bluebird bio
Annual Report 2016

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549 FORM 10-K (Mark One)☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2016OR☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from to Commission File Number: 001-35966 bluebird bio, Inc.(Exact Name of Registrant as Specified in Its Charter) Delaware 13-3680878(State or Other Jurisdiction ofIncorporation or Organization) (IRS EmployerIdentification No.) 150 Second StreetCambridge, Massachusetts 02141(Address of Principal Executive Offices) (Zip Code)(339) 499-9300(Registrant’s Telephone Number, Including Area Code) Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past90 days. Yes ☒ No ☐Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted andposted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit andpost such files). Yes ☒ No ☐Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, tothe best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “largeaccelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ (Do not check if a smaller reporting company) Smaller reporting company ☐Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒The aggregate market value of common stock held by non-affiliates of the registrant based on the closing price of the registrant’s common stock as reported on the NasdaqGlobal Select Market on June 30, 2016, the last business day of the registrant’s most recently completed second quarter, was $1,586,834,900.As of February 17, 2017, there were 40,844,757 shares of the registrant’s common stock, par value $0.01 per share, outstanding.DOCUMENTS INCORPORATED BY REFERENCEPortions of the registrant’s definitive Proxy Statement relating to its 2017 Annual Meeting of Stockholders are incorporated by reference into Part III of this Annual Report onForm 10-K where indicated. Such Proxy Statement will be filed with the U.S. Securities and Exchange Commission within 120 days after the end of the fiscal year to which thisreport relates.  Table of Contents PagePART I.Item 1. Business 1Item 1A. Risk Factors 41Item 1B. Unresolved Staff Comments 70Item 2. Properties 70Item 3. Legal Proceedings 71Item 4. Mine Safety Disclosures 71 PART II. Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 72Item 6. Selected Financial Data 74Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 75Item 7A. Quantitative and Qualitative Disclosures about Market Risk 90Item 8. Financial Statements and Supplementary Data 91Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 91Item 9A. Controls and Procedures 91Item 9B. Other Information 93 PART III. Item 10. Directors, Executive Officers and Corporate Governance 94Item 11. Executive Compensation 94Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 94Item 13. Certain Relationships and Related Transactions and Director Independence 94Item 14. Principal Accountant Fees and Services 94 PART IV. Item 15. Exhibits and Financial Statement Schedules 95Item 16. Form 10-K Summary 95 Signatures  FORWARD-LOOKING STATEMENTSThis Annual Report on Form 10-K contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they nevermaterialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. We make suchforward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws.All statements other than statements of historical facts contained in this Annual Report on Form 10-K are forward-looking statements. In some cases, you canidentify forward-looking statements by words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,”“plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “would,” or the negative of these words or other comparable terminology. These forward-looking statements include, but are not limited to, statements about: ●the initiation, timing, progress and results of our preclinical and clinical studies, and our research and development programs; ●our ability to advance product candidates into, and successfully complete, clinical studies; ●our ability to advance our viral vector and drug product manufacturing capabilities; ●the timing or likelihood of regulatory filings and approvals for our product candidates; ●the timing or success of commercialization of our product candidates, if approved; ●the pricing and reimbursement of our product candidates, if approved; ●the implementation of our business model, strategic plans for our business, product candidates and technology; ●the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates and technology; ●estimates of our expenses, future revenues, capital requirements and our needs for additional financing; ●the potential benefits of strategic collaboration agreements and our ability to enter into strategic arrangements; ●our ability to maintain and establish collaborations and licenses; ●developments relating to our competitors and our industry; and ●other risks and uncertainties, including those listed under Part I, Item 1A. Risk Factors.Any forward-looking statements in this Annual Report on Form 10-K reflect our current views with respect to future events or to our future financialperformance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to bematerially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that may causeactual results to differ materially from current expectations include, among other things, those listed under Part I, Item 1A. Risk Factors and elsewhere in thisAnnual Report on Form 10-K. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required bylaw, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.This Annual Report on Form 10-K also contains estimates, projections and other information concerning our industry, our business, and the markets forcertain diseases, including data regarding the estimated size of those markets, and the incidence and prevalence of certain medical conditions. Informationthat is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties and actual events orcircumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained this industry,business, market and other data from reports, research surveys, studies and similar data prepared by market research firms and other third parties, industry,medical and general publications, government data and similar sources.  PART I Item 1. BusinessOverviewWe are a clinical-stage biotechnology company committed to developing potentially transformative gene therapies for severe genetic diseases andcancer. With our lentiviral-based gene therapy and gene editing capabilities, we have built an integrated product platform with broad potential application inthese areas. We believe that gene therapy for severe genetic diseases has the potential to change the way these patients are treated by correcting theunderlying genetic defect that is the cause of their disease, rather than offering treatments that only address their symptoms. Our clinical programs in severegenetic diseases include our LentiGlobin® product candidate to treat transfusion-dependent β-thalassemia, or TDT, and to treat severe sickle cell disease, orsevere SCD, and our Lenti-D™ product candidate to treat cerebral adrenoleukodystrophy, or CALD. Our programs in oncology are built upon our leadershipin lentiviral gene delivery and T cell engineering, with a focus on developing novel T cell-based immunotherapies, including chimeric antigen receptor(CAR) and T cell receptor (TCR) T cell therapies. bb2121, our lead product candidate in oncology, is a CAR T cell product candidate for the treatment ofmultiple myeloma. We also have discovery research programs utilizing megaTALs/homing endonuclease gene editing technologies with the potential for useacross our pipeline.We are conducting four clinical studies of our LentiGlobin product candidate: a Phase I/II study in the United States, Australia, and Thailand for thetreatment of subjects with TDT, called the Northstar Study (HGB-204); a multi-site, international, Phase III study for the treatment of subjects with TDT andnon-β0/β0 genotypes, called the Northstar-2 Study (HGB-207); a single-center Phase I/II study in France for the treatment of subjects who with TDT or withsevere SCD (HGB-205); and a multi-site Phase I study in the United States for the treatment of subjects with severe SCD (HGB-206). Both TDT and severeSCD are rare, hereditary blood disorders that often lead to severe anemia and shortened lifespans. Our LentiGlobin product candidate has been grantedOrphan Drug status by the U.S. Food and Drug Administration, or FDA, and the European Medicines Agency, or EMA, for both β-thalassemia and SCD. OurLentiGlobin product candidate was granted Fast-Track designation by the FDA for the treatment of β-thalassemia major and for the treatment of certainpatients with severe SCD. The FDA has granted Breakthrough Therapy designation to our LentiGlobin product candidate for the treatment of transfusion-dependent patients with β-thalassemia major. The EMA has granted access to its Priority Medicines (PRIME) scheme for our LentiGlobin product candidatefor the treatment of TDT.We are conducting a multi-site, international, Phase II/III clinical study of our Lenti-D™ product candidate, called the Starbeam Study (ALD-102), for thetreatment of subjects with CALD, a rare, hereditary neurological disorder that is often fatal. Our Lenti-D product candidate has been granted Orphan Drugstatus by the FDA and the EMA for the treatment of adrenoleukodystrophy.We are conducting a multi-site Phase I clinical study in the United States of our bb2121 product candidate for the treatment of subjects withrelapsed/refractory multiple myeloma (CRB-401). bb2121 is the lead product candidate arising from our multi-year collaboration with Celgene Corporation,or Celgene, for the discovery, development and commercialization of CAR T cell therapies targeting B-cell maturation antigen, or BCMA. We haveexclusively licensed to Celgene the right to develop and commercialize our bb2121 product candidate, and we may exercise our option to co-develop andco-promote this product candidate in the United States. The FDA has granted Orphan Drug status to bb2121 for the treatment of patients withrelapsed/refractory multiple myeloma.Our gene therapy platform is based on viral vectors that utilize a modified, non-replicating version of the Human Immunodeficiency Virus Type 1, or HIV-1, that has been stripped of all of the components required for it to self-replicate and infect additional cells. HIV-1 is part of the lentivirus family of viruses,and we refer to our vectors as lentiviral vectors. Our lentiviral vectors are used to introduce a functional copy of a gene to the patient’s own isolatedhematopoietic stem cells, or HSCs, in the case of our LentiGlobin and Lenti-D product candidates, or the patient’s own isolated white blood cells whichinclude T cells, in the case of our bb2121 product candidate. Additionally, we have developed a proprietary cell-based vector manufacturing process that isboth reproducible and scalable. We believe our innovations in viral vector design and related manufacturing processes are important steps towards advancingthe field of gene therapy and in realizing its full potential on a commercial scale.Utilizing our gene therapy platform, we are developing product candidates comprising the patient’s own gene-modified HSCs and T cells. Clinical proof-of-concept already exists for allogeneic hematopoietic stem cell transplant, or HSCT, an approach of treating a patient with HSCs contributed by a donorother than the patient that contain the properly functioning copy of the gene whose mutation has caused the underlying disease. However, this approach hassignificant limitations, including difficulties in finding appropriate genetically-matched donors and the risk of transplant-related rejection, graft-versus-hostdisease, or GVHD, and mortality, and is therefore typically only available on a limited basis. Our approach is intended to address the significant limitations ofallogeneic HSCT while utilizing existing stem cell transplant infrastructure and processes. Also, because our approach has the potential to drive sustainedexpression of the functional protein encoded by the gene insert after potentially a single-administration, we believe the value proposition offered by ourproduct candidates for patients, families, health care providers and payors would be significant.1 Although our initial focus for HSCs is in TDT, severe SCD and CALD, and for T cells is in oncology, we believe our gene therapy platform has broadtherapeutic potential in a variety of indications. We believe that our vectors can be used to introduce virtually any gene into a cell and have the potential tobe manufactured on a commercial scale reproducibly and reliably, as each new vector is produced using substantially the same process. We also takeadvantage of lentivirus’ ability to transduce HSCs more efficiently than other vectors, such as those derived from another virus used in gene therapyapproaches, called adeno-associated virus, or AAV, which gives us the potential to address diseases in a variety of cell lineages that are derived from HSCs,such as microglia (useful for CALD), red blood cells (useful for TDT and SCD) or other cells, or from T cells (useful for cancer and immunology).We also have discovery research programs utilizing our cell signaling technology and gene editing technology platform across our pipeline. For instance,we are exploring applications of our CAR and TCR T cell technologies in combination with novel proteins based on synthetic biology. These technologiesmay potentially allow our future T cell-based product candidates to detect the tumor microenvironment or, in the case of future CAR T cell productcandidates, to be regulated by small molecules. In addition, we are focused on utilizing homing endonuclease and megaTAL gene editing technologies in avariety of potential applications and disease areas, including for oncology and hematology. Homing endonucleases and MegaTALs are novel enzymes thatprovide a highly specific and efficient way to modify DNA sequences to edit or insert genetic components to potentially treat a variety of diseases.Our gene therapy platform and proprietary lentiviral vectorsOur gene therapy product candidates for severe genetic diseases and in cancer are being developed based on a simple notion: to genetically modify apatient’s own cells to fundamentally correct or address the genetic basis underlying a disease. Although the notion of gene transfer to a patient’s own cellsis simple, the processes of developing viral vectors capable of delivering the genetic material and inserting gene sequences safely into a patient’s target cellsis highly technical and demands significant expertise, experience and know-how. Leveraging our extensive expertise in viral vector design andmanufacturing and transduction, we have developed a gene therapy platform that we believe is broadly applicable in a variety of indications with significantunmet medical need.The success of a gene therapy platform is highly dependent on the type of delivery system used. Our platform is based upon an ex vivo viral deliverysystem whereby a certain type of virus delivers the DNA that it is carrying into a cell and inserts this DNA into the cell’s genome. We have developedsignificant expertise in designing a particular type of vector delivery system employing a lentivirus for use in gene therapy and have also developed and in-licensed relevant intellectual property, including know-how, related to lentiviral vectors. Our lentiviral construct design includes only the minimal viralcomponents of HIV-1 required to enable the vector to undergo one round of replication within the cell during manufacturing and subsequently to enter thetarget cells and deliver the gene that it is carrying.We believe that our lentiviral vectors are particularly well-suited for treating a number of diseases and have certain advantages over other viral vectorsused in developing gene therapy products, including: •Sustained expression—Unlike other vectors based on viruses such as AAV, lentiviral vectors are capable of integrating the functional gene they carryinto the DNA of the target cell’s genome. As such, they are well-suited to introduce a sustained therapeutic effect in dividing cells because the genesequence introduced by the lentiviral vector will be replicated with the rest of the cell’s chromosomal DNA and subsequent dividing cells will alsocarry the newly inserted gene sequence. Other vector platforms that take advantage of different viruses introduce genes into cells but they don’tactively integrate into a cell’s DNA and require many viral events to transform a cell. •Potentially Improved Safety—In clinical studies of gene therapy product candidates conducted by other entities, earlier generations of integratingviral vectors based on a mouse gamma-retrovirus were shown to preferentially integrate into certain regulatory regions of genes (such as the promoterregions) and in some instances inappropriately activate the cell to divide uncontrollably, leading to cancer through a process called insertionaloncogenesis. These genetic alterations have led to several well-publicized adverse events, including several reported cases of leukemia, andhighlighted the need to develop new gene therapy vectors with potentially improved safety profiles. Next generation lentiviral vectors, unlike gammaretroviruses, have a distinct pattern of integrating into regions that provide instructions for making proteins rather than preferentially integrating intoregions that can lead to cell proliferation and cancer. We believe this difference in integration patterns is a critical factor in potentially improving thesafety profile of the vector, and distinguishes them from earlier generations of integrating viral vectors. •Carrying capacity—Unlike AAV, the lentivirus is able to carry large therapeutic gene sequences (up to 8,000 base pairs) into a host cell. This maylimit the utility of AAV in some diseases where the required gene sequences will be too large to fit into an AAV construct. In this regard, lentiviralvectors offer more flexibility.2 Hematopoietic Stem Cells (HSCs)Our gene therapy platform takes advantage of lentiviral vectors’ ability to stably integrate into the target cell’s genome by focusing on diseases we cantreat through genetic modification of HSCs, which when reintroduced back into the patient, differentiate into numerous other cell lineages, as depictedbelow. We believe our initial clinical indications in severe genetic diseases (CALD, TDT and severe SCD) can all be treated by introducing a specificfunctional gene into HSCs taken from the patient to correct the gene defect responsible for the disease.HSCs are dividing stem cells that are permanently found in a patient’s bone marrow and are an ongoing replacement source of mature cell types as theydie off. HSCs produce progeny cells, called progenitors, that differentiate into all of the cellular elements that compose the blood, including red blood cells(useful for TDT and severe SCD), microglia (useful for CALD), T cells (useful for cancer and immunology) and others. As such, all progenitors derived from asingle gene therapy-modified HSC will carry the same corrective genetic modification, which we believe gives our approach the potential to deliver life-longclinical benefits based on a single therapeutic administration.Our therapeutic approach in severe genetic diseasesThe delivery of a gene therapy product in HSCs for the treatment of severe genetic diseases requires several steps. Importantly, our approach seeks toleverage cell transplant procedures and infrastructure already widely used in the clinic for allogeneic HSCT. 1.We produce our lentiviral vector by co-transfecting a packaging cell line with multiple plasmids that separately encode the various components of thevirus as well as the functional gene sequence the viral vector will carry. The use of multiple plasmids is an important safety step designed to furtherprevent the resulting lentiviral vectors from being able to replicate and cause infection on their own. 2.A sample of HSCs is extracted from the patient through a standard process known as apheresis, where HSCs are first mobilized into the blood streamfrom the bone marrow using a routinely-used pharmaceutical agent and then isolated and collected from the patient’s blood. HSCs may also beextracted directly from the patient’s bone marrow, particularly as in the treatment of severe SCD. 3.The lentiviral vector is mixed with the patient’s isolated HSCs ex vivo. This leads to the insertion of the functional gene into the HSCs’ existing DNA,thus creating a pool of the patient’s own, or autologous, gene-modified cells. The cells are then washed to remove any remnants of the viral vector orculture media. These gene-modified cells are the therapeutic drug product that is delivered back into the patient. 4.Prior to administering our drug product, the patient undergoes a standard myeloablation procedure (also used in allogeneic HSCT) to removeendogenous bone marrow cells. The modified HSCs are then re-infused back into the patient (approximately one to two months after initial extractionof the patient’s HSCs) and begin re-populating a portion of the bone marrow as permanently modified HSCs in a process known as engraftment. Theengrafted HSCs will go on to give rise to progenitor cell types with the functional gene.Our therapeutic approach in oncologyThe delivery of modified T cell products in oncology requires several steps that are similar to our therapeutic approach in severe genetic diseases withHSCs. Importantly, our approach seeks to leverage cell transplant procedures and infrastructure already widely used in the clinic for autologous andallogeneic bone marrow transplant. 1.We produce our lentiviral vector by co-transfecting a packaging cell line with multiple plasmids that separately encode the various components of thevirus as well as the tumor-targeting protein the viral vector will carry. 2.For the treatment of cancer, a sample of the patient’s white blood cells is extracted and isolated through a standard process known as leukapheresis, inwhich white blood cells are separated from the remaining fractions of the patient’s blood. 3.The lentiviral vector is mixed with the patient’s white blood cells, which include T cells, ex vivo. This leads to the insertion of the gene encoding aCAR into the T cells’ existing DNA, thus creating a population of modified T cells expressing a CAR or TCR. The cells are then washed to remove anyremnants of the viral vector or culture media and expanded to increase the number of modified T cells to the required dosage. These modified T cellsare the therapeutic drug product that is delivered back into the patient. 4.Prior to administering our drug product, the patient undergoes a standard lymphodepletion procedure to reduce the number of T cells that maycompete with the modified T cells. The modified T cells are then re-infused back into the patient.3 Our product candidate pipelineWe are developing our LentiGlobin product candidate to treat patients with TDT and severe SCD. We are conducting four clinical studies of ourLentiGlobin product candidate: a Phase I/II study in the United States, Australia, and Thailand to evaluate its safety and efficacy in the treatment of subjectswith TDT, called the Northstar Study (HGB-204); a multi-site, international, Phase III study to evaluate its safety and efficacy in the treatment of subjects withTDT and a non-β0/β0 genotype, called the Northstar-2 Study (HGB-207); a single-center Phase I/II study in France to evaluate its safety and efficacy in thetreatment of subjects with TDT or with severe SCD (HGB-205); and a multi-site Phase I study in the United States to evaluate its safety and efficacy in thetreatment of subjects with severe SCD (HGB-206). In addition, in 2017 we intend to initiate our planned Phase III study of our LentiGlobin product candidatefor the treatment of subjects with TDT and a β0/β0 genotype, called the Northstar-3 Study (HGB-212).We are developing our Lenti-D product candidate to treat patients with CALD. We are currently conducting a Phase II/III clinical study of our Lenti-Dproduct candidate in the United States, which we refer to as the Starbeam Study (ALD-102), to examine the safety and efficacy of our Lenti-D productcandidate in subjects with CALD. We are also pursuing opportunities to apply our gene therapy platform technologies in cancer by genetically modifying a patient’s own T cells to targetand destroy cancer cells. Our collaboration with Celgene focuses on CAR T cell product candidates directed against BCMA, a protein expressed on thesurface of multiple myeloma cells, plasma cells and some mature B cells. We are conducting a multi-site Phase I clinical study in the United States to evaluatethe safety and efficacy of our bb2121 product candidate, the lead product candidate from this collaboration, in the treatment of subjects withrelapsed/refractory multiple myeloma (CRB-401). We have exclusively licensed to Celgene the right to develop and commercialize our bb2121 productcandidate, while we have retained an option to co-develop and co-promote this product candidate in the United States. In addition, we anticipate initiating in2017 a Phase I clinical study in the United States to evaluate the safety and efficacy of the next anti-BCMA CAR T cell product candidate arising from ourcollaboration with Celgene. We are also collaborating with Kite Pharma, Inc. in the research and development of second-generation TCR product candidatesdirected against an antigen relating to certain cancers associated with the human papilloma virus, and with Medigene AG, through its subsidiary MedigeneImmunotherapies GmbH, in the research and development of TCR product candidates directed against up to four antigens for the treatment of cancerindications.Our LentiGlobin product candidate opportunityβ-thalassemiaOverviewβ-thalassemia is a rare hereditary blood disorder caused by a mutation in the β-globin gene resulting in the production of defective red blood cells, orRBCs. Genetic mutations cause the absence or reduced production of the beta chains of hemoglobin, or β-globin, thereby preventing the proper formation ofhemoglobin A, which normally accounts for greater than 95% of the hemoglobin in the blood of adults. Hemoglobin is an iron-containing protein in theblood that carries oxygen from the respiratory organs to the rest of the body. Hemoglobin A consists of four chains—two chains each of a-globin and β-globin. Genetic mutations that impair the production of β-globin can lead to a relative excess of a-globin, leading to premature death of RBCs. The clinicalimplications of the a-globin/ β-globin imbalance are two-fold: first, patients lack sufficient RBCs and hemoglobin to effectively transport oxygen throughoutthe body and can become severely anemic; and second, the shortened life span and ineffective production of RBCs can lead to a range of multi-systemiccomplications, including but not limited to splenomegaly, marrow expansion, bone deformities, and iron overload in major organs.The clinical course of β-thalassemia correlates with the degree of globin chain imbalance. Nearly 200 different mutations have been described in patientswith β-thalassemia. The clinical presentation varies widely, dependent largely upon the type of inherited mutation. Mutations can be categorized as thosethat result in no functional β-globin production (β0) and those that result in decreased functional β-globin production (β+). TDT refers to any mutationpairing that results in the need for chronic transfusions due to severe anemia, and is the clinical finding in most patients with β0/ β0 genotypes as well asmany patients with other genotypes resulting in abnormal β-globin production, such as the β0/β+ and β+/β+ genotypes. Affected patients produce as little asone to seven g/dL of hemoglobin (in contrast, a normal adult produces 12-18 g/dL of hemoglobin). Hemoglobin E (βE), which is another β-globin mutationand is usually asymptomatic, can also result in TDT when paired with β0 or β+ mutations.Limitations of current treatment optionsIn geographies where treatment is available, patients with TDT receive chronic blood transfusion regimens. These regimens consist of regular infusionswith units of packed RBC, or pRBC, usually every three to five weeks, which are intended to maintain hemoglobin levels and control symptoms of thedisease. While chronic blood transfusions can be effective at minimizing the symptoms of TDT, they often lead to iron overload, which over time leads tosignificant morbidity and mortality through iron-4 associated heart and liver toxicity. To help prevent iron overload-associated risks and resulting complications, patients must adhere to therapeutic ironchelation regimens to reduce the iron overload. Poor compliance with chelation regimens remains a key challenge; it is estimated that with typicalcompliance, the overall life expectancy for a patient with TDT is significantly reduced compared to the general population. Even patients who are compliantwith transfusion and iron chelation regimens can experience a reduced quality of life due to the burden and side effects of therapy and the fluctuating levelsof hemoglobin on a month-to-month basis.The only potentially curative therapy for β-thalassemia today is allogeneic HSCT. However, complications of allogeneic HSCT include a risk ofengraftment failure in unrelated human-leukocyte-antigen, or HLA, matched patients, a risk of life-threatening infection, and a risk of GVHD, a commoncomplication in which donor immune cells (white blood cells in the graft) recognize the cells of the recipient (the host) as “foreign” and attack them. As aresult of these safety challenges, allogeneic HSCT can lead to significant mortality rates, particularly for patients treated with cells from a donor who is not amatched sibling, and in older patients. Consequently, transplants are offered primarily to pediatric patients with a matched sibling donor, which occurs inonly a fraction of all cases. In addition, because of the need for immunosuppression following allogeneic HSCT, there is a risk of opportunistic infections andother serious side effects associated with immunosuppressive drugs. Overall, TDT remains a devastating disease with an unmet medical need.Sickle cell diseaseOverviewSickle cell disease, or SCD, is a hereditary blood disorder resulting from a mutation in the β-globin gene that causes polymerization of hemoglobinproteins and abnormal red blood cell function. The disease is characterized by anemia, vaso-occlusive pain crisis (a common complication of SCD in whichthere is severe pain due to obstructed blood flow in the small blood vessels of the body), cumulative damage to multiple organs, infections, stroke, overallpoor quality of life and early death in a large subset of patients. Under low-oxygen conditions, which are exacerbated by the RBC abnormalities, the mutanthemoglobin aggregates causing the RBCs to take on a sickle shape (sickle cells), which causes them to aggregate and obstruct small blood vessels, therebyrestricting blood flow to organs resulting in pain, cell death and organ damage. If oxygen levels are restored, the hemoglobin can disaggregate and the RBCswill return to their normal shape, but over time, the sickling damages the cell membrane and the cells fail to return to the normal shape even in high-oxygenconditions.Limitations of current treatment optionsWhere adequate medical care is available, common treatments for patients with SCD largely revolve around management and prevention of acute sicklingepisodes. Chronic management may include hydroxyurea and, in certain cases, chronic transfusions. Hydroxyurea is currently the only medication approvedfor the treatment of SCD and is recommended for patients with recurrent episodes of acute pain or specific frequencies of painful crises. Not all SCD patientsrespond to hydroxyurea however, or are able to tolerate the cytotoxic effect of reduced white blood cell and platelet counts. A significant number of patientswith severe SCD find it difficult to adhere to hydroxyurea treatment, and for most patients there is no effective long-term treatment.RBC transfusion therapy can be utilized to maintain the level of sickle hemoglobin below 30% to 50%, which decreases sickling of RBCs, reduces therisk of recurrent stroke, and decreases the incidence of associated co-morbidities. While transfusion therapy can be critical in the management of acutedisease, and can be vital in preventing some of the chronic manifestations of severe SCD, it does not provide equal benefit to all patients.Similar to TDT, the only potentially curative therapy currently available for severe SCD is allogeneic HSCT, however because of the significant risk oftransplant-related morbidity and mortality, this option is usually offered primarily to pediatric patients with available sibling-matched donors. It isparticularly difficult to find suitable donors for individuals of African descent, and it is estimated that only a fraction of eligible patients undergo transplant.In light of these factors, we believe that severe SCD is a devastating disease with a significant unmet medical need.Our LentiGlobin product candidateWe are developing our LentiGlobin product candidate as a potential one-time treatment for both TDT and severe SCD. Our approach involves the ex vivoinsertion of a single codon variant of the normal β-globin gene using a lentiviral vector into the patient’s own HSCs to enable formation of normallyfunctioning hemoglobin A and normal RBCs in patients. Importantly, this codon variant, referred to as T87Q, also serves as a distinct biomarker used toquantify expression levels of the functional β-globin protein in patients with TDT and severe SCD, while also providing anti-sickling properties in thecontext of severe SCD. We refer to the cells that have undergone our ex vivo manufacturing process resulting in genetically modified HSCs as the finalLentiGlobin drug product, or our LentiGlobin product candidate.5 We are conducting three clinical studies of our LentiGlobin product candidate to evaluate its safety and efficacy in the treatment of subjects with TDT. InDecember 2013, we announced that the first subject with TDT had been treated in our HGB-205 study, which also includes the enrollment of subjects withsevere SCD. In March 2014, we announced that the first subject with TDT had been treated in our Northstar Study (HGB-204). We presented interim resultsfrom both our Northstar Study and our HGB-205 study at the American Society of Hematology Annual Meeting in December 2016. We also announced inDecember 2016 that the first subject had been treated in our Northstar-2 Study (HGB-207), which evaluates the safety and efficacy of our LentiGlobinproduct candidate in the treatment of subjects with TDT and non-β0/β0 genotypes. In addition, we intend to initiate in 2017 our planned Phase III study ofour LentiGlobin product candidate for the treatment of subjects with TDT and a β0/β0 genotype, called the Northstar-3 Study (HGB-212). In October 2014,we announced that the first subject with severe SCD had been treated in our HGB-205 study. We are also conducting our HGB-206 study to evaluate thesafety and efficacy of our LentiGlobin product candidate in the treatment of subjects with severe SCD. In 2016, we amended the protocol of our HGB-206study to expand enrollment and to incorporate several process changes, including our updated drug product manufacturing process. In February 2017, weannounced that the first subject has been treated under this amended protocol. We will be using our updated drug product manufacturing process with theobjective of increasing the vector copy number and the percentage of transduced cells in the LentiGlobin drug product in our ongoing Northstar-2 Study, ourHGB-206 study under the amended protocol, and our planned Northstar-3 Study.If successful, we believe that data from the ongoing Northstar Study and Northstar-2 Study could form the basis for a biologics licensing application, orBLA, submission for our LentiGlobin product candidate in the United States for the treatment of patients with TDT and non-β0/β0 genotypes. In addition, ifsuccessful, we believe the data from our planned Northstar-3 Study, together with data from our ongoing Northstar Study, Northstar-2 Study and HGB-205study, could be sufficient to form the basis for a BLA supplement submission for our LentiGlobin product candidate for the treatment of patients with TDTand a β0/β0 genotype.Our LentiGlobin product candidate has been granted Orphan Drug status by the FDA and EMA for both β-thalassemia and SCD. Our LentiGlobin productcandidate was granted Fast-Track designation by the FDA for the treatment of β-thalassemia major and for the treatment of certain patients with severeSCD. The FDA has granted Breakthrough Therapy designation to our LentiGlobin product candidate for the treatment of transfusion-dependent patients withβ-thalassemia major. We are participating in the EMA’s Adaptive Pathways pilot program (formerly referred to as Adaptive Licensing), which is part of theEMA’s effort to improve timely access for patients to new medicines. Based on our discussions involving the EMA, European Health Technology Assessmentagencies and patient advocacy organizations as part of this program, we believe that it is possible to seek conditional approval for LentiGlobin for thetreatment of TDT on the basis of the totality of the clinical data from our ongoing Northstar Study and HGB-205 study, assuming these studies demonstrateacceptable efficacy and safety, respectively, and in particular a reduction in transfusion requirements. We believe that conversion to full approval would besubject to the successful completion of our ongoing Northstar-2 Study and our planned Northstar-3 Study, supportive long-term follow-up data and “real-world” post-approval monitoring data. Whether or not our clinical data are sufficient to support conditional, and ultimately full, approval will be a reviewdecision by the EMA. In addition, the EMA has granted access to its Priority Medicines (PRIME) scheme for our LentiGlobin product candidate in thetreatment of TDT.Clinical development of our LentiGlobin product candidateThe Northstar Study (HGB-204) – Phase I/II clinical study in subjects with TDTOur Northstar Study is a single-dose, open-label, non-randomized, multi-site Phase I/II clinical study in the United States, Australia and Thailand toevaluate the safety and efficacy of the LentiGlobin product candidate in increasing hemoglobin production and eliminating or reducing transfusiondependence following treatment. In March 2014, we announced that the first subject with TDT had been treated in our Northstar Study.Eighteen adults and adolescents have been enrolled in the study. To be eligible for enrollment in this study, subjects were between 12 and 35 years of agewith a diagnosis of TDT and receive at least 100 mL/kg/year of pRBCs or greater than or equal to eight transfusions of pRBCs per year in each of the twoyears preceding enrollment. The subjects were also eligible for allogeneic HSCT. In September 2016, we announced that our Northstar Study has been fullyenrolled.Efficacy will be evaluated primarily by the production of ≥2.0 g/dL of hemoglobin A containing βA-T87Q-globin for the six-month period between 18 and24 months post-transplant. In order to allow for endogenous hemoglobin production following transplant, subjects will be transfused with RBCs only whentotal hemoglobin decreases below 7.0 g/dL. The rationale for this endpoint is that production of ≥2.0 g/dL of hemoglobin A containing βA-T87Q-globinrepresents a clinically meaningful increase in endogenous hemoglobin production that would be expected to diminish transfusion requirements, and couldresult in transfusion independence in TDT subjects.6 Exploratory efficacy endpoints include RBC transfusion requirements (measured in milliliters per kilogram) per month and per year, post-transplant.Safety evaluations to be performed during the study include success and kinetics of HSC engraftment, incidence of transplant-related mortality post-treatment, overall survival, detection of vector-derived replication-competent lentivirus in any subject and characterization of events of insertionalmutagenesis leading to clonal dominance or leukemia. Subjects will be monitored by regular screening. Each subject will remain on study for approximately26 months from time of consent and then will be enrolled in a long-term follow-up protocol that will assess safety and efficacy beyond 24 months.The HGB-205 study – Phase I/II clinical study in subjects with TDT or with severe SCDOur HGB-205 study is a single-dose, open-label, non-randomized, Phase I/II clinical study at a single site in France to examine the safety and efficacy ofour LentiGlobin product candidate in up to seven subjects with a diagnosis of TDT or severe SCD. Study subjects must be between five and 35 years of agewith a diagnosis of TDT or severe SCD. In December 2013, we announced that the first subject with TDT had been treated in our HGB-205 study and inOctober 2014 we announced that the first subject with severe SCD had been treated in our HGB-205 study. To be enrolled, subjects with TDT must havereceived at least 100 mL/kg/year of pRBCs per year for the past two years. Those with severe SCD must have failed to achieve clinical benefit from treatmentwith hydroxyurea and have an additional poor prognostic risk factor (e.g., recurrent vaso-occlusive crises or acute chest syndromes). All subjects must beeligible for allogeneic HSCT, but without a matched sibling allogeneic HSCT donor.The primary objective of our HGB-205 study is to determine the safety, tolerability and success of engraftment of the LentiGlobin drug product. Thesecondary objectives of the study are to quantify gene transfer efficiency and expression, and to measure the effects of treatment with the LentiGlobin drugproduct on disease-specific biological parameters and clinical events. In the case of subjects with TDT and SCD, this means the volume of pRBCtransfusions, and for subjects with SCD, it also means the number of vaso-occlusive crises and acute chest syndrome events in each subject, compared withthe two-year period prior to treatment.Safety evaluations to be performed during the study include success and kinetics of HSC engraftment, incidence of transplant-related mortality post-treatment, overall survival, detection of vector-derived replication-competent lentivirus in any subject and characterization of events of insertionalmutagenesis leading to clonal dominance or leukemia.The HGB-206 study – Phase I clinical study in subjects with severe SCDOur HGB-206 study is a single-dose, open-label, non-randomized, multi-site Phase I clinical study in the United States to evaluate the safety and efficacyof the LentiGlobin product candidate to treat severe SCD. Up to 29 adults will be enrolled in the study. Study subjects must be ≥18 years of age with a diagnosis of sickle cell disease, with either βS/βS or βS/β0genotype. The sickle cell disease must be severe, as defined by recurrent severe vaso-occlusive events, acute chest syndrome, history of an overt stroke, orechocardiographic evidence of an elevated tricuspid regurgitation jet velocity, an indicator of pulmonary hypertension, and subjects must have failed toachieve clinical benefit from treatment with hydroxyurea. The subjects must also be eligible for HSCT.Efficacy endpoints include changes in the frequency of severe vaso-occlusive crises, acute chest syndrome, and strokes or ischemicattacks. Pharmacodynamic endpoints include measurements of transgene persistence and transgene expression. Safety endpoints include monitoring forlaboratory parameters and frequency and severity of adverse events; the success and kinetics of HSC engraftment; the incidence of treatment related mortalityand overall survival; the detection of vector-derived replication-competent lentivirus in any subject; and the characterization of events of insertionalmutagenesis leading to clonal dominance or leukemia.Each subject will remain on study for approximately 26 months from time of consent and then will be enrolled in a long-term follow-up protocol that willassess safety and efficacy beyond 24 months.In October 2016, we announced that we have amended the protocol for our HGB-206 study to incorporate several changes with the goal of increasingproduction of anti-sickling β-globin, such as increasing the percentage of transduced cells through manufacturing improvements, increasing target busulfanarea under the curve, introducing a minimum period of regular blood transfusions prior to stem cell collection, and exploring an alternate HSC procurementmethod, with the goal of increasing transduced cell dose. Enrollment has begun under this amended protocol and in February 2017, we treated the firstsubject under this amended protocol.The Northstar-2 Study (HGB-207) – Phase III study in subjects with TDT and a non-β0/ β0 genotypeOur Northstar-2 Study is an ongoing single-dose, open-label, non-randomized, international, multi-site Phase III clinical study to evaluate the safety andefficacy of the LentiGlobin product candidate to treat subjects with TDT and a non-β0/β0 genotype.7 Approximately 23 subjects will be enrolled in the study, consisting of at least 15 adolescent and adult subjects between 12 and 50 years of age atenrollment, and at least eight pediatric subjects less than 12 years of age at enrollment. To be enrolled, subjects with TDT and a non-β0/β0 genotype musthave received at least 100 mL/kg/year of pRBCs per year for the past two years. All subjects must be eligible for allogeneic HSCT, but without a matchedsibling allogeneic HSCT donor.The primary endpoint of this study is the proportion of treated subjects who achieve transfusion independence, defined as hemoglobin levels ≥9.0 g/dLwithout any pRBC transfusions for a continuous period of at least 12 months at any time during the study after treatment. The secondary endpoints of thisstudy are to quantify gene transfer efficiency and expression, and to measure the effects of treatment with the LentiGlobin drug product on transfusionrequirements post-transplant and clinical events. Each subject will remain on study for approximately 24 months from time of consent.Safety evaluations to be performed during the study include success and kinetics of HSC engraftment, incidence of transplant-related mortality post-treatment, overall survival, detection of vector-derived replication-competent lentivirus in any subject and characterization of events of insertionalmutagenesis leading to clonal dominance or leukemia.Subjects in our Northstar-2 Study will be treated with our LentiGlobin