductions are reflected within restructuring expense in the Company's consolidated statements of operations and comprehensive loss.

The Company expects that substantially all accrued restructuring charges will be paid in cash by March 31, 2022.

The following table summarizes the accrued liabilities activity recorded in connection with the reduction in workforce for the year ended December 31, 2021 (in thousands):


	Charges		Amount paid		Amounts accrued at December 31, 2021
April 2021 reduction	$	4,625	$	(4,625)	$	—
July 2021 reduction	21,176		(16,503)		4,673
Total	$	25,801	$	(21,128)	$	4,673

During the year ended December 31, 2021, the Company recorded approximately $25.8 million in restructuring expenses. During the year ended December 31, 2021, the Company recorded $2.5 million in research and development expenses and selling, general and administrative expenses related to the grant of unrestricted stock awards to affected employees.

18. 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):


	Year ended December 31,
	2021	2020	2019
Outstanding stock options (1)	5,534	6,262	5,483
Restricted stock units (1)	3,427	1,495	1,127
ESPP shares and other	—	326	19
	8,961	8,083	6,629

(1) Outstanding stock options and restricted stock units include awards outstanding to employees of 2seventy bio.

~~F-43~~F-37

Table of Contents

Year ended December 31, 2019
2019 2018 2017
Outstanding stock options 5,483 4,643 3,755
Restricted stock units 1,127 931 477
ESPP shares 19 10 9
6,629 5,584 4,241

~~18.~~19. Selected quarterly financial data (unaudited)

The following table contains quarterly financial information for ~~2019~~2021 and ~~2018.~~2020. The Company believes that the following information reflects all normal recurring adjustments necessary for a fair presentation of the information for the periods presented. The operating results for any quarter are not necessarily indicative of results for any future period.


	2021
	First quarter		Second quarter		Third quarter		Fourth quarter		Total
	(in thousands, except per share data)
Total revenues	$	894	$	143	$	1,019	$	1,606	$	3,662
Total operating expenses	146,988		154,844		155,468		137,273		594,573
Loss from operations	(146,094)		(154,701)		(154,449)		(135,667)		(590,911)
Net loss from continuing operations	(121,504)		(155,973)		(152,834)		(132,327)		(562,638)
Net loss from discontinued operations	(84,304)		(85,729)		(63,982)		(22,725)		(256,740)
Net loss	(205,808)		(241,702)		(216,816)		(155,052)		(819,378)
Net loss per share from continuing operations —basic and diluted	(1.81)		(2.31)		(2.23)		(1.83)		(8.16)
Net loss per share from discontinued operations—basic and diluted	(1.26)		(1.27)		(0.93)		(0.31)		(3.73)
Net loss per share—basic and diluted	$	(3.07)	$	(3.58)	$	(3.16)	$	(2.14)	$	(11.89)


		2019																			2020
		First quarter		Second quarter		Third quarter		Fourth quarter		Total			First quarter		Second quarter		Third quarter		Fourth quarter		Total
		(in thousands, except per share data)																			(in thousands, except per share data)
Total revenues	Total revenues	$	12,471	$	13,296	$	8,910	$	9,997	$	44,674	Total revenues	$	—	$	—	$	—	$	—	$	—
Total operating expenses	Total operating expenses	183,645		215,998		219,326		240,531		859,500		Total operating expenses	144,479		143,650		131,743		139,387		559,259
Loss from operations	Loss from operations	(171,174)		(202,702)		(210,416)		(230,534)		(814,826)		Loss from operations	(144,479)		(143,650)		(131,743)		(139,387)		(559,259)
Net loss from continuing operations												Net loss from continuing operations	(146,392)		(140,665)		(137,678)		(136,321)		(561,056)
Net income (loss) from discontinued operations												Net income (loss) from discontinued operations	(56,219)		119,200		(57,067)		(63,553)		(57,639)
Net loss	Net loss	(164,446)		(195,782)		(206,033)		(223,347)		(789,608)		Net loss	(202,611)		(21,465)		(194,745)		(199,874)		(618,695)
Net loss per share applicable to common stockholders - basic and diluted		$	(2.99)	$	(3.55)	$	(3.73)	$	(4.04)	$	(14.31)
Net loss per share from continuing operations —basic and diluted												Net loss per share from continuing operations —basic and diluted	(2.63)		(2.33)		(2.08)		(2.05)		(9.02)
Net income (loss) per share from discontinued operations—basic and diluted												Net income (loss) per share from discontinued operations—basic and diluted	(1.01)		1.97		(0.86)		(0.96)		(0.93)
Net loss per share—basic and diluted												Net loss per share—basic and diluted	$	(3.64)	$	(0.36)	$	(2.94)	$	(3.01)	$	(9.95)


