BLUEBIRD BIO, INC. The following information should be read in conjunction with the unaudited financial information and the notes thereto included in this Quarterly Report on Form 10-Q and the audited financial information and the notes thereto included in our Annual Report on Form 10-K, which was filed with theSecurities and Exchange Commission , or theSEC , onFebruary 23, 2021 . Except for the historical information contained herein, the matters discussed in this Quarterly Report on Form 10-Q may be deemed to be forward-looking statements that involve risks and uncertainties. We make such forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. In this Quarterly Report on Form 10-Q, words such as "may," "expect," "anticipate," "estimate," "intend," "plan," and similar expressions (as well as other words or expressions referencing future events, conditions or circumstances) are intended to identify forward-looking statements. Our actual results and the timing of certain events may differ materially from the results discussed, projected, anticipated, or indicated in any forward-looking statements. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which we operate may differ materially from the forward-looking statements contained in this Quarterly Report. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate are consistent with the forward-looking statements contained in this Quarterly Report, they may not be predictive of results or developments in future periods. The following information and any forward-looking statements should be considered in light of factors discussed elsewhere in this Quarterly Report on Form 10-Q, including those risks identified under Part II, Item 1A. Risk Factors. We caution readers not to place undue reliance on any forward-looking statements made by us, which speak only as of the date they are made. We disclaim any obligation, except as specifically required by law and the rules of theSEC , 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. 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. Our gene therapy programs in severe genetic diseases include programs for transfusion-dependent ?-thalassemia (TDT), sickle cell disease (SCD), and cerebral adrenoleukodystrophy (CALD). The Company's programs in oncology are focused on developing novel engineered cell and gene therapies for cancer, including the anti-BCMA CAR T programs for multiple myeloma under the Company's collaboration arrangement with Bristol-Myers Squibb (BMS). We are commercializing betibeglogene autotemcel (beti-cel; formerly LentiGlobin for ?-thalassemia gene therapy) as ZYNTEGLO in theEuropean Union and began to treat patients in the commercial context in the first quarter of 2021. However, inFebruary 2021 , we temporarily suspended marketing of ZYNTEGLO in light of safety events reported in the HGB-206 clinical study of LentiGlobin for SCD, which is manufactured using the same vector as ZYNTEGLO. Additionally, theEuropean Medicines Agency (EMA) has paused the renewal procedure for ZYNTEGLO's conditional marketing authorization while the EMA's pharmacovigilance risk assessment committee reviews the risk-benefit assessment for ZYNTEGLO and determines whether any additional pharmacovigilance measures are necessary. We are engaged with the EMA in discussions regarding our proposed development plans for beti-cel as a treatment for patients with TDT who are less than 12 years of age and for patients who have a ?0/?0 genotype. We are engaged with the FDA in discussions regarding our proposed development plans for beti-cel as a treatment for patients with TDT. We currently expect to complete our BLA submission for beti-cel in mid-2021 for the treatment of all patients with TDT across all genotypes, including non-?0/?0 and ?0/?0 genotypes. Based on our discussions with the FDA, we believe that we may be able to seek accelerated approval for LentiGlobin for SCD inthe United States on the basis of clinical data from Group C of our ongoing HGB-206 clinical study, and with our ongoing HGB-210 clinical study providing confirmatory data for full approval. However, in light of safety events reported in 25 -------------------------------------------------------------------------------- Table of Contents our HGB-206 clinical study, the FDA has placed our clinical studies of LentiGlobin for SCD on clinical hold in the first quarter of 2021. We are investigating these events and plan to continue to work closely with the FDA in their review of these events. In addition, we are also engaged with the EMA in discussions regarding our proposed development plans for LentiGlobin for SCD inEurope . InOctober 2020 , the EMA accepted our Marketing Authorization Application in the EU for eli-cel for the treatment of patients with CALD. Based on our discussions with the FDA, we believe that we may be able to seek approval for eli-cel for the treatment of patients with CALD on the basis of our clinical data from our ongoing Starbeam study, safety data from our ongoing ALD-104 study, and the completed ALD-103 observational study. We currently expect to submit the BLA for eli-cel for the treatment of patients with CALD in mid-2021. In collaboration with BMS, we are developing the ide-cel and 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 as ABECMA inthe United States with BMS and we have exclusively licensed to BMS the development and commercialization rights for ide-cel outside ofthe United States . 