product candidate manufactured using our updated drug product manufacturingprocess with the objective of increasing the vector copy number and the percentage of transduced cells. In December 2016, we announced the first subjecthad received treatment with our LentiGlobin product candidate.The planned Northstar-3 Study (HGB-212) – Phase III Study for TDT in subjects with TDT and a β0/ β0 genotypeWe have discussed with the FDA and the EMA the design of our planned international, multi-site Phase III study of our LentiGlobin product candidate forsubjects with TDT and a β0/β0 genotype, called the Northstar-3 Study (HGB-212), which we expect to enroll up to 15 adult, adolescent, and pediatricsubjects. We anticipate that the primary endpoint of our planned Northstar-3 Study will be transfusion reduction, which is defined as a demonstration of areduction in the volume of pRBC transfusion requirements in the post-treatment time period of months 12 to 24, as compared to the average annualtransfusion requirements in the 24 months prior to enrollment. We intend to initiate this study in 2017.8 Interim clinical data in subjects with TDT – The Northstar Study and the HGB-205 studyInterim clinical data from the Northstar StudyIn December 2016, we presented interim clinical data from our Northstar Study at the Annual Meeting of the American Society of Hematology, or ASH.All data presented at ASH Annual Meeting and summarized below from our Northstar Study are as of the data cut-off date of September 16, 2016. As of thedata cut-off date, ten subjects with non-β0/β0 genotypes and eight subjects with β0/β0 genotypes had undergone infusion with LentiGlobin drug product inour Northstar Study. The median follow-up period was 17 months (with a range of 6.3 to 29.8 months). Two subjects had completed the two-year primaryanalysis period. Below is a table summarizing the interim clinical data from our Northstar Study presented at the ASH Annual Meeting. Genotypeβ0/β0 genotypes(n=8)Non-β0/β0 genotypes(n=10)GenotypeβE/β0Other (β+/β0, β+/β+, βx/β0)8––1064Age at the start of regular transfusionsMedian (range) (years)0 (0 – 7)6 (0 – 26)Age at enrollmentMedian (range) (years)23 (12 – 35)19.5 (16 – 34)Transfusion requirements prior to study entryAnnualized median (range) (mL/kg/year)184.9 (128.7 – 261.3)146.3 (117.0 – 234.5)Splenectomy33LentiGlobin drug product VCN 1Median (range) (c/dg)0.7 (0.3 – 1.5)0.8 (0.3 – 1.1)LentiGlobin drug product cell doseMedian (range) CD34+ cell count (x106/kg)11.0 (6.1 – 18.1)7.1 (5.2 – 13.0)In vivo VCN at six months of follow-upMedian (range) (c/dg)0.3 (0.1 – 1.0)0.4 (0.1 – 0.9) 1VCN is a measurement of the mean number of viral vectors in a population of cells, or vector copies per diploid genome. In the case of LentiGlobin drug product VCN, themeasurement is prior to infusion of the study subject. If more than one lot of drug product was manufactured for a subject, the VCN of each drug product lot was quantified andthe cell count is combined.All five subjects with non-β0/β0 genotypes that had at least twelve months of follow-up have been free from the need for transfusions, as of the data cut-off date. The median βA-T87Q production for these five subjects was 11.7 g/dL, with a range of 9.5 to 12.5 g/dL. At the last follow-up, the median totalhemoglobin of all ten subjects with non-β0/β0 genotypes was 10.3 g/dL, with a range of 7.2 to 12.5 g/dL. The median follow up for these ten subjects was14.7 months, ranging from 6.3 to 29.8 months. Subjects with a β0/β0 genotype and at least twelve months of follow-up had a median reduction in annualizedtransfusion volume of 63% (ranging from 47 to 78%), and median reduction in annualized transfusion frequency of 65% (ranging from 31 to 81%),calculated based on their transfusion requirements from month 6 to the data cut-off date. The median follow-up for the eight subjects with a β0/β0 genotypewas 17.3 months, ranging from 6.7 to 25.4 months. Hemoglobin fractions at month 12 showed consistent production of βA-T87Q across genotypes in subjectswith at least 12 months of follow-up.A correlation between VCN and βA-T87Q production was observed as of the data cut-off date. In our Northstar Study, the safety profile of treatment withour LentiGlobin product candidate has been consistent with autologous transplantation, with no drug product-related Grade 3 or greater adverse eventsobserved as of the data cut-off date.It should be noted that these data presented above are current as of the data cut-off date, are preliminary in nature and our Northstar Study is not complete.There is limited data concerning long-term safety and efficacy following treatment with our LentiGlobin product candidate. These data may not continue forthese subjects or be repeated or observed in ongoing or future studies involving our LentiGlobin product candidate in subjects with TDT, including thisstudy, our ongoing HGB-205 study, our Northstar-2 Study, or our planned Northstar-3 Study. It is possible that subjects for whom transfusion support hasbeen reduced or eliminated may receive transfusion support in the future.Interim clinical data from the HGB-205 studyIn December 2016, we presented interim clinical data from our HGB-205 study in subjects with TDT at the ASH Annual Meeting. All data presented atthe ASH Annual Meeting and summarized below from our HGB-205 study are as of the data cut-off date of9 September 9, 2016. As of the data cut-off date, four subjects with TDT had undergone infusion with LentiGlobin drug product in our HGB-205 study. Thesubjects with TDT had between 11.6 and 33.5 months of follow-up. Three subjects with TDT and the β0/βE genotype have remained free of transfusions sinceshortly after infusion with the LentiGlobin drug product. As of the data cut-off date, these three subjects have been free from the need for transfusions for33.1, 29.9 and 11.5 months, respectively. The subject with TDT and homozygosity for the severe β+ mutation IVS1-110 had been free of transfusions for 11.6months (since approximately 3 months after receiving treatment with the LentiGlobin drug product). In these subjects with TDT, treatment with ourLentiGlobin product candidate has been well tolerated, with no drug product-related adverse events as of the data cut-off date. Below is a table summarizingthe interim data from our HGB-205 study in subjects with TDT that were presented at the ASH Annual Meeting. TDTSubject1201120212031206Age at enrollment(years)18161917Genotypeβ0/βEβ0/βEhomozygousIVS1 nt 110 G>Aβ0/βETransfusion requirements prior to study entry 1 (mL/kg/year)139188176197LentiGlobin drug product VCN 2(c/dg)1.52.10.81.1LentiGlobin drug product cell doseCD34+ cell count (x106/kg)8.913.68.812.0Hemoglobin AT87Q / Total hemoglobin(g/dL)7.7 / 10.910.1 / 13.56.7 / 8.38.6 / 11.3Busulfan area under the curveMedian (range) (μM/min)4,9675,2124,6704,930Follow up(months)33.530.314.611.6 1Mean pRBC requirement per year, over the two years prior to consent.2VCN is a measurement of the mean number of viral vectors in a population of cells, or vector copies per diploid genome. In the case of LentiGlobin drug product VCN, themeasurement is prior to infusion of the study subject. If more than one lot of drug product was manufactured for a subject, the VCN of each drug product lot was quantified andthe cell count is combined.It should be noted that these data presented above are current as of the data cut-off date, are preliminary in nature and our HGB-205 study is not complete.There is limited data concerning long-term safety and efficacy following treatment with our LentiGlobin product candidate. These data may not continue forthese subjects or be repeated or observed in ongoing or future studies involving our LentiGlobin product candidate in subjects with TDT, including thisstudy, our ongoing Northstar Study, our Northstar-2 Study, or our planned Northstar-3 Study. It is possible that subjects for whom transfusion support hasbeen reduced or eliminated may receive transfusion support in the future. Furthermore, the LentiGlobin drug product used for the HGB-205 study ismanufactured at the clinical trial site in Paris, and is not manufactured at our third-party manufacturing locations, and does not use our updated drug productmanufacturing process that is being utilized in our Northstar-2 Study.Interim clinical data in subjects with severe SCD – The HGB-205 study and the HGB-206 studyIn December 2016, we presented interim clinical data from our HGB-205 study regarding a subject with severe SCD at the ASH Annual Meeting. All datapresented at the ASH Annual Meeting and summarized below from our HGB-205 study are as of the data cut-off date of September 9, 2016. As of the data cut-off date, one subject with severe SCD had undergone infusion with LentiGlobin drug product in our HGB-205 study, with 22.9 months of follow up. At the21-month post-infusion follow up for the subject with severe SCD, the proportion of anti-sickling hemoglobin accounted for over 48 percent of allhemoglobin production, which was above the 30 percent threshold expected to potentially achieve a disease-modifying clinical effect. Prior to infusion, thissubject required chronic blood transfusions to reduce the occurrence of vaso-occlusive crises. Since infusion with LentiGlobin drug product, this subject hasnot received a pRBC transfusion for more than 18 months. Since infusion and as of the data cut-off date, this subject had no hospitalizations or acute SCD-related events. In this subject with severe SCD, treatment with our LentiGlobin product candidate has been well tolerated, with no drug product-relatedadverse events as of the data cut-off date.Also at the ASH Annual Meeting in December 2016, we presented preliminary clinical data from our HGB-206 study in subjects with severe SCD. All datapresented at the ASH Annual Meeting and summarized below from our HGB-206 study are as of the data cut-off date of November 9, 2016. As of the data cut-off date, seven subjects with severe SCD have been infused with LentiGlobin10 drug product under the original study protocol for our HGB-206 study. One subject experienced a steady increase in hemoglobin levels and is producing 2.0g/dL HbAT87Q with 22.8% overall anti-sickling hemoglobin (HbAT87Q + HbF), even after a substantial drop in VCN measured in the drug product and the invivo measurement taken from peripheral blood at latest follow up (from 0.9 c/dg to 0.24 c/dg at nine months follow up). As of the data cutoff, this was theonly subject in our HGB-206 study who received chronic transfusions prior to receiving LentiGlobin drug product. At last follow up, all treated subjects wereproducing measureable HbAT87Q, with a range of 0.1 to 2.0 g/dL HbAT87Q. The safety profile in the infused subjects in our HGB-206 study is consistent withautologous transplantation. As of the data cut-off date, there were ten grade 3 bone marrow harvest-related adverse events that were reported in three subjects,including one severe adverse event reported for pain/ prolonged hospitalization. Six subjects experienced at least one severe adverse event post-infusion.There were no drug product-related adverse events reported as of the data cut-off date.Below is a table summarizing the interim clinical data in subjects with severe SCD from our HGB-205 study and our HGB-206 study that were presentedat the ASH Annual Meeting, and the data summarized below are as of their respective data cut-off dates. All eight subjects have a history of severe SCD in thetwo years prior to enrollment, despite hydroxyurea therapy. Among these eight subjects, two had a history of recurrent vaso-occlusive crises, two had ahistory of stroke, six had a history of acute chest syndrome, and two had regular pRBC transfusions prior to treatment with the LentiGlobin drug product. HGB-205(n=1)HGB-206(n=7)Age at enrollmentMedian (range) (years)1326 (18 – 42)Bone marrow harvests22 (1 – 4)Target daily busulfan area under the curveMedian (range) (μM/min)4,841 (actual)5,000 (4,400 – 5,400)LentiGlobin drug product VCN 1Median (range) (c/dg)1.0, 1.20.6 (0.3 – 1.3)LentiGlobin drug product cell doseMedian (range) CD34+ cell count (x106/kg)5.62.1 (1.6 – 5.1)Follow upMedian (range) (Months)2111.5 (8.1 – 17.1) 1VCN is a measurement of the mean number of viral vectors in a population of cells, or vector copies per diploid genome. In the case of LentiGlobin drug product VCN, themeasurement is prior to infusion of the study subject. If more than one lot of drug product was manufactured for a subject, the VCN of each drug product lot was quantified andthe cell count is combined.It should be noted that these data presented above are current as of the respective data cut-off dates, are preliminary in nature and our HGB-205 and HGB-206 studies are not complete. There is limited data concerning long-term safety and efficacy following treatment with our LentiGlobin drug product. Thesedata may not continue for these subjects or be repeated or observed in ongoing or future studies involving our LentiGlobin product candidate in subjectswith severe SCD, including these two ongoing studies. It is possible that subjects for whom complications of severe SCD have been reduced or eliminatedmay experience complications of severe SCD in the future. Furthermore, the LentiGlobin drug product used in the HGB-205 study and in the HGB-206 studyunder the original protocol and presented above did not utilize our updated drug product manufacturing process that is being utilized under the amendedprotocol for the HGB-206 study. In addition, the LentiGlobin drug product used for the HGB-205 study is manufactured at the clinical trial site in Paris, andis not manufactured at our third-party manufacturing locations.Our Lenti-D product candidate opportunityAdrenoleukodystrophyAdrenoleukodystrophy is a rare X-linked, metabolic disorder caused by mutations in the ABCD1 gene which results in a deficiency inadrenoleukodystrophy protein, or ALDP and subsequent accumulation of very long-chain fatty acids, or VLCFA. VLCFA accumulation occurs in plasma andall tissue types, but primarily affects the adrenal cortex and white matter of the brain and spinal cord, leading to a range of clinical outcomes. The most severeform of ALD, the inflammatory cerebral phenotype, which we refer to as CALD, involves a progressive destruction of myelin, the protective sheath of thenerve cells in the brain that are responsible for thinking and muscle control. Symptoms of CALD usually occur in early childhood and progress rapidly ifuntreated, leading to severe loss of neurological function and eventual death in most patients. We estimate that a significant proportion of males with ALDwill develop CALD.11 Limitations of current treatment optionsThere is a clear unmet medical need for patients with CALD. Currently, the only effective treatment option is allogeneic HSCT. In this procedure, thepatient is treated with HSCs containing a functioning copy of the gene contributed by a donor other than the patient.Allogeneic HSCT is reserved for patients in the earliest stages of cerebral disease, ideally using an unaffected matched sibling HSC donor to minimizecomplications. However, the majority of allogeneic HSCT procedures for CALD are carried out with non-sibling matched donor cells or partially matchedrelated or unrelated donor cells including umbilical cord blood cells because a matched sibling donor is not available. The difficulty of finding a suitabledonor is one of the primary limitations of this approach. Complications of allogeneic HSCT include a significant risk of morbidity and mortality related tograft failure, GVHD and opportunistic infections, particularly in patients who undergo non-sibling-matched allogeneic HSCT.As the outcome of HSCT varies with clinical stage of the disease at the time of transplant, early diagnosis of CALD is important. Favorable outcomes havebeen observed in patients who undergo transplant in the early stages of cerebral disease. ALD can be detected at birth, allowing boys at risk for CALD to bemonitored and identified prior to the onset of symptoms. In the United States, newborn screening for ALD was added to the Recommended UniversalScreening Panel, or RUSP, in February 2016. The RUSP is a list of disorders that are screened at birth and recommended by the Secretary of the U.S.Department of Health and Human Services for states to screen as part of their state universal newborn screening program. Disorders are chosen based onevidence that supports the potential net benefit of screening, among other factors. A number of states in the United States have added ALD to their newbornscreening programs.Our Lenti-D product candidateWe are developing our Lenti-D product candidate as a potential one-time treatment to halt the progression of CALD. Our approach involves the ex vivoinsertion of a functional copy of the ABCD1 gene via an HIV-1 based lentiviral vector into the patient’s own HSCs to correct the aberrant expression ofALDP in patients with CALD. Upon successful engraftment of our Lenti-D product candidate, we expect that microglia in the brain derived from thetransduced HSCs will correct the metabolic abnormalities resulting from deficient ALDP and stabilize the demyelination and cerebral inflammationcharacteristic of CALD.We treated the first subject in the Starbeam Study in the United States in 2013. In April 2016, we presented preliminary clinical data from this study at theAmerican Academy of Neurology Annual Meeting. In December 2016, we announced that we intend to expand the Starbeam Study to enroll up to eightadditional patients in an effort to enable the first manufacture of our Lenti-D product candidate in Europe, and the subsequent treatment of subjects inEurope, and to bolster our overall clinical data package for potential future regulatory filings in the United States and Europe. We plan to begin treating theseadditional subjects in the Starbeam Study in early 2017.If successful, and pending further discussion with the regulatory authorities, the results from the Starbeam Study could potentially form the basis of a BLAsubmission to the FDA and an MAA to the EMA for this product candidate. However, there can be no assurance that the FDA and the EMA will not requireadditional studies before the approval of a BLA or MAA, respectively. The FDA has advised us that the Starbeam Study may not be deemed to be a pivotalstudy or may not provide sufficient support for a BLA submission. The FDA normally requires two pivotal clinical studies to approve a drug or biologicproduct, and thus the FDA may require that we conduct additional clinical studies of Lenti-D prior to a BLA submission. Lenti-D has been granted OrphanDrug status by the FDA and EMA for adrenoleukodystrophy.Clinical development of our Lenti-D product candidateCompleted non-interventional retrospective study (the ALD-101 Study)CALD is a rare disease and as such, data on the natural history of the disease, as well as the efficacy and safety profile of allogeneic HSCT is limited in thescientific literature. In order to properly design clinical studies of Lenti-D and interpret the efficacy and safety results thereof, at the recommendation of theFDA, we performed a non-interventional retrospective data collection study to assess the natural course of disease in CALD patients that were left untreatedin comparison to the efficacy and safety data obtained from patients that received allogeneic HSCT. A non-interventional retrospective data collection studyinvolves an examination of historical clinical records from patients in order to assess the typical course of the condition and the efficacy and safety oftreatment options. In the study, we collected survival, functional and neuropsychological assessments and neuroimaging data for both treated and untreatedpatients, as available; however, given the retrospective nature of the study, we were not able to collect comprehensive data for all subjects. For this study, wecollected data from four U.S. sites and one French site on a total of 137 subjects, 72 of whom were untreated and 65 of whom were treated with allogeneicHSCT.12 Starbeam Study (ALD-102) – Phase II/III clinical study in subjects with CALDIn October 2013, we treated the first subject in a Phase II/III clinical study, called the Starbeam Study, of our Lenti-D product candidate, to evaluate itssafety and efficacy in subjects with CALD. In May 2015, we announced that we had achieved our initial enrollment target for the Starbeam Study with 18subjects enrolled. The study is designed as a single-dose, open-label, non-randomized, international, multi-site Phase II/III study to test the safety andefficacy of our Lenti-D product candidate in preserving neurological function and stabilizing cerebral demyelination in subjects with CALD. Subjects will befollowed for 24 months post-infusion under this protocol. In accordance with applicable guidance from the FDA and EMA, we will be monitoring studysubjects in a separate long-term follow up protocol to evaluate safety for up to 15 years, and will also monitor efficacy endpoints to demonstrate a sustainedtreatment effect.In this study, we use the neurologic function score, or NFS, the existence and number of major functional disabilities, or MFDs, the Loes score, andevidence of gadolinium enhancement on MRI to evaluate potential subjects’ eligibility for the study, and to evaluate efficacy.The NFS is a 25-point score used to evaluate the severity of gross neurologic dysfunction by scoring 15 neurological abnormalities across multipledomains. These neurological abnormalities are listed below. Among the 15 functional domains in the NFS scale, we consider six to be of particular clinicalimportance because when these neurological abnormalities occur, a potential subject’s ability to function independently is severely compromised. Theseparticular deficiencies, which we define as major functional disabilities, or MFDs, are loss of communication, complete loss of voluntary movement, corticalblindness, requirement for tube feeding, wheelchair dependence and total incontinence. Symptoms ScoreLoss of communication* 3No voluntary movement* 3Cortical blindness* 2Tube feeding* 2Wheelchair required* 2Total incontinence* 2Swallowing/other CNS dysfunctions 2Spastic gait (needs assistance) 2Hearing/auditory processing problems 1Aphasia/apraxia 1Visual impairment/fields cut 1Running difficulties/hyperreflexia 1Walking difficulties/spasticity/spastic gait (no assistance) 1Episodes of incontinency 1Nonfebrile seizures 1Total 25 *Major Functional Disabilities (MFDs)The Loes score is a 34-point scale specifically designed to objectively measure the extent of demyelination in CALD based on brain magnetic resonanceimaging, or MRI, studies. Increasing Loes scores indicate worsening disease. A Loes score of one-half or more (i.e., the presence of any such abnormalities)indicates the cerebral form of the disease, and patients with a Loes score of 10 or more generally are not considered to be good candidates for allogeneicHSCT due to the advanced stage of the disease. CALD can progress rapidly and is associated with severe inflammation and disruption of the blood brainbarrier which can be detected by gadolinium enhancement on MRI. Evidence of gadolinium enhancement in the brain in a MRI study, referred to byclinicians as a gadolinium positive result, is highly predictive of rapid neurologic decline. However, while pre-transplant gadolinium status is clearlycorrelated with rapid disease progression, the kinetics of gadolinium enhancement after clinically successful HCST are not well understood.In the study, subjects must be age seventeen years or younger with a confirmed diagnosis of active CALD, including elevated levels of plasma VLCFA, abrain MRI Loes score of 0.5 to nine, inclusive, evidence of gadolinium enhancement and an NFS ≤ one. Subjects with a willing, unaffected 10/10 HLAmatched sibling HSCT donor will be excluded from the study. In December 2016, we amended the protocol of the Starbeam Study to enroll up to eightadditional patients in an effort to enable the first manufacture of our Lenti-D product candidate in Europe and the subsequent treatment of subjects in Europe,and to bolster our overall clinical data package for potential future regulatory filings in the United States and Europe. We plan to begin treating theadditional patients in early 2017.13 We have defined the primary efficacy endpoint in the Starbeam Study as the proportion of subjects who have no MFDs at 24 months (±two months) post-infusion. Secondary efficacy evaluations, in each case measured at 24 months (±two months) post-infusion, capture the key assessments of CALD diseasestatus, including the change from baseline in NFS, and Loes score, resolution of gadolinium enhancement on MRI and determination of MFD-free survivaland overall survival.The sample size for this study was not determined by formal statistical methods, but we believe it may be sufficient to demonstrate a robust effect on thebinary response endpoint, where a responder is defined as a subject with no MFD at 24 months (±two months) following treatment with Lenti-D drug product.Thus, we expect the FDA and EMA will make a qualitative assessment of the efficacy and safety data from this study to evaluate whether the results aresufficient to support a BLA or MAA filing.Safety evaluations will be performed during the study and will include evaluation of the following: success and kinetics of HSC engraftment; incidenceof transplant-related mortality; detection of vector-derived replication of the lentivirus; and characterization and quantification of events related to thelocation of insertion of the functional gene in target cells.If successful, we believe that the results from the Starbeam Study could form the basis of a BLA and an MAA. However, given the current number ofsubjects and design of the study and the qualitative/subjective assessment of the data, there can be no assurance the FDA or EMA will not require one or moreadditional clinical studies as a precursor to a BLA application or an MAA, respectively. The FDA has advised us that the Starbeam Study may not be deemedto be a pivotal study or may not provide sufficient support for a BLA submission. The FDA normally requires two pivotal clinical studies to approve a drug orbiologic product, and thus the FDA may require that we conduct additional clinical studies of our Lenti-D product candidate prior to a BLA submission.Preliminary Clinical Data from the Starbeam StudyIn April 2016, we presented preliminary clinical data from the Starbeam Study at the American Academy of Neurology (AAN) Annual Meeting. All datapresented at the AAN Annual Meeting and summarized below from the Starbeam Study are as of the data cut-off date of March 31, 2016. As of the data cut-offdate, 17 subjects with CALD had received Lenti-D drug product. All subjects had at least six months of follow up, with eight subjects having between 12 and24 months of follow up.Sixteen of 17 subjects had NFS stabilization (change of <3 points and an absolute NFS≤4). Two subjects had an increase in NFS from 0 to 1, due to theoccurrence of stuttering in one patient, and episodic urinary incontinence in another patient. One patient had an early, rapidly progressive course and had anNFS of 5, reflecting deficits in speech, vision, difficulty walking and running, and episodes of urinary incontinence. Fourteen of 17 subjects had a stable Loesscore (change of ≤5 points or an absolute Loes score ≤9). Sixteen of 17 had resolution of gadolinium enhancement by month six. Reemergence of diffusecontrast enhancement was seen in five subjects at month 12. Of those five subjects, the two with at least 18 months of follow up showed resolution ofgadolinium enhancement at month 18.As of the data cut-off date, the safety profile of treatment with the Lenti-D drug product appears consistent with myeloablative conditioning with onepossibly drug-related serious adverse event (Grade 3 BK-mediated viral cystitis), and one possibly drug-related adverse event (Grade 1 tachycardia). Bothresolved with standard measures. Integration site analyses demonstrated polyclonal reconstitution in all subjects without evidence of clonal dominance, as ofthe data cut-off date.It should be noted that these data presented above are current as of the data cut-off date, are preliminary in nature and the Starbeam Study is not complete.There is limited data concerning long-term safety and efficacy following treatment with our Lenti-D product candidate. These data may not continue for thesesubjects or be repeated or observed in our ongoing Starbeam Study or future studies involving our Lenti-D product candidate. It is possible that subjects whoexhibit NFS stabilization, a stable Loes score, or resolution of gadolinium enhancement as of the data cut-off date may ultimately progress in the future.The ALD-103 study – Observational studyWe are also conducting the ALD-103 study, an observational study of subjects with CALD treated by allogeneic HSCT. This study is ongoing anddesigned to collect efficacy and safety outcomes data in subjects who have undergone allogeneic HSCT in a period that is contemporaneous with theStarbeam Study. We anticipate that our Lenti-D product candidate safety and efficacy will be evaluated by the FDA and EMA in light of the data collected inthe Starbeam Study in conjunction with our retrospective observational ALD-101 study and our retrospective and prospective observational ALD-103 study.14 Our Preclinical Research Opportunities in HSCsWe believe our current gene therapy platform will enable us to develop and test new vectors based on similar viral vector backbones that carry differentgene sequences for other severe genetic diseases. In this way, we believe that we can advance products efficiently through preclinical into clinicaldevelopment. We may consider research and development programs targeting other monogenic, genetic diseases that involve cells derived from HSCs for usein the ex vivo setting. These programs may involve severe genetic and rare diseases that could be developed and potentially commercialized on our own.In addition, we believe our expertise in lentiviral vector production and cell transduction also provides an opportunity to develop new lentiviral productsfor use in the in vivo setting. In this case, lentiviral vectors carrying certain gene sequences would be delivered directly to the disease site (e.g., to the brain,liver or eye) or into the bloodstream of the patient and, in each case, the vector would need to find the target cell in vivo and deliver the genetic material intothose target cells. Although this represents a less controlled environment in which to transduce cells and deliver genetic material, we believe it opens upadditional rare disease and large market indications where this approach is more appropriate for the disease and targeted cells.Our Opportunity in T Cell-Based Therapies for CancerWe are engaging in the discovery and development of novel, disease-altering gene therapies in oncology. We believe that our gene therapy platform canbe applied to genetically modify a patient’s own T cells to target and destroy cancer cells by recognizing specific cell surface proteins, in the case of chimericantigen receptors, or CARs, or by recognizing specific protein fragments derived from either intracellular or extracellular protein, in the case of T cellreceptors, or TCRs.Immune System and T CellsThe immune system recognizes danger signals and responds to threats at a cellular level. It is often described as having two arms. The first arm is known asthe innate immune system, which recognizes non-specific signals of infection or abnormalities as a first line of defense. The innate immune system is theinitial response to an infection, and the response is the same every time regardless of prior exposure to the infectious agent. The second arm is known as theadaptive immune system, which is composed of highly specific, targeted cells and provides long-term recognition and protection from infectious agents andabnormal processes such as cancer. The adaptive immune response is further subdivided into humoral, or antibody based, and cellular, which includes T cell-based immune responses.The most significant components of the cellular aspect of the adaptive immune response are T cells, so called because they generally mature in thethymus. T cells are involved in both sensing and killing infected or abnormal cells, as well as coordinating the activation of other cells in an immuneresponse. These cells can be classified into two major subsets, CD4+ T cells and CD8+ T cells, based on cell surface expression of the CD4 or CD8glycoproteins. Both subsets of T cells have specific functions in mounting an immune response capable of clearing an infection or eliminating cancerouscells. CD4+ T cells, or helper T cells, are generally involved in coordinating the immune response by enhancing the activation, expansion, migration, andeffector functions of other types of immune cells. CD8+ T cells, or cytotoxic T cells, can directly attack and kill cells they recognize as infected or otherwiseabnormal, and are aided by CD4+ T cells. Both types of T cells are activated when their T cell receptor recognizes and binds to a specific protein structureexpressed on the surface of another cell. This protein structure is composed of the major histocompatibility complex, or MHC, and a small protein fragment,or peptide, derived from either proteins inside the cell or on the cell surface. Circulating CD4+ and CD8+ T cells survey the body differentiating betweenMHC/peptide structures containing “foreign” peptides and those containing “self” peptides. A foreign peptide may signal the presence of an immune threat,such as an infection or cancer, causing the T cell to activate, recruit other immune cells, and eliminate the targeted cell.Although the immune system is designed to identify foreign or abnormal proteins expressed on tumor cells, this process is either ineffective or defectivein cancer patients. The defective process sometimes occurs when cancer cells closely resemble healthy cells and go unnoticed or if tumors lose their MHCprotein expression. Additionally, cancer cells employ a number of mechanisms to escape immune detection to suppress the effect of the immune response.Some tumors also encourage the production of cells that suppress the immune response, such as regulatory T cells that block cytotoxic T cells that wouldnormally attack the cancer.15 History of Cancer ImmunotherapyCancer has historically been treated with surgery, radiation, chemotherapy and hormone therapy. More recently, advances in understanding of theimmune system’s role in cancer have led to immunotherapy becoming an important treatment approach. Cancer immunotherapy began with treatments thatnonspecifically activated the immune system and had limited efficacy and/or significant toxicity. In contrast, new immunotherapy treatments can activatespecific, important immune cells, leading to improved targeting of cancer cells, efficacy, and safety. Within the immunotherapy category, treatments haveincluded cytokine therapies, antibody therapies, and adoptive cell transfer therapies.In 1986, interferon-a became the first cytokine approved for cancer patients. In 1992, interleukin-2, or IL-2, was the second approved cytokine in cancertreatment, showing efficacy in melanoma and renal cell cancer. IL-2 does not kill cancer cells directly, but instead nonspecifically activates and stimulatesthe growth of the body’s own T cells which then combat the tumor. Although interferon-a, IL-2, and subsequent cytokine therapies represent importantadvances in cancer treatment, they are generally limited by toxicity and can only be used in a limited number of cancers and patients.Cytokine-based therapies set the stage for immunotherapy, and antibody therapies represented the next significant advance, with targeted specificity anda generally better-tolerated side effect profile. Monoclonal antibodies, or mAbs, are designed to attach to proteins on cancer cells, and once attached, themAbs can make cancer cells more visible to the immune system, block growth signals of cancer cells, stop new blood vessels from forming, or deliverradiation or chemotherapy to cancer cells. The first FDA-approved mAb specifically for cancer was rituximab in 1997, and since then, many other antibodieshave received approval, including trastuzumab, bevacizumab, alemtuzumab, cetuximab, and panitumumab. More recently, antibodies have been conjugatedwith cytotoxic drugs to increase activity. The first approved antibody drug conjugate was gemtuzumab ozogamicin in 2000, followed by brentuximabvedotin in 2011 and trastuzumab emtansine in 2013.The next important advance has been the development of antibodies that target T cell checkpoint pathways, which are means by which cancer cells areable to inhibit or turn down the body’s immune response to cancer. These treatments have shown an ability to activate T cells, shrink tumors, and improvepatient survival. In 2011, ipilimumab became the first checkpoint inhibitor approved by the FDA. Recent clinical data from new checkpoint inhibitors suchas nivolumab and pembrolizumab led to their approval by FDA (in 2015 and 2016) as treatments in multiple cancers and confirmed both the approach andthe importance of T cells as promising tools for the treatment of cancer.Despite these many advances, a significant unmet need in cancer still persists. We believe that the use of human cells as therapeutic entities to re-energizethe immune system will be the next significant advancement in the treatment of cancer. These cellular therapies may avoid the long-term side effectsassociated with current treatments and have the potential to be effective regardless of the type of previous treatments patients have experienced. We aredeveloping CAR and TCR-based approaches using our lentiviral vector gene transfer technology and experience in order to specifically and directly delivera payload of potent anti-cancer agents to T cells, which may give them the ability to kill the cancer cells.Our CAR and TCR T Cell TechnologiesLike our programs for HSCs, our T cell-based immunotherapies use a customized lentiviral vector to alter T cells ex vivo, or outside the body, so that the Tcells can recognize specific proteins or protein fragments on the surface of cancer cells in order to kill these diseased cells. T cells that have been genetically-engineered to make CAR or TCRs are designed to help a patient’s immune system overcome survival mechanisms employed by cancer cells. CAR T celltechnology directs T cells to recognize cancer cells based on expression of specific cell surface antigens, whereas TCR T cell technology provides the T cellswith a specific T cell receptor that recognizes protein fragments derived from either intracellular or extracellular proteins.With both our CAR and TCR T cell technologies, we harvest a patient’s white blood cells in a process called leukapheresis, activate certain T cells togrow and then the gene sequences for the CAR or TCR construct are transferred into the T cell DNA using a lentiviral vector. The number of cells is expandeduntil it reaches the desired dose. These genetically engineered cells, which will express the receptors that can recognize the specific proteins that arecharacteristic of specific cancers, are then infused back into the patient. Our T cell engineering process is rapid (complete in approximately ten days) andmanufactures modified T cells in a sterile closed system. When the engineered T cell is returned to the cancer patient, it engages the target protein on thecancer cell, triggers a series of signals that result in tumor cell killing through the production of anti-cancer cytokines, and undergoes multiple rounds of celldivision to greatly expand the number of these anti-cancer T cells. These engineered T cells have the natural “auto-regulatory” capability of normal T cellsand once the tumor cells containing the target antigen are destroyed, the engineered T cells decrease in number, but with the potential to leave a smallernumber of T cells in the body as a form of immune surveillance against potential tumor regrowth. The genetically-engineered T cells are designed tosupplement a patient’s immune system and can be further engineered to overcome immune evasion mechanisms employed by cancer cells.16 Our CAR and TCR T cell technologies also bring genomic engineering tools to the immunotherapy field. For instance, we are exploring applications ofour CAR and TCR T cell technologies in combination with novel proteins based on synthetic biology. These technologies may potentially allow our futureT cell-based product candidates to detect the tumor microenvironment or, in the case of future CAR T cell product candidates, to be regulated by smallmolecules. In addition, using our gene editing technology, we potentially have a number of additional options to manipulate the genome of the cancerpatient’s T cells to further increase the specificity of the anti-tumor activity and to potentially make these cells even more potent. Specificity and potency areessential to the development of T cell therapies that can effectively treat solid tumor cancers such as breast, lung and colon cancer. Our cancerimmunotherapy research group is staffed by scientists drawn from both industry and academic research centers that have pioneered the field of T celltherapy. This team is focused on the next generation of T cell engineering to discover and develop T cell product candidates to treat a variety of hematologicand solid tumor malignancies. Our CAR T cell product candidate - bb2121We are developing bb2121, our first CAR T cell product candidate, as a potential treatment for multiple myeloma by binding to BCMA, a cell surfaceprotein expressed on cancer cells. Multiple myeloma is a hematologic malignancy that develops in the bone marrow in which normal antibody-producingcells transform into myeloma. The growth of the cancer cells in the bone marrow blocks production of normal blood cells and antibodies, and also causeslesions that weaken the bone. BCMA is expressed on normal plasma cells, some mature B cells, and on malignant multiple myeloma cells, but is absent fromother normal tissues. We believe BCMA presents an attractive immunotherapeutic target for our technology for a number of reasons. In a preclinical BCMAmultiple myeloma xenograft model, a single intravenous administration of bb2121 anti-BCMA CAR T cells resulted in rapid and sustained elimination ofthe tumors with 100 percent survival, while a month-long course of anti-myeloma therapy bortezomib only delayed tumor growth. In December 2015,researchers from the NIH announced promising clinical data in multiple myeloma with an anti-BCMA CAR T cell therapy that established clinical proof-of-concept for the BCMA target using a gamma-retroviral vector.We are conducting a Phase I clinical study of our bb2121 product candidate in the United States. Our product candidate bb2121 is the lead productcandidate from our multi-year collaboration with Celgene. Since our collaboration arrangement with Celgene was announced in March 2013, we haveworked collaboratively to discover, develop and commercialize CAR T cell product candidates in oncology. Our collaboration arrangement with Celgenewas amended in June 2015 to focus on CAR T cell product candidates targeting BCMA. In February 2016, we exclusively licensed to Celgene the right todevelop and commercialize our bb2121 product candidate. We retain an option to co-develop and co-commercialize this product candidate, as describedmore fully below under “Strategic collaborations—Our strategic alliance with Celgene.”In 2017, we intend to initiate a Phase I clinical study of our bb21217 product candidate (CRB-402), a second-generation anti-BCMA CAR T cell productcandidate arising from our collaboration with Celgene. Upon initiation of our planned CRB-402 study, Celgene will have the option of exclusively licensingour bb21217 product candidate, and if Celgene exercises its option, we will retain an option to co-develop and co-commercialize this product candidate.The CRB-401 study – Phase I clinical study in subjects with relapsed/refractory multiple myelomaOur CRB-401 study is a single-dose, open-label, non-randomized, multi-site Phase I clinical study in the United States to examine the safety and efficacyof our bb2121 product candidate in up to 50 subjects with relapsed/refractory multiple myeloma. In order to be eligible for CRB-401, subjects must havereceived three prior regimens, including a proteasome inhibitor (bortezomib or carfilzomib) and immunomodulatory agent (lenalidomide or pomalidomide).Following screening, enrolled subjects will undergo a leukapheresis procedure to collect autologous T cells for manufacturing our bb2121 drug product.The bb2121 drug product is produced from each subject’s own blood cells, which are modified using a lentiviral vector encoding the anti-BCMA CAR.Following manufacture of the bb2121 drug product, subjects will receive one cycle of lymphodepletion of cyclophosphamide and fludarabine prior toinfusion of the bb2121 drug product.The primary endpoint of the study is the incidence of adverse events and abnormal laboratory test results, including dose-limiting toxicities. The studyalso seeks to assess disease-specific response criteria including: complete response (CR), very good partial response (VGPR), and partial response (PR)according to the International Myeloma Working Group Uniform Response Criteria for Multiple Myeloma. The study also seeks to determine the maximallytolerated dose and recommended dose for further clinical trials.Each subject will be followed for up to 24 months post-treatment, and then will be enrolled in a long-term follow-up protocol that will assess safety andefficacy beyond the 24-month period.17 Preliminary Clinical Data from the CRB-401 StudyIn December 2016, we presented preliminary clinical data from our CRB-401 study at the EORTC-NCI-AACR Molecular Targets and CancerTherapeutics Symposium, or the Triple Meeting. All data presented at the Triple Meeting and summarized below from our CRB-401 study are as of the datacut-off date of November 18, 2016. As of the data cut-off date, eleven subjects had been enrolled and dosed in four dose cohorts: 5.0 x 107, 15.0 x 107, 45.0 x107 and 80 x 107 CAR + T cells. Subjects on study were heavily pre-treated, with a median of six prior therapies, ranging from five to 13. All eleven dosedsubjects were evaluable for safety and the first nine subjects (in 5.0 x 107, 15.0 x 107, and 45.0 x 107 dose cohorts) have undergone their first multiplemyeloma tumor restaging and were evaluable for efficacy, summarized in the table below. Cohort 1(n=3)2(n=3)3(n=3)CAR + T cell dose 5.0 x 10715.0 x 10745.0 x 107Overall response rate in cohort 33%100%100%Best response PDsCR(time to response: 2 months)PRSDsCR*(time to response: 4 months)PRPRVGPR*PR*Both subjects with a minimal residualdisease assessment at month 1 were MRDnegativeAll subjects in cohorts 2 and 3 with bone marrow involvement atbaseline had no detectable multiple myeloma cells in their bonemarrow on day 14 or beyond. All subjects had a prior autologous stem cell transplant, as well as prior exposure to a proteasome inhibitor and an immunomodulatory agent; 64% ofsubjects had previously received daratumumab or CD38 antibody. No dose-limiting toxicities and no Grade 3 or higher neurotoxicities or Grade 3 or highercytokine release syndrome were observed. No subject had received tocilizumab or steroids.It should be noted that these data presented above are current as of data cut-off date, are preliminary in nature and our CRB-401 study is not complete.There is limited data concerning long-term safety and efficacy following treatment with our bb2121 drug product. These data may not continue for thesesubjects or be repeated or observed in this ongoing study or future studies involving our bb2121 product candidate. It is possible that subjects for whoinitially respond to treatment with our bb2121 drug product may experience disease progression.Our TCR product candidates and other preclinical research opportunities in cancerWe are pursuing multiple programs that leverage the unique properties of lentiviral vectors to target T cells as a therapy for various cancers. Thisrepresents a direct application of our expertise in gene therapy and our capabilities, know-how and patents associated with lentiviral gene therapy and geneediting for ex vivo applications.In collaboration with Kite Pharma, Inc., we are co-developing and, if approved, co-commercializing, second generation TCR product candidates directedagainst an antigen relating to certain cancers associated with the human papilloma virus, or HPV. HPV is the most common viral infection of the reproductivetract, and two viral strains, HPV type 16 and HPV type 18, are believed to cause a majority of cervical cancers and precancerous cervical lesions, and isassociated with other urogenital cancers. Additionally, HPV infection has become established as an etiologic risk factor for oropharyngeal head and neckcancers. Our collaboration with Kite will leverage our lentiviral vector gene transfer platform in combination with gene editing technology. Kite will leadthe program in the United States and we will have the option to lead the program in the European Union. Both companies will share overall costs, includingresearch and development and sales and marketing expenses, and profits will be equally split between the companies. Additionally, Kite will have a co-promotion option in the European Union, and we will have a co-promotion option in the United States.We are collaborating with Medigene AG, through its subsidiary Medigene Immunotherapies GmbH, to jointly discover and develop TCR productcandidates directed against up to four antigens in the field of cancer. We are also independently researching and developing other CAR T cell productcandidates against a variety of targets relevant to both hematologic and solid tumors. 