Delaware						13-3680878
(State or Other Jurisdiction of Incorporation or Organization)						(IRS Employer Identification No.)
60 Binney Street
Cambridge, Massachusetts						02142
(Address of Principal Executive Offices)						(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	BLUE	The NASDAQ Stock Market LLC


CAR+ T cell dose level	150 x 10⁶	300 x 10⁶	450 x 10⁶	150-450 x 10⁶
N	4	70	54	128

Measures:
Overall response rate, n (%)	2 (50.0)	48 (68.6)	44 (81.5)	94 (73.4)
Complete response (CR)/ Stringent CR, n (%)	1 (25.0)	20 (28.6)	19 (35.2)	40 (31.3)
Median DoR, months	*	9.9	11.3	10.6
Median PFS, months	*	5.8	11.3	8.6
*Median DoR and median PFS are not reported for the 150 x 10⁶ CAR+ T cells dose group due to the small number of evaluable patients


CAR T cell dose level	50 x 10⁶	150 x 10⁶	> 150 x 10⁶
N	3	14	22
Median follow up (min, max)	84 days (59, 94)	87 days (36, 638)	194 days (46, 556)

Measures:
Overall response rate (ORR)	33.3%	57.1%	95.5%
Complete response (CR)	0%	42.9%	50%
Very good partial response (VGPR)	0%	7.1%	36.4%
Median duration of response (mDOR)	1.9 months	Not estimable	10.8 months


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


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


		Page
PART I.
Item 1.	Business	1
Item 1A.	Risk Factors	4725
Item 1B.	Unresolved Staff Comments	7755
Item 2.	Properties	7756
Item 3.	Legal Proceedings	7856
Item 4.	Mine Safety Disclosures	7856

PART II.
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	7957
Item 6.	~~Selected Financial Data~~[Reserved]	8058
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	8259
Item 7A.	Quantitative and Qualitative Disclosures About Market Risks	~~100~~77
Item 8.	Financial Statements and Supplementary Data	~~100~~77
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	~~100~~77
Item 9A.	Controls and Procedures	~~100~~77
Item 9B.	Other Information	~~103~~80
Item 9C.	Disclosures Regarding Foreign Jurisdictions that Prevent Inspections

PART III.
Item 10.	Directors, Executive Officers and Corporate Governance	~~104~~81
Item 11.	Executive Compensation	~~104~~81
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	~~104~~81
Item 13.	Certain Relationships and Related Transactions and Director Independence	~~104~~81
Item 14.	Principal Accountant Fees and Services	~~104~~81

PART IV.
Item 15.	Exhibits and Financial Statement Schedules	~~105~~82
Item 16.	Form 10-K Summary	~~105~~82

Signatures


	Year ended December 31,
	2019		2018⁽²⁾		2017 ^{(1) (2)}		2016^{(1) (2)}		2015^{(1) (2)}
	(in thousands, except per share amounts)
Consolidated statements of operations data:
Revenue:
Collaboration revenue	$	36,469	$	52,353	$	22,207	$	6,155	$	14,079
License and royalty revenue	8,205		2,226		13,220		—		—
Total revenues	44,674		54,579		35,427		6,155		14,079
Operating expenses:
Research and development	582,413		448,589		273,040		204,775		134,038
Selling, general and administrative	271,362		174,129		93,550		65,119		46,209
Cost of license and royalty revenue	2,978		885		1,527		—		—
Change in fair value of contingent consideration	2,747		2,999		(525)		4,091		2,869
Total operating expenses	859,500		626,602		367,592		273,985		183,116
Loss from operations	(814,826)		(572,023)		(332,165)		(267,830)		(169,037)
Interest income (expense), net	34,761		14,624		(2,001)		3,782		1,591
Other (expense) income, net	(10,088)		1,961		(1,267)		(71)		723
Income tax benefit (expense)	545		(187)		(210)		612		(60)
Net loss	$	(789,608)	$	(555,625)	$	(335,643)	$	(263,507)	$	(166,783)
Net loss per share - basic and diluted	$	(14.31)	$	(10.68)	$	(7.71)	$	(7.07)	$	(4.81)
Weighted-average number of common shares used in computing net loss per share - basic and diluted	55,191		52,032		43,535		37,284		34,669


	As of December 31,
	2019		2018 ⁽¹⁾		2017 ⁽¹⁾		2016 ⁽¹⁾		2015 ⁽¹⁾
	(in thousands)
Consolidated balance sheet data:
Cash, cash equivalents and marketable securities	$	1,237,966	$	1,891,427	$	1,614,302	$	884,830	$	865,763
Total assets	1,727,424		2,242,844		1,900,567		1,118,122		1,002,337
Total current liabilities	223,580		146,431		95,612		74,533		40,368
Total long-term liabilities	218,851		211,343		181,523		174,149		111,473
Total stockholders' equity	$	1,284,993	$	1,885,070	$	1,623,432	$	869,440	$	850,496