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 bb21217 withinthe United States . InMay 2020 , we and BMS entered into an amendment and restatement of the ide-cel co-promotion/co-development agreement, an amendment and restatement of the bb21217 license agreement, and a non-exclusive license agreement to certain patent rights controlled by us and related to lentiviral vector technology for BMS to develop and commercialize CD19-directed CAR T cell therapies. Under the amended agreements, BMS was relieved of its obligations to pay us for future ex-U.S. milestones and royalties on ex-U.S. sales for each of ide-cel and bb21217 in exchange for an up-front, non-refundable, non-creditable payment of$200.0 million , which represents the aggregate of the probability-weighted, net present value of the future ex-U.S. milestones and royalties on ex-U.S. sales for each of ide-cel and bb21217. BMS also assumed the contract manufacturing agreements relating to ide-cel adherent lentiviral vector and over time, BMS is assuming responsibility for manufacturing ide-cel suspension lentiviral vector outside of theU.S. , with bluebird responsible for manufacturing ide-cel suspension lentiviral vector in theU.S. In addition, the parties are released from future exclusivity related to BCMA-directed T cell therapies. InMarch 2021 , BMS received marketing approval from the FDA for ide-cel, marketed as ABECMA, as a treatment of adult patients with relapsed or refractory multiple myeloma after four or more prior lines of therapy, including an immunomodulatory agent, a proteasome inhibitor, and an anti-CD38 monoclonal antibody. There were no product sales of ABECMA during the first quarter of 2021. Since our inception in 1992, we have devoted substantially all of our resources to our development efforts relating to our product candidates, including activities to manufacture product candidates in compliance with good manufacturing practices, or GMP, to conduct clinical studies of our product candidates, to provide selling, general and administrative support for these operations and to protect our intellectual property. We have generated immaterial revenues from product sales. We have funded our operations primarily through the sale of common stock in our public offerings, private placements of preferred stock and warrants, and through collaborations. As ofMarch 31, 2021 , we had cash, cash equivalents and marketable securities of approximately$1.09 billion . We have never been profitable and have incurred net losses in each year since inception. Our net loss was$205.8 million for the three months endedMarch 31, 2021 , and our accumulated deficit was$3.11 billion as ofMarch 31, 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 our expenses will increase substantially in connection with our ongoing and planned activities, as we: •conduct clinical studies for our clinical programs in ?-thalassemia, SCD, and ALD, fund our share of the costs of clinical studies for our program in multiple myeloma in collaboration with BMS, and advance our preclinical programs into clinical development; •increase research and development-related activities for the discovery and development of product candidates in severe genetic diseases and oncology; •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; 26 -------------------------------------------------------------------------------- Table of Contents •fund activities related to the commercialization of ZYNTEGLO in multiple markets inEurope , the potential commercial launch of beti-cel inthe United States , and the potential commercial launches of additional late-stage product candidates inthe United States andEurope ; •fund our share of the costs of commercialization of ABECMA in collaboration with BMS; and •incur costs related to the separation of our portfolio of programs and product in severe genetic disease and oncology into two separate, independent publicly traded companies. InMarch 2021 , we placed a portion our internal lentiviral vector manufacturing facility into service, while still completing qualification of the remaining portion. 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 as we prepare for and begin product sales, marketing, commercial 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, 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 product, 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 Beginning in late 2019, the outbreak of a novel strain of coronavirus (COVID-19) has evolved into a global pandemic. As a result, we continue to experience disruptions and increased risk in our operations 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 COVID-19 pandemic has impacted 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. The COVID-19 pandemic has also impacted the timing of our regulatory interactions for marketing approval across our programs, as well as our discussions with payers for market access and reimbursement for ZYNTEGLO inEurope , due to shifting priorities of the local authorities and healthcare system. 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. 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 implemented policies at our locations to mitigate the risk of exposure to COVID-19 by our personnel, including restrictions on the number of staff in any given research and development laboratory or manufacturing facility, a work-from-home policy applicable to the majority of our personnel, and a phased approach to bringing personnel back to our locations over time. Given the importance of supporting our patients, we are diligently working with our suppliers, healthcare providers and partners to provide patients with access to ZYNTEGLO, while taking into account regulatory, institutional, and government guidance, policies and protocols. Further, we are working with our clinical study sites to understand the duration and scope of the impact on enrollment, develop protocols to help mitigate the impact of the COVID-19 pandemic, and other 