18 Our Gene Editing OpportunityIn June 2014, we acquired Pregenen, a privately-held biotechnology company headquartered in Seattle, Washington. Through the acquisition, weobtained rights to Pregenen’s gene editing technology platform and cell signaling technology, and have integrated these technologies and research team andexpanded its research efforts. We are focused on utilizing homing endonuclease and megaTAL gene editing technologies in a variety of potentialapplications and disease areas, including for oncology and hematology. Homing endonucleases and MegaTALs are novel enzymes that provide a highlyspecific and efficient way to modify the genome of a target cell to potentially treat a variety of diseases.All of the gene-editing technologies currently being explored by the pharmaceutical industry, including zinc finger nucleases, CRISPR/Cas9, andTALENs, share common features of a DNA binding domain and a DNA cleavage domain. They all differ in specificity, size, ease of delivery and as naturallyoccurring versus engineered nucleases. Homing endonucleases and megaTALs are based on a naturally-occurring class of DNA cleaving enzymes thatfunction as monomeric proteins able to bind DNA in a sequence-specific manner and cleave their target site. We believe there are multiple advantages ofhoming endonucleases and MegaTALs compared to other gene editing technologies, most notably: they are highly specific and efficient in cutting DNA andtheir compact size simplifies delivery to therapeutically relevant cell types. We are using our gene editing platform, along with collaborations with multipleacademic institutions, to potentially discover and develop next generation versions of our current ex vivo gene therapy product candidates, and to potentiallyexpand into new disease indications.ManufacturingOur gene therapy platform has two main components: lentiviral vector production and the target cell transduction process, which results in drug product.Our lentiviral manufacturing process Our lentiviral vectors are assembled using a human cell line called HEK293T. The HEK293T cells are maintained in disposable flasks until sufficient cellmass has been generated to fill approximately 40 ten tray cell factories, or TTCFs, then transferred and allowed to adhere to the bottom of the trays. Adherentcells are transfected with multiple plasmids encoding all the genetic material required to assemble the lentiviral vector carrying the functional gene ofinterest. The transfected HEK293T cells then assemble our lentiviral vectors packaged with the functional gene of interest, which bud off into the cell culturemedia. The media containing the assembled vectors is harvested, purified, concentrated and formulated prior to freezing for storage. These finished lentiviralvectors are what is ultimately used to transduce the targeted cells isolated from the patient.We believe that our lentiviral vectors have broad applicability, since the majority of the viral production system can remain the same, while we changeonly the therapeutic gene “cassette” depending on the disease. In other words, the vector “backbone” stays the same, while only the therapeutic gene andrelated sequences are changed. If we were to undertake drug development in an additional indication, we believe we could rapidly move forward using thislentiviral vector backbone and associated assays, simply by switching the therapeutic gene insert and associated control elements.19 Although we intend to continue manufacturing our Lenti-D vectors in TTCFs, we are adapting our LentiGlobin and bb2121 vector productiontechnology to scalable production systems with the potential to satisfy an increased number of subjects per manufacturing cycle. So far, we havedemonstrated successful production of LentiGlobin and bb2121 vectors on a small scale and are transferring the new process to a contract manufacturer toaccommodate future demand for our drug candidates, if approved, in their current indications as well as those beyond our initial focus. Our HSC transduction process—creating the gene-modified HSCs (our drug product)The ultimate product of our manufacturing processes is the patient’s own gene-modified HSC cells, which we refer to as our drug product. The process forproducing drug product for our HSC-based product candidates is as follows: 1.Selection: We extract HSCs from peripheral blood mononuclear cells obtained from the patient’s blood by apheresis following mobilization via acolony stimulating factor (or alternatively, by bone marrow harvest). The process is carried out using existing hospital infrastructure and standardprotocols currently in place for stem cell transplant procedures, with enhanced controls for extracting the cells to be used for making our drug product. 2.Pre-stimulation: The isolated HSCs are treated with a mixture of growth factors that help enable an efficient transduction process. 3.Transduction: The isolated, purified and pre-treated HSCs are exposed to our lentiviral vectors containing the appropriate functional gene andadditional proprietary elements for a period of time to facilitate transduction and insertion of the therapeutic DNA into the genome of the target cells. 4.Final harvest: Once transduction is complete, the gene-modified HSCs are washed and re-suspended into cell culture media to remove any residualimpurities. A portion of the harvested cells is removed for quality control release testing, which includes ensuring that transduction was successful andthe functional gene delivered by the vector is adequately expressed by the target cells. 5.Formulation and freeze: The remaining cells are appropriately formulated and cryopreserved.The final step is to return the gene-modified HSCs to the patient. We will be using our updated drug product manufacturing process with the objective ofincreasing the vector copy number and the percentage of transduced cells in the LentiGlobin drug product in our ongoing Northstar-2 Study, our HGB-206study under the amended protocol, and our planned Northstar-3 Study.Our T cell transduction process—creating the gene-modified T cells (our drug product)The ultimate product of our manufacturing processes is the patient’s own gene-modified T cells, which we refer to as our drug product. The process forproducing drug product for our T cell-based product candidates is as follows: 1.Leukapheresis: We collect white blood cells from the patient’s blood through a process called leukapheresis. The process is carried out using existinghospital infrastructure and standard protocols currently in place for blood donation procedures, with enhanced controls for extracting the cells to beused for making our drug product. 2.Activation: The white blood cell mixture, which includes T cells, are treated with proprietary processes to enable an efficient transduction process. 3.Transduction: The isolated, purified and pre-treated T cells are exposed to our lentiviral vectors containing the appropriate functional gene for aperiod of time to facilitate transduction and insertion of the therapeutic DNA into the genome of the target cells. 4.Expansion: The transduced T cells are then expanded for a period of approximately one week to increase the number of gene-modified T cells. 5.Final harvest: The gene-modified T cells are washed and re-suspended into cell culture media to remove any residual impurities. A portion of theharvested cells is removed for quality control release testing, which includes ensuring that transduction was successful and the functional genedelivered by the vector is adequately expressed by the target cells. 6.Formulation and freeze: The remaining cells are appropriately formulated and cryopreserved.20 The final step is to return the gene-modified T cells to the patient. We rely exclusively on the use of third party manufacturing organizations to manufacture our LentiGlobin, Lenti-D and bb2121 vectors and drug productcandidates, and do not own or operate any of our own facilities for these purposes. However, we believe our team of technical personnel has extensivemanufacturing, analytical and quality experience as well as strong project management discipline to effectively oversee these contract manufacturing andtesting activities, and to compile manufacturing and quality information for our regulatory submissions.Strategic collaborationsOur objective is to develop and commercialize products based on the transformative potential of gene therapy to treat patients with severe genetic andrare diseases and cancer. To access the substantial funding and other resources required to develop and commercialize gene therapy products in thesediseases, we have formed, and intend to seek other opportunities to form, strategic collaborations with third parties who can augment our industry leadinggene therapy, T cell immunotherapy, lentiviral vector and gene-editing expertise. To date, we have focused on forging a limited number of significantstrategic collaborations with leading pharmaceutical companies and academic research centers where both parties contribute expertise to enable thediscovery and development of potential product candidates.Our collaboration with CelgeneIn March 2013, we announced a strategic collaboration with Celgene to discover, develop and commercialize novel disease-altering gene therapies inoncology, which was amended and restated in June 2015, and amended again in February 2016. The multi-year research and development collaborationfocused on applying our expertise in gene therapy technology to CAR T cell-based therapies, to target and destroy cancer cells. Our collaboration nowfocuses exclusively on anti-BCMA CAR T product candidates. We advanced our development of our bb2121 product candidate, the first CAR productcandidate from our collaboration with Celgene, into clinical trials in February 2016. In February 2016, we exclusively licensed to Celgene the right todevelop and commercialize our bb2121 product candidate, pursuant to Celgene’s exercise of its exclusive option under the collaboration arrangement. Wehave the obligation to continue conducting our ongoing CRB-401 study, but Celgene has the responsibility for the costs of further development and ofcommercialization. We retain an option to co-develop and co-promote the bb2121 product candidate in the United States. We will also work collaborativelywith Celgene on potential additional anti-BCMA product candidates under this collaboration, including our anticipated next-generation anti-BCMA CAR Tproduct candidate bb21217, which has been engineered for improved persistence as compared to bb2121.Under the terms of the collaboration, we are and will be responsible for conducting and funding all research and development activities performed upthrough completion of the initial Phase I clinical study for up to two product candidates selected for development under the collaboration, the first of whichis our bb2121 product candidate. Celgene has agreed to reimburse us a specified amount per patient in the event we and Celgene mutually agree to expandany Phase I clinical trial for any product candidate under the collaboration beyond a specified number of patients per clinical trial. This collaboration isgoverned by a joint steering committee, or JSC, formed by representatives from us and Celgene. The JSC, among other activities, reviews the collaborationprogram, reviews and evaluates product candidates and approves regulatory plans. On a product candidate-by-product candidate basis, up through a specifiedperiod following enrollment for the first patient in an initial Phase I clinical study for such product candidate, we have granted Celgene an option to obtainan exclusive worldwide license to develop and commercialize such product candidate pursuant to a written agreement, the form of which we have alreadyagreed upon. Effective as of February 2016, Celgene has exercised its option with respect to the bb2121 product candidate, and we have exclusively licensedto Celgene the worldwide rights to develop and commercialize the bb2121 product candidate. We may elect to co-develop and co-promote the bb2121product candidate and any other product candidates in the United States, provided that, if we do not exercise our option to co-develop and co-promote thebb2121 product candidate, then we will not be permitted to exercise our option to co-develop and co-promote any future product candidates under thecollaboration.Celgene is solely responsible for all costs and expenses of manufacturing and supplying the bb2121 product candidate and for any other productcandidates arising from the collaboration that it exclusively licenses. Subject to customary “back-up” supply rights granted to Celgene, we have the soleright to manufacture or have manufactured supplies of vectors and associated payloads manufactured for incorporation into the optioned product candidate.Celgene would reimburse us for our costs to manufacture and supply such vectors and associated payloads, plus a modest mark-up.In connection with its exercise of the option to exclusively in-license the bb2121 product candidate, Celgene paid to us an option fee in the amount of$10.0 million. If Celgene elects to exercise its option to exclusively in-license any additional product candidates, it must pay us an additional $15.0 millionper product candidate. In addition, for each product candidate that is in-licensed by Celgene, including bb2121, we will be eligible to receive up to $10.0million in clinical milestone payments, up to $117.0 million in regulatory21 milestone payments and up to $78.0 million in commercial milestone payments if we do not exercise our option to co-develop and co-promote in the UnitedStates. We will also be eligible to receive a percentage of net sales as a royalty in a range from the mid-single digits to low-teens. The royalties payable to usare subject to certain reductions, including for any royalty payments required to be made by Celgene to acquire patent rights, with an aggregate minimumfloor. Celgene will assume certain development obligations and must report on their progress in achieving these milestones on a quarterly basis.If we do elect to co-develop and co-promote the product candidate within the United States, we would share equally in all costs relating to developing,commercializing and manufacturing the product candidate within the United States and we would share equally in the United States profits. Additionally, ifwe elect to co-develop and co-promote a product candidate, then the milestones and royalties would decrease compared to those described above. Under thisscenario, we would receive per product candidate up to $10.0 million in clinical milestone payments and outside of the United States, up to $54.0 million inregulatory milestone payments and up to $36.0 million in commercial milestone payments. In addition, to the extent any of the product candidates licensedby Celgene and co-developed and co-promoted by us are commercialized, we 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 United States. The royalties payable to us are subject to certainreductions, including any royalty payments required to be made by Celgene to acquire patent rights, with an aggregate minimum floor.If Celgene does not exercise its option with respect to any product candidate prior to expiration of the applicable option period, then we have the right todevelop that product candidate outside the scope of the collaboration.We received an initial up-front payment of $75.0 million from Celgene in connection with the collaboration, plus an additional $25.0 million inconnection with the amendment in June 2015. The collaboration term ends in June 2018. Either party may terminate the agreement upon written notice to theother party in the event of the other party’s uncured material breach. Celgene may terminate the agreement for any reason upon prior written notice to us. Ifthe agreement is terminated, rights to product candidates in development at the time of such termination will be allocated to the parties through a mechanismincluded in the agreement. In addition, if Celgene terminates the agreement for our breach, any then- existing co-development and co-promotion agreementwill be automatically terminated and replaced with a license agreement for such product candidate and any amounts payable by Celgene under any then-existing product license agreements will be reduced.Our collaboration with Kite PharmaIn June 2015, we announced a strategic collaboration with Kite Pharma, Inc. to jointly develop and commercialize second generation TCR productcandidates for the treatment of certain cancers associated with HPV. The collaboration will apply our gene editing technology and expertise to modify certaingenes to enhance T cell function. In addition, we will explore using lentiviral vectors to optimize delivery of TCRs in patient T cells. Kite will lead theprogram in the United States, and we will have the option to lead the program in the European Union. Both companies will share overall costs, includingresearch and development, and sales and marketing expenses and profits will be equally split between the companies. Additionally, Kite will have a co-promotion option in the European Union, and we will have a co-promotion option in the United States.Intellectual propertyWe strive to protect and enhance the proprietary technology, inventions, and improvements that are commercially important to the development of ourbusiness, including seeking, maintaining, and defending patent rights, whether developed internally or licensed from third parties. We also rely on tradesecrets relating to our proprietary technology platform and on know-how, continuing technological innovation and in-licensing opportunities to develop,strengthen and maintain our proprietary position in the field of gene therapy that may be important for the development of our business. We additionally relyon regulatory protection afforded through orphan drug designations, data exclusivity, market exclusivity, and patent term extensions where available.Our commercial success may depend in part on our ability to obtain and maintain patent and other proprietary protection for commercially importanttechnology, inventions and know-how related to our business; defend and enforce our patents; preserve the confidentiality of our trade secrets; and operatewithout infringing the valid enforceable patents and proprietary rights of third parties. Our ability to stop third parties from making, using, selling, offering tosell or importing our products may depend on the extent to which we have rights under valid and enforceable patents or trade secrets that cover theseactivities. With respect to both licensed and company-owned intellectual property, we cannot be sure that patents will be granted with respect to any of ourpending patent applications or with respect to any patent applications filed by us in the future, nor can we be sure that any of our existing patents or anypatents that may be granted to us in the future will be commercially useful in protecting our commercial products and methods of manufacturing the same.22 We have developed or in-licensed numerous patents and patent applications and possess substantial know-how and trade secrets relating to thedevelopment and commercialization of gene therapy products. Our proprietary intellectual property, including patent and non-patent intellectual property, isgenerally directed to, for example, certain genes, transgenes, methods of transferring genetic material into cells, genetically modified cells, processes tomanufacture our lentivirus-based product candidates and other proprietary technologies and processes related to our lead product development candidates.As of January 31, 2017, our patent portfolio includes the following: •approximately 222 patents or patent applications that we own or have exclusively in-licensed from third parties related to lentiviral vectors and vectorsystems; •approximately 62 patents or patent applications that we have non-exclusively in-licensed from third parties related to lentiviral vectors and vectorsystems; •approximately 38 patents or patent applications that we own or have exclusively in-licensed from third parties, including eight that are co-owned withMIT, related to vector manufacturing or production; •approximately seven patents or patent applications that have been non-exclusively in-licensed from third parties related to vector manufacturing orproduction; •approximately 58 patents or patent applications that we own or have exclusively or co-exclusively in-licensed from third parties related to therapeuticcellular product candidates; •approximately 252 patents or patent applications that we own or have exclusively in-licensed or optioned from third parties related to oncologyproduct candidates, including CAR T cell vector systems and manufacturing, T cell manufacturing, and therapeutic T cells; •approximately 147 patents or patent applications that we own or have exclusively or co-exclusively in-licensed from third parties related to geneediting compositions and methods; and •approximately 22 patent applications that we have non-exclusively in-licensed from third parties related to gene editing compositions and methods.Our objective is to continue to expand our portfolio of patents and patent applications in order to protect our gene therapy product candidatesmanufacturing processes. Examples of the products and technology areas covered by our intellectual property portfolio are described below. See also “—License agreements.” From time to time, we also evaluate opportunities to sublicense our portfolio of patents and patent applications that we own orexclusively license, and we may enter into such licenses from time to time.β-thalassemia/SCDThe β-thalassemia/SCD program includes three patent portfolios, described below. •Pasteur Institute. The Pasteur patent portfolio contains patent applications directed to FLAP/cPPT elements and lentiviral vectors utilized to produceour LentiGlobin product candidate for β-thalassemia and SCD. As of January 31, 2017, we had an exclusive license to nine issued U.S. patents andone pending U.S. patent application. Corresponding foreign patents and patent applications include issued patents in Australia, Canada, China,Europe, Hong Kong, Israel, and Japan. We expect the issued composition of matter patents to expire from 2019-2023 in the United States, and from2019-2020 in the rest of the world (excluding possible patent term extensions). Further, we expect composition of matter patents, if issued from thepending patent applications and if the appropriate maintenance, renewal, annuity or other governmental fees are paid, to expire in 2019-2020(excluding possible patent term extensions). We expect any other patents and patent applications in this portfolio other than composition of matterpatents, if issued, and if the appropriate maintenance, renewal, annuity, or other governmental fees are paid, to expire in 2019-2020 (worldwide,excluding possible patent term extensions). •RDF. The in-licensed patent portfolio from Research Development Foundation, or RDF, in part, contains patents and patent applications directed toaspects of our lentiviral vectors utilized to produce our LentiGlobin product candidate for β-thalassemia and SCD. As of January 31, 2017, we had anexclusive license (from RDF) to eight issued U.S. patents related to our lentiviral vector platform. Corresponding foreign patents and patentapplications related to our lentiviral vector platform include pending applications or issued patents in Canada, Europe, and Israel. We expect theissued composition of matter patents to expire from 2021-2027 (excluding possible patent term extensions). Further, we expect composition of matterpatents, if issued from the pending patent applications and if the appropriate maintenance, renewal, annuity or other governmental fees are paid, toexpire in 2021-2022 (excluding possible patent term extensions). We expect any other patents and patent applications in this portfolio other thancomposition of matter patents, if issued, and if the appropriate maintenance, renewal, annuity, or other governmental fees are paid, to expire in 2021-2022 (worldwide, excluding possible patent term extensions).23 •MIT/bluebird bio. MIT/bluebird bio. The co-owned patent portfolio contains patents and patent applications directed to certain specificcompositions of matter for lentiviral β-globin expression vectors. As of January 31, 2017, we co-owned two issued U.S. patents and one pending U.S.patent application, as well as corresponding foreign patents issued in Europe and Hong Kong. We expect the issued composition of matter patents toexpire in 2023 (excluding possible patent term extensions). Further, we expect composition of matter patents, if issued from the pending patentapplications and if the appropriate maintenance, renewal, annuity or other governmental fees are paid, to expire in 2023 (excluding possible patentterm extensions). We expect any other patents and patent applications in this portfolio, if issued, and if the appropriate maintenance, renewal,annuity, or other governmental fees are paid, to expire in 2023 (worldwide, excluding possible patent term extensions). We note that we have anexclusive license to MIT’s interest in this co-owned intellectual property.Our β-thalassemia/SCD research program also includes the additional patent portfolio described below. •β-thalassemia/SCD Product Candidate Licenses. We have in-licensed patents and patent applications that are directed to certain specificcompositions of matter and methods for treating β-thalassemia/SCD. As of January 31, 2017, we had an exclusive license to one pending U.S. patentapplication and 21 pending corresponding foreign applications. We expect any composition of matter or method patents, if issued from the pendingpatent applications, if applicable, and if the appropriate maintenance, renewal, annuity or other governmental fees are paid, to expire in 2035(worldwide, excluding possible patent term extensions). We expect any other patents in this portfolio, if issued, and if the appropriate maintenance,renewal, annuity, or other governmental fees are paid, to expire from 2035 (worldwide, excluding possible patent term extensions). In addition, as ofJanuary 31, 2017, we had a non-exclusive license to two issued U.S. patents, one pending U.S. patent application, and 26 pending correspondingforeign patent applications and two issued foreign patents (Europe and Mexico). We expect the issued composition of matter and method patents toexpire in 2029 in the United States and in the rest of the world (excluding possible patent term extensions). We expect any composition of matter ormethod patents, if issued from the pending patent applications, if applicable, and if the appropriate maintenance, renewal, annuity or othergovernmental fees are paid, to expire in 2029 (worldwide, excluding possible patent term extensions). We expect any other patents in this portfolio, ifissued, and if the appropriate maintenance, renewal, annuity, or other governmental fees are paid, to expire from 2029 (worldwide, excluding possiblepatent term extensions.Cerebral Adrenoleukodystrophy (CALD)The CALD program includes three patent portfolios, described below. •Pasteur Institute. The in-licensed Pasteur patent portfolio contains the patents and patent applications described above directed towards aspects ofour lentiviral vectors utilized to produce our Lenti-D product candidate for CALD. •RDF. The in-licensed RDF patent portfolio contains the patents and patent applications described above directed towards aspects of our lentiviralvectors utilized to produce our Lenti-D product candidate for CALD. •bluebird bio. The bluebird bio patent portfolio contains patent applications directed to compositions of matter for CALD gene therapy vectors andcompositions and methods of using the vectors and compositions in cell-based gene therapy of adrenoleukodystrophy or adrenomyeloneuropathy. Asof January 31, 2017, we owned two U.S. patents and one pending U.S. patent application and 10 pending corresponding foreign applications and fourissued foreign patents. We expect the issued composition of matter patents for CALD gene therapy vectors to expire in 2032 (excluding possiblepatent term extensions). Further, we expect composition of matter or method patents, if issued from the pending patent applications and if theappropriate maintenance, renewal, annuity or other governmental fees are paid, to expire in 2032 (worldwide, excluding possible patent termextensions). We expect any other patents in this portfolio, if issued, and if the appropriate maintenance, renewal, annuity, or other governmental feesare paid, to expire in 2032 (worldwide, excluding possible patent term extensions).24 Multiple MyelomaThe multiple myeloma program includes five patent portfolios, described below. •Pasteur Institute. The in-licensed Pasteur patent portfolio contains patents and patent applications described above that are directed towards aspectsof our lentiviral vectors utilized to produce our bb2121 product candidate for multiple myleoma. •RDF. The in-licensed RDF patent portfolio contains the patents and patent applications described above directed towards aspects of our lentiviralvectors utilized to produce our bb2121 product candidate for multiple myleoma. In addition, the RDF portfolio contains additional patentapplications directed to aspects of our oncology program. As of January 31, 2017, we had an exclusive license (from RDF) to three issued patents andtwo pending U.S. patent applications related to our oncology platform. We expect the issued patent to expire in 2021 (excluding possible patent termextensions). Further, we expect composition of matter or methods patents, if issued from the pending patent applications and if the appropriatemaintenance, renewal, annuity or other governmental fees are paid, to expire in 2021-2022 (excluding possible patent term extensions). We expectany other patents and patent applications in this portfolio, if issued, and if the appropriate maintenance, renewal, annuity, or other governmental feesare paid, to expire in 2021-2022 (worldwide, excluding possible patent term extensions). •Biogen. The in-licensed patent portfolio from Biogen Inc., formerly Biogen Idec MA Inc. and referred to herein as Biogen, contains patents and patentapplications directed towards aspects of T cell-based products that target BCMA. As of January 31, 2017, we had a co-exclusive license to eight issuedU.S. patents and three pending U.S. patent applications and 10 pending corresponding foreign applications and 101 issued corresponding foreignpatents related to bb2121. We expect the issued patents to expire from 2020-2032 (excluding possible patent term extensions). Further, we expectcomposition of matter or methods patents, if issued from the pending patent applications and if the appropriate maintenance, renewal, annuity or othergovernmental fees are paid, to expire from 2020-2032 (excluding possible patent term extensions). We expect any other patents and patentapplications in this portfolio, if issued, and if the appropriate maintenance, renewal, annuity, or other governmental fees are paid, to expire in 2020-2032 (worldwide, excluding possible patent term extensions). •NIH. The in-licensed patent portfolio from NIH contains patent applications directed towards aspects of T cell-based products that target BCMA. As ofJanuary 31, 2017, we had an exclusive license to one pending U.S. patent application and 19 corresponding foreign patent applications related tobb2121. We expect composition of matter and methods patents, if issued from the pending patent applications and if the appropriate maintenance,renewal, annuity or other governmental fees are paid, to expire in 2033 (excluding possible patent term extensions). We expect any other patents andpatent applications in this portfolio, if issued, and if the appropriate maintenance, renewal, annuity, or other governmental fees are paid, to expire in2033 (worldwide, excluding possible patent term extensions). •bluebird bio. The bluebird bio patent portfolio contains patent applications directed to certain specific compositions of matter for generating CAR Tcells. As of January 31, 2017, we owned four pending U.S. patent applications and 62 corresponding pending foreign patent applications and twopending PCT applications. We expect any composition of matter or methods patents, if issued from a corresponding nonprovisional application ornational stage application, or corresponding foreign applications, if applicable, and if the appropriate maintenance, renewal, annuity or othergovernmental fees are paid, to expire from 2035-2038 (worldwide, excluding possible patent term extensions). We expect any other patents and patentapplications in this portfolio, if issued, and if the appropriate maintenance, renewal, annuity, or other governmental fees are paid, to expire from 2035-2038 (worldwide, excluding possible patent term extensions).Lentiviral platform (e.g., vectors, manufacturing, and cell therapy products)The lentiviral platform, which is potentially applicable to the β-thalassemia, SCD, CALD, oncology and other potential programs, includes three patentportfolios, described below. •Pasteur Institute. The Pasteur patent portfolio contains the patents and patent applications described above. •RDF. The in-licensed RDF patent portfolio contains the patents and patent applications described above. •bluebird bio. Another component of the bluebird bio patent portfolio includes the vector manufacturing platform and is potentially applicable to theCALD, β-thalassemia, SCD, oncology, and other programs. This portion of the portfolio contains patents and patent applications directed to improvedmethods for transfection and transduction of therapeutic cells. As of January 31, 2017, we owned, or have in-licensed from third parties other than thePasteur Institute and RDF, two related pending provisional applications, two pending U.S. patent applications and 22 corresponding foreign patentapplications. We expect composition of matter and method patents, if issued from the pending patent applications and if the appropriate maintenance,renewal, annuity or other governmental fees are paid, to expire from 2032-2037 (excluding possible patent term extensions). We expect any otherpatents and patent applications in this portfolio, if issued, and if the appropriate maintenance, renewal, annuity, or other governmental fees are paid, toexpire in 2032-2037 (worldwide, excluding possible patent term extensions).25 Oncology platform (e.g., vectors, manufacturing, and T cell-based products)Our T cell-based oncology platform and oncology research program, which is applicable to our multiple myeloma program and other potential programsin cancer, includes four patent portfolios, described below. •Pasteur Institute. The Pasteur patent portfolio contains the patents and patent applications described above. •RDF. The in-licensed RDF patent portfolio described above contains patents and patent applications that are also applicable to our oncologyplatform. In addition, the RDF portfolio contains additional patent applications directed to aspects of our oncology program. As of January 31, 2017,we had an exclusive license (from RDF) to three issued patents and two pending U.S. patent applications related to our oncology platform. We expectthe issued patent to expire in 2021 (excluding possible patent term extensions). Further, we expect composition of matter or methods patents, if issuedfrom the pending patent applications and if the appropriate maintenance, renewal, annuity or other governmental fees are paid, to expire in 2021-2022(excluding possible patent term extensions). We expect any other patents and patent applications in this portfolio, if issued, and if the appropriatemaintenance, renewal, annuity, or other governmental fees are paid, to expire in 2021-2022 (worldwide, excluding possible patent term extensions). •bluebird bio. One aspect of the bluebird bio patent portfolio contains patent applications directed to certain specific compositions of matter forgenerating CAR T cells directed against various cancers and improved CAR T cell compositions. As of January 31, 2017, we owned four pending U.S.patent applications and five corresponding pending foreign patent applications; five families of pending U.S. provisional applications; and onepending PCT application. We expect any composition of matter or methods patents, if issued from a corresponding nonprovisional application ornational stage application, or corresponding foreign applications, if applicable, and if the appropriate maintenance, renewal, annuity or othergovernmental fees are paid, to expire in 2033-2036 (worldwide, excluding possible patent term extensions). We expect any other patents and patentapplications in this portfolio, if issued, and if the appropriate maintenance, renewal, annuity, or other governmental fees are paid, to expire from 2033-2036 (worldwide, excluding possible patent term extensions). •T Cell Manufacturing Methods License. We have in-licensed patents and patent applications that are directed to certain specific methods forgenerating CAR T cells. As of January 31, 2017, we had a nonexclusive license to one issued U.S. patent, one pending U.S. patent application, and 30corresponding issued foreign patents. We expect the issued method patents to expire in 2026 (excluding possible patent term extensions). Further, weexpect methods patents, if issued from the pending patent applications and if the appropriate maintenance, renewal, annuity or other governmentalfees are paid, to expire in 2026 (excluding possible patent term extensions). We expect any other patents and patent applications in this portfolio, ifissued, and if the appropriate maintenance, renewal, annuity, or other governmental fees are paid, to expire from 2026 (worldwide, excluding possiblepatent term extensions). •T Cell Immunotherapy Product Candidate Licenses. We have in-licensed patents and patent applications that are directed to certain specificcompositions of matter for generating CAR T cells directed against various cancers and related methods of treatment. As of January 31, 2017, we hada co-exclusive or exclusive license to one pending PCT application related to one particular target antigen. We expect any composition of matter ormethods patents, if issued from a corresponding nonprovisional application or national stage application, or corresponding foreign applications, ifapplicable, and if the appropriate maintenance, renewal, annuity or other governmental fees are paid, to expire in 2036 (worldwide, excluding possiblepatent term extensions). We expect any other patents and patent applications in this portfolio, if issued, and if the appropriate maintenance, renewal,annuity, or other governmental fees are paid, to expire from 2036 (worldwide, excluding possible patent term extensions). In addition, as of January31, 2017, we have an exclusive license to one issued U.S. patent and ten corresponding foreign patents and co-own a pending PCT application toanother particular target antigen. We expect the issued composition of matter patent to expire in 2025 (excluding possible patent termextensions). We expect any composition of matter or methods patents, if issued from a corresponding nonprovisional application or national stageapplication, or corresponding foreign applications, if applicable, and if the appropriate maintenance, renewal, annuity or other governmental fees arepaid, to expire in 2036 (worldwide, excluding possible patent term extensions). We expect any other patents and patent applications in this portfolio,if issued, and if the appropriate maintenance, renewal, annuity, or other governmental fees are paid, to expire from 2036 (worldwide, excludingpossible patent term extensions). In addition, as of January 31, 2017, we have an exclusive license to two issued U.S. patents, one pending U.S. patentapplication and ten corresponding foreign patents; have an exclusive license to a pending PCT application; and co-own a pending PCT application,to another particular target antigen. We expect the issued method of use patents to expire in 2029 (excluding possible patent term extensions). Weexpect any composition of matter or methods patents, if issued from a corresponding nonprovisional application or national stage application, orcorresponding foreign applications, if applicable, and if the appropriate maintenance, renewal, annuity or other governmental fees are paid, to expirefrom 2029-2036 (worldwide, excluding possible patent term extensions). We expect any other patents and patent applications in this portfolio, ifissued, and if the appropriate maintenance, renewal, annuity, or other governmental fees are paid, to expire from 2029-2036 (worldwide, excludingpossible patent term extensions).26 Gene editing platform (e.g., homing endonucleases, chimeric endonucleases, megaTALs, genetically modified cells)The gene editing platform includes five patent portfolios, described below. •Pasteur Institute. The Pasteur patent portfolio described above may contain patents and patent applications that are potentially applicable to our geneediting platform. •RDF. The in-licensed RDF patent portfolio described above may contain patents and patent applications that are potentially applicable to our geneediting platform. •Gene Editing License. We in-licensed patent portfolios that contain patents and patent applications directed to aspects of our gene editing platform toproduce genome modifying enzymes and genetically modified cells that are potentially applicable to our β-thalassemia, SCD, oncology and otherprograms. As of January 31, 2017, we had an exclusive/co-exclusive license to five issued U.S. patents and one pending U.S. patent application and60 corresponding foreign patents and seven corresponding patent applications related to our gene editing platform. We expect the issuedcomposition of matter patents to expire in 2030 (excluding possible patent term extensions). Further, we expect composition of matter or methodspatents, if issued from the pending patent applications and if the appropriate maintenance, renewal, annuity or other governmental fees are paid, toexpire in 2030 (excluding possible patent term extensions). We expect any other patents and patent applications in this portfolio, if issued, and if theappropriate maintenance, renewal, annuity, or other governmental fees are paid, to expire in 2030 (worldwide, excluding possible patent termextensions). In addition, as of January 31, 2017, we had an exclusive license to one issued U.S. patent and one pending U.S. application and fivecorresponding foreign patents related to our gene editing platform. We expect the issued composition of matter patent to expire in 2031 in the UnitedStates (excluding possible patent term extensions) and in 2027 in the rest of the world. Further, we expect composition of matter and methods patents,if issued from the pending patent applications and if the appropriate maintenance, renewal, annuity or other governmental fees are paid, to expire in2027 (excluding possible patent term extensions). We expect any other patents and patent applications in this portfolio, if issued, and if theappropriate maintenance, renewal, annuity, or other governmental fees are paid, to expire in 2027 (worldwide, excluding