	Year ended December 31,
	2018		2017		Change
	(in thousands)
Revenue:
Collaboration revenue	$	52,353	$	22,207	$	30,146
License and royalty revenue	2,226		13,220		(10,994)
Total revenues	54,579		35,427		19,152
Operating expenses:
Research and development	448,589		273,040		175,549
Selling, general and administrative	174,129		93,550		80,579
Cost of license and royalty revenue	885		1,527		(642)
Change in fair value of contingent consideration	2,999		(525)		3,524
Total operating expenses	626,602		367,592		259,010
Loss from operations	(572,023)		(332,165)		(239,858)
Interest income (expense), net	14,624		(2,001)		16,625
Other income (expense), net	1,961		(1,267)		3,228
Loss before income taxes	(555,438)		(335,433)		(220,005)
Income tax benefit (expense)	(187)		(210)		23
Net loss	$	(555,625)	$	(335,643)	$	(219,982)


	Total		2020		2021 through 2022		2023 through 2024		2025 and after
	(in thousands)
Operating leases	$	251,553	$	33,257	$	66,868	$	63,092	$	88,336
Contract manufacturing	247,947		129,950		46,907		71,090		—
Total contractual obligations⁽¹⁾	$	499,500	$	163,207	$	113,775	$	134,182	$	88,336


	As of
Maturity of lease liabilities	December 31, 2019
2020	$	33,257
2021	35,816
2022	31,052
2023	31,540
2024	31,552
2025 and thereafter	88,336
Total lease payments	251,553
Less: imputed interest	(60,566)
Total operating lease liabilities	$	190,987


	Allocation of transaction price to performance obligations		Transaction price unsatisfied as of December 31, 2019
Ide-cel research and development services	$	40,912	$	—
Ide-cel license and manufacturing services	166,277		17,815
	$	207,189	$	17,815


	For the years ended December 31,
	2019		2018		2017 ⁽¹⁾
Ide-cel research and development services revenue	$	2,264	$	5,751	$	6,208
	$	2,264	$	5,751	$	6,208


	For the years ended December 31
	2019		2018		2017 ⁽¹⁾
ASC 606 ide-cel license and manufacturing revenue - outside of U.S.	$	25,522	$	35,900	$	10,372


	Allocation of transaction price to performance obligations		Transaction price unsatisfied as of December 31, 2019
bb21217 research and development services	$	5,444	$	—
bb21217 license and manufacturing services	36,243		36,243
	$	41,687	$	36,243


	Balance at December 31, 2018		Additions		Deductions		Balance at December 31, 2019
Receivables	$	6,528	$	11,250	$	(17,378)	$	400
Contract liabilities:
Deferred revenue	$	34,939	$	10,000	$	(26,674)	$	18,265


	As of December 31, 2019
2020	$	4,285
2021	4,285
2022	2,404
2023	522
2024	522
Total	$	12,018


	Shares (in thousands)	Weighted-average grant date fair value
Unvested balance at December 31, 2018	931	$	155.99
Granted	570	128.87
Vested	(251)	138.93
Forfeited	(123)	155.68
Unvested balance at December 31, 2019	1,127	$	146.10


	Year ended December 31, 2019
	2019	2018	2017
Outstanding stock options	5,483	4,643	3,755
Restricted stock units	1,127	931	477
ESPP shares	19	10	9
	6,629	5,584	4,241


		Incorporated by Reference
Exhibit Number	Exhibit Title	Form	File no.	Exhibit	Filing Date
10.41	First Amendment to Lease, dated June 21, 2016, by and between the Registrant and ARE-MA Region No. 40 LLC	10-Q	001-35966	10.37	August 3, 2016
10.42	Second Amendment to Lease, dated November 14, 2016, by and between the Registrant and ARE-MA Region No. 40 LLC	10-K	001-35966	10.44	February 22, 2017
10.43††	Sublease, dated April 16, 2019, by and between the Registrant and Aventis Inc.	10-Q	001-35966	10.42	August 1, 2019
10.44	Amendment to Sublease, dated April 19, 2019, by and between the Registrant and Aventis Inc.	10-Q	001-35966	10.43	August 1, 2019
21.1	Subsidiaries of the Registrant	—	—	—	Filed herewith
23.1	Consent of Ernst & Young LLP	—	—	—	Filed herewith
31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	—	—	—	Filed herewith
31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	—	—	—	Filed herewith
32.1	Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	—	—	—	Furnished herewith
101.INS	Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH	Inline XBRL Taxonomy Extension Schema Document.	—	—	—	Filed herewith
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.	—	—	—	Filed herewith
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.	—	—	—	Filed herewith
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.	—	—	—	Filed herewith
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.	—	—	—	Filed herewith
104	Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101)	—	—	—	Filed herewith


bluebird bio, Inc.

By:			/s/ ~~Nick Leschly~~Andrew Obenshain
			~~Nick Leschly~~Andrew Obenshain President, Chief Executive Officer and Director