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. InApril 2021 , we announced plans to reduce and reshape our workforce, primarily inEurope . This reduction and reallocation of resources is intended to enable us to focus on priority European markets and streamline global operations going forward based on our current business plans. We expect our cash, cash equivalents and marketable securities of$1.09 billion as ofMarch 31, 2021 will be sufficient to fund planned operations for at least the next twelve months from the date of issuance of these financial statements, though we 27 -------------------------------------------------------------------------------- Table of Contents may pursue additional cash resources through public or private equity or debt financings or by establishing additional collaborations with other companies. InJanuary 2021 , we announced our intent to separate our severe genetic disease and oncology programs into two separate, independent publicly traded companies, bluebird bio, Inc. and 2seventy bio, Inc., a newly-formedDelaware corporation and wholly-owned subsidiary prior to the separation. bluebird bio, Inc. intends to retain focus on our severe genetic disease programs and 2seventy bio, Inc. is expected to focus on our oncology programs. The transaction is expected to be completed in late 2021 and is anticipated to be tax-free, subject to receipt of a favorableIRS ruling. Financial operations overview Revenues To date, we have generated immaterial revenues from the sale of products. Our revenues have primarily been derived from collaboration arrangements, out-licensing arrangements, research fees, and grant revenues. To date, revenue recognized under our collaborative arrangements has been primarily generated from our collaboration arrangement with BMS. The terms of the arrangement with respect to ide-cel contain multiple promised goods or services, which include at inception: (i) research and development services, (ii) a license to ide-cel, and (iii) manufacture of vectors and associated payload for incorporation into ide-cel under the license. These performance obligations were fully satisfied during the first quarter of 2021. As ofSeptember 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. We entered into an agreement with BMS to co-develop and co-promote ide-cel inMarch 2018 , which was subsequently amended inMay 2020 , in which both parties will share equally inU.S. costs and profits. Revenue from our collaborative arrangements is recognized as the underlying performance obligations are satisfied. We analyze our collaboration arrangements 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 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 deemed to be within the scope of ASC 808 and those that are more reflective of a vendor-customer relationship and therefore within the scope of ASC 606, Revenue from Contracts with Customers ("Topic 606" or "ASC 606"). For elements of collaboration arrangements that are accounted for pursuant to ASC 808, an appropriate recognition method is determined and applied consistently, generally by analogy to Topic 606. Amounts that are owed to collaboration partners are recognized as an offset to collaborative arrangement revenues as such amounts are incurred by the collaboration partner. Where amounts owed to a collaboration partner exceed our collaborative arrangement revenues in a quarterly period, such amounts in excess 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 prescribed in Topic 606. Non-refundable license fees paid to us 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 out-license agreements, under which 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, and the license is deemed to be the predominant item to which the royalties relate, we recognize revenue 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. 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; 28 -------------------------------------------------------------------------------- Table of Contents •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 up-front license payments; •costs associated with our regulatory, quality assurance and quality control operations; and •amortization of intangible assets. Research and development costs are expensed as incurred. Costs for certain development activities are recognized based on an evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors and our clinical sites. We cannot determine with certainty the duration and completion costs of the current or future clinical studies of our product candidates or if, when, or to what extent we will generate revenues from the commercialization and sale of any of our product candidates that obtain regulatory approval. We may not succeed in achieving regulatory approval for all of our product candidates. The duration, costs, and timing of clinical studies and development of our product candidates will depend on a variety of factors, any of which could mean a significant change in the costs and timing associated with the development of our product candidates including: •the scope, rate of progress, and expense of our ongoing as well as any additional clinical studies and other research and development activities we undertake; •future clinical study results; •uncertainties in clinical study enrollment rates; •new manufacturing processes or protocols that we may choose to or be required to implement in the manufacture of our lentiviral vector or drug product; •regulatory feedback on requirements for regulatory approval, as well as changing standards for regulatory approval; and •the timing and receipt of any regulatory approvals. We plan to continue to invest in research and development for the foreseeable future as we continue to advance the development of beti-cel, eli-cel, LentiGlobin for SCD, and bb21217 product candidates, conduct research and development activities in severe genetic diseases and oncology, fund our share of the costs of development of ide-cel in collaboration with BMS, and continue the research and development of product candidates using our gene editing technology platform. 