possible patent termextensions). •Academic Gene Editing Licenses. We in-licensed patent portfolios from multiple academic medical centers, each portfolio containing patents andpatent applications directed to aspects of our gene editing platform to produce genome modifying enzymes and genetically modified cells that arepotentially applicable to our β-thalassemia, SCD, oncology and other programs. As of January 31, 2017, we had an exclusive license to one issuedU.S. patent and seven pending U.S. patent applications and four corresponding foreign patents and four corresponding patent applications related toour gene editing platform. We expect the issued patent to expire in 2032 (excluding possible patent term extensions) in the U.S. and 2027-3032 in therest of the world. We expect composition of matter or method patents, if issued from the pending patent applications and if the appropriatemaintenance, renewal, annuity or other governmental fees are paid, to expire from 2027-2032 (excluding possible patent term extensions). We expectany other patents and patent applications in this portfolio, if issued, and if the appropriate maintenance, renewal, annuity, or other governmental feesare paid, to expire in 2027-2032 (worldwide, excluding possible patent term extensions). As of January 31, 2017, we also had a non-exclusive licenseto one pending U.S. patent application and one pending PCT application related to our gene editing platform. We expect any composition of matteror methods patents, if issued from a corresponding nonprovisional application or national stage application, or corresponding foreign applications, ifapplicable, and if the appropriate maintenance, renewal, annuity or other governmental fees are paid, to expire in 2036 (worldwide, excluding possiblepatent term extensions). We expect any other patents and patent applications in this portfolio, if issued, and if the appropriate maintenance, renewal,annuity, or other governmental fees are paid, to expire from 2036 (worldwide, excluding possible patent term extensions). In addition, as of January31, 2017, we had an exclusive license to 2 pending U.S. applications and one corresponding issued foreign patent and 18 pending foreign patentapplications related to our gene editing platform. We expect the issued composition of matter patens to expire in 2033 (excluding possible patentterm extensions). We expect other composition of matter or method patents, if issued from the pending patent applications and if the appropriatemaintenance, renewal, annuity or other governmental fees are paid, to expire from 2031-2033 (excluding possible patent term extensions). We expectany other patents and patent applications in this portfolio, if issued, and if the appropriate maintenance, renewal, annuity, or other governmental feesare paid, to expire in 2031-2033 (worldwide, excluding possible patent term extensions). As of January 31, 2017, we also had a non-exclusive licenseto one pending U.S. application and 19 corresponding foreign patent applications related to our gene editing platform. We expect composition ofmatter or method patents, if issued from the pending patent applications and if the appropriate maintenance, renewal, annuity or other governmentalfees are paid, to expire from 2033 (excluding possible patent term extensions). We expect any other patents and patent applications in this portfolio,if issued, and if the appropriate maintenance, renewal, annuity, or other governmental fees are paid, to expire in 2033 (worldwide, excluding possiblepatent term extensions).27 •bluebird bio. One aspect of the bluebird bio patent portfolio contains patent applications that are potentially applicable to certain aspects of our geneediting platform to produce genome modifying enzymes and genetically modified cells that are potentially applicable to our oncology and otherprograms. As of January 31, 2017, we owned seven families of provisional applications related to our gene editing platform. We expect anycomposition of matter or methods patents, if issued from a corresponding nonprovisional application or national stage application, or correspondingforeign applications, if applicable, and if the appropriate maintenance, renewal, annuity or other governmental fees are paid, to expire in 2037(worldwide, excluding possible patent term extensions). We expect any other patents and patent applications in this portfolio, if issued, and if theappropriate maintenance, renewal, annuity, or other governmental fees are paid, to expire in 2037 (worldwide, excluding possible patent termextensions). As of January 31, 2017, we co-owned (with Cellectis) two pending U.S. applications and 12 corresponding pending foreign patentapplications related to our gene editing platform. We expect composition of matter or method patents, if issued from the pending patent applicationsand if the appropriate maintenance, renewal, annuity or other governmental fees are paid, to expire from 2034 (excluding possible patent termextensions). We expect the other patents and patent applications in this portfolio, if issued, and if the appropriate maintenance, renewal, annuity, orother governmental fees are paid, to expire in 2034 (worldwide, excluding possible patent term extensions). The term of individual patents depends upon the legal term of the patents in the countries in which they are obtained. In most countries in which we file,the patent term is 20 years from the date of filing the non-provisional application. In the United States, a patent’s term may be lengthened by patent termadjustment, which compensates a patentee for administrative delays by the U.S. Patent and Trademark Office in granting a patent, or may be shortened if apatent is terminally disclaimed over an earlier-filed patent.The term of a patent that covers an FDA-approved drug may also be eligible for patent term extension, which permits patent term restoration of a U.S.patent as compensation for the patent term lost during the FDA regulatory review process. The Hatch-Waxman Act permits a patent term extension of up tofive years beyond the expiration of the patent. The length of the patent term extension is related to the length of time the drug is under regulatory review. Apatent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval and only one patentapplicable to an approved drug may be extended. Moreover, a patent can only be extended once, and thus, if a single patent is applicable to multipleproducts, it can only be extended based on one product. Similar provisions are available in Europe and other foreign jurisdictions to extend the term of apatent that covers an approved drug. When possible, depending upon the length of clinical trials and other factors involved in the filing of a BLA, we expectto apply for patent term extensions for patents covering our product candidates and their methods of use.We may rely, in some circumstances, on trade secrets to protect our technology. However, trade secrets can be difficult to protect. We seek to protect ourproprietary technology and processes, in part, by entering into confidentiality agreements with our employees, consultants, scientific advisors and thirdparties. We also seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining physical security of our premises and physicaland electronic security of our information technology systems. While we have confidence in these individuals, organizations and systems, agreements orsecurity measures may be breached, and we may not have adequate remedies for any breach. In addition, our trade secrets may otherwise become known or beindependently discovered by competitors. To the extent that our consultants or collaborators use intellectual property owned by others in their work for us,disputes may arise as to the rights in related or resulting know-how and inventions.License agreementsInserm-TransfertIn May 2009, we entered into an exclusive license with Inserm-Transfert, which is a wholly-owned subsidiary of Institut national de la santé et de larecherche médicale, for use of certain patents and know-how related to the ABCD1 gene and corresponding protein, for use in the field of human ALDtherapy. Inserm-Transfert is referred to herein as Inserm. The last patent in the Inserm licensed patent portfolio expired in February of 2016. Inserm retains theright to practice the intellectual property licensed under the agreement for educational, clinical and preclinical studies purposes.Upon commercialization of our products covered by the in-licensed intellectual property, which we expect would include our Lenti-D product candidate,we will be obligated to pay Inserm a percentage of net sales as a royalty for the longer of the life of any patents covering the product or 10 years from firstcommercial sale. This royalty is in the low single digits. The royalties payable to Inserm are subject to reduction for any third party payments required to bemade, with a minimum floor in the low single digits.We are required to use all commercially reasonable efforts to develop licensed products and introduce them into the commercial market as soon aspractical, consistent with our reasonable business practices and judgment in compliance with an agreed upon development plan. We have assumed certaindevelopment, regulatory and commercial milestone obligations and must report on our progress in achieving these milestones on an annual basis.28 We may unilaterally terminate the license agreement at any time. Either party may terminate the agreement in the event of the other party’s materialbreach which remains uncured after 60 days of receiving written notice of such breach or in the event the other party become subject of a voluntary orinvoluntary petition in bankruptcy and such petition is not dismissed with prejudice within 120 days after filing. In addition, Inserm may terminate thelicense agreement in the event that we cannot prove within 60 days of written notice from Inserm that we have been diligent in developing the licensedproducts and introducing them into the commercial market.Absent early termination, the agreement will automatically terminate upon the expiration of all issued patents and filed patent applications within thepatent rights covered by the agreement or 10 years from the date of first commercial sale of a licensed product, whichever is later. The license grant ceases inconnection with any such termination. The longest lived patent rights licensed to us under the agreement are currently expected to expire in 2016.Institut PasteurWe have entered into a license with Institut Pasteur for certain patents relating to the use of DNA sequences, lentiviral vectors and recombinant cells inthe field of ex vivo gene therapy and CAR T cell-based therapy in a range of indications, excluding vaccinations. This agreement was amended twice in 2012,again in 2013 and most recently in 2015. The Institut Pasteur licensed patent portfolio includes at least 107 U.S. and foreign patents and patent applications.Any patents within this portfolio that have issued or may yet issue would have a statutory expiration dates between 2019 and 2023. The license is exclusivefor products containing human and non-human lentiviral vectors. Institut Pasteur retains the right, on behalf of itself, its licensees and research partners, toconduct research using the licensed intellectual property.We have the right to grant sublicenses outright to third parties under the agreement. For the first sublicense including a product targeting β-hemoglobinopathies (including TDT and severe SCD) or ALD (including CALD and AMN), we must pay Institut Pasteur an additional payment of €3.0million. If we receive any income (cash or non-cash) in connection with sublicenses for products targeting indications other than β-hemoglobinopathies(including TDT and severe SCD) or ALD (including CALD and AMN), we must pay Institut Pasteur a percentage of such income varying from low singledigits if the sublicense also includes licenses to intellectual property controlled by us, and a percentage of sublicense income in the mid-range double digitsif the sublicense does not include licenses to intellectual property controlled by us.Upon commercialization of our products covered by the in-licensed intellectual property, which we expect would include our LentiGlobin and Lenti-Dproduct candidates, we will be obligated to pay Institut Pasteur a percentage of net sales as a royalty. This royalty varies depending on the indication of theproduct but in any event is in the low single digits. In addition, starting in 2016 we must make under this agreement an annual maintenance payment whichis creditable against royalty payments on a year-by-year basis. If the combined royalties we would be required to pay to Institut Pasteur and third parties ishigher than a pre-specified percentage, we may ask Institut Pasteur to re-negotiate our royalty rates under this relationship.We are required to use all reasonable commercial efforts (as compared to a company of similar size and scope) to develop and commercialize one or moreproducts in the license field and to obtain any necessary governmental approvals in respect of, and market the products in license field, if any. Additionally,we have assumed certain development and regulatory milestone obligations. We must report on our progress towards achieving these milestones on anannual basis. We may unilaterally terminate the license agreement at any time by sending Institut Pasteur 90 days prior written notice. Either party mayterminate the license in the event of the other party’s substantial breach which remains uncured after 60 days of receiving written notice of such breach.Institut Pasteur may also terminate the agreement in the event bankruptcy proceedings are opened against us and not dismissed within 60 days.Absent early termination, the agreement will automatically terminate upon the expiration of the last licensed patents or five years after first marketauthorization of the first product, whichever occurs later. In the event the agreement is terminated, while the license grant would cease, we would retain theright to manufacture, import, use and sell licensed products for a certain period of time post-termination. In addition, our ownership stake in certain jointlymade improvements covered by the licensed patents would survive termination of the agreement. The longest lived patent rights licensed to us under theagreement are currently expected to expire in 2023.Stanford UniversityIn July 2002, we entered into a non-exclusive license agreement with the Board of Trustees of the Leland Stanford Junior University, referred to herein asStanford, which we amended and restated in April 2012. Under this agreement, we are granted a license to use the HEK293T cell line for any commercial ornon-commercial use for research, nonclinical and clinical development purpose and human and animal gene therapy products.29 We have the right to grant sublicenses outright to third parties under the agreement. For each such sublicense we grant, we must pay Stanford a fee (unlessthe sublicense is to a collaborating partner, contract manufacturer or contract research organization).Upon commercialization of our products covered by the in-licensed intellectual property, which we expect would include our Lenti-D product candidate,we will be obligated to pay Stanford a percentage of net sales as a royalty. This royalty varies with net sales but in any event is in the low single digits and isreduced 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 aspecified percentage which is less than one percent. Since April 2013, we have been paying Stanford an annual maintenance fee, which will be creditableagainst our royalty payments.We may unilaterally terminate the agreement by giving Stanford 30 days’ written notice. Stanford may also terminate the license agreement if after 30days of providing notice we are delinquent on any report or payment, are not using commercially reasonable efforts to develop, manufacture and/orcommercialize one or more licensed products, are in material breach of any provision or provide any false report. Termination of this agreement may requireus to utilize different cell types for vector manufacturing, which could lead to delays.Absent early termination, the license will expire in April 2037. We may elect to extend the term for an additional 25 years so long as we have acommercial product on the market at that time and we are in material compliance with the license agreement.Massachusetts Institute of TechnologyIn December 1996, we entered into an exclusive license with the Massachusetts Institute of Technology, referred to herein as MIT, for use of certainpatents in any field. This license agreement was amended in December 2003, May 2004 and June 2011. The licensed patent portfolio includes at least 18 U.S.and foreign patents and patent applications. Any patents within this portfolio that have issued or may yet issue would have a statutory expiration date from2017-2023. This license also has been amended to include a case jointly owned by MIT and us wherein we received the exclusive license to MIT’s rights inthis case. MIT retains the right to practice the intellectual property licensed under the agreement for noncommercial research purposes.We have the right to grant sublicenses outright to third parties under the agreement. In the event we sublicense the patent rights, we must pay MIT apercentage of all payments we receive from by the sublicensee. This percentage varies from mid-single digits to low double digits.Upon commercialization of our products covered by the in-licensed intellectual property, which we expect would include our LentiGlobin productcandidate, we will be obligated to pay MIT a percentage of net sales by us or our sublicensees as a royalty. This royalty is in the low single digits and isreduced 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. In addition,we make under this agreement an annual maintenance payment which may be credited against the royalty payments.We are required to use diligent efforts to market licensed products and to continue active, diligent development and marketing efforts for licensedproducts during the term of the agreement. We have assumed certain milestones with respect to raising capital investment and regulatory progress. We mustreport on our progress on achieving these milestones on an annual basis.We may unilaterally terminate the license agreement upon six months’ notice to MIT. MIT may terminate the agreement if we cease to carry on ourbusiness, or in the event of our material breach which remains uncured after 90 days of receiving written notice of such breach (30 days in the case ofnonpayment). In the event the agreement is terminated, while the license grant would cease, we would retain a right to complete manufacture of any licensedproducts in process and sell then-existing inventory. In addition, MIT would grant our sublicensees a direct license following such termination. With respectto jointly owned intellectual property, any termination would allow MIT to grant licenses to any third party to such intellectual property, without ourapproval, unless a sublicensee was already in place, in which case, MIT would grant our sublicensees a direct license.Research Development FoundationIn December 2011, we entered into an exclusive license with RDF to use certain patents that involve lentiviral vectors. The RDF licensed patent portfolioincludes at least 29 U.S. and foreign patents and patent applications. Any patents within this portfolio that have issued or may yet issue would have anexpected statutory expiration date between 2021 and 2027. RDF retains the right, on behalf of itself and other nonprofit academic research institutions, topractice and use the licensed patents for any academic, non-clinical research and educational purposes. We have the right to grant sublicenses outright tothird parties under the agreement.30 Upon commercialization of our products covered by the in-licensed intellectual property, which we expect would include both our Lenti-D andLentiGlobin product candidates, we are obligated to pay RDF a percentage of net sales as a royalty. This royalty is in the low single digits and is reduced byhalf if during the following ten years from the first marketing approval the last valid claim within the licensed patent that covers the licensed product expiresor ends.We are required to use commercially reasonable and diligent efforts for a company of our size and resources to develop or commercialize one or morelicensed products, including our first licensed product by 2016 and a second licensed product by 2018. These diligence efforts include minimum annualroyalty payments to RDF, which are creditable against earned royalties otherwise due to RDF, and payments upon regulatory milestones.RDF may terminate the agreement in the event of our material breach which remains uncured after 90 days of receiving written notice of such breach (30days in the case of nonpayment) or in the event we become bankrupt, our business or assets or property are placed in the hands of a receiver, assignee ortrustee, we institute or suffer to be instituted any procedure in bankruptcy court for reorganization or rearrangement of our financial affairs, make a generalassignment for the benefit of creditors, or if we or an affiliate or a sublicensee institutes any procedure challenging the validity or patentability of any patentor patent application within the licensed patents, the agreement will immediately terminate.Absent early termination, the agreement will continue until its expiration upon the later of there being no more valid claims within the licensed patents orthe expiration of our royalty obligations on licensed products that are subject to an earned royalty, if such earned royalty is based on the minimum 10-yearroyalty period described above. In the event the agreement is terminated, while the license grant would cease, RDF will grant our sublicensees a directlicense. The longest lived patent rights licensed to us under the agreement are in one U.S. patent currently expected to expire in 2027.BiogenIn August 2014, we entered into a license agreement with Biogen, pursuant to which we co-exclusively licensed certain patents and patent applicationsdirected towards aspects of T cell-based products that target BCMA. Any patents within this portfolio that have issued or may yet issue would have anexpected statutory expiration date between 2020 and 2032. Biogen retains the right to practice and use the licensed patents in the licensed field andterritory. We have the right to grant sublicenses to third parties, subject to certain conditions. Upon commercialization of our products covered by the in-licensed intellectual property, which we expect would include our bb2121 product candidate, we will be obligated to pay Biogen a percentage of net sales asa royalty in the low single digits. We are required to use commercially reasonable efforts to research and develop one or more licensed products in the licensefield during the term of the agreement. Additionally, we have assumed certain development and regulatory milestone obligations and must report on ourprogress in achieving those milestones on a periodic basis. We may be obligated to pay up to $24.0 million in the aggregate for a licensed product upon theachievement of these milestones. We may unilaterally terminate the license agreement at any time with prior written notice to Biogen. Either party mayterminate the license in the event of the other party’s material breach upon notice and an opportunity for the breaching party to cure. Either party may alsoterminate the agreement in the event bankruptcy proceedings are opened against the other party and are not dismissed within a specified period oftime. Absent early termination, the agreement will automatically terminate upon the expiration of all patent rights covered by the agreement or ten yearsfrom the date of first commercial sale of a licensed product, whichever is later. The license grant ceases in connection with any such termination. The longestlived patent rights licensed to us under the Agreement are in a U.S. patent, currently expected to expire in 2032.NIHIn August 2015, we entered into a license agreement with the NIH, pursuant to which we exclusively licensed certain patents and patent applicationsdirected towards aspects of T cell-based products that target BCMA. Any patents within this portfolio that have issued or may yet issue would have anexpected statutory expiration date in 2033. NIH retains the right to practice the intellectual property licensed under the agreement on behalf of thegovernment of the United States. We have the right to grant sublicenses to third parties, subject to certain conditions. For each such sublicense we grant wemust pay the NIH a fee. Upon commercialization of our products covered by the in-licensed intellectual property, which we expect would include our bb2121product candidate, we will be obligated to pay the NIH a percentage of net sales as a royalty in the low single digits. We are required to use commerciallyreasonable efforts to research and develop one or more licensed products in the license field during the term of the agreement. Additionally, we have assumedcertain development and regulatory milestone obligations and must report on our progress in achieving those milestones on a periodic basis. We may beobligated to pay up to $9.7 million in the aggregate for a licensed product upon the achievement of these milestones. We may unilaterally terminate thelicense agreement at any time with prior written notice to the NIH. The NIH may terminate the license in the event of our material breach upon notice andfollowing an opportunity for us to cure the material breach. The NIH may also terminate the agreement in the event bankruptcy proceedings are openedagainst us and are not dismissed within a specified period of time. Absent early termination, the agreement will automatically terminate upon the expiration31 of the patent rights covered by the agreement. The license grant ceases in connection with any such termination. The longest lived patent rights licensed tous under the Agreement are currently expected to expire in 2033.CompetitionThe biotechnology and pharmaceutical industries are characterized by intense and rapidly changing competition to develop new technologies andproprietary products. We face potential competition from many different sources, including larger and better-funded pharmaceutical and biotechnologycompanies. Not only must we compete with other companies that are focused on gene therapy products but any products that we may commercialize willhave to compete with existing therapies and new therapies that may become available in the future.There are other organizations working to improve existing therapies or to develop new therapies for our initially selected indications. Depending on howsuccessful these efforts are, it is possible they may increase the barriers to adoption and success for our LentiGlobin, Lenti-D and bb2121 product candidates,and our preclinical T cell-based cancer immunotherapy product candidates. These efforts include the following: •β-thalassemia: The current standard of care for the treatment of β-thalassemia in the developed world is chronic blood transfusions to address thepatient’s anemia. In addition, such patients often receive iron chelation therapy to help manage the iron overload associated with their chronic bloodtransfusions. We understand that established biopharmaceutical companies, such as Novartis AG and ApoPharma Inc., who provide the leading ironchelation therapy, are seeking to develop improvements to their product profile and accessibility. A number of different approaches are underinvestigation that seek to improve the current standard of care treatment options, including iron modulating agents and fetal hemoglobin regulators.In addition, some patients with β-thalassemia receive HSCT treatment, particularly if a sufficiently well-matched source of donor cells is identified. Inaddition, there are a number of academic and industry-sponsored research and development programs to improve allogeneic HSCT, or the tolerabilityand safety of haploidentical HSCT, while increasing the availability of suitable donors. These programs include a modified donor T cell therapy to beused in conjunction with haploidentical HSCT that is in an ongoing Phase I/II study supported by Bellicum Pharmaceuticals, Inc.; and an adjunctiveT cell immunotherapy treatment in conjunction with allogeneic HSCT that is in an ongoing Phase I/II study supported by Kiadis Pharma. AcceleronPharma, Inc. is investigating Luspatercept (ACE-536), a subcutaneously-delivered protein therapeutic that targets molecules in the TGF-β superfamily,which is currently in a Phase III clinical trial in subjects with β-thalassemia. There are also several different groups developing other approaches for β-thalassemia, some of which use a similar ex vivo autologous gene therapy approach, but make use of different vectors and different cell processingtechniques. These include: GlaxoSmithKline plc, which has entered into an agreement with the San Raffaele Telethon Institute for Gene Therapy toadvance several gene therapy programs, including one for β-thalassemia; Memorial Sloan Kettering, which received clearance for its IND from theFDA in 2012 for a Phase I/II gene therapy study; and Sangamo BioSciences Inc. (through its partnership with Biogen), which has announced plans toinitiate a Phase I clinical study using zinc finger nuclease-mediated gene-editing techniques in hemoglobinopathies including β-thalassemia. •Sickle cell disease: The current standard of care for the treatment of SCD in the developed world is chronic blood transfusions or hydroxyurea (ageneric drug). In addition, such patients often receive iron chelation therapy to help manage the iron overload associated with chronic bloodtransfusions. We are aware of ongoing studies that continue to evaluate the efficacy and safety of hydroxyurea in various populations. In addition,some patients with SCD receive allogeneic HSCT treatment, particularly if a sufficiently well-matched source of donor cells is identified. In addition,there are a number of academic and industry-sponsored research and development programs to improve allogeneic HSCT, or the tolerability and safetyof haploidentical HSCT, while increasing the availability of suitable donors. These programs include a modified donor T cell therapy to be used inconjunction with haploidentical HSCT that is in an ongoing Phase I/II study supported by Bellicum Pharmaceuticals, Inc. A number of differenttherapeutic approaches are under investigation targeting the various aspects of SCD pathophysiology, including: antibodies to p-selectin includingcrizanlizumab which recently completed a Phase II study supported by Novartis AG; pharmaceutical grade L-glutamine, for which Emmaus LifeSciences, Inc. (which is under contract for Generex Biotechnology Corporation to acquire a controlling interest) completed a Phase III study andsubmitted an NDA in 2016; hemoglobin modifiers to prevent the sickling of RBC, including GBT440 in a Phase III study supported by Global BloodTherapeutics, Inc.; pan-selectin inhibitors, including GMI-1070 in Phase II studies supported by GlycoMimetics Inc. (in 2011, Pfizer Inc. andGlycoMimetics Inc. entered a global collaboration to advance this compound); and also gene editing approaches being supported by IntelliaTherapeutics, Inc. (in collaboration with Novartis AG), Editas Medicine, Inc. and CRISPR Therapeutics, Inc. (in collaboration with VertexPharmaceuticals Incorporated); and Sangamo BioSciences Inc. (through its partnership with Biogen) which has announced plans to investigate the useof zinc finger nuclease-mediated gene-editing techniques in hemoglobinopothies including SCD, although to our knowledge no clinical studies havebeen initiated. There are also several different groups developing gene therapy approaches for SCD. Some of these groups use a similar ex vivoautologous approach, but make use of different vectors and different cell processing techniques. These include: UCLA, which has received fundingfrom the California Institute of Regenerative Medicine to pursue a Phase I gene therapy study for SCD; and Cincinnati Children’s Hospital MedicalCenter, which is conducting a Phase I/II gene therapy study for SCD.32 •CALD: The current standard of care for the treatment of CALD is allogeneic HSCT. We understand that various academic centers around the world areseeking to develop improvements to allogeneic HSCT. In addition, some physicians recommend glyceryl trierucate—better known as Lorenzo’s Oil—to patients diagnosed with ALD or AMN. However, Lorenzo’s Oil has not been clinically proven to address the cerebral symptoms of ALD, and has notbeen approved by any major regulatory agency as a prescription drug. There are efforts underway to obtain FDA approval for Lorenzo’s Oil as aprescription drug. •Relapsed/Refractory Multiple Myeloma: The current standard of care for relapsed/refractory multiple myeloma includes IMIDs (e.g., thalidomide,lenalidomide, pomalidomide), proteasome inhibitors (e.g., bortezomib, carfilzomib, ixazomib), monoclonal antibodies (e.g., daratumamab,elotumuzumab), cytotoxic agents, and in some cases, HSCT. There are several groups developing autologous T cell therapies for relapsed/refractorymultiple myeloma that use a similar autologous ex vivo approach, but a different target antigen, BCMA single-chain variable fragment or, we believe,cell processing techniques. These programs include: an anti-BCMA CAR T cell therapy that is currently in a single-center Phase I study by theUniversity of Pennsylvania (in collaboration with Novartis AG); an anti-NY-ESO TCR T cell therapy that is currently in a Phase I/II study beingsupported by Adaptimmune Inc. (in collaboration with GlaxoSmithKline plc); and preclinical anti-BCMA CAR T programs announced by JunoTherapeutics, Inc. and Kite Pharma, Inc. In addition to these autologous T cell-based approaches, Cellectis SA has disclosed a preclinical program foran allogeneic BCMA CAR T cell therapy. There are also antibody-based therapies being developed by several groups, including a bispecific antibodytherapy currently in a Phase I study supported by Amgen Inc., an antibody drug conjugate therapy currently in a Phase I study supported byGlaxoSmithKline plc, and those being developed in preclinical programs announced by Celgene, Five Prime Therapeutics, Inc., JanssenPharmaceutical Companies of Johnson & Johnson, and Pfizer Inc. •T cell-based immunotherapies in oncology: A number of pharmaceutical companies and academic collaborators are researching and developing Tcell-based immunotherapies in oncology, in addition to the multiple myeloma programs described above. These include: Novartis AG (incollaboration with the University of Pennsylvania), Adaptimmune Inc., Juno Therapeutics, Inc. (in collaboration with Celgene, Memorial SloanKettering and the Fred Hutchinson Cancer Research Center), Kite Pharma, Inc. (in collaboration with Amgen, Inc. and the National Institutes ofHealth), Pfizer Inc. (through their collaboration with Cellectis SA and Servier), among others. Many of the T cell-based immunotherapy programsbeing developed by these companies are already in Phase I/II clinical trials for multiple indications, some of which are planning to apply formarketing approval in the United States in 2017.Many of our competitors, either alone or with their strategic partners, have substantially greater financial, technical and human resources than we do andsignificantly greater experience in the discovery and development of product candidates, obtaining FDA and other regulatory approvals of treatments and thecommercialization of those treatments. Accordingly, our competitors may be more successful than us in obtaining approval for treatments and achievingwidespread market acceptance. Our competitors’ treatments may be more effective, or more effectively marketed and sold, than any treatment we maycommercialize and may render our treatments obsolete or non-competitive before we can recover the expenses of developing and commercializing any of ourtreatments.These competitors also compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical study sitesand patient registration for clinical studies, as well as in acquiring technologies complementary to, or necessary for, our programs. Smaller or early-stagecompanies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.We anticipate that we will face intense and increasing competition as new drugs enter the market and advanced technologies become available. Weexpect any treatments that we develop and commercialize to compete on the basis of, among other things, efficacy, safety, convenience of administration anddelivery, price, the level of generic competition and the availability of reimbursement from government and other third-party payors.Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, havefewer or less severe side effects, are more convenient or are less expensive than any products that we may develop. Our competitors also may obtain FDA orother regulatory approval for their products more rapidly than we may obtain approval for ours, which could result in our competitors establishing a strongmarket position before we are able to enter the market. In addition, our ability to compete may be affected in many cases by insurers or other third-partypayors seeking to encourage the use of generic products. If our therapeutic product candidates are approved, we expect that they will be priced at asignificant premium over competitive generic products.Government regulationIn the United States, biological products, including gene therapy products, are subject to regulation under the Federal Food, Drug, and Cosmetic Act, orFD&C Act, and the Public Health Service Act, or PHS Act, and other federal, state, local and foreign statutes and regulations. Both the FD&C Act and the PHSAct and their corresponding regulations govern, among other things, the testing,33 manufacturing, safety, efficacy, labeling, packaging, storage, record keeping, distribution, reporting, advertising and other promotional practices involvingbiological products. FDA approval must be obtained before clinical testing of biological products, and each clinical study protocol for a gene therapyproduct is reviewed by the FDA and, in some instances, the NIH, through its RAC. FDA approval also must be obtained before marketing of biologicalproducts. The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes andregulations require the expenditure of substantial time and financial resources and we may not be able to obtain the required regulatory approvals.Within the FDA, the CBER regulates gene therapy products. The CBER works closely with the NIH and its RAC, which makes recommendations to theNIH on gene therapy issues and engages in a public discussion of scientific, safety, ethical and societal issues related to proposed and ongoing gene therapyprotocols. The FDA and the NIH have published guidance documents with respect to the development and submission of gene therapy protocols. The FDAalso has published guidance documents related to, among other things, gene therapy products in general, their preclinical assessment, observing subjectsinvolved in gene therapy studies for delayed adverse events, potency testing, and chemistry, manufacturing and control information in gene therapy INDs.Ethical, social and legal concerns about gene therapy, genetic testing and genetic research could result in additional regulations restricting or prohibitingthe processes we may use. Federal and state agencies, congressional committees and foreign governments have expressed interest in further regulatingbiotechnology. More restrictive regulations or claims that our products are unsafe or pose a hazard could prevent us from commercializing any products. Newgovernment requirements may be established that could delay or prevent regulatory approval of our product candidates under development. It is impossibleto predict whether legislative changes will be enacted, regulations, policies or guidance changed, or interpretations by agencies or courts changed, or whatthe impact of such changes, if any, may be.U.S. biological products development processThe process required by the FDA before a biological product may be marketed in the United States generally involves the following: •completion of nonclinical laboratory tests and animal studies according to good laboratory practices, or GLPs, and applicable requirements for thehumane use of laboratory animals or other applicable regulations; •submission to the FDA of an application for an IND, which must become effective before human clinical studies may begin; •performance of adequate and well-controlled human clinical studies according to the FDA’s regulations commonly referred to as good clinicalpractices, or GCPs, and any additional requirements for the protection of human research subjects and their health information, to establish the safetyand efficacy of the proposed biological product for its intended use; •submission to the FDA of a Biologics License Application, or BLA, for marketing approval that includes substantive evidence of safety, purity, andpotency from results of nonclinical testing and clinical studies; •satisfactory completion of an FDA inspection of the manufacturing facility or facilities where the biological product is produced to assess compliancewith GMP, to assure that the facilities, methods and controls are adequate to preserve the biological product’s identity, strength, quality and purityand, if applicable, the FDA’s current good tissue practices, or GTPs, for the use of human cellular and tissue products; •potential FDA audit of the nonclinical and clinical study sites that generated the data in support of the BLA; and •FDA review and approval, or licensure, of the BLA.Before testing any biological product candidate, including a gene therapy product, in humans, the product candidate enters the preclinical testing stage.Preclinical tests, also referred to as nonclinical studies, include laboratory evaluations of product chemistry, toxicity and formulation, as well as animalstudies to assess the potential safety and activity of the product candidate. The conduct of the preclinical tests must comply with federal regulations andrequirements including GLPs.Where a gene therapy study is conducted at, or sponsored by, institutions receiving NIH funding for recombinant DNA research, prior to the submission ofan IND to the FDA, a protocol and related documentation is submitted to and the study is registered with the NIH Office of Biotechnology Activities, or OBA,pursuant to the NIH Guidelines for Research Involving Recombinant DNA Molecules, or NIH Guidelines. Compliance with the NIH Guidelines is mandatoryfor investigators at institutions receiving NIH funds for research involving recombinant DNA, however many companies and other institutions not otherwisesubject to the NIH Guidelines voluntarily follow them. The NIH is responsible for convening the RAC, a federal advisory committee that discusses protocolsthat raise novel or particularly important scientific, safety or ethical considerations, at one of its quarterly public meetings. The OBA will notify the FDA ofthe RAC’s decision regarding the necessity for full public review of a gene therapy protocol. RAC proceedings and reports are posted to the OBA web siteand may be accessed by the public.34 The clinical study sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data, any available clinicaldata or literature and a proposed clinical protocol, to the FDA as part of the IND. Some preclinical testing may continue even after the IND is submitted. TheIND automatically becomes effective 30 days after receipt by the FDA, unless the FDA places the clinical study on a clinical hold within that 30-day timeperiod. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical study can begin. With gene therapy protocols,if the FDA allows the IND to proceed, but the RAC decides that full public review of the protocol is warranted, the FDA will request at the completion of itsIND review that sponsors delay initiation of the protocol until after completion of the RAC review process. The FDA may also impose clinical holds on abiological product candidate at any time before or during clinical studies due to safety concerns or non-compliance. If the FDA imposes a clinical hold,studies may not recommence without FDA authorization and then only under terms authorized by the FDA. Accordingly, we cannot be sure that submissionof an IND will result in the FDA allowing clinical studies to begin, or that, once begun, issues will not arise that suspend or terminate such studies.Clinical studies involve the administration of the biological product candidate to healthy volunteers or patients under the supervision of qualifiedinvestigators, generally physicians not employed by or under the study sponsor’s control. Clinical studies are conducted under protocols detailing, amongother things, the objectives of the clinical study, dosing procedures, subject selection and exclusion criteria, and the parameters to be used to monitor subjectsafety, including stopping rules that assure a clinical study will be stopped if certain adverse events should occur. Each protocol and any amendments to theprotocol must be submitted to the FDA as part of the IND. Clinical studies must be conducted and monitored in accordance with the FDA’s regulationscomprising the GCP requirements, including the requirement that all research subjects provide informed consent. Further, each clinical study must bereviewed and approved by an independent institutional review board, or IRB, at or servicing each institution at which the clinical study will be conducted.An IRB is charged with protecting the welfare and rights of study participants and considers such items as whether the risks to individuals participating in theclinical studies are minimized and are reasonable in relation to anticipated benefits. The IRB also approves the form and content of the informed consent thatmust be signed by each clinical study subject or his or her legal representative and must monitor the clinical study until completed. Clinical studies also mustbe reviewed by an institutional biosafety committee, or IBC, a local institutional committee that reviews and oversees basic and clinical research conductedat that institution. The IBC assesses the safety of the research and identifies any potential risk to public health or the environment.Human clinical studies are typically conducted in three sequential phases that may overlap or be combined: •Phase I. The biological product is initially introduced into healthy human subjects and tested for safety. In the case of some products for severe or life-threatening diseases, especially when the product may be too inherently toxic to ethically administer to healthy volunteers, the initial human testingis often conducted in patients. •Phase II. The biological product is evaluated in a limited patient population to identify possible adverse effects and safety risks, to preliminarilyevaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance, optimal dosage and dosing schedule. •Phase III. Clinical studies are undertaken to further evaluate dosage, clinical efficacy, potency, and safety in an expanded patient population atgeographically dispersed clinical study sites. These clinical studies are intended to establish the overall risk/benefit ratio of the product and providean adequate basis for product labeling.Post-approval clinical studies, sometimes referred to as Phase IV clinical studies, may be conducted after initial marketing approval. These clinical studiesare used to gain additional experience from the treatment of patients in the intended therapeutic indication, particularly for long-term safety follow-up. TheFDA recommends that sponsors observe subjects for potential gene therapy-related delayed adverse events for a 15-year period, including a minimum of fiveyears of annual examinations followed by ten years of annual queries, either in person or by questionnaire, of study subjects.During all phases of clinical development, regulatory agencies require extensive monitoring and auditing of all clinical activities, clinical data, andclinical study investigators. Annual progress reports detailing the results of the clinical studies must be submitted to the FDA. Written IND safety reports mustbe promptly submitted to the FDA, the NIH and the investigators for serious and unexpected adverse events, any findings from other studies, tests inlaboratory animals or in vitro testing that suggest a significant risk for human subjects, or any clinically important increase in the rate of a serious suspectedadverse reaction over that listed in the protocol or investigator brochure. The sponsor must submit an IND safety report within 15 calendar days after thesponsor determines that the information qualifies for reporting. The sponsor also must notify the FDA of any unexpected fatal or life-threatening suspectedadverse reaction within seven calendar days after the sponsor’s initial receipt of the information. Phase I, Phase II and Phase III clinical studies may not becompleted successfully within any specified period, if at all. The FDA or the sponsor or its data safety monitoring board may suspend a clinical study at anytime on various grounds, including a finding that the research subjects or patients are being exposed to an unacceptable health risk. Similarly, an IRB cansuspend or terminate approval of a clinical study at its institution if the clinical study is not being conducted in accordance with the IRB’s requirements or ifthe biological product has been associated with unexpected serious harm to patients.35 Human gene therapy products are a new category of therapeutics. Because this is a relatively new and expanding area of novel therapeutic interventions,there can be no assurance as to the length of the study period, the number of patients the FDA will require to be enrolled in the studies in order to establishthe safety, efficacy, purity and potency of human gene therapy products, or that the data generated in these studies will be acceptable to the FDA to supportmarketing approval. The NIH has a publicly accessible database, the Genetic Modification Clinical Research Information System which includes informationon gene transfer studies and serves as an electronic tool to facilitate the reporting and analysis of adverse events on these studies.Concurrent with clinical studies, companies usually complete additional animal studies and must also develop additional information about the physicalcharacteristics of the biological product as well as finalize a process for manufacturing the product in commercial quantities in accordance with GMPrequirements. To help reduce the risk of the introduction of adventitious agents with use of biological products, the PHS Act emphasizes the importance ofmanufacturing control for products whose attributes cannot be precisely defined. The manufacturing process must be capable of consistently producingquality batches of the product candidate and, among other things, the sponsor must develop methods for testing the identity, strength, quality, potency andpurity of the final biological product. Additionally, appropriate packaging must be selected and tested and stability studies must be conducted todemonstrate that the biological product candidate does not undergo unacceptable deterioration over its shelf life.U.S. review and approval processesAfter the completion of clinical studies of a biological product, FDA approval of a BLA, must be obtained before commercial marketing of the biologicalproduct. The BLA must include results of product development, laboratory and animal studies, human studies, information on the manufacture andcomposition of the product, proposed labeling and other relevant information. In addition, under the Pediatric Research Equity Act, or PREA, a BLA orsupplement to a BLA must contain data to assess the safety and effectiveness of the biological product for the claimed indications in all relevant pediatricsubpopulations and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective. The FDA may grantdeferrals for submission of data or full or partial waivers. Unless otherwise required by regulation, PREA does not apply to any biological product for anindication for which orphan designation has been granted. The testing and approval processes require substantial time and effort and there can be noassurance that the FDA will accept the BLA for filing and, even if filed, that any approval will be granted on a timely basis, if at all.Within 60 days following submission of the application, the FDA reviews a BLA submitted to determine if it is substantially complete before the agencyaccepts it for filing. The FDA may refuse to file any BLA that it deems incomplete or not properly reviewable at the time of submission and may requestadditional information. In this event, the BLA must be resubmitted with the additional information. The resubmitted application also is subject to reviewbefore the FDA accepts it for filing. Once the submission is accepted for filing, the FDA begins an in-depth substantive review of the BLA. The FDA reviewsthe BLA to determine, among other things, whether the proposed product is safe and potent, or effective, for its intended use, and has an acceptable purityprofile, and whether the product is being manufactured in accordance with GMP to assure and preserve the product’s identity, safety, strength, quality,potency and purity. The FDA may refer applications for novel biological products or biological products that present difficult questions of safety or efficacyto an advisory committee, typically a panel that includes clinicians and other experts, for review, evaluation and a recommendation as to whether theapplication should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers suchrecommendations carefully when making decisions. During the biological product approval process, the FDA also will determine whether a Risk Evaluationand Mitigation Strategy, or REMS, is necessary to assure the safe use of the biological product. If the FDA concludes a REMS is needed, the sponsor of theBLA must submit a proposed REMS; the FDA will not approve the BLA without a REMS, if required.Before approving a BLA, the FDA will inspect the facilities at which the product is manufactured. The FDA will not approve the product unless itdetermines that the manufacturing processes and facilities are in compliance with GMP requirements and adequate to assure consistent production of theproduct within required specifications. For a gene therapy product, the FDA also will not approve the product if the manufacturer is not in compliance withthe GTPs. These are FDA regulations that govern the methods used in, and the facilities and controls used for, the manufacture of human cells, tissues, andcellular and tissue based products, or HCT/Ps, which are human cells or tissue intended for implantation, transplant, infusion, or transfer into a humanrecipient. The primary intent of the GTP requirements is to ensure that cell and tissue based products are manufactured in a manner designed to prevent theintroduction, transmission and spread of communicable disease. FDA regulations also require tissue establishments to register and list their HCT/Ps with theFDA and, when applicable, to evaluate donors through screening and testing. Additionally, before approving a BLA, the FDA will typically inspect one ormore clinical sites to assure that the clinical studies were conducted in compliance with IND study requirements and GCP requirements. To assure GMP, GTPand GCP compliance, an applicant must incur significant expenditure of time, money and effort in the areas of training, record keeping, production, andquality control.Notwithstanding the submission of relevant data and information, the FDA may ultimately decide that the BLA does not satisfy its regulatory criteria forapproval and deny approval. Data obtained from clinical studies are not always conclusive and the FDA may36 interpret data differently than we interpret the same data. If the agency decides not to approve the BLA in its present form, the FDA will issue a completeresponse letter that usually describes all of the specific deficiencies in the BLA identified by the FDA. The deficiencies identified may be minor, for example,requiring labeling changes, or major, for example, requiring additional clinical studies. Additionally, the complete response letter may include recommendedactions that the applicant might take to place the application in a condition for approval. If a complete response letter is issued, the applicant may eitherresubmit the BLA, addressing all of the deficiencies identified in the letter, or withdraw the application.If a product receives regulatory approval, the approval may be significantly limited to specific diseases and dosages or the indications for use mayotherwise be limited, which could restrict the commercial value of the product. Further, the FDA may require that certain contraindications, warnings orprecautions be included in the product labeling. The FDA may impose restrictions and conditions on product distribution, prescribing, or dispensing in theform of a risk management plan, or otherwise limit the scope of any approval. In addition, the FDA may require post marketing clinical studies, sometimesreferred to as Phase IV clinical studies, designed to further assess a biological product’s safety and effectiveness, and testing and surveillance programs tomonitor the safety of approved products that have been commercialized.One of the performance goals agreed to by the FDA under the PDUFA is to review 90% of standard BLAs in 10 months and 90% of priority BLAs in sixmonths, whereupon a review decision is to be made. The FDA does not always meet its PDUFA goal dates for standard and priority BLAs and its review goalsare subject to change from time to time. The review process and the PDUFA goal date may be extended by three months if the FDA requests or the BLAsponsor otherwise provides additional information or clarification regarding information already provided in the submission within the last three monthsbefore the PDUFA goal date.Orphan drug designationUnder the Orphan Drug Act, the FDA may grant orphan designation to a drug or biological product intended to treat a rare disease or condition, which isgenerally a disease or condition that affects fewer than 200,000 individuals in the United States, or more than 200,000 individuals in the United States andfor which there is no reasonable expectation that the cost of developing and making a drug or biological product available in the United States for this typeof disease or condition will be recovered from sales of the product. Orphan product designation must be requested before submitting an NDA or BLA. Afterthe FDA grants orphan product designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA. Orphanproduct designation does not convey any advantage in or shorten the duration of the regulatory review and approval process.If a product that has orphan designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, theproduct is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications to market the same drug or biologicalproduct for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphanexclusivity. Competitors, however, may receive approval of different products for the indication for which the orphan product has exclusivity or obtainapproval for the same product but for a different indication for which the orphan product has exclusivity. Orphan product exclusivity also could block theapproval of one of our products for seven years if a competitor obtains approval of the same biological product as defined by the FDA or if our productcandidate is determined to be contained within the competitor’s product for the same indication or disease. If a drug or biological product designated as anorphan product receives marketing approval for an indication broader than what is designated, it may not be entitled to orphan product exclusivity. Orphandrug status in the European Union has similar, but not identical, benefits.Expedited development and review programsThe FDA has a Fast Track program that is intended to expedite or facilitate the process for reviewing new drugs and biological products that meet certaincriteria. Specifically, new drugs and biological products are eligible for Fast Track designation if they are intended to treat a serious or life-threateningcondition and demonstrate the potential to address unmet medical needs for the condition. Fast Track designation applies to the combination of the productand the specific indication for which it is being studied. The sponsor of a new drug or biologic may request the FDA to designate the drug or biologic as aFast Track product at any time during the clinical development of the product. Unique to a Fast Track product, the FDA may consider for review sections ofthe marketing application on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of thesections of the application, the FDA agrees to accept sections of the application and determines that the schedule is acceptable, and the sponsor pays anyrequired user fees upon submission of the first section of the application.Any product submitted to the FDA for marketing, including under a Fast Track program, may be eligible for other types of FDA programs intended toexpedite development and review, such as priority review and accelerated approval. Under the Breakthrough Therapy program, products intended to treat aserious or life-threatening disease or condition may be eligible for the benefits of the Fast Track program when preliminary clinical evidence demonstratesthat such product may have substantial improvement on one or more clinically significant endpoints over existing therapies. Additionally, FDA will seek toensure the sponsor of a breakthrough37 therapy product receives timely advice and interactive communications to help the sponsor design and conduct a development program as efficiently aspossible. Any product is eligible for priority review if it has the potential to provide safe and effective therapy where no satisfactory alternative therapy existsor a significant improvement in the treatment, diagnosis or prevention of a disease compared to marketed products. The FDA will attempt to direct additionalresources to the evaluation of an application for a new drug or biological product designated for priority review in an effort to facilitate the review.Additionally, a product may be eligible for accelerated approval. Drug or biological products studied for their safety and effectiveness in treating serious orlife-threatening illnesses and that provide meaningful therapeutic benefit over existing treatments may receive accelerated approval, which means that theymay be approved on the basis of adequate and well-controlled clinical studies establishing that the product has an effect on a surrogate endpoint that isreasonably likely to predict a clinical benefit, or on the basis of an effect on a clinical endpoint other than survival or irreversible morbidity. As a conditionof approval, the FDA may require that a sponsor of a drug or biological product receiving accelerated approval perform adequate and well-controlled post-marketing clinical studies. In addition, the FDA currently requires as a condition for accelerated approval pre-approval of promotional materials, which couldadversely impact the timing of the commercial launch of the product. Fast Track designation, Breakthrough Therapy designation, priority review andaccelerated approval do not change the standards for approval but may expedite the development or approval process.Accelerated approval for regenerative advanced therapiesAs part of the 21st Century Cures Act, Congress recently amended the FD&C Act to create an accelerated approval program for regenerative advancedtherapies, which include cell therapies, therapeutic tissue engineering products, human cell and tissue products, and combination products using any suchtherapies or products. Regenerative advanced therapies do not include those human cells, tissues, and cellular and tissue based products regulated solelyunder section 361 of the Public Health Service Act and 21 CFR Part 1271. The new program is intended to facilitate efficient development and expeditereview of regenerative advanced therapies, which are intended to treat, modify, reverse, or cure a serious or life-threatening disease or condition. A drugsponsor may request that FDA designate a drug as a regenerative advanced therapy concurrently with or at any time after submission of an IND. FDA has 60calendar days to determine whether the drug meets the criteria, including whether there is preliminary clinical evidence indicating that the drug has thepotential to address unmet medical needs for a serious or life-threatening disease or condition. A new drug application or BLA for a regenerative advancedtherapy may be eligible for priority review or accelerated approval through surrogate or intermediate endpoints reasonably likely to predict long-termclinical benefit, or reliance upon data obtained from a meaningful number of sites. Benefits of such designation also include early interactions with FDA todiscuss any potential surrogate or intermediate endpoint to be used to support accelerated approval. A regenerative advanced therapy that is grantedaccelerated approval and is subject to post-approval requirements may fulfill such requirements through the submission of clinical evidence, clinical studies,patient registries, or other sources of real world evidence, such as electronic health records; the collection of larger confirmatory data sets; or post-approvalmonitoring of all patients treated with such therapy prior to its approval.Post-approval requirementsMaintaining substantial compliance with applicable federal, state, and local statutes and regulations requires the expenditure of substantial time andfinancial resources. Rigorous and extensive FDA regulation of biological products continues after approval, particularly with respect to GMP. We will rely,and expect to continue to rely, on third parties for the production of clinical and commercial quantities of any products that we may commercialize.Manufacturers of our products are required to comply with applicable requirements in the GMP regulations, including quality control and quality assuranceand maintenance of records and documentation. Other post-approval requirements applicable to biological products, include reporting of GMP deviationsthat may affect the identity, potency, purity and overall safety of a distributed product, record-keeping requirements, reporting of adverse effects, reportingupdated safety and efficacy information, and complying with electronic record and signature requirements. After a BLA is approved, the product also may besubject to official lot release. As part of the manufacturing process, the manufacturer is required to perform certain tests on each lot of the product before it isreleased for distribution. If the product is subject to official release by the FDA, the manufacturer submits samples of each lot of product to the FDA togetherwith a release protocol showing a summary of the history of manufacture of the lot and the results of all of the manufacturer’s tests performed on the lot. TheFDA also may perform certain confirmatory tests on lots of some products, such as viral vaccines, before releasing the lots for distribution by themanufacturer. In addition, the FDA conducts laboratory research related to the regulatory standards on the safety, purity, potency, and effectiveness ofbiological products.We also must comply with the FDA’s advertising and promotion requirements, such as those related to direct-to-consumer advertising, the prohibition onpromoting products for uses or in patient populations that are not described in the product’s approved labeling (known as “off-label use”), industry-sponsored scientific and educational activities, and promotional activities involving the internet. Discovery of previously unknown problems or the failureto comply with the applicable regulatory requirements may result in restrictions on the marketing of a product or withdrawal of the product from the marketas well as possible civil or criminal sanctions. Failure to comply with the applicable U.S. requirements at any time during the product development process,approval process or after approval, may subject an applicant or manufacturer to administrative or judicial civil or criminal sanctions and adverse38 publicity. FDA sanctions could include refusal to approve pending applications, withdrawal of an approval, clinical hold, warning or untitled letters, productrecalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, mandated correctiveadvertising or communications with doctors, debarment, restitution, disgorgement of profits, or civil or criminal penalties. Any agency or judicialenforcement action could have a material adverse effect on us.Biological product manufacturers and other entities involved in the manufacture and distribution of approved biological products are required to registertheir establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies forcompliance with GMPs and other laws. Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and qualitycontrol to maintain GMP compliance. Discovery of problems with a product after approval may result in restrictions on a product, manufacturer, or holder ofan approved BLA, including withdrawal of the product from the market. In addition, changes to the manufacturing process or facility generally require priorFDA approval before being implemented and other types of changes to the approved product, such as adding new indications and additional labeling claims,are also subject to further FDA review and approval.U.S. patent term restoration and marketing exclusivityDepending upon the timing, duration and specifics of the FDA approval of the use of our product candidates, some of our U.S. patents may be eligible forlimited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, commonly referred to as the Hatch-WaxmanAmendments. The Hatch-Waxman Amendments permit a patent restoration term of up to five years as compensation for patent term lost during productdevelopment and the FDA regulatory review process. However, patent term restoration cannot extend the remaining term of a patent beyond a total of 14years from the product’s approval date. The patent term restoration period is generally one-half the time between the effective date of an IND and thesubmission date of a BLA plus the time between the submission date of a BLA and the approval of that application. Only one patent applicable to anapproved biological product is eligible for the extension and the application for the extension must be submitted prior to the expiration of the patent. TheU.S. PTO, in consultation with the FDA, reviews and approves the application for any patent term extension or restoration. In the future, we may intend toapply for restoration of patent term for one of our currently owned or licensed patents to add patent life beyond its current expiration date, depending on theexpected length of the clinical studies and other factors involved in the filing of the relevant BLA.A biological product can obtain pediatric market exclusivity in the United States. Pediatric exclusivity, if granted, adds six months to existing exclusivityperiods and patent terms. This six-month exclusivity, which runs from the end of other exclusivity protection or patent term, may be granted based on thevoluntary completion of a pediatric study in accordance with an FDA-issued “Written Request” for such a study.The Patient Protection and Affordable Care Act, or Affordable Care Act, signed into law on March 23, 2010, includes a subtitle called the Biologics PriceCompetition and Innovation Act of 2009 which created an abbreviated approval pathway for biological products shown to be similar to, or interchangeablewith, an FDA-licensed reference biological product. This amendment to the PHS Act attempts to minimize duplicative testing. Biosimilarity, which requiresthat there be no clinically meaningful differences between the biological product and the reference product in terms of safety, purity, and potency, can beshown through analytical studies, animal studies, and a clinical study or studies. Interchangeability requires that a product is biosimilar to the referenceproduct and the product must demonstrate that it can be expected to produce the same clinical results as the reference product and, for products administeredmultiple times, the biologic and the reference biologic may be switched after one has been previously administered without increasing safety risks or risks ofdiminished efficacy relative to exclusive use of the reference biologic. However, complexities associated with the larger, and often more complex, structure ofbiological products, as well as the process by which such products are manufactured, pose significant hurdles to implementation that are still being workedout by the FDA.A reference biologic is granted twelve years of exclusivity from the time of first licensure of the reference product. The first biologic product submittedunder the abbreviated approval pathway that is determined to be interchangeable with the reference product has exclusivity against other biologicssubmitting under the abbreviated approval pathway for the lesser of (i) one year after the first commercial marketing, (ii) 18 months after approval if there isno legal challenge, (iii) 18 months after the resolution in the applicant’s favor of a lawsuit challenging the biologics’ patents if an application has beensubmitted, or (iv) 42 months after the application has been approved if a lawsuit is ongoing within the 42-month period.Additional regulationIn addition to the foregoing, state and federal laws regarding environmental protection and hazardous substances, including the Occupational Safety andHealth Act, the Resource Conservancy and Recovery Act and the Toxic Substances Control Act, affect our business. These and other laws govern our use,handling and disposal of various biological, chemical and radioactive substances used in, and wastes generated by, our operations. If our operations result incontamination of the environment or expose individuals to39 hazardous substances, we could be liable for damages and governmental fines. We believe that we are in material compliance with applicable environmentallaws and that continued compliance therewith will not have a material adverse effect on our business. We cannot predict, however, how changes in these lawsmay affect our future operations.U.S. Foreign Corrupt Practices ActThe U.S. Foreign Corrupt Practices Act, to which we are subject, prohibits corporations and individuals from engaging in certain activities to obtain orretain business or to influence a person working in an official capacity. It is illegal to pay, offer to pay or authorize the payment of anything of value to anyforeign government official, government staff member, political party or political candidate in an attempt to obtain or retain business or to otherwiseinfluence a person working in an official capacity.Government regulation outside of the United StatesIn addition to regulations in the United States, we will be subject to a variety of regulations in other jurisdictions governing, among other things, clinicalstudies and any commercial sales and distribution of our products. Because biologically sourced raw materials are subject to unique contamination risks,their use may be restricted in some countries.Whether or not we obtain FDA approval for a product, we must obtain the requisite approvals from regulatory authorities in foreign countries prior to thecommencement of clinical studies or marketing of the product in those countries. Certain countries outside of the United States have a similar process thatrequires the submission of a clinical study application much like the IND prior to the commencement of human clinical studies. In the European Union, forexample, a CTA must be submitted for each clinical trial to each country’s national health authority and an independent ethics committee, much like theFDA and the IRB, respectively. Once the CTA is approved in accordance with a country’s requirements, the corresponding clinical study may proceed.The requirements and process governing the conduct of clinical studies, product licensing, pricing and reimbursement vary from country to country. In allcases, the clinical studies are conducted in accordance with GCP and the applicable regulatory requirements and the ethical principles that have their originin the Declaration of Helsinki.To obtain regulatory approval of an investigational product under European Union regulatory systems, we must submit a marketing authorizationapplication. The application used to file the BLA in the United States is similar to that required in the European Union, with the exception of, among otherthings, region-specific document requirements. The European Union also provides opportunities for market exclusivity. For example, in the European Union,upon receiving marketing authorization, innovative medicinal products generally receive eight years of data exclusivity and an additional two years ofmarket exclusivity. If granted, data exclusivity prevents regulatory authorities in the European Union from referencing the innovator’s data to assess ageneric or biosimilar application. During the additional two-year period of market exclusivity, a generic or biosimilar marketing authorization can besubmitted, and the innovator’s data may be referenced, but no generic or biosimilar product can be marketed until the expiration of the market exclusivity.However, there is no guarantee that a product will be considered by the European Union’s regulatory authorities to be an innovative medicinal product, andproducts may not qualify for data exclusivity. Products receiving orphan designation in the European Union can receive ten years of market exclusivity,during which time no similar medicinal product for the same indication may be placed on the market. An orphan product can also obtain an additional twoyears of market exclusivity in the European Union for pediatric studies. No extension to any supplementary protection certificate can be granted on the basisof pediatric studies for orphan indications.The criteria for designating an “orphan medicinal product” in the European Union are similar in principle to those in the United States. Under Article 3 ofRegulation (EC) 141/2000, a medicinal product may be designated as orphan if (1) it is intended for the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition; (2) either (a) such condition affects no more than five in 10,000 persons in the European Union when theapplication is made, or (b) the product, without the benefits derived from orphan status, would not generate sufficient return in the European Union to justifyinvestment; and (3) there exists no satisfactory method of diagnosis, prevention or treatment of such condition authorized for marketing in the EuropeanUnion, or if such a method exists, the product will be of significant benefit to those affected by the condition, as defined in Regulation (EC) 847/2000.Orphan medicinal products are eligible for financial incentives such as reduction of fees or fee waivers and are, upon grant of a marketing authorization,entitled to ten years of market exclusivity for the approved therapeutic indication. The application for orphan drug designation must be submitted before theapplication for marketing authorization. The applicant will receive a fee reduction for the marketing authorization application if the orphan drug designationhas been granted, but not if the designation is still pending at the time the marketing authorization is submitted. Orphan drug designation does not conveyany advantage in, or shorten the duration of, the regulatory review and approval process.40 The 10-year market exclusivity may be reduced to six years if, at the end of the fifth year, it is established that the product no longer meets the criteria fororphan designation, for example, if the product is sufficiently profitable not to justify maintenance of market exclusivity. Additionally, marketingauthorization may be granted to a similar product for the same indication at any time if: •The second applicant can establish that its product, although similar, is safer, more effective or otherwise clinically superior; •The applicant consents to a second orphan medicinal product application; or •The applicant cannot supply enough orphan medicinal product.For other countries outside of the European Union, such as countries in Eastern Europe, Latin America or Asia, the requirements governing the conduct ofclinical studies, product licensing, pricing and reimbursement vary from country to country. In all cases, again, the clinical studies are conducted inaccordance with GCP and the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.The EMA has established the Adaptive Pathways program intended to expedite or facilitate either an initial approval of a drug in a well-defined patientsubgroup with a high medical need and subsequent widening of the indication to a larger patient population, or an early regulatory approval (e.g.,conditional approval), which is prospectively planned, and where uncertainty is reduced through the collection of post-approval data on a drug’s use inpatients. The approach builds in regulatory processes already in place within the existing EU legal framework.If we fail to comply with applicable foreign regulatory requirements, we may be subject to, among other things, fines, suspension or withdrawal ofregulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution.EmployeesAs of January 31, 2017, we had 328 full-time employees, 75 of whom have Ph.D., M.D. or Pharm.D. degrees. Of these full-time employees, 245 employeesare engaged in research and development activities and 83 employees are engaged in commercial, finance, legal, business development, human resources,information technology, facilities and other general administrative functions. We have no collective bargaining agreements with our employees and we havenot experienced any work stoppages. We consider our relations with our employees to be good.Corporate InformationWe were incorporated in Delaware in April 1992 under the name Genetix Pharmaceuticals, Inc., and subsequently changed our name to bluebird bio, Inc.in September 2010. Our mailing address and executive offices are located at 150 Second Street, Third Floor, Cambridge, Massachusetts and our telephonenumber at that address is (339) 499-9300. We maintain an Internet website at the following address: www.bluebirdbio.com. The information on our website isnot incorporated by reference in this annual report on Form 10-K or in any other filings we make with the Securities and Exchange Commission, or SEC.We make available on or through our website certain reports and amendments to those reports that we file with or furnish to the SEC in accordance withthe Securities Exchange Act of 1934, as amended. These include our annual reports on Form 10-K, our quarterly reports on Form 10-Q, and our current reportson Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act. We make this information availableon or through our website free of charge as soon as reasonably practicable after we electronically file the information with, or furnish it to, the SEC. Item 1A. Risk FactorsAn investment in shares of our common stock involves a high degree of risk. You should carefully consider the following information about these risks,together with the other information appearing elsewhere in this Annual Report on Form 10-K, including our financial statements and related notes hereto,before deciding to invest in our common stock. The occurrence of any of the following risks could have a material adverse effect on our business, financialcondition, results of operations and future growth prospects. In these circumstances, the market price of our common stock could decline, and you may loseall or part of your investment.41 Risks related to the discovery and development of our product candidatesOur gene therapy product candidates are based on a novel technology, which makes it difficult to predict the time and cost of product candidatedevelopment and subsequently obtaining regulatory approval. At the moment, no gene therapy products have been approved in the United States and onlya few products have been approved in the European Union, or EU.We have concentrated our therapeutic product research and development efforts on our gene therapy platform, and our future success depends on thesuccessful development of this therapeutic approach. There can be no assurance that any development problems we experience in the future related to ourgene therapy platform will not cause significant delays or unanticipated costs, or that such development problems can be solved. We may also experiencedelays in developing a sustainable, reproducible and commercial-scale manufacturing process or transferring that process to commercial partners, which mayprevent us from completing our clinical studies or commercializing our products on a timely or profitable basis, if at all.In addition, the clinical study requirements of the U.S. Food and Drug Administration, or FDA, the European Medicines Agency, or EMA, and otherregulatory agencies and the criteria these regulators use to determine the safety and efficacy of a product candidate vary substantially according to the type,complexity, novelty and intended use and market of the potential products. The regulatory approval process for novel product candidates such as ours can bemore expensive and take longer than for other, better known or more extensively studied pharmaceutical or other product candidates. At the moment, only afew gene therapy products have been approved in the Western world, including UniQure’s Glybera, which received marketing authorization in the EU in2012, and GlaxoSmithKline’s Strimvelis, which received marketing authorization in the EU in 2016. Given the few precedents of approved gene therapyproducts, it is difficult to determine how long it will take or how much it will cost to obtain regulatory approvals for our product candidates in the UnitedStates, the EU or other jurisdictions. Approvals by the EMA and the European Commission may not be indicative of what the FDA may require for approval.Regulatory requirements governing gene and cell therapy products have evolved and may continue to change in the future. For example, the FDA hasestablished the Office of Cellular, Tissue and Gene Therapies within its Center for Biologics Evaluation and Research, or CBER, to consolidate the review ofgene therapy and related products, and the Cellular, Tissue and Gene Therapies Advisory Committee to advise CBER on its review. Gene therapy clinicalstudies conducted at institutions that receive funding for recombinant DNA research from the U.S. National Institutes of Health, or NIH, are also subject toreview by the NIH Office of Biotechnology Activities’ Recombinant DNA Advisory Committee, or RAC. Although the FDA decides whether individual genetherapy protocols may proceed, the RAC review process can impede the initiation of a clinical study, even if the FDA has reviewed the study and approvedits initiation. Clinical trial sites in the United States that receive NIH funding for research involving recombinant or synthetic nucleic acid molecules arerequired to follow RAC recommendations, or risk losing NIH funding for such research or needing NIH pre-approval before conducting such research. Inaddition, the FDA can put an investigational new drug application, or IND, on clinical hold if the information in an IND is not sufficient to assess the risks inpediatric patients. Before a clinical study can begin at any institution, that institution’s institutional review board, or IRB, and its Institutional BiosafetyCommittee will have to review the proposed clinical study to assess the safety of the study. Moreover, serious adverse events or developments in clinicaltrials of gene therapy product candidates conducted by others may cause the FDA or other regulatory bodies to initiate a clinical hold on our clinical trials orotherwise change the requirements for approval of any of our product candidates.These regulatory review agencies, committees and advisory groups and the new requirements and guidelines they promulgate may lengthen theregulatory review process, require us to perform additional or larger studies, increase our development costs, lead to changes in regulatory positions andinterpretations, delay or prevent approval and commercialization of these treatment candidates or lead to significant post-approval studies, limitations orrestrictions. As we advance our product candidates, we will be required to consult with these regulatory and advisory groups and comply with applicablerequirements and guidelines. If we fail to do so, we may be required to delay or discontinue development of our product candidates. Delay or failure toobtain, or unexpected costs in obtaining, the regulatory approval necessary to bring a potential product to market could decrease our ability to generatesufficient product revenue to maintain our business.We may find it difficult to enroll patients in our clinical studies, which could delay or prevent clinical studies of our product candidates.Identifying and qualifying patients to participate in clinical studies of our product candidates is critical to our success. The timing of our clinical studiesdepends on the speed at which we can recruit eligible patients to participate in testing our product candidates. We have experienced delays in some of ourclinical studies, and we may experience similar delays in the future. If patients are unwilling to participate in our gene therapy studies because of negativepublicity from adverse events in the biotechnology or gene therapy industries or for other reasons, including competitive clinical studies for similar patientpopulations, the timeline for recruiting patients, conducting studies and obtaining regulatory approval of potential products may be delayed. These delayscould result in increased costs, delays in advancing our product development, delays in testing the effectiveness of our technology or termination of theclinical studies altogether.42 We may not be able to identify, recruit and enroll a sufficient number of patients, or those with required or desired characteristics to achieve diversity in astudy, to complete our clinical studies in a timely manner. Patient enrollment is affected by factors including: •severity of the disease under investigation; •design of the study protocol; •size of the patient population; •eligibility criteria for the study in question; •perceived risks and benefits of the product candidate under study, including as a result of adverse effects observed in similar or competing therapies; •proximity and availability of clinical study sites for prospective patients; •availability of competing therapies and clinical studies; •efforts to facilitate timely enrollment in clinical studies; •patient referral practices of physicians; and •ability to monitor patients adequately during and after treatment.In particular, each of the conditions for which we plan to evaluate our current hematopoietic stem cell, or HSC, product candidates are rare geneticdisorders with limited patient pools from which to draw for clinical studies. Further, because newborn screening for CALD is not widely adopted, and it canbe difficult to diagnose CALD in the absence of a genetic screen, we may have difficulty finding patients who are eligible to participate in our study. Theeligibility criteria of our clinical studies will further limit the pool of available study participants. Additionally, the process of finding and diagnosingpatients may prove costly. Finally, our treatment process requires that the procurement of autologous cells from subjects be conducted where the cells can beshipped to a transduction facility within the required timelines, as the HSCs and T cells, in the case of our oncology product candidate, have limited viabilityfollowing harvest.Our current product candidates are being developed to treat severe genetic diseases and certain cancers. We plan to seek initial marketing approval in theUnited States and the European Union. We may not be able to initiate or continue clinical studies if we cannot enroll a sufficient number of eligible patientsto participate in the clinical studies required by the FDA or the EMA or other regulatory agencies. Our ability to successfully initiate, enroll and complete aclinical study in any foreign country is subject to numerous risks unique to conducting business in foreign countries, including: •difficulty in establishing or managing relationships with contract research organizations, or CROs, and physicians; •different standards for the conduct of clinical studies; •our inability to locate qualified local consultants, physicians and partners; and •the potential burden of complying with a variety of foreign laws, medical standards and regulatory requirements, including the regulation ofpharmaceutical and biotechnology products and treatment.If we have difficulty enrolling a sufficient number of patients to conduct our clinical studies as planned, we may need to delay, limit or terminate ongoingor planned clinical studies, any of which would have an adverse effect on our business.We may encounter substantial delays in our clinical studies or we may fail to demonstrate safety and efficacy to the satisfaction of applicable regulatoryauthorities.Before obtaining marketing approval from regulatory authorities for the sale of our product candidates, we must conduct extensive clinical studies todemonstrate the safety, purity and potency, or efficacy, of the product candidates in humans. Clinical testing is expensive, time-consuming and uncertain asto outcome. We cannot guarantee that any clinical studies will be conducted as planned or completed on schedule, if at all. A failure of one or more clinicalstudies can occur at any stage of testing. Events that may prevent successful or timely completion of clinical development include: •delays in reaching a consensus with regulatory agencies on study design; •delays in obtaining required IRB or Institutional Ethics Committee approval at each clinical study site; •delays in recruiting suitable patients to participate in our clinical studies;43 •imposition of a clinical hold by regulatory agencies, after an inspection of our clinical study operations or study sites or due to unforeseen safetyissues; •failure by our CROs, other third parties or us to adhere to clinical study requirements; •failure to perform in accordance with the FDA’s good clinical practices, or GCP, or applicable regulatory requirements in other countries; •delays in the testing, validation, manufacturing and delivery of our product candidates to the clinical sites; •failure to obtain sufficient cells from patients to manufacture enough drug product or achieve target cell doses; •delays in having patients complete participation in a study or return for post-treatment follow-up; •clinical study sites or patients dropping out of a study; •occurrence of serious adverse events associated with the product candidate that are viewed to outweigh its potential benefits; or •changes in regulatory requirements and guidance that require amending or submitting new clinical protocols.Any inability to successfully complete preclinical and clinical development could result in additional costs to us or impair our ability to generaterevenues from product sales, regulatory and commercialization milestones and royalties. In addition, if we make manufacturing or formulation changes to ourproduct candidates, we may need to conduct additional studies to demonstrate comparability of our modified product candidates to earlier versions. Clinicalstudy delays could also shorten any periods during which we may have the exclusive right to commercialize our product candidates or allow our competitorsto bring products to market before we do, which could impair our ability to successfully commercialize our product candidates and may harm our businessand results of operations.If the results of our clinical studies are inconclusive or if there are safety concerns or adverse events associated with our product candidates, we may: •be delayed in obtaining regulatory approval for our product candidates, if at all; •obtain approval for indications or patient populations that are not as broad as intended or desired; •obtain approval with labeling that includes significant use or distribution restrictions or safety warnings; •be required to perform additional clinical studies or clinical studies of longer duration to support approval or be subject to additional post-marketingtesting requirements; •have regulatory authorities withdraw their approval of the product or impose restrictions on its use; •be subject to the addition of labeling statements, such as warnings or contraindications; •be sued; or •experience damage to our reputation.Treatment with our gene therapy product candidates involves chemotherapy and myeloablative treatments, which can cause side effects or adverse eventsthat are unrelated to our product candidates, but may still impact the success of our clinical studies. Additionally, our product candidates could potentiallycause other adverse events that have not yet been predicted. The inclusion of critically ill patients in our clinical studies may result in deaths or other adversemedical events due to other therapies or medications that such patients may be using, or the progression of their disease. As described above, any of theseevents could prevent us from achieving or maintaining market acceptance of our product candidates and impair our ability to commercialize our products.We have not completed any clinical studies of our current product candidates. Initial success in our ongoing clinical studies may not be indicative ofresults obtained when these studies are completed. Furthermore, success in early clinical studies may not be indicative of results obtained in later studies.Our current viral vectors and our product candidates first initiated evaluation in human clinical studies in 2013, and we may experience unexpectedresults in the future. Earlier gene therapy clinical studies, which we believe serve as proof-of-concept for our product candidates, utilized lentiviral vectorssimilar to ours. However, these studies should not be relied upon as evidence that our ongoing or future clinical studies will succeed. Study designs andresults from previous or ongoing studies are not necessarily predictive of our future clinical study results, and initial or interim results may not continue or beconfirmed upon completion of the study. There is limited data concerning long-term safety and efficacy following treatment with our gene therapy and Tcell-based44 product candidates. These data, or other positive data, may not continue or occur for these subjects or for any future subjects in our ongoing or future clinicalstudies, and may not be repeated or observed in ongoing or future studies involving our product candidates. For instance, while patients with TDT or severeSCD who have been treated with our LentiGlobin product candidate may experience a reduction or temporary elimination of transfusion support, there can beno assurance that they will not require transfusion support in the future. Similarly, patients with relapsed/refractory multiple myeloma who have been treatedwith our bb2121 product candidate may experience disease progression. Furthermore, our product candidates may also fail to show the desired safety andefficacy in later stages of clinical development despite having successfully advanced through initial clinical studies. There can be no assurance that any ofthese studies will ultimately be successful or support further clinical advancement or regulatory approval of our product candidates.There is a high failure rate for drugs and biologics proceeding through clinical studies. A number of companies in the pharmaceutical and biotechnologyindustries have suffered significant setbacks in later stage clinical studies even after achieving promising results in earlier stage clinical studies. Dataobtained from preclinical and clinical activities are subject to varying interpretations, which may delay, limit or prevent regulatory approval. In addition,regulatory delays or rejections may be encountered as a result of many factors, including changes in regulatory policy during the period of productdevelopment.Patients with different genotypes may respond differently to treatment with our product candidates, which may result in the delay of our clinicaldevelopment and commercialization plans.Initial results from our ongoing clinical studies suggest that patients with TDT and a non-β0/β0 genotype respond better to treatment with ourLentiGlobin product candidate than patients with TDT and a β0/β0 genotype. Consequently, we expect to seek FDA approval of our LentiGlobin productcandidate initially for the treatment of patients with TDT and non-β0/β0 genotype. In order to support an application for FDA approval of our LentiGlobinproduct candidate in patients with TDT and a β0/β0 genotype, we intend to conduct the HGB-212 study, but we do not know if or when our LentiGlobinproduct candidate may be commercially available to patients with all genotypes.The results from our Starbeam Study may not be sufficiently robust to support the submission of marketing approval for our Lenti-D product candidate.Before we submit our Lenti-D product candidate for marketing approval, the FDA and the EMA may require us to enroll additional subjects, conductadditional clinical studies, or evaluate subjects for an additional follow-up period.The FDA has advised us that our Starbeam Study, which is a single-arm, open-label study to evaluate the safety and efficacy of our Lenti-D productcandidate to halt the progression of CALD, may not be deemed to be a pivotal study or may not provide sufficient support for a Biologics LicenseApplication, or BLA, submission. The FDA normally requires two pivotal clinical studies to approve a drug or biologic product, and thus the FDA mayrequire that we conduct larger or additional clinical studies of our Lenti-D product candidate prior to a BLA submission. The FDA typically does not considera single clinical study to be adequate to serve as a pivotal study unless it is, among other things, well-controlled and demonstrates a clinically meaningfuleffect on mortality, irreversible morbidity, or prevention of a disease with potentially serious outcome, and a confirmatory study would be practically orethically impossible. Due to the nature of CALD and the limited number of patients with this condition, we believe a placebo-controlled and blinded study isnot practicable for ethical and other reasons. However, it is still possible that, even if we achieve favorable results in the Starbeam Study, the FDA may requireus to enroll additional subjects or conduct additional clinical studies, possibly involving a larger sample size or a different clinical study design, particularlyif the FDA does not find the results from the Starbeam Study to be sufficiently persuasive to support a BLA submission. The FDA may also require that weconduct a longer follow-up period of subjects treated with our Lenti-D product candidate prior to accepting our BLA submission.In addition, the Starbeam Study was not designed to achieve a statistically significant efficacy determination. Rather, we anticipate that the safety andefficacy of our Lenti-D product candidate will be evaluated in light of the data collected in our retrospective ALD-101 study and our observational ALD-103study. However, due to the retrospective nature of the ALD-101 study, and the limited number of patients with this condition, the FDA has advised us that theALD-101 study is not sufficiently robust to serve as a conventional historical control group and as a basis of comparison against the results of the StarbeamStudy. Thus, we expect that the FDA will assess the totality of the safety and efficacy data from our CALD clinical studies in reviewing any future BLAsubmission for our Lenti-D product candidate. Based on this assessment, the FDA may require that we conduct additional preclinical or clinical studies priorto submitting or approving a BLA for this indication.It is possible that the FDA or the EMA may not consider the results of this study to be sufficient for approval of our Lenti-D product candidate for thisindication. If the FDA or the EMA requires additional studies, we would incur increased costs and delays in the marketing approval process, which mayrequire us to expend more resources than we have available. In addition, it is possible that the FDA and the EMA may have divergent opinions on theelements necessary for a successful BLA and Marketing Authorization Application, or MAA, respectively, which may cause us to alter our development,regulatory and/or commercialization strategies.45 We cannot be certain that our Northstar-2 Study in patients with TDT and a non-β0/β0 genotype, or our planned Northstar-3 Study in patients with TDTand a β0/β0 genotype, together with data from our Northstar Study and HGB-205 study, will be sufficient to form the basis for a BLA submission for ourLentiGlobin product candidate.In general, the FDA requires the successful completion of two pivotal trials to support approval of a BLA, but in certain circumstances, will approve aBLA based on only one pivotal trial. If successful, we believe the results from our ongoing Northstar-2 Study, together with data from our ongoing NorthstarStudy and HGB-205 study, could be sufficient to form the basis for a BLA submission for our LentiGlobin product candidate to treat patients with TDT and anon-β0/β0 genotype. In addition, if successful, we believe the results from our planned Northstar-3 Study, together with data from our ongoing NorthstarStudy, Northstar-2 Study and HGB-205 study, could be sufficient to form the basis for a BLA supplement submission for our LentiGlobin product candidateto treat patients with TDT and a β0/β0 genotype. However, it should be noted that our ability to submit and obtain approval of a BLA is ultimately an FDAreview decision, which will be dependent upon the data available at such time, and the available data may not be sufficiently robust from a safety and/orefficacy perspective to support the submission or approval of a BLA. Depending on the outcome of these planned and ongoing clinical studies, the FDA mayrequire that we conduct additional or larger pivotal trials before we can submit or obtain approval for a BLA for our LentiGlobin product candidate for thetreatment of TDT.Before beginning our planned Northstar-3 Study of our LentiGlobin product candidate, the FDA must review the final protocols for the study, along withadditional information supporting the respective proposed study designs. Concurrent with starting the study, the FDA will review certain updated chemistry,manufacturing and controls, or CMC, information that we are required to submit. If the FDA does not approve the protocol for the planned study in the formsin which we submit them, or if the FDA is not satisfied with the additional CMC information we plan to provide, the start or continuation of these clinicalstudies may be delayed or the design of the studies may change.There can be no assurance that we will ultimately receive conditional marketing approval of our LentiGlobin product candidate in the European Union,or the nature of the conditions that would be imposed on us if conditionally approved.The EMA Adaptive Pathways program in which we are participating is intended to facilitate either an initial approval in a well-defined patient subgroupwith a high medical need and subsequent widening of the indication to a larger patient population, or an early regulatory approval (e.g. conditionalapproval), which is prospectively planned, and where uncertainty is reduced through the collection of post-approval data on a drug’s use in patients. Basedon our discussions with the EMA, we believe our LentiGlobin product candidate may be eligible for conditional approval under this program for thetreatment of patients with TDT on the basis of the totality of clinical data, in particular reduction in transfusion need, from the ongoing Northstar Study andsupportive ongoing HGB-205 study.However, it should be noted that the EMA Adaptive Pathways program is a pilot program, and as such there is limited information and precedentregarding the potential outcomes for sponsors that participate in this program. Whether our LentiGlobin product candidate is eligible for conditionalapproval will ultimately be determined at the discretion of the EMA and will be dependent upon the data available at such time, and the available data maynot be sufficiently robust from a safety and/or efficacy perspective to support conditional approval. Depending on the outcome of our planned and ongoingclinical trials, the EMA may require that we conduct additional or larger clinical trials before our LentiGlobin product candidate is eligible for conditionalapproval. Even if conditional approval is obtained, the conditions to be imposed on us under this program are unknown and will be imposed at the time ofany such conditional approval.Changes in our manufacturing processes may cause delays in our clinical development and commercialization plans.The manufacturing processes for our lentiviral vectors and our product candidates are complex. We have developed and have implemented an updatedmanufacturing process of our LentiGlobin drug product that will be administered in our Northstar-2 Study in patients with TDT and a non-β0/β0 genotype,our amended ongoing HGB-206 study in patients with severe SCD, and our planned Northstar-3 Study in patients with TDT and a β0/β0 genotype. There canbe no assurances that LentiGlobin drug product manufactured using the updated manufacturing process will have similar or improved efficacy or safetycompared to the LentiGlobin drug product used in the ongoing Northstar Study, HGB-205 study or subjects in the HGB-206 study under the originalprotocol.As we develop a commercial-scale manufacturing process for our LentiGlobin and Lenti-D product candidates, we are implementing improvements to themanufacturing process for both producing our lentiviral vectors and for our product candidates on a continual basis. In some circumstances, changes in themanufacturing process may require us to perform additional comparability studies or to collect additional clinical data from patients prior to undertakingadditional clinical studies or filing for regulatory approval. These requirements may lead to delays in our clinical development and commercialization plans.46 In previous clinical studies involving viral vectors for gene therapy, some subjects experienced serious adverse events, including the development ofleukemia due to vector-related insertional oncogenesis. If our vectors demonstrate a similar effect, we may be required to halt or delay further clinicaldevelopment of our product candidates.A significant risk in any gene therapy product based on viral vectors is that the vector will insert in or near cancer-causing oncogenes leading touncontrolled clonal proliferation of mature cancer cells in the patient. For example, in 2003, 20 subjects treated for X-linked severe combinedimmunodeficiency in two gene therapy studies using a murine, or mouse-derived, gamma-retroviral vector showed correction of the disease, but the studieswere terminated after five subjects developed leukemia (four of whom were subsequently cured). The cause of these adverse events was shown to beinsertional oncogenesis, which is the process whereby the corrected gene inserts in or near a gene that is important in a critical cellular process like growth ordivision, and this insertion results in the development of a cancer (often leukemia). Using molecular diagnostic techniques, it was determined that clonesfrom these subjects showed retrovirus insertion in proximity to the promoter of the LMO2 proto-oncogene. Earlier generation retroviruses like the one used inthese two studies have been shown to preferentially integrate in regulatory regions of genes that control cell growth.These well-publicized adverse events led to the development of new viral vectors, such as lentiviral vectors, with improved safety profiles and also therequirement of enhanced safety monitoring in gene therapy clinical trials, including periodic analyses of the therapy’s genetic insertion sites. In publishedstudies, lentiviral vectors have demonstrated an improved safety profile over gamma-retroviral vectors, with no disclosed events of gene therapy-relatedadverse events, which we believe is due to a number of factors including the tendency of these vectors to integrate within genes rather than in areas thatcontrol gene expression, as well as their lack of strong viral enhancers. However, it should be noted that in our Phase I/II study (the LG001 Study) ofautologous HSCs transduced ex vivo using an earlier generation of our LentiGlobin vector, called HPV569, we initially observed in one subject that adisproportionate number of the cells expressing our functional gene had the same insertion site. Tests showed that this partial clonal dominance contained aninsertion of the functional gene in the HMGA2 gene that persisted for a period of two to three years. Although there was some initial concern that theobserved clonal dominance might represent a pre-leukemic event, there have been no adverse clinical consequences of this event, or any signs of cancer, inover seven years since the observation was made. The presence of the HMGA2 clone has steadily declined in this subject over time to the point that it is nolonger the most common clone observed in this subject.Notwithstanding the historical data regarding the potential safety improvements of lentiviral vectors, the risk of insertional oncogenesis remains asignificant concern for gene therapy and we cannot assure that it will not occur in any of our ongoing or planned clinical studies. There is also the potentialrisk of delayed adverse events following exposure to gene therapy products due to persistent biological activity of the genetic material or other componentsof products used to carry the genetic material. The FDA has stated that lentiviral vectors possess characteristics that may pose high risks of delayed adverseevents. If any such adverse events occur, further advancement of our clinical studies could be halted or delayed, which would have a material adverse effecton our business and operations.In previous clinical studies involving T cell-based immunotherapies, some subjects experienced serious adverse events. Our T cell-based immunotherapyproduct candidates may demonstrate a similar effect or have other properties that could halt their clinical development, prevent their regulatory approval,limit their commercial potential, or result in significant negative consequences.Our bb2121 product candidate is a chimeric antigen receptor, or CAR, T cell-based immunotherapy. In previous and ongoing clinical studies involvingCAR T cell products by other companies or academic researchers, many subjects experienced side effects such as neurotoxicity and cytokine releasesyndrome, which have in some cases resulted in clinical holds in ongoing clinical trials of CAR T product candidates. There have been life threateningevents related to severe neurotoxicity and cytokine release syndrome, requiring intense medical intervention such as intubation or pressor support, and inseveral cases, resulted in death. Severe neurotoxicity is a condition that is currently defined clinically by cerebral edema, confusion, drowsiness, speechimpairment, tremors, seizures, or other central nervous system side effects, when such side effects are serious enough to lead to intensive care. In some cases,severe neurotoxicity was thought to be associated with the use of certain lymphodepletion regimens used prior to the administration of the CAR T cellproducts. Cytokine release syndrome is a condition that is currently defined clinically by certain symptoms related to the release of cytokines, which caninclude fever, chills, low blood pressure, when such side effects are serious enough to lead to intensive care with mechanical ventilation or significantvasopressor support. The exact cause or causes of cytokine release syndrome and severe neurotoxicity in connection with treatment of CAR T cell products isnot fully understood at this time. In addition, subjects have experienced other adverse events in these studies, such as a reduction in the number of bloodcells (in the form of neutropenia, thrombocytopenia, anemia or other cytopenias), febrile neutropenia, chemical laboratory abnormalities (including elevatedliver enzymes), and renal failure.Undesirable side effects caused by our bb2121 product candidate, other CAR T product candidates targeting BCMA, or our other T cell-basedimmunotherapy product candidates, could cause us or regulatory authorities to interrupt, delay or halt clinical studies and could result in a more restrictivelabel or the delay or denial of regulatory approval by the FDA or other comparable foreign regulatory47 authorities. Results of our studies could reveal a high and unacceptable severity and prevalence of side effects or unexpected characteristics. Treatment-related side effects could also affect patient recruitment or the ability of enrolled subjects to complete the studies or result in potential product liabilityclaims. In addition, these side effects may not be appropriately recognized or managed by the treating medical staff, as toxicities resulting from T cell-basedimmunotherapies are not normally encountered in the general patient population and by medical personnel. We expect to have to train medical personnelregarding our T cell-based immunotherapy product candidates to understand their side effects for both our planned clinical trials and upon anycommercialization of any T cell-based immunotherapy product candidates. Inadequate training in recognizing or managing the potential side effects of Tcell-based immunotherapy product candidates could result in patient deaths. Any of these occurrences may harm our business, financial condition andprospects significantly. Even if we complete the necessary preclinical and clinical studies, we cannot predict when or if we will obtain regulatory approval to commercialize aproduct candidate or the approval may be for a more narrow indication than we expect.We cannot commercialize a product until the appropriate regulatory authorities have reviewed and approved the product candidate. Even if our productcandidates demonstrate safety and efficacy in clinical studies, the regulatory agencies may not complete their review processes in a timely manner, or we maynot be able to obtain regulatory approval. Additional delays may result if an FDA Advisory Committee or other regulatory advisory group or authorityrecommends non-approval or restrictions on approval. In addition, we may experience delays or rejections based upon additional government regulationfrom future legislation or administrative action, or changes in regulatory agency policy during the period of product development, clinical studies and thereview process. Regulatory agencies also may approve a treatment candidate for fewer or more limited indications than requested or may grant approvalsubject to the performance of post-marketing studies. In addition, regulatory agencies may not approve the labeling claims that are necessary or desirable forthe successful commercialization of our treatment candidates. For example, the development of our product candidates for pediatric use is an important partof our current business strategy, and if we are unable to obtain regulatory approval for the desired age ranges, our business may suffer.Even if we obtain regulatory approval for a product candidate, our products will remain subject to regulatory scrutiny.Even if we obtain regulatory approval in a jurisdiction, the regulatory authority may still impose significant restrictions on the indicated uses ormarketing of our product candidates, or impose ongoing requirements for potentially costly post-approval studies, post-market surveillance or patient or drugrestrictions. For example, the FDA typically advises that patients treated with gene therapy undergo follow-up observations for potential adverse events for a15-year period. Additionally, the holder of an approved BLA is obligated to monitor and report adverse events and any failure of a product to meet thespecifications in the BLA. The holder of an approved BLA must also submit new or supplemental applications and obtain FDA approval for certain changesto the approved product, product labeling or manufacturing process. Advertising and promotional materials must comply with FDA rules and are subject toFDA review, in addition to other potentially applicable federal and state laws.In addition, product manufacturers and their facilities are subject to payment of user fees and continual review and periodic inspections by the FDA andother regulatory authorities for compliance with good manufacturing practices, or GMP, and adherence to commitments made in the BLA. If we or aregulatory agency discovers previously unknown problems with a product such as adverse events of unanticipated severity or frequency, or problems withthe facility where the product is manufactured, a regulatory agency may impose restrictions relative to that product or the manufacturing facility, includingrequiring recall or withdrawal of the product from the market or suspension of manufacturing.If we fail to comply with applicable regulatory requirements following approval of any of our product candidates, a regulatory agency may: •issue a warning letter asserting that we are in violation of the law; •seek an injunction or impose civil or criminal penalties or monetary fines; •suspend or withdraw regulatory approval; •suspend any ongoing clinical studies; •refuse to approve a pending marketing application, such as a BLA or supplements to a BLA submitted by us; •seize product; or •refuse to allow us to enter into supply contracts, including government contracts.48 Any government investigation of alleged violations of law could require us to expend significant time and resources in response and could generatenegative publicity. The occurrence of any event or penalty described above may inhibit our ability to commercialize our product candidates and generaterevenues.Risks related to our reliance on third partiesWe expect to rely on third parties to conduct some or all aspects of our vector production, drug product manufacturing, research and preclinical andclinical testing, and these third parties may not perform satisfactorily.We do not expect to independently conduct all aspects of our vector production, product manufacturing, research and preclinical and clinical testing. Wecurrently rely, and expect to continue to rely, on third parties with respect to these items. In some cases these third parties are academic, research or similarinstitutions that may not apply the same quality control protocols utilized in certain commercial settings.Our reliance on these third parties for research and development activities will reduce our control over these activities but will not relieve us of ourresponsibility to ensure compliance with all required regulations and study protocols. For example, for product candidates that we develop andcommercialize on our own, we will remain responsible for ensuring that each of our IND-enabling studies and clinical studies are conducted in accordancewith the study plan and protocols.If these third parties do not successfully carry out their contractual duties, meet expected deadlines or conduct our studies in accordance with regulatoryrequirements or our stated study plans and protocols, we will not be able to complete, or may be delayed in completing, the preclinical and clinical studiesrequired to support future IND and BLA submissions and approval of our product candidates.Any of these third parties may terminate their engagements with us at any time. If we need to enter into alternative arrangements, it could delay ourproduct development activities.Reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured the product candidates ourselves, including: •the inability to negotiate manufacturing agreements with third parties under commercially reasonable terms; •reduced control as a result of using third-party manufacturers for all aspects of manufacturing activities; •the risk that these activities are not conducted in accordance with our study plans and protocols; •termination or nonrenewal of manufacturing agreements with third parties in a manner or at a time that is costly or damaging to us; and •disruptions to the operations of our third-party manufacturers or suppliers caused by conditions unrelated to our business or operations, including thebankruptcy of the manufacturer or supplier.Any of these events could lead to clinical study delays or failure to obtain regulatory approval, or impact our ability to successfully commercialize futureproducts. Some of these events could be the basis for FDA action, including injunction, recall, seizure or total or partial suspension of production.We and our contract manufacturers are subject to significant regulation with respect to manufacturing our products. The manufacturing facilities onwhich we rely may not continue to meet regulatory requirements and have limited capacity.We currently have relationships with a limited number of suppliers for the manufacturing of our viral vectors and product candidates. Each supplier mayrequire licenses to manufacture such components if such processes are not owned by the supplier or in the public domain and we may be unable to transfer orsublicense the intellectual property rights we may have with respect to such activities.All entities involved in the preparation of therapeutics for clinical studies or commercial sale, including our existing contract manufacturers for ourproduct candidates, are subject to extensive regulation. Some components of a finished therapeutic product approved for commercial sale or used in late-stage clinical studies must be manufactured in accordance with GMP. These regulations govern manufacturing processes and procedures (including recordkeeping) and the implementation and operation of quality systems to control and assure the quality of investigational products and products approved forsale. Poor control of production processes can lead to the introduction of adventitious agents or other contaminants, or to inadvertent changes in theproperties or stability of our product candidates that may not be detectable in final product testing. We or our contract manufacturers must supply allnecessary49 documentation in support of a BLA or MAA on a timely basis and where required, must adhere to the FDA’s or other regulator’s good laboratory practices, orGLP, and GMP regulations enforced by the FDA or other regulator through facilities inspection programs. Some of our contract manufacturers have notproduced a commercially-approved product and therefore have not obtained the requisite FDA or other regulatory approvals to do so. Our facilities andquality systems and the facilities and quality systems of some or all of our third-party contractors must pass a pre-approval inspection for compliance with theapplicable regulations as a condition of regulatory approval of our product candidates or any of our other potential products. In addition, the regulatoryauthorities may, at any time, audit or inspect a manufacturing facility involved with the preparation of our product candidates or our other potential productsor the associated quality systems for compliance with the regulations applicable to the activities being conducted. If these facilities do not pass a pre-approval plant inspection, FDA or other regulatory approval of the products will not be granted.The regulatory authorities also may, at any time following approval of a product for sale, audit the manufacturing facilities of our third-party contractors.If any such inspection or audit identifies a failure to comply with applicable regulations or if a violation of our product specifications or applicableregulations occurs independent of such an inspection or audit, we or the relevant regulatory authority may require remedial measures that may be costlyand/or time-consuming for us or a third party to implement and that may include the temporary or permanent suspension of a clinical study or commercialsales or the temporary or permanent closure of a facility. Any such remedial measures imposed upon us or third parties with whom we contract couldmaterially harm our business.If we or any of our third-party manufacturers fail to maintain regulatory compliance, the FDA or other regulators can impose regulatory sanctionsincluding, among other things, refusal to approve a pending application for a biologic product, or revocation of a pre-existing approval. As a result, ourbusiness, financial condition and results of operations may be materially harmed.Additionally, if supply from one approved manufacturer is interrupted, there could be a significant disruption in commercial supply. The number ofmanufacturers with the necessary manufacturing capabilities is limited. In addition, an alternative manufacturer would need to be qualified through a BLAsupplement or similar regulatory submission which could result in further delay. The regulatory agencies may also require additional studies if a newmanufacturer is relied upon for commercial production. Switching manufacturers may involve substantial costs and is likely to result in a delay in our desiredclinical and commercial timelines.These factors could cause the delay of clinical studies, regulatory submissions, required approvals or commercialization of our product candidates, causeus to incur higher costs and prevent us from commercializing our products successfully. Furthermore, if our suppliers fail to meet contractual requirements,and we are unable to secure one or more replacement suppliers capable of production at a substantially equivalent cost, our clinical studies may be delayed orwe could lose potential revenue.We are dependent on Celgene for the successful development and commercialization of bb2121, our most advanced T cell-based product candidate in thefield of oncology. If Celgene does not devote sufficient resources to the development of bb2121, is unsuccessful in its efforts, or chooses to terminate itsagreements with us, our business will be materially harmed.We have exclusively licensed to Celgene the right to develop and commercialize the bb2121 product candidate, and we retain an option to co-developand co-promote bb2121 in the United States under our license agreement and collaboration agreement with Celgene. With respect to bb2121, we areresponsible for completing our ongoing CRB-401 study, but Celgene is responsible for further clinical development and commercialization costs, unless wechoose to exercise our option to co-develop and co-promote bb2121 in the United States. If we exercise our option to co-develop and co-promote bb2121 inthe United States, we and Celgene will share the obligation to develop and commercialize bb2121 in the United States, and we will be solely dependent onCelgene to develop and commercialize bb2121 outside of the United States. Celgene is obligated to use commercially reasonable efforts to develop and commercialize bb2121. Celgene may determine however, that it iscommercially reasonable to develop and commercialize a next-generation product candidate that arises from the collaboration between us and Celgene,rather than continue the development of bb2121. Alternatively, Celgene may determine that it is not commercially reasonable to continue development ofany product candidates that arise from our collaboration. These outcomes may occur for many reasons, including internal business reasons or because ofunfavorable regulatory feedback. Further, on review of the safety and efficacy data, the FDA may impose requirements on the clinical trial program thatrender such a program commercially nonviable. In addition, under our license agreement, Celgene may determine the development plan and activities forthat product candidate. We may disagree with Celgene about the development strategy it employs, but we will have limited rights to impose ourdevelopment strategy on Celgene. Similarly, Celgene may decide to seek regulatory approval for, and limit commercialization of, bb2121 to narrowerindications than we would pursue. More broadly, if Celgene elects to discontinue the development of bb2121, we may be unable to advance the productcandidate ourselves. We would also be prevented from developing or commercializing another CAR T cell-based product candidate that targets BCMAoutside of our collaboration with Celgene.50 This partnership may not be scientifically or commercially successful for us due to a number of important factors, including the following: •Celgene has wide discretion in determining the efforts and resources that it will apply to its partnership with us. The timing and amount of anydevelopment milestones, and downstream commercial milestones and royalties that we may receive under such partnership will depend on, amongother things, Celgene’s efforts, allocation of resources and successful development and commercialization of bb2121 and other product candidatesthat are the subject of its collaboration with us. •Celgene may develop and commercialize, either alone or with others, products that are similar to or competitive with bb2121 and other productcandidates that are the subject of its collaboration with us. For example, Celgene is currently commercializing certain of its existing products,including lenalidomide and pomalidomide, for certain patients with relapsed/refractory multiple myeloma. •Celgene may terminate its partnership with us without cause and for circumstances outside of our control, which could make it difficult for us to attractnew strategic partners or adversely affect how we are perceived in scientific and financial communities. •Celgene may develop or commercialize our product candidates in such a way as to elicit litigation that could jeopardize or invalidate our intellectualproperty rights or expose us to potential liability. •Celgene may not comply with all applicable regulatory requirements, or may fail to report safety data in accordance with all applicable regulatoryrequirements. •If Celgene were to breach its arrangements with us, we may need to enforce our right to terminate the agreement in legal proceedings, which could becostly and cause delay in our ability to receive rights back to the relevant product candidates. If we were to terminate an agreement with Celgene dueto Celgene's breach or Celgene terminated the agreement without cause, the development and commercialization of bb2121 and other productcandidates that are the subject of its collaboration with us could be delayed, curtailed or terminated because we may not have sufficient financialresources or capabilities to continue development and commercialization of these product candidates on our own if we choose not to, or are unable to,enter into a new collaboration for these product candidates. •Celgene may enter into one or more transactions with third parties, including a merger, consolidation, reorganization, sale of substantial assets, sale ofsubstantial stock or other change in control, which could divert the attention of its management and adversely affect Celgene's ability to retain andmotivate key personnel who are important to the continued development of the programs under the strategic partnership with us. In addition, the third-party to any such transaction could determine to reprioritize Celgene's development programs such that Celgene ceases to diligently pursue thedevelopment of our programs and/or cause the respective collaboration with us to terminate.We expect to rely on third parties to conduct, supervise and monitor our clinical studies, and if these third parties perform in an unsatisfactory manner, itmay harm our business.We expect to rely on CROs and clinical study sites to ensure our clinical studies are conducted properly and on time. While we will have agreementsgoverning their activities, we will have limited influence over their actual performance. We will control only certain aspects of our CROs’ activities.Nevertheless, we will be responsible for ensuring that each of our clinical studies is conducted in accordance with the applicable protocol, legal, regulatoryand scientific standards, and our reliance on the CROs does not relieve us of our regulatory responsibilities.We and our CROs are required to comply with the FDA’s GCPs for conducting, recording and reporting the results of clinical studies to assure that thedata and reported results are credible and accurate and that the rights, integrity and confidentiality of clinical study participants are protected. The FDAenforces these GCPs through periodic inspections of study sponsors, principal investigators and clinical study sites. If we or our CROs fail to comply withapplicable GCPs, the clinical data generated in our future clinical studies may be deemed unreliable and the FDA may require us to perform additionalclinical studies before approving any marketing applications. Upon inspection, the FDA may determine that our clinical studies did not comply with GCPs.In addition, our future clinical studies will require a sufficient number of test subjects to evaluate the safety and efficacy of our product candidates.Accordingly, if our CROs fail to comply with these regulations or fail to recruit a sufficient number of patients, we may be required to repeat such clinicalstudies, which would delay the regulatory approval process.Employees of our CROs are not our employees, and we are therefore unable to directly monitor whether or not they devote sufficient time and resources toour clinical and nonclinical programs, which must be conducted in accordance with GCPs and GLPs, respectively. These CROs may also have relationshipswith other commercial entities, including our competitors, for whom they may also be conducting clinical studies or other drug development activities thatcould harm our competitive position. If our CROs do not successfully carry out their contractual duties or obligations, fail to meet expected deadlines, or ifthe quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements, or forany51 other reasons, our clinical studies may be extended, delayed or terminated, and we may not be able to obtain regulatory approval for, or successfullycommercialize our product candidates. As a result, our financial results and the commercial prospects for our product candidates would be harmed, our costscould increase, and our ability to generate revenues could be delayed.We also expect to rely on other third parties to store and distribute our vectors and products for any clinical studies that we may conduct. Anyperformance failure on the part of our distributors could delay clinical development or marketing approval of our product candidates or commercialization ofour products, if approved, producing additional losses and depriving us of potential product revenue.Our reliance on third parties requires us to share our trade secrets, which increases