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 the safety and efficacy of beti-cel in the treatment of patients with TDT and a non-?0/?0 genotype. •Northstar-3 Study (HGB-212) - a multi-site, international phase 3 study to examine the safety and efficacy of beti-cel in the treatment of patients with TDT and a ?0/?0 genotype or an IVS-I-110 mutation. •HGB-206 study - a multi-site phase 1/2 study inthe United States to study the safety and efficacy of LentiGlobin in the treatment of patients with SCD. •HGB-210 study - a multi-site, international phase 3 study of LentiGlobin in patients with SCD and a history of vaso-occlusive events. •Starbeam Study (ALD-102) - a multi-site, international phase 2/3 study to examine the safety and efficacy of eli-cel in the treatment of patients with CALD. •ALD-104 study - our multi-site, international phase 3 study to examine the safety and efficacy of eli-cel after myeloablative conditioning using busulfan and fludarabine in the treatment of patients with CALD. •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 - 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. 29 -------------------------------------------------------------------------------- Table of Contents •KarMMa-3 - 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 - 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. •We will continue to incur costs related to the manufacture of clinical study materials in support of our clinical studies. We expect that the timing of investment in our ongoing clinical studies will reflect COVID-19 related delays in our ongoing clinical studies. Our direct research and development expenses consist principally of external costs, such as fees paid to investigators, consultants, central laboratories and CROs in connection with our clinical studies, and costs related to acquiring and manufacturing clinical study materials. We allocate salary and benefit costs directly related to specific programs. We do not allocate personnel-related discretionary bonus or stock-based compensation costs, costs associated with our general discovery 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: For the three months ended March 31, 2021 2020 (in thousands) beti-cel$ 13,706 $ 20,588 LentiGlobin for SCD 13,162 16,293 eli-cel 13,311 7,813 ide-cel 29,369 31,162 bb21217 2,706 6,071 Preclinical programs 13,690 17,450 Total direct research and development expense 85,944
99,377
Employee-and contractor-related expenses 22,583
15,904
Stock-based compensation expense 19,868
16,269
Laboratory and related expenses(1) 3,389
3,795
License and other collaboration expenses(1) 1,042 1,222 Facility expenses 20,787 16,752 Other expenses 865 804 Total other research and development expenses 68,534
54,746
Total research and development expense$ 154,478
(1)Prior to the fourth quarter of 2020, costs within these categories were
disclosed in the aggregate as "platform-related expenses."
Selling, general and administrative expenses
Selling, general and administrative expenses consist primarily of salaries and
related costs for personnel, including stock-based compensation and travel
expenses for our employees in executive, operational, finance, legal, business
development, commercial, information technology, and human resource functions.
Other selling, general and administrative expenses include facility-related
costs, professional fees for accounting, tax, legal and consulting services,
directors' fees and expenses associated with obtaining and maintaining patents.
Cost of royalty and other revenue
Cost of royalty and other revenue consists of expense associated with amounts
owed to third party licensors as a result of revenue recognized under our
out-license arrangements as well as an immaterial amount of cost of goods sold
related to product revenue.
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Change in fair value of contingent consideration
In June 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.
As of March 31, 2021 , 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 $1.9 million as of March 31, 2021 , which are
classified within accrued expenses and other current liabilities and other
non-current liabilities on our condensed consolidated balance sheets.
Interest income, net
For the three months ended March 31, 2021 and 2020, interest income, net
consists primarily of interest income earned on investments.
Other income (expense), net
Other income (expense), net consists primarily of gains and losses on equity
securities held by us, gains and losses on disposal of assets, and gains and
losses on foreign currency.
Critical accounting policies and estimates
Our management's discussion and analysis of our financial condition and results
of operations are based on our financial statements, which have been prepared in
accordance with generally accepted accounting principles. 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. During
the three months ended March 31, 2021 , there were no material changes to our
critical accounting policies as reported in our Annual Report on Form 10-K for
the year ended December 31, 2020 , which was filed with the SEC on February 23,
2021 , except as otherwise described in Note 2, Basis of presentation, principles
of consolidation and significant accounting policies, in the Notes to Condensed
Consolidated Financial Statements.