the possibility that a competitor will discover them or that our tradesecrets will be misappropriated or disclosed.Because we rely on third parties to manufacture our vectors and our product candidates, and because we collaborate with various organizations andacademic institutions on the advancement of our gene therapy platform, we must, at times, share trade secrets with them. We seek to protect our proprietarytechnology in part by entering into confidentiality agreements and, if applicable, material transfer agreements, collaborative research agreements, consultingagreements or other similar agreements with our collaborators, advisors, employees and consultants prior to beginning research or disclosing proprietaryinformation. These agreements typically limit the rights of the third parties to use or disclose our confidential information, such as trade secrets. Despite thecontractual provisions employed when working with third parties, the need to share trade secrets and other confidential information increases the risk thatsuch trade secrets become known by our competitors, are inadvertently incorporated into the technology of others, or are disclosed or used in violation ofthese agreements. Given that our proprietary position is based, in part, on our know-how and trade secrets, a competitor’s discovery of our trade secrets orother unauthorized use or disclosure would impair our competitive position and may have a material adverse effect on our business.In addition, these agreements typically restrict the ability of our collaborators, advisors, employees and consultants to publish data potentially relating toour trade secrets. Our academic collaborators typically have rights to publish data, provided that we are notified in advance and may delay publication for aspecified time in order to secure our intellectual property rights arising from the collaboration. In other cases, publication rights are controlled exclusively byus, although in some cases we may share these rights with other parties. We also conduct joint research and development programs that may require us toshare trade secrets under the terms of our research and development partnerships or similar agreements. Despite our efforts to protect our trade secrets, ourcompetitors may discover our trade secrets, either through breach of these agreements, independent development or publication of information including ourtrade secrets in cases where we do not have proprietary or otherwise protected rights at the time of publication. A competitor’s discovery of our trade secretswould impair our competitive position and have an adverse impact on our business.Risks related to our financial condition and capital requirementsWe have incurred significant losses since our inception and anticipate that we will continue to incur significant losses for the foreseeable future.We are a clinical-stage biotechnology company, and we have not yet generated significant revenues. We have incurred net losses in each year since ourinception in 1992, including net losses of $263.5 million and $166.8 million for the years ended December 31, 2016 and 2015, respectively. As of December31, 2016, we had an accumulated deficit of $577.7 million.We have devoted most of our financial resources to research and development, including our clinical and preclinical development activities. To date, wehave financed our operations primarily through the sale of equity securities and, to a lesser extent, through collaboration agreements and grants fromgovernmental agencies and charitable foundations. The amount of our future net losses will depend, in part, on the rate of our future expenditures and ourability to obtain funding through equity or debt financings, strategic collaborations or additional grants. We have not completed pivotal clinical studies forany product candidate and it will be several years, if ever, before we have a product candidate ready for commercialization. Even if we obtain regulatoryapproval to market a product candidate, our future revenues will depend upon the size of any markets in which our product candidates have receivedapproval, and our ability to achieve sufficient market acceptance, reimbursement from third-party payors and adequate market share for our productcandidates in those markets.We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. We anticipate that our expenses willincrease substantially if and as we: •continue our research and preclinical and clinical development of our product candidates; •expand the scope of our current clinical studies for our product candidates;52 •initiate additional preclinical, clinical or other studies for our oncology product candidates; •further develop the manufacturing process for our vectors or our product candidates; •change or add additional manufacturers or suppliers; •seek regulatory and marketing approvals for our product candidates that successfully complete clinical studies; •seek to identify and validate additional product candidates; •acquire or in-license other product candidates and technologies; •make milestone or other payments under any license agreements or our stock purchase agreement with the former equityholders of Pregenen; •maintain, protect and expand our intellectual property portfolio; •establish a sales, marketing and distribution infrastructure in the United States and Europe to commercialize any products for which we may obtainmarketing approval; •attract and retain skilled personnel; •build additional infrastructure to support our operations as a public company and our product development and planned future commercializationefforts, including manufacturing capacity at third-party manufacturers or potentially our own manufacturing facility; and •experience any delays or encounter issues with any of the above.The net losses we incur may fluctuate significantly from quarter to quarter and year to year, such that a period-to-period comparison of our results ofoperations may not be a good indication of our future performance. In any particular quarter or quarters, our operating results could be below the expectationsof securities analysts or investors, which could cause our stock price to decline.We have never generated any revenue from product sales and may never be profitable.Our ability to generate revenue and achieve profitability depends on our ability, alone or with strategic collaboration partners, to successfully completethe development of, and obtain the regulatory, pricing and reimbursement approvals necessary to commercialize our product candidates. We do notanticipate generating revenues from product sales for the foreseeable future, if ever. Our ability to generate future revenues from product sales dependsheavily on our success in: •completing research and preclinical and clinical development of our product candidates; •seeking and obtaining regulatory and marketing approvals for product candidates for which we complete clinical studies; •developing a sustainable, commercial-scale, reproducible, and transferable manufacturing process for our vectors and product candidates; •establishing and maintaining supply and manufacturing relationships with third parties that can provide adequate (in amount and quality) productsand services to support clinical development and the market demand for our product candidates, if approved; •launching and commercializing product candidates for which we obtain regulatory and marketing approval, either by collaborating with a partner or,if launched independently, by establishing a sales force, marketing and distribution infrastructure; •obtaining sufficient pricing and reimbursement for our product candidates from private and governmental payors; •obtaining market acceptance of our product candidates and gene therapy as a viable treatment option; •addressing any competing technological and market developments; •identifying and validating new gene therapy product candidates; •negotiating favorable terms in any collaboration, licensing or other arrangements into which we may enter; and •maintaining, protecting and expanding our portfolio of intellectual property rights, including patents, trade secrets and know-how.Even if one or more of the product candidates that we develop is approved for commercial sale, we anticipate incurring significant costs associated withcommercializing any approved product candidate. Our expenses could increase beyond expectations if we are53 required by the FDA, the EMA, or other regulatory agencies, domestic or foreign, to perform clinical and other studies in addition to those that we currentlyanticipate. Even if we are able to generate revenues from the sale of any approved products, we may not become profitable and may need to obtain additionalfunding to continue operations.From time to time, we will need to raise additional funding, which may not be available on acceptable terms, or at all. Failure to obtain this necessarycapital when needed may force us to delay, limit or terminate our product development efforts or other operations.We are currently advancing our LentiGlobin, Lenti-D and bb2121 product candidates through clinical development and other product candidatesthrough preclinical development. Developing gene therapy products is expensive, and we expect our research and development expenses to increasesubstantially in connection with our ongoing activities, particularly as we advance our product candidates in clinical studies.As of December 31, 2016, our cash, cash equivalents and marketable securities were $884.8 million. We expect that our existing cash, cash equivalents,and marketable securities will be sufficient to fund our current operations into the second half of 2019. However, our operating plan may change as a result ofmany factors currently unknown to us, and we may need to seek additional funds sooner than planned, through public or private equity or debt financings,government or other third-party funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements ora combination of these approaches. In any event, we will require additional capital to obtain regulatory approval for, and to commercialize, our productcandidates. Even if we believe we have sufficient funds for our current or future operating plans, we may seek additional capital if market conditions arefavorable or if we have specific strategic objectives.Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop andcommercialize our product candidates. In addition, we cannot guarantee that future financing will be available in sufficient amounts or on terms acceptableto us, if at all. Moreover, the terms of any financing may adversely affect the holdings or the rights of our stockholders and the issuance of additionalsecurities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our shares to decline. The sale of additional equityor convertible securities would dilute all of our stockholders. The incurrence of indebtedness would result in increased fixed payment obligations and wemay be required to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sellor license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. We could also berequired to seek funds through arrangements with collaborative partners or otherwise at an earlier stage than otherwise would be desirable and we may berequired to relinquish rights to some of our technologies or product candidates or otherwise agree to terms unfavorable to us, any of which may have amaterial adverse effect on our business, operating results and prospects.If we are unable to obtain funding on a timely basis, we may be required to significantly curtail, delay or discontinue one or more of our research ordevelopment programs or the commercialization of any product candidates or be unable to expand our operations or otherwise capitalize on our businessopportunities, as desired, which could materially affect our business, financial condition and results of operations.Risks related to commercialization of our product candidatesWe intend to rely on third-party manufacturers to produce our vector, product candidates and other key materials, but we have not entered into bindingagreements with all of the manufacturers needed to support commercialization. Additionally, these manufacturers do not have experience producing ourvectors and product candidates at commercial levels and may not achieve the necessary regulatory approvals or produce our vectors and products at thequality, quantities, locations and timing needed to support commercialization.We have not yet secured manufacturing capabilities for commercial quantities of our viral vectors or established transduction facilities in all of thedesired commercialization regions to support commercialization of our products. Although we intend to rely on third-party manufacturers forcommercialization, we have not entered into binding agreements with all of the manufacturers needed to support our planned commercialization activities,and may not be able to negotiate binding agreements at commercially reasonable terms.No manufacturer currently has the experience or ability to produce our vectors or drug product candidates at commercial levels. We are currentlydeveloping a commercial-scale manufacturing process for our LentiGlobin and Lenti-D product candidates, which we are transferring to one or more contractmanufacturers. We may run into technical or scientific issues related to manufacturing or development that we may be unable to resolve in a timely manner orwith available funds. Although we have been able to produce our Lenti-D vector at commercial scale, we have not completed the characterization andvalidation activities necessary for commercial and regulatory approvals. If our manufacturing partners do not obtain such regulatory approvals, ourcommercialization efforts will be harmed.54 Additionally, since the HSCs and T cells have a limited window of stability following procurement from the subject, we must set up transduction facilitiesin the regions where we wish to commercialize our product. Currently, we rely on third-party contract manufacturers in the United States and Europe toproduce our product candidates for our clinical studies. Since a portion of our target patient populations will be outside the United States and Europe, we willneed to set up additional transduction facilities that can replicate our transduction process. Establishment of such facilities may be financially impractical orimpeded by technical, quality, or regulatory issues related to these new sites and we may also run into technical or scientific issues related to transfer of ourtransduction process or other developmental issues that we may be unable to resolve in a timely manner or with available funds.Even if we timely develop a manufacturing process and successfully transfer it to the third-party vector and product manufacturers, if such third-partymanufacturers are unable to produce the necessary quantities of viral vectors and our product candidates, or in compliance with GMP or other pertinentregulatory requirements, and within our planned time frame and cost parameters, the development and sales of our products, if approved, may be materiallyharmed. Furthermore, if our third-party manufacturers are unable to produce the necessary quantities of viral vectors or our product candidates in quantities,quality requirements, or within the time frames that we need to support our commercialization activities, we may seek to establish our own manufacturingfacilities, which may result in delays in our development plans or increased capital expenditures.In addition, any significant disruption in our supplier relationships could harm our business. We source key materials from third parties, either directlythrough agreements with suppliers or indirectly through our manufacturers who have agreements with suppliers. There are a small number of suppliers forcertain key materials that are used to manufacture our product candidates. Such suppliers may not sell these key materials to our manufacturers at the timeswe need them or on commercially reasonable terms. We do not have any control over the process or timing of the acquisition of these key materials by ourmanufacturers. Moreover, we currently do not have any agreements for the commercial production of these key materials.We have no sales or distribution experience and only early capabilities for marketing and market access, and expect to invest significant financial andmanagement resources to establish these capabilities. If we are unable to establish sales and distribution capabilities or enter into agreements with thirdparties to market and sell our product candidates, we may be unable to generate any revenues.We have no sales or distribution experience and only early capabilities for marketing and market access. To successfully commercialize any products thatmay result from our development programs, we will need to develop these capabilities in the United States, Europe and other regions, either on our own orwith others. We may enter into collaborations with other entities to utilize their mature marketing and distribution capabilities, but we may be unable to enterinto marketing agreements on favorable terms, if at all. If our future collaborative partners do not commit sufficient resources to commercialize our futureproducts, if any, and we are unable to develop the necessary marketing capabilities on our own, we will be unable to generate sufficient product revenue tosustain our business. We will be competing with many companies that currently have extensive and well-funded marketing and sales operations. Without asignificant internal team or the support of a third party to perform marketing and sales functions, we may be unable to compete successfully against thesemore established companies.We face intense competition and rapid technological change and the possibility that our competitors may develop therapies that are more advanced oreffective than ours, which may adversely affect our financial condition and our ability to successfully commercialize our product candidates.We are engaged in gene therapy for severe genetic and rare diseases and in the field of T cell-based immunotherapy, both of which are competitive andrapidly changing fields. We have competitors both in the United States and internationally, including major multinational pharmaceutical companies,biotechnology companies and universities and other research institutions. Some of the pharmaceutical and biotechnology companies we expect to competewith include Bellicum Pharmaceuticals, Inc., Acceleron Pharma, Inc., GlaxoSmithKline plc through their collaboration with TIGET/MolMed, SangamoBioSciences Inc. through their collaboration with Biogen, Novartis AG, Global Blood Therapeutics, Inc., GlycoMimetics Inc., Kite Pharma, Inc., Pfizer Inc.through their collaboration with Cellectis SA, Adaptimmune Inc. and Juno Therapeutics, Inc. through their collaboration with Celgene Corporation. Inaddition, many universities and private and public research institutes are active in our target disease areas.Many of our competitors have substantially greater financial, technical and other resources, such as larger research and development staff, manufacturingcapabilities, experienced marketing and manufacturing organizations. Competition may increase further as a result of advances in the commercialapplicability of technologies and greater availability of capital for investment in these industries. Our competitors may succeed in developing, acquiring orlicensing on an exclusive basis, products that are more effective or less costly than any product candidate that we may develop, or achieve earlier patentprotection, regulatory approval, product commercialization and market penetration than us. Additionally, technologies developed by our competitors mayrender our potential product candidates uneconomical or obsolete, and we may not be successful in marketing our product candidates against competitors.55 Even if we are successful in achieving regulatory approval to commercialize a product candidate faster than our competitors, we may face competitionfrom biosimilars due to the changing regulatory environment. In the United States, the Biologics Price Competition and Innovation Act of 2009 created anabbreviated approval pathway for biological products that are demonstrated to be “highly similar,” or biosimilar, to or “interchangeable” with an FDA-approved biological product. This pathway could allow competitors to reference data from biological products already approved after 12 years from the timeof approval. In Europe, the European Commission has granted marketing authorizations for several biosimilars pursuant to a set of general and product class-specific guidelines for biosimilar approvals issued over the past few years. In Europe, a competitor may reference data from biological products alreadyapproved, but will not be able to get on the market until 10 years after the time of approval. This 10-year period will be extended to 11 years if, during thefirst eight of those 10 years, the marketing authorization holder obtains an approval for one or more new therapeutic indications that bring significant clinicalbenefits compared with existing therapies. In addition, companies may be developing biosimilars in other countries that could compete with our products. Ifcompetitors are able to obtain marketing approval for biosimilars referencing our products, our products may become subject to competition from suchbiosimilars, with the attendant competitive pressure and consequences. Expiration or successful challenge of our applicable patent rights could also triggercompetition from other products, assuming any relevant exclusivity period has expired.In addition, although our product candidates have been granted orphan drug status by the FDA and EMA, there are limitations to the exclusivity. In theUnited States, the exclusivity period for orphan drugs is seven years, while pediatric exclusivity adds six months to any existing patents or exclusivityperiods. In Europe, orphan drugs may be able to obtain 10 years of marketing exclusivity and up to an additional two years on the basis of qualifyingpediatric studies. However, orphan exclusivity may be reduced to six years if the drug no longer satisfies the original designation criteria. Additionally, amarketing authorization holder may lose its orphan exclusivity if it consents to a second orphan drug application or cannot supply enough drug. Orphandrug exclusivity also can be lost when a second applicant demonstrates its drug is “clinically superior” to the original orphan drug.Finally, as a result of the expiration or successful challenge of our patent rights, we could face more litigation with respect to the validity and/or scope ofpatents relating to our competitors’ products. The availability of our competitors’ products could limit the demand, and the price we are able to charge, forany products that we may develop and commercialize.The commercial success of any current or future product candidate will depend upon the degree of market acceptance by physicians, patients, third-partypayors and others in the medical community.Ethical, social and legal concerns about gene therapy and genetic research could result in additional regulations restricting or prohibiting the productsand processes we may use. Even with the requisite approvals, the commercial success of our product candidates will depend in part on the medicalcommunity, patients, and third-party or governmental payors accepting gene therapy products in general, and our product candidates in particular, asmedically useful, cost-effective, and safe. Any product that we bring to the market may not gain market acceptance by physicians, patients, third-party payorsand others in the medical community. If these products do not achieve an adequate level of acceptance, we may not generate significant product revenue andmay not become profitable. The degree of market acceptance of these product candidates, if approved for commercial sale, will depend on a number offactors, including: •the potential efficacy and potential advantages over alternative treatments; •the prevalence and severity of any side effects, including any limitations or warnings contained in a product’s approved labeling; •the prevalence and severity of any side effects resulting from the chemotherapy and myeloablative treatments associated with the procedure by whichour product candidates are administered; •relative convenience and ease of administration; •the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies; •the strength of marketing and distribution support and timing of market introduction of competitive products; •the pricing of our products; •publicity concerning our products or competing products and treatments; and •sufficient third-party insurance coverage or reimbursement.Even if a potential product displays a favorable efficacy and safety profile in preclinical and clinical studies, market acceptance of the product will not beknown until after it is launched. Our efforts to educate the medical community and third-party payors on the benefits of the product candidates may requiresignificant resources and may never be successful. Such efforts to educate the marketplace may require more resources than are required by the conventionaltechnologies marketed by our competitors.56 We intend to market our products outside of the United States, and we will be subject to the risks of doing business outside of the United States.Because we intend to market our product candidates, if approved, outside of the United States, our business is subject to risks associated with doingbusiness outside of the United States. Accordingly, our business and financial results in the future could be adversely affected due to a variety of factors,including: •efforts to develop an international sales, marketing and distribution organization may increase our expenses, divert our management’s attention fromthe acquisition or development of product candidates or cause us to forgo profitable licensing opportunities in these geographies; •changes in a specific country’s or region’s political and cultural climate or economic condition; •unexpected changes in foreign laws and regulatory requirements; •difficulty of effective enforcement of contractual provisions in local jurisdictions; •inadequate intellectual property protection in foreign countries; •trade-protection measures, import or export licensing requirements such as Export Administration Regulations promulgated by the U.S. Department ofCommerce and fines, penalties or suspension or revocation of export privileges; •the effects of applicable foreign tax structures and potentially adverse tax consequences; and •significant adverse changes in foreign currency exchange rates. In addition to FDA and related regulatory requirements in the United States and abroad, we are subject to extensive additional federal, state and foreignanti-bribery regulation, which include the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, and similar laws in other countries outside of the UnitedStates. We have developed and implemented a corporate compliance program based on what we believe are current best practices in the pharmaceuticalindustry for companies similar to ours, but we cannot guarantee that we, our employees, our consultants or our third-party contractors are or will be incompliance with all federal, state and foreign regulations regarding bribery and corruption. Moreover, our partners and third party contractors located outsidethe United States may have inadequate compliance programs or may fail to respect the laws and guidance of the territories in which they operate. Even if weare not determined to have violated these laws, government investigations into these issues typically require the expenditure of significant resources andgenerate negative publicity, which could also have an adverse effect on our business, financial condition and results of operationsThe insurance coverage and reimbursement status of newly-approved products is uncertain. Failure to obtain or maintain adequate coverage andreimbursement for new or current products could limit our ability to market those products and decrease our ability to generate revenue.The availability and extent of reimbursement by governmental and private payors is essential for most patients to be able to afford expensive treatments,such as stem cell transplants or gene therapy. In addition, because our CAR and TCR T cell product candidates represent new approaches to the treatment ofcancer, we cannot accurately estimate the potential revenue. Sales of our product candidates will depend substantially, both domestically and abroad, on theextent to which the costs of our product candidates will be paid by health maintenance, managed care, pharmacy benefit and similar healthcare managementorganizations, or reimbursed by government health administration authorities, private health coverage insurers and other third-party payors. If reimbursementis not available, or is available only to limited levels, we may not be able to successfully commercialize our product candidates. Even if coverage is provided,the approved reimbursement amount may not be high enough to allow us to establish or maintain pricing sufficient to realize a sufficient return on ourinvestment.There is significant uncertainty related to the insurance coverage and reimbursement of newly approved products, including gene therapies. In the UnitedStates, the principal decisions about reimbursement for new medicines are typically made by the Centers for Medicare & Medicaid Services, or CMS, anagency within the U.S. Department of Health and Human Services, as CMS decides whether and to what extent a new medicine will be covered andreimbursed under Medicare. Private payors tend to follow CMS to a substantial degree. It is difficult to predict what CMS will decide with respect toreimbursement for fundamentally novel products such as ours, as there is no body of established practices and precedents for these new products.Reimbursement agencies in Europe may be more conservative than CMS. For example, a number of cancer drugs have been approved for reimbursement inthe United States and have not been approved for reimbursement in certain European countries. In addition, costs or difficulties associated with thereimbursement of Glybera could create an adverse environment for reimbursement of other gene therapies.Outside the United States, certain countries, including a number of member states of the European Union, set prices and reimbursement for pharmaceuticalproducts, or medicinal products, as they are commonly referred to in the European Union, with57 limited participation from the marketing authorization holders. We cannot be sure that such prices and reimbursement will be acceptable to us or ourcollaborators. If the regulatory authorities in these foreign jurisdictions set prices or reimbursement levels that are not commercially attractive for us or ourcollaborators, our revenues from sales by us or our collaborators, and the potential profitability of our drug products, in those countries would be negativelyaffected. An increasing number of countries are taking initiatives to attempt to reduce large budget deficits by focusing cost-cutting efforts onpharmaceuticals for their state-run health care systems. These international price control efforts have impacted all regions of the world, but have been mostdrastic in the European Union. Additionally, some countries require approval of the sale price of a product before it can be marketed. In many countries, thepricing review period begins after marketing or product licensing approval is granted. As a result, we might obtain marketing approval for a product in aparticular country, but then be subject to price regulations that delay our commercial launch of the product, possibly for lengthy time periods, which couldnegatively impact the revenues we are able to generate from the sale of the product in that particular country.Moreover, increasing efforts by governmental and third-party payors, in the United States and abroad, to cap or reduce healthcare costs may cause suchorganizations to limit both coverage and level of reimbursement for new products approved and, as a result, they may not cover or provide adequate paymentfor our product candidates. We expect to experience pricing pressures in connection with the sale of any of our product candidates, due to the trend towardmanaged healthcare, the increasing influence of health maintenance organizations and additional legislative changes. The downward pressure on healthcarecosts in general, particularly prescription drugs and surgical procedures and other treatments, has become very intense. As a result, increasingly high barriersare being erected to the entry of new products.Healthcare legislative reform measures may have a material adverse effect on our business and results of operations.In the United States, there have been and continue to be a number of legislative initiatives to contain healthcare costs. For example, in March 2010, thePatient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, or the Affordable Care Act, waspassed, which substantially changes the way health care is financed by both governmental and private insurers, and significantly impacts the U.S.pharmaceutical industry. The Affordable Care Act, among other things, increased the minimum Medicaid rebates owed by manufacturers under the MedicaidDrug Rebate Program and extended the rebate program to individuals enrolled in Medicaid managed care organizations, established annual fees and taxes onmanufacturers of certain branded prescription drugs, and promoted a new Medicare Part D coverage gap discount program.In addition, other legislative changes have been proposed and adopted in the United States since the Affordable Care Act was enacted. On August 2,2011, the Budget Control Act of 2011, among other things, created measures for spending reductions by Congress. A Joint Select Committee on DeficitReduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach requiredgoals, thereby triggering the legislation’s automatic reduction to several government programs. This includes aggregate reductions of Medicare payments toproviders up to 2% per fiscal year. On January 2, 2013, then President Obama signed into law the American Taxpayer Relief Act of 2012, which, among otherthings, delayed for another two months the budget cuts mandated by these sequestration provisions of the Budget Control Act of 2011. On March 1, 2013,the President signed an executive order implementing sequestration, and on April 1, 2013, the 2% Medicare payment reductions went into effect. We expectthat additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and stategovernments will pay for healthcare products and services, which could result in reduced demand for our product candidates or additional pricing pressures.For each state that does not choose to expand its Medicaid program, there may be fewer insured patients overall, which could impact the sales, business andfinancial condition of manufacturers of branded prescription drugs or other therapies. Where patients receive insurance coverage under any of the newoptions made available through the Affordable Care Act, the possibility exists that manufacturers may be required to pay Medicaid rebates on that resultingdrug utilization, a decision that could impact manufacturer revenues. Some of the provisions of the Affordable Care Act have yet to be fully implemented,while certain provisions have been subject to judicial and Congressional challenges. In January 2017, Congress voted to adopt a budget resolution for fiscalyear 2017, that while not a law, is widely viewed as the first step toward the passage of legislation that would repeal certain aspects of the Affordable CareAct. Further, on January 20, 2017, President Trump signed an Executive Order directing federal agencies with authorities and responsibilities under theAffordable Care Act to waive, defer, grant exemptions from, or delay the implementation of any provision of the Affordable Care Act that would impose afiscal burden on states or a cost, fee, tax, penalty or regulatory burden on individuals, healthcare providers, health insurers, or manufacturers ofpharmaceuticals or medical devices. Congress also could consider subsequent legislation to replace elements of the Affordable Care Act that are repealed.The implications of a potential repeal and/or replacement of the Affordable Care Act, for our and our partners’ business and financial condition, if any, are notyet clear.The delivery of healthcare in the European Union, including the establishment and operation of health services and the pricing and reimbursement ofmedicines, is almost exclusively a matter for national, rather than EU, law and policy. National governments and health service providers have differentpriorities and approaches to the delivery of health care and the pricing and reimbursement of products in that context. In general, however, the healthcarebudgetary constraints in most EU member states have resulted in58 restrictions on the pricing and reimbursement of medicines by relevant health service providers. Coupled with ever-increasing EU and national regulatoryburdens on those wishing to develop and market products, this could prevent or delay marketing approval of our product candidates, restrict or regulate post-approval activities and affect our ability to commercialize any products for which we obtain marketing approval.We cannot predict what healthcare reform initiatives may be adopted in the future. Further federal, state and foreign legislative and regulatorydevelopments are likely, and we expect ongoing initiatives to increase pressure on drug pricing. Such reforms could have an adverse effect on anticipatedrevenues from product candidates that we may successfully develop and for which we may obtain regulatory approval and may affect our overall financialcondition and ability to develop product candidates.Due to the novel nature of our technology and the potential for our product candidates to offer therapeutic benefit in a single administration, we faceuncertainty related to pricing and reimbursement for these product candidates.Our target patient populations are relatively small, as a result, the pricing and reimbursement of our product candidates, if approved, must be adequate tosupport commercial infrastructure. If we are unable to obtain adequate levels of reimbursement, our ability to successfully market and sell our productcandidates will be adversely affected. The manner and level at which reimbursement is provided for services related to our product candidates (e.g., foradministration of our product to patients) is also important. Inadequate reimbursement for such services may lead to physician resistance and adversely affectour ability to market or sell our products.If the market opportunities for our product candidates are smaller than we believe they are, our revenues may be adversely affected and our business maysuffer. Because the target patient populations of our product candidates are small, we must be able to successfully identify patients and achieve asignificant market share to maintain profitability and growth.We focus our research and product development on treatments for severe genetic and rare diseases. Our projections of both the number of people whohave these diseases, as well as the subset of people with these diseases who have the potential to benefit from treatment with our product candidates, arebased on estimates. These estimates may prove to be incorrect and new studies may change the estimated incidence or prevalence of these diseases. Thenumber of patients in the United States, Europe and elsewhere may turn out to be lower than expected, may not be otherwise amenable to treatment with ourproducts, or new patients may become increasingly difficult to identify or gain access to, all of which would adversely affect our results of operations and ourbusiness.The market opportunities for our T cell-based immunotherapy product candidates may be limited to those patients who are ineligible for or have failedprior treatments and may be small.The FDA often approves new therapies initially only for use in patients with relapsed or refractory advanced disease. We expect to initially seek approvalof our T cell-based product candidates in cancer in this context. Subsequently, for those products that prove to be sufficiently beneficial, if any, we wouldexpect to seek approval in earlier lines of treatment and potentially as a first line therapy, but there is no guarantee that our product candidates, even ifapproved, would be approved for earlier lines of therapy, and, prior to any such approvals, we may have to conduct additional clinical trials.Our projections of both the number of people who have the cancers we may be targeting, as well as the subset of people with these cancers in a position toreceive second or third line therapy, and who have the potential to benefit from treatment with our product candidates, are based on our beliefs and estimates.These estimates have been derived from a variety of sources, including scientific literature, surveys of clinics, patient foundations, or market research, andmay prove to be incorrect. Further, new studies may change the estimated incidence or prevalence of these cancers. The number of patients may turn out to belower than expected. Additionally, the potentially addressable patient population for our product candidates may be limited or may not be amenable totreatment with our product candidates. Even if we obtain significant market share for our product candidates, because the potential target populations aresmall, we may never achieve profitability without obtaining regulatory approval for additional indications.59 Risks related to our business operationsIf we undertake business combinations, collaborations or similar strategic transactions, they may disrupt our business, divert management’s attention,dilute stockholder value or be difficult to integrate.On a regular basis, we consider various business combination transactions, collaborations, license agreements and strategic transactions with third parties,including transactions which may result in us acquiring, or being acquired by, a third party. The consummation or performance of any future businesscombination, collaboration or strategic transaction may involve risks, such as: •diversion of managerial resources from day-to-day operations; •challenges associated with integrating acquired technologies and operations of acquired companies; •exposure to unforeseen liabilities; •difficulties in the assimilation of different cultures and practices, as well as in the assimilation and retention of broad and geographically dispersedpersonnel and operations; •misjudgment with respect to value, return on investment or strategic fit; •higher than expected transaction costs; and •additional dilution to our existing stockholders if we issue equity securities as consideration for any acquisitions.As a result of these risks, we may not be able to achieve the expected benefits of any such transaction. If we are unsuccessful in completing or integratingany acquisition, we may be required to reevaluate that component of our strategy only after we have incurred substantial expenses and devoted significantmanagement time and resources in seeking to complete and integrate the acquisition.Future business combinations could involve the acquisition of significant intangible assets. We may need to record write-downs from future impairmentsof identified intangible assets and goodwill. These accounting charges would increase a reported loss or reduce any future reported earnings. In addition, wecould use substantial portions of our available cash to pay the purchase price for company or product candidate acquisitions. Subject to the limitations underour existing indebtedness, it is possible that we could incur additional debt or issue additional equity securities as consideration for these acquisitions, whichcould cause our stockholders to suffer significant dilution.Negative public opinion and increased regulatory scrutiny of gene therapy and genetic research may damage public perception of our product candidatesor adversely affect our ability to conduct our business or obtain regulatory approvals for our product candidates.Public perception may be influenced by claims that gene therapy is unsafe, and gene therapy may not gain the acceptance of the public or the medicalcommunity. In particular, our success will depend upon physicians specializing in the treatment of those diseases that our product candidates targetprescribing treatments that involve the use of our product candidates in lieu of, or in addition to, existing treatments they are already familiar with and forwhich greater clinical data may be available. More restrictive government regulations or negative public opinion would have a negative effect on ourbusiness or financial condition and may delay or impair the development and commercialization of our product candidates or demand for any products wemay develop. For example, in 2003, 20 subjects treated for X-linked severe combined immunodeficiency in two gene therapy studies using a murine gamma-retroviral vector showed correction of the disease, but the studies were terminated after five subjects developed leukemia (four of whom were subsequentlycured). Although none of our current product candidates utilize these gamma-retroviruses, our product candidates use a viral delivery system. Adverse eventsin our clinical studies, even if not ultimately attributable to our product candidates (such as the many adverse events that typically arise from the transplantprocess) and the resulting publicity could result in increased governmental regulation, unfavorable public perception, potential regulatory delays in thetesting or approval of our potential product candidates, stricter labeling requirements for those product candidates that are approved and a decrease indemand for any such product candidates.Our future success depends on our ability to retain key employees, consultants and advisors and to attract, retain and motivate qualified personnel.We are highly dependent on principal members of our executive team and key employees, the loss of whose services may adversely impact theachievement of our objectives. While we have entered into employment agreements with each of our executive officers, any of them could leave ouremployment at any time, as all of our employees are “at will” employees. Recruiting and retaining other qualified