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Results of Operations
Comparison of the three months ended March 31, 2021 and 2020:
For the three months ended
March 31,
2021 2020 Change
(in thousands)
Revenue:
Service revenue $ 5,918 $ 16,833 $ (10,915)
Collaborative arrangement revenue 1,519 2,302 (783)
Royalty and other revenue 5,357 2,728 2,629
Total revenues 12,794 21,863 (9,069)
Operating expenses:
Research and development 154,478 154,123 355
Selling, general and administrative 86,874 73,248 13,626
Cost of royalty and other revenue 2,281 1,025 1,256
Change in fair value of contingent consideration 369 (3,108) 3,477
Total operating expenses 244,002 225,288 18,714
Loss from operations (231,208) (203,425) (27,783)
Interest income, net 710 5,355 (4,645)
Other income (expense), net 24,756 (4,447) 29,203
Loss before income taxes (205,742) (202,517) (3,225)
Income tax expense (66) (94) 28
Net loss $ (205,808) $ (202,611) $ (3,197)
Revenues. Total revenue was $12.8 million for the three months ended March 31,
2021 , compared to $21.9 million for the three months ended March 31, 2020 . The
decrease of $9.1 million was primarily attributable to a decrease in ide-cel
license and manufacturing services revenue and a decrease in revenue recognized
in connection with treating patients in the bb21217 phase 1 trial under our
agreements with BMS.
Research and development expenses. Research and development expenses were $154.5
million for the three months ended March 31, 2021 , compared to $154.1 million
for the three months ended March 31, 2020 . The overall increase of $0.4 million
was primarily attributable to the following:
•$15.3 million of increased collaboration research funding costs, primarily due
to an increase in collaboration costs incurred by BMS as a result of BMS
assuming the contract manufacturing agreements relating to ide-cel adherent
lentiviral vector under the May 2020 contract modification;
•$7.8 million of increased employee compensation, benefit, and other headcount
related expenses, which is primarily driven by our employee retention program
which commenced during the first quarter of 2021. This increase includes a $3.6
million increase in stock-based compensation expense; and
•$5.1 million of increased information technology and facility-related costs.
These increased costs were partially offset by:
•$21.3 million of decreased material production costs, primarily in clinical
manufacturing due to the timing of clinical trials and in light of the clinical
hold due to safety events in the HGB-206 study of LentiGlobin gene therapy for
SCD;
•$3.7 million of decreased laboratory expenses and other platform costs; and
•$1.7 million of decreased clinical trials and medical research costs.
Selling, general and administrative expenses. Selling, general and
administrative expenses were $86.9 million for the three months ended March 31,
2021 , compared to $73.2 million for the three months ended March 31, 2020 . The
overall increase of $13.6 million was primarily attributable to the following:
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•$9.4 million of increased employee compensation, benefit, and other headcount
related expenses, which is primarily driven by our employee retention program
which commenced during the first quarter of 2021. This increase includes a $2.6
million increase in stock-based compensation expense; and
•$6.5 million of increased consulting fees associated with the on-going project
to separate our severe genetic disease and oncology programs into two separate,
independent publicly traded companies.
The increased cost was partially offset by:
•$2.3 million of decreased commercial readiness and digital marketing costs due
to delays in commercialization as a result of the COVID-19 pandemic and in light
of safety events in the HGB-206 study of LentiGlobin gene therapy for SCD.
Cost of royalty and other revenue. Cost of royalty and other revenue was $2.3
million for the three months ended March 31, 2021 , compared to $1.0 million for
the three months ended March 31, 2020 . The increase is attributable to increased
royalty and other revenue in the same periods.
Change in fair value of contingent consideration. The change in fair value of
contingent consideration was primarily due to the change in significant
unobservable inputs used in the fair value measurement of contingent
consideration, including the probabilities of successful achievement of clinical
and commercial milestones and discount rates.
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
interest rates.
Other income (expense), net. The increase in other income (expense), net was
primarily related to the gain recognized on equity securities.
Liquidity and Capital Resources
As of March 31, 2021 , we had cash, cash equivalents and marketable securities of
approximately $1.09 billion . We expect our cash, cash equivalents, and
marketable securities will be sufficient to fund planned operations for at least
the next twelve months from the date of issuance of these financial statements,
though we may pursue additional cash resources through public or private equity
or debt financings or by establishing additional collaborations with other
companies. Cash in excess of immediate requirements is invested in accordance
with our investment policy, primarily with a view to liquidity and capital
preservation. As of March 31, 2021 , our funds are primarily held in U.S.
Treasury securities, U.S. government agency securities, equity securities,
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 March 31, 2021 we had an accumulated
deficit of $3.11 billion . We expect that our 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, which we may
raise through public or private equity or debt financings, strategic
collaborations, or other sources. 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.
Sources of Liquidity
Cash Flows
The following table sets forth the primary sources and uses of cash for each of
the periods below:
For the three months ended March
31,
2021 2020
(in thousands)
Net cash used in operating activities $ (203,327) $ (206,121)
Net cash provided by investing activities 321,352 224,578
Net cash provided by financing activities 3,796 963
Net increase in cash, cash equivalents and restricted cash
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Cash Flows from Operating Activities. The $2.8 million decrease in cash used in
operating activities for the three months ended March 31, 2021 compared to the
three months ended March 31, 2020 was primarily due to changes in operating
assets and liabilities, partially offset by the increase in net loss for the
period of $3.2 million .
Cash Flows from Investing Activities. The $96.8 million increase in cash
provided by investing activities for the three months ended March 31, 2021 was
due to a decrease in cash used to purchase marketable securities of $48.2
million , an increase in cash provided from the sales of marketable securities of
$31.3 million , an increase in proceeds for maturities of marketable securities
of $14.2 million , and a decrease in cash used to purchase property, plant and
equipment of $3.1 million , compared to the three months ended March 31, 2020 .
Cash Flows from Financing Activities. The $2.8 million increase in cash provided
by financing activities was driven by an increase in proceeds from exercise of
stock options and ESPP contributions in the three months ended March 31, 2021
compared to the three months ended March 31, 2020 .
Contractual Obligations and Commitments
Except as discussed in Note 8, Leases, and Note 9, Commitments and
contingencies, in the Notes to Condensed Consolidated Financial Statements,
there have been no material changes to our contractual obligations and
commitments as included in our Annual Report on Form 10-K, which was filed with
the SEC on February 23, 2021 .
Off-Balance Sheet Arrangements
As of March 31, 2021 , we did not have any off-balance sheet arrangements as
defined in the rules and regulations of the SEC .
Item 3. Quantitative and Qualitative Disclosures About Market Risks
We are exposed to market risk related to changes in interest rates. As of
March 31, 2021 and December 31, 2020 , we had cash, cash equivalents and
marketable securities of $1.09 billion and $1.27 billion , respectively,
primarily invested in U.S. government agency securities and Treasuries, equity
securities, corporate bonds, commercial paper and money market accounts invested
in U.S. government agency securities. Our primary exposure to market risk is
interest rate sensitivity, which is affected by changes in the general level of
U.S. interest rates, particularly because our investments are in short-term
securities. Our available for sale securities are subject to interest rate risk
and will fall in value if market interest rates increase. If market interest
rates were to increase immediately and uniformly by 100 basis points, or one
percentage point, from levels at March 31, 2021 , the net fair value of our
interest-sensitive marketable securities would have resulted in a hypothetical
decline of approximately $2.6 million .
Item 4. Controls and Procedures
Management's Evaluation of our Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in the reports that we file or submit under
the Securities Exchange Act of 1934 is (1) recorded, processed, summarized, and
reported within the time periods specified in the SEC's rules and forms and
(2) accumulated and communicated to our management, including our principal
executive officer and principal financial officer, to allow timely decisions
regarding required disclosure.
As of March 31, 2021 , our management, with the participation of our principal
executive officer and principal financial officer, evaluated the effectiveness
of our disclosure controls and procedures (as defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934). Our management recognizes
that any controls and procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving their objectives, and management
necessarily applies its judgment in evaluating the cost-benefit relationship of
possible controls and procedures. Our principal executive officer and principal
financial officer have concluded based upon the evaluation described above that,
as of March 31, 2021 , our disclosure controls and procedures were effective at
the reasonable assurance level.
Changes in Internal Control over Financial Reporting
During the quarter ended March 31, 2021 there were no changes in our internal
control over financial reporting, as such term is defined in Rules 13a-15(f) and
15(d)-15(f) promulgated under the Securities Exchange Act of 1934, that have
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.
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