employees, consultants and advisors forour business, including scientific and technical personnel, will also be critical to our success. There is currently a shortage of skilled executives in ourindustry, which is likely to continue. As a result,60 competition for skilled personnel is intense and the turnover rate can be high. We may not be able to attract and retain personnel on acceptable terms giventhe competition among numerous pharmaceutical and biotechnology companies for individuals with similar skill sets. In addition, failure to succeed inpreclinical or clinical studies may make it more challenging to recruit and retain qualified personnel. The inability to recruit or loss of the services of anyexecutive, key employee, consultant or advisor may impede the progress of our research, development and commercialization objectives.We will need to expand our organization and we may experience difficulties in managing this growth, which could disrupt our operations.As of January 31, 2017, we had 328 full-time employees. As our business activities expand, we expect to expand our full-time employee base and to hiremore consultants and contractors. Our management may need to divert a disproportionate amount of its attention away from our day-to-day activities anddevote a substantial amount of time to managing these growth activities. We may not be able to effectively manage the expansion of our operations, whichmay result in weaknesses in our infrastructure, operational mistakes, loss of business opportunities, loss of employees and reduced productivity amongremaining employees. Our expected growth could require significant capital expenditures and may divert financial resources from other projects, such as thedevelopment of additional product candidates. If our management is unable to effectively manage our growth, our expenses may increase more thanexpected, our ability to generate and/or grow revenues could be reduced, and we may not be able to implement our business strategy.Our employees, principal investigators, consultants and commercial partners may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements and insider trading.We are exposed to the risk of fraud or other misconduct by our employees, principal investigators, consultants and commercial partners. Misconduct bythese parties could include intentional failures to comply with the regulations of the FDA and non-U.S. regulators, provide accurate information to the FDAand non-U.S. regulators, comply with healthcare fraud and abuse laws and regulations in the United States and abroad, report financial information or dataaccurately or disclose unauthorized activities to us. In particular, sales, marketing and business arrangements in the healthcare industry are subject toextensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations mayrestrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other businessarrangements. Such misconduct could also involve the improper use of information obtained in the course of clinical studies, which could result in regulatorysanctions and cause serious harm to our reputation or could cause regulatory agencies not to approve our product candidates. We have adopted a code ofconduct applicable to all of our employees, but it is not always possible to identify and deter employee misconduct, and the precautions we take to detectand prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations orother actions or lawsuits stemming from a failure to comply with these laws or regulations. If any such actions are instituted against us, and we are notsuccessful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition ofsignificant fines or other sanctions.We face potential product liability, and, if successful claims are brought against us, we may incur substantial liability and costs. If the use of our productcandidates harms patients, or is perceived to harm patients even when such harm is unrelated to our product candidates, our regulatory approvals could berevoked or otherwise negatively impacted and we could be subject to costly and damaging product liability claims.The use of our product candidates in clinical studies and the sale of any products for which we obtain marketing approval exposes us to the risk ofproduct liability claims. Product liability claims might be brought against us by subjects participating in clinical trials, consumers, healthcare providers,pharmaceutical companies or others selling or otherwise coming into contact with our products. There is a risk that our product candidates may induceadverse events. If we cannot successfully defend against product liability claims, we could incur substantial liability and costs. In addition, regardless ofmerit or eventual outcome, product liability claims may result in: •impairment of our business reputation; •withdrawal of clinical study participants; •costs due to related litigation; •distraction of management’s attention from our primary business; •substantial monetary awards to patients or other claimants; •the inability to commercialize our product candidates; and •decreased demand for our product candidates, if approved for commercial sale.61 We carry product liability insurance and we believe our product liability insurance coverage is sufficient in light of our current clinical programs;however, we may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses due to liability. If andwhen we obtain marketing approval for product candidates, we intend to expand our insurance coverage to include the sale of commercial products; however,we may be unable to obtain product liability insurance on commercially reasonable terms or in adequate amounts. On occasion, large judgments have beenawarded in class action lawsuits based on drugs or medical treatments that had unanticipated adverse effects. A successful product liability claim or series ofclaims brought against us could cause our stock price to decline and, if judgments exceed our insurance coverage, could adversely affect our results ofoperations and business.Patients with the diseases targeted by our product candidates are often already in severe and advanced stages of disease and have both known andunknown significant pre-existing and potentially life-threatening health risks. During the course of treatment, patients may suffer adverse events, includingdeath, for reasons that may be related to our product candidates. Such events could subject us to costly litigation, require us to pay substantial amounts ofmoney to injured patients, delay, negatively impact or end our opportunity to receive or maintain regulatory approval to market our products, or require us tosuspend or abandon our commercialization efforts. Even in a circumstance in which we do not believe that an adverse event is related to our products, theinvestigation into the circumstance may be time-consuming or inconclusive. These investigations may interrupt our sales efforts, delay our regulatoryapproval process in other countries, or impact and limit the type of regulatory approvals our product candidates receive or maintain. As a result of thesefactors, a product liability claim, even if successfully defended, could have a material adverse effect on our business, financial condition or results ofoperations.If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that couldhave a material adverse effect on the success of our business.We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling,use, storage, treatment and disposal of hazardous materials and wastes. Our operations involve the use of hazardous and flammable materials, includingchemicals and biological materials. Our operations also produce hazardous waste products. We generally contract with third parties for the disposal of thesematerials and wastes. We cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from ouruse of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources. We also could incur significantcosts associated with civil or criminal fines and penalties.Although we maintain workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting fromthe use of hazardous materials or other work-related injuries, this insurance may not provide adequate coverage against potential liabilities. In addition, wemay incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or future laws andregulations may impair our research, development or production efforts. Failure to comply with these laws and regulations also may result in substantial fines,penalties or other sanctions.We may not be successful in our efforts to identify or discover additional product candidates.The success of our business depends primarily upon our ability to identify, develop and commercialize products based on our gene therapy and geneediting platforms. Although our LentiGlobin, Lenti-D and bb2121 product candidates are currently in clinical development, our research programs,including our oncology research programs, may fail to identify other potential product candidates for clinical development for a number of reasons. Ourresearch methodology may be unsuccessful in identifying potential product candidates or our potential product candidates may be shown to have harmfulside effects or may have other characteristics that may make the products unmarketable or unlikely to receive marketing approval.If any of these events occur, we may be forced to abandon our development efforts for a program or programs, which would have a material adverse effecton our business and could potentially cause us to cease operations. Research programs to identify new product candidates require substantial technical,financial and human resources. We may focus our efforts and resources on potential programs or product candidates that ultimately prove to be unsuccessful.We may use our financial and human resources to pursue a particular research program or product candidate and fail to capitalize on programs orproduct candidates that may be more profitable or for which there is a greater likelihood of success.Because we have limited resources, we may forego or delay pursuit of opportunities with certain programs or product candidates or for indications thatlater prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products orprofitable market opportunities. Our spending on current and future research and development programs for product candidates may not yield anycommercially viable products. If we do not accurately evaluate the62 commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through strategiccollaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development andcommercialization rights to such product candidate, or we may allocate internal resources to a product candidate in a therapeutic area in which it would havebeen more advantageous to enter into a partnering arrangement.We incur significant costs as a result of operating as a public company, and our management devotes substantial time to new compliance initiatives.As a public company, we have incurred and will continue to incur significant legal, accounting and other expenses. In addition, the Sarbanes-Oxley Act,as well as rules subsequently implemented by the SEC, and The NASDAQ Global Select Market have imposed various requirements on public companies. InJuly 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, was enacted, resulting in significant corporategovernance and executive compensation-related regulations. Stockholder activism, the current political environment and the current high level ofgovernment intervention and regulatory reform may lead to substantial new regulations and disclosure obligations, which may lead to additional compliancecosts and impact the manner in which we operate our business in ways we cannot currently anticipate. Our management and other personnel will need todevote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliancecosts and will make some activities more time-consuming and costly. For example, we expect these rules and regulations to make it more difficult and moreexpensive for us to obtain director and officer liability insurance and we may be required to incur substantial costs to maintain our current levels of suchcoverage.Risks related to our intellectual propertyIf we are unable to obtain or protect intellectual property rights related to our product candidates, we may not be able to compete effectively in ourmarkets.We rely upon a combination of patents, trade secret protection and confidentiality agreements to protect the intellectual property related to our productcandidates. The strength of patents in the biotechnology and pharmaceutical field involves complex legal and scientific questions and can be uncertain. Thepatent 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 otherforeign countries. There is no assurance that all of the potentially relevant prior art relating to our patents and patent applications has been found, which caninvalidate a patent or prevent a patent from issuing from a pending patent application. Even if patents do successfully issue and even if such patents coverour 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 forour product candidates or prevent others from designing around our claims. Any of these outcomes could impair our ability to prevent competition from thirdparties, 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 ofprotection is threatened, or if they fail to provide meaningful exclusivity for our product candidates, it could dissuade companies from collaborating with usto develop product candidates, and threaten our ability to commercialize, future products. Several patent applications covering our product candidates havebeen 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 willbe found invalid and unenforceable or will be threatened by third parties. Any successful opposition to these patents or any other patents owned by orlicensed to us could deprive us of rights necessary for the successful commercialization of any product candidates that we may develop. Further, if weencounter 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, wecannot be certain that we were the first to file any patent application related to a product candidate. Furthermore, if third parties have filed such patentapplications, an interference proceeding in the United States can be initiated by a third party to determine who was the first to invent any of the subjectmatter 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 isgenerally 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 patentscovering our product candidates are obtained, once the patent life has expired for a product, we may be open to competition from generic medications.In addition to the protection afforded by patents, we rely on trade secret protection and confidentiality agreements to protect proprietary know-how that isnot patentable or that we elect not to patent, processes for which patents are difficult to enforce and any other elements of our product candidate discoveryand development processes that involve proprietary know-how, information or technology that is not covered by patents. However, trade secrets can bedifficult 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 maintainingphysical security of63 our premises and physical and electronic security of our information technology systems. While we have confidence in these individuals, organizations andsystems, agreements or security measures may be breached, and we may not have adequate remedies for any breach. In addition, our trade secrets mayotherwise 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 thirdparties who have access to our proprietary know-how, information or technology to enter into confidentiality agreements, we cannot provide any assurancesthat all such agreements have been duly executed or that our trade secrets and other confidential proprietary information will not be disclosed or thatcompetitors 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 ourbusiness. Additionally, if the steps taken to maintain our trade secrets are deemed inadequate, we may have insufficient recourse against third parties formisappropriating the trade secret. In addition, others may independently discover our trade secrets and proprietary information. For example, the FDA, as partof its Transparency Initiative, is currently considering whether to make additional information publicly available on a routine basis, including informationthat 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 changein 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 aresult, we may encounter significant problems in protecting and defending our intellectual property both in the United States and abroad. If we are unable toprevent material disclosure of the non-patented intellectual property related to our technologies to third parties, and there is no guarantee that we will haveany such enforceable trade secret protection, we may not be able to establish or maintain a competitive advantage in our market, which could materiallyadversely 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 amountof litigation, both within and outside the United States, involving patent and other intellectual property rights in the biotechnology and pharmaceuticalindustries, including patent infringement lawsuits, interferences, oppositions, ex parte reexaminations, post-grant review, and inter partes review proceedingsbefore the U.S. Patent and Trademark Office, or U.S. PTO, and corresponding foreign patent offices. Numerous U.S. and foreign issued patents and pendingpatent applications, which are owned by third parties, exist in the fields in which we are pursuing development candidates. As the biotechnology andpharmaceutical industries expand and more patents are issued, the risk increases that our product candidates may be subject to claims of infringement of thepatent rights of third parties.Third parties may assert that we are employing their proprietary technology without authorization. There may be third-party patents or patent applicationswith claims to materials, formulations, methods of manufacture or methods for treatment related to the use or manufacture of our product candidates. Becausepatent applications can take many years to issue, there may be currently pending patent applications which may later result in issued patents that our productcandidates may infringe. In addition, third parties may obtain patents in the future and claim that use of our technologies infringes upon these patents. If anythird-party patents were held by a court of competent jurisdiction to cover the manufacturing process of any of our product candidates, any molecules formedduring the manufacturing process or any final product itself, the holders of any such patents may be able to block our ability to commercialize such productcandidate 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 ofcompetent jurisdiction to cover aspects of our formulations, processes for manufacture or methods of use, including combination therapy, the holders of anysuch patents may be able to block our ability to develop and commercialize the applicable product candidate unless we obtained a license or until suchpatent 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 andcommercialize one or more of our product candidates. Defense of these claims, regardless of their merit, would involve substantial litigation expense andwould 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 paysubstantial damages, including treble damages and attorneys’ fees for willful infringement, pay royalties, redesign our infringing products or obtain one ormore 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 pipelinethrough 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 gene therapyproduct candidates. Because our programs may involve additional product candidates that may require the use of64 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 proprietaryrights. In addition, our product candidates may require specific formulations to work effectively and efficiently and these rights may be held by others. Wemay be unable to acquire or in-license any compositions, methods of use, processes or other third-party intellectual property rights from third parties that weidentify. The licensing and acquisition of third-party intellectual property rights is a competitive area, and a number of more established companies are alsopursuing strategies to license or acquire third-party intellectual property rights that we may consider attractive. These established companies may have acompetitive 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 development under writtenagreements with these institutions. Typically, these institutions provide us with an option to negotiate a license to any of the institution’s rights intechnology resulting from the collaboration. Regardless of such right of first negotiation for intellectual property, we may be unable to negotiate a licensewithin 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 toother parties, potentially blocking our ability to pursue our program.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 acquirethird-party intellectual property rights on terms that would allow us to make an appropriate return on our investment. If we are unable to successfully obtainrights 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 experiencedisruptions 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 licenseagreements in the future. Our existing license agreements impose, and we expect that future license agreements will impose, various diligence, milestonepayment, royalty and other obligations on us. If we fail to comply with our obligations under these agreements, or we are subject to a bankruptcy, the licensormay 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 our research or allow commercialization of our product candidates, and we have done sofrom 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 expendsignificant time and resources to develop or license replacement technology. If we are unable to do so, we may be unable to develop or commercialize theaffected product candidates, which could harm our business significantly. We cannot provide any assurances that third-party patents do not exist whichmight be enforced against our current product candidates or future products, resulting in either an injunction prohibiting our sales, or, with respect to oursales, 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 orother protection for the proprietary intellectual property we license from them, we could lose our rights to the intellectual property or our exclusivity withrespect to those rights, and our competitors could market competing products using the intellectual property. In certain cases, we control the prosecution ofpatents resulting from licensed technology. In the event we breach any of our obligations related to such prosecution, we may incur significant liability toour licensing partners. Licensing of intellectual property is of critical importance to our business and involves complex legal, business and scientific issuesand is complicated by the rapid pace of scientific discovery in our industry. Disputes may arise regarding intellectual property subject to a licensingagreement, 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.65 If disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements on acceptableterms, we may be unable to successfully develop and commercialize the affected 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 andunsuccessful.Competitors may infringe our patents or the patents of our licensors. To counter infringement or unauthorized use, we may be required to file infringementclaims, 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 isnot 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 donot cover the technology in question. An adverse result in any litigation or defense proceedings could put one or more of our patents at risk of beinginvalidated or interpreted narrowly and could put our patent applications at risk of not issuing.Interference proceedings provoked by third parties or brought by us may be necessary to determine the priority of inventions with respect to our patents orpatent applications or those of our licensors. An unfavorable outcome could require us to cease using the related technology or to attempt to license rights toit 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 oflitigation or interference proceedings may fail and, even if successful, may result in substantial costs and distract our management and other employees. Wemay not be able to prevent, alone or with our licensors, misappropriation of our intellectual property rights, particularly in countries where the laws may notprotect 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 ourconfidential information could be compromised by disclosure during this type of litigation. There could also be public announcements of the results ofhearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have amaterial adverse effect on the price of our common stock.Patent reform legislation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defenseof our issued patents.On September 16, 2011, the Leahy-Smith America Invents Act, or the Leahy-Smith Act, was signed into law. The Leahy-Smith Act includes a number ofsignificant changes to U.S. patent law, including provisions that affect the way patent applications will be prosecuted and may also affect patent litigation.The U.S. PTO is currently developing regulations and procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes topatent law associated with the Leahy-Smith Act, and in particular, the first to file provisions, were enacted March 16, 2013. However, it is not clear what, ifany, impact the Leahy-Smith Act will have on the operation of our business. However, the Leahy-Smith Act and its implementation could increase theuncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have amaterial adverse effect on our business and financial condition.We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information ofthird 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 orpotential competitors. Although we try to ensure that our employees, consultants and independent contractors do not use the proprietary information orknow-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 orotherwise used or disclosed intellectual property, including trade secrets or other proprietary information, of any of our employee’s former employer or otherthird parties. Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, wemay lose valuable intellectual property rights or personnel, which could adversely impact our business. Even if we are successful in defending against suchclaims, 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 intellectualproperty. We have had in the past, and we may also have to in the future, ownership disputes arising, for example, from conflicting obligations of consultantsor others who are involved in developing our product candidates. Litigation may be necessary to defend against these and other claims challenginginventorship or ownership. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual propertyrights, such as exclusive ownership of, or right to66 use, valuable intellectual property. Such an outcome could have a material adverse effect on our business. Even if we are successful in defending against suchclaims, 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 otherrequirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with theserequirements.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 havesystems 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. patentagencies. The U.S. PTO and various non-U.S. governmental patent agencies require compliance with a number of procedural, documentary, fee payment andother 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 whichnon-compliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevantjurisdiction. 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.Issued patents covering our product candidates could be found invalid or unenforceable if challenged in court.If we or one of our licensing partners initiated legal proceedings against a third party to enforce a patent covering one of our product candidates, thedefendant could counterclaim that the patent covering our product candidate is invalid and/or unenforceable. 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 meetany of several statutory requirements, including patent eligible subject matter, lack of novelty, obviousness or non-enablement. Grounds for anunenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the U.S. PTO, ormade a misleading statement, during prosecution. Third parties may also raise similar claims before administrative bodies in the United States or abroad, evenoutside 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 productcandidates. The outcome following legal assertions of invalidity and unenforceability is unpredictable. With respect to the validity question, for example, wecannot 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 prevailon a legal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the patent protection on our product candidates.Such a loss of patent protection would have a material adverse impact on our business.Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our products.As is the case with other biotechnology companies, our success is heavily dependent on intellectual property, particularly patents. Obtaining andenforcing patents in the biotechnology industry involve both technological and legal complexity, and is therefore obtaining and enforcing biotechnologypatents is costly, time-consuming and inherently uncertain. In addition, the United States has recently enacted and is currently implementing wide-rangingpatent reform legislation. Recent U.S. Supreme Court rulings have narrowed the scope of patent protection available in certain circumstances and weakenedthe rights of patent owners in certain situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, thiscombination of events has created uncertainty with respect to the value of patents, once obtained. Depending on decisions by the U.S. Congress, the federalcourts, and the U.S. PTO, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain newpatents 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 ourintellectual property rights in some countries outside the United States can be less extensive than those in the United States. In addition, the laws of someforeign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States. Consequently, we may not beable to prevent third parties from practicing our inventions in all countries outside the United States, or from selling or importing products made using ourinventions in and into the United States or other jurisdictions. Competitors may use our technologies in jurisdictions where we have not obtained patentprotection to develop their own products and further, may export otherwise infringing products to territories where we have patent protection, butenforcement is not as strong as that in the United States. These products may compete with our products and our patents or other intellectual property rightsmay not be effective or sufficient to prevent them from competing.67 Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legalsystems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets and other intellectual propertyprotection, particularly those relating to biotechnology products, which could make it difficult for us to stop the infringement of our patents or marketing ofcompeting products in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign jurisdictions could result insubstantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpretednarrowly 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 thatwe initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectualproperty 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 stockThe 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 purchasethem.Companies trading in the stock market in general, and The NASDAQ Global Select Market in particular, have experienced extreme price and volumefluctuations that have often been unrelated or disproportionate to the operating performance of these companies. Broad market and biotechnology andpharmaceutical 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 may be volatile. Our stock price could be subject to wide fluctuations in response to a variety of factors, includingthe following: •adverse results or delays in preclinical or clinical studies; •reports of adverse events in other gene therapy products or clinical studies of such products; •inability to obtain additional funding; •any delay in filing an IND or BLA for any of our product candidates and any adverse development or perceived adverse development with respect tothe FDA’s review of that IND or BLA; •failure to develop successfully and commercialize our product candidates; •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 our product candidates or the inability to do so at acceptable prices; •adverse regulatory decisions; •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; •announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments by us, our strategic collaboration partner orour competitors; •disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for ourtechnologies; •additions or departures of key scientific or management personnel; •significant lawsuits, including patent or stockholder litigation; •changes in the market valuations of similar companies;68 •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 couldcause our stock price to fall or prevent it from increasing for numerous reasons, and actual or potential sales by such persons could be viewed negativelyby 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 stocktransactions, a number of our employees, including executive officers and members of our board of directors, have adopted and may continue to adopt stocktrading 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 byour executive officers and directors require public filings. Actual or potential sales of our common stock by such persons could cause the price of ourcommon 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 inadditional 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 transactionsat prices and in a manner we determine from time to time. If we sell common stock, convertible securities or other equity securities in more than onetransaction, investors may be materially diluted by subsequent sales. These sales may also result in material dilution to our existing stockholders, and newinvestors could gain rights superior to our existing stockholders.Pursuant to our 2013 Stock Option and Incentive Plan, or the 2013 Plan, our management is authorized to grant stock options and other equity-basedawards to our employees, directors and consultants. The number of shares available for future grant under the 2013 Plan automatically increases each year byup 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 orcompensation committee to take action to reduce the size of the increase in any given year. Currently, we plan to register the increased number of sharesavailable for issuance under the 2013 Plan each year. If our board of directors or compensation committee elects to increase the number of shares available forfuture grant by the maximum amount each year, our stockholders may experience additional dilution, which could cause our stock price to fall. We also havean Employee Stock Purchase Plan and any shares of common stock purchased pursuant to that plan will also cause dilution.We could be subject to securities class action litigation.In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk isespecially relevant for us because biotechnology and pharmaceutical companies have experienced significant stock price volatility in recent years. If we facesuch litigation, it 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 greaterthan 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, and other pre-change tax attributes (such as research tax credits) to offset its post-change income may be limited. We have completed severalfinancings since our inception which we believe have resulted in a change in control as defined by IRC Section 382. We may also experience ownershipchanges 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 netoperating loss carryforwards to offset U.S. federal taxable income may be subject to limitations, which could potentially result in increased future tax liabilityto 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 orpermanently increase state taxes owed.We do not intend to pay 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 stockholderswill therefore be limited to the appreciation of their stock.69 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 athird 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 ofdelaying or preventing a change in control of us or changes in our management. Our amended and restated certificate of incorporation and by-laws, includeprovisions 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 chiefexecutive 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 proposednominations of persons for election to our board of directors; •provide that our directors may be removed only for cause; •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 •require supermajority votes of the holders of our common stock to amend specified provisions of our amended and restated certificate of incorporationand 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, whichlimits 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 ordeterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could alsoaffect the price that some investors are willing to pay for our common stock. Item 1B. Unresolved Staff CommentsNot applicable. Item 2. PropertiesOur corporate headquarters are located in Cambridge, Massachusetts. Our current leased facility encompasses approximately 53,500 square feet of officeand laboratory space, located at 150 Second Street, Cambridge, Massachusetts. The nine-year lease commenced in December 2013. We signed anAssignment and Assumption of Lease relating to our current headquarters on September 30, 2016 and expect to surrender this leased premise during thesecond quarter of 2017 in accordance with the terms of the lease. We also lease 23,195 square feet of office space located at 215 First Street, Cambridge,Massachusetts. This lease expires between March 12, 2017 and July 12, 2020 at our option. We have informed our landlord of our intent to vacate the leasedpremises located at 215 First Street on April 12, 2017. In 2015 we also entered into a lease agreement for approximately 253,108 square feet of office andlaboratory space located at 60 Binney Street, Cambridge, Massachusetts starting on October 1, 2016. The lease will continue until the end of the 120th fullcalendar month following April 2017 or the earlier the date we occupy the building or other conditions specified in the lease occur. We have the option toextend the 60 Binney Street Lease for two successive five-year terms. We also lease approximately 7,800 square feet of office and laboratory space in Seattle,Washington, which lease expires in December 2017. We believe that our existing facilities are adequate for our current needs. 70 Item 3. Legal ProceedingsIn the ordinary course of business, we are from time to time involved in lawsuits, claims, investigations, proceedings, and threats of litigation relating tointellectual property, commercial arrangements and other matters. While the outcome of these proceedings and claims cannot be predicted with certainty, asof December 31, 2016, we were not party to any legal or arbitration proceedings that may have, or have had in the recent past, significant effects on ourfinancial position or profitability. No governmental proceedings are pending or, to our knowledge, contemplated against us. We are not a party to anymaterial 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 amaterial interest adverse to us or our subsidiaries. Item 4. Mine Safety DisclosuresNot applicable. 71 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesOur common stock has been traded on the Nasdaq Global Select Market under the symbol “BLUE.” The following table shows the high and low saleprices per share of our common stock as reported on the Nasdaq Global Select Market for the periods indicated: High Low 2015 First Quarter 2015 $128.88 $83.00 Second Quarter 2015 $197.35 $116.00 Third Quarter 2015 $171.24 $82.05 Fourth Quarter 2015 $106.95 $48.85 2016 First Quarter 2016 $65.00 $37.40 Second Quarter 2016 $53.38 $35.37 Third Quarter 2016 $74.95 $43.10 Fourth Quarter 2016 $79.70 $37.05 On February 17, 2017, the last reported sale price for our common stock on the Nasdaq Global Select Market was $77.10 per share.Stock Performance GraphThe graph set forth below compares the cumulative total stockholder return on our common stock between June 19, 2013 (the date of our initial publicoffering) and December 31, 2016, with the cumulative total return of (a) the Nasdaq Biotechnology Index and (b) the Nasdaq Composite Index, over the sameperiod. This graph assumes the investment of $100 on June 19, 2013 in our common stock, the Nasdaq Biotechnology Index and the Nasdaq CompositeIndex and assumes the reinvestment of dividends, if any. The graph assumes our closing sales price on June 19, 2013 of $26.91 per share as the initial valueof our common stock and not the initial offering price to the public of $17.00 per share.72 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 notnecessarily indicative of, nor is it intended to forecast, the potential future performance of our common stock. Information used in the graph was obtainedfrom the Nasdaq Stock Market LLC, a financial data provider and a source believed to be reliable. The Nasdaq Stock Market LLC is not responsible for anyerrors or omissions in such information. HoldersAs of February 17, 2017, there were approximately 11 holders of record of our common stock. The actual number of stockholders is greater than thisnumber of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees. Thisnumber of holders of record also does not include stockholders whose shares may be held in trust by other entities.DividendsWe have not paid any cash dividends on our common stock since inception and do not anticipate paying cash dividends in the foreseeable future.73 Securities authorized for issuance under equity compensation plansInformation about our equity compensation plans is incorporated herein by reference to Item 12 of Part III of this Annual Report on Form 10-K. Item 6. Selected Financial DataThe following selected consolidated financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Conditionand Results of Operations”, the consolidated financial statements and related notes, and other financial information included in this Annual Report onForm 10-K.We derived the consolidated financial data for the years ended December 31, 2016, 2015 and 2014 and as of December 31, 2016 and 2015 from ouraudited consolidated financial statements, which are included elsewhere in this Annual Report on Form 10-K. We derived the consolidated financial data forthe years ended December 31, 2013 and 2012 and as of December 31, 2014, 2013 and 2012 from our audited consolidated financial statements that are notincluded elsewhere in this Annual Report on Form 10-K. Historical results are not necessarily indicative of the results to be expected in future periods. Years Ended December 31, 2016 2015 2014 2013 2012 (1) (in thousands, except per share amounts) Consolidated statements of operations data: Revenue: Collaboration revenue $6,155 $14,079 $25,031 $19,792 $— Research and license fees — — 390 389 340 Total revenue 6,155 14,079 25,421 20,181 340 Expenses: Research and development 204,775 134,038 62,574 31,002 17,210 General and administrative 65,119 46,209 23,227 14,126 6,846 Change in fair value of contingent consideration 4,091 2,869 246 — — Total operating expenses 273,985 183,116 86,047 45,128 24,056 Loss from operations (267,830) (169,037) (60,626) (24,947) (23,716)Other income, net 3,711 2,314 120 (374) 46 Income tax benefit (expense) 612 (60) 11,797 — — Net loss $(263,507) $(166,783) $(48,709) $(25,321) $(23,670)Net loss per share applicable to common stockholders - basic and diluted $(7.07) $(4.81) $(1.83) $(2.02) $(13.79)Weighted-average number of common shares used in net loss per share applicable to common stockholders - basic and diluted 37,284 34,669 26,546 12,555 262 As of December 31, 2016 2015 2014 2013 2012 (1) (in thousands) Consolidated balance sheet data: Cash and cash equivalents $278,887 $164,269 $347,845 $206,279 $67,011 Marketable securities 605,943 701,494 144,158 — — Working capital 649,681 483,597 437,011 177,113 63,156 Total assets 1,118,122 1,002,337 556,739 224,390 69,322 Construction financing lease obligation 120,140 61,901 — — — Other long-term obligations 54,009 49,572 22,504 37,849 601 Preferred stock — — — — 122,177 Common stock and additional paid-in capital 1,448,263 1,166,954 638,712 250,342 15,270 Total stockholders' equity (deficit) 869,440 850,496 491,257 151,667 (55,747) (1)Starting in 2014, the selected financial data includes the impact of the acquisition of Pregenen in June 2014. 74 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe following information should be read in conjunction with the consolidated financial statements and related notes thereto included in this AnnualReport on Form 10-KExcept for the historical information contained herein, the matters discussed in this Annual Report on Form 10-K may be deemed to be forward-lookingstatements that involve risks and uncertainties. We make such forward-looking statements pursuant to the safe harbor provisions of the Private SecuritiesLitigation Reform Act of 1995 and other federal securities laws. In this Annual Report on Form 10-K, words such as “may,” “expect,” “anticipate,”“estimate,” “intend,” and similar expressions (as well as other words or expressions referencing future events, conditions or circumstances) are intended toidentify 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 statementscontained in this Annual Report. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry inwhich we operate are consistent with the forward-looking statements contained in this Annual Report, they may not be predictive of results or developmentsin future periods.The following information and any forward-looking statements should be considered in light of factors discussed elsewhere in this Annual Report onForm 10-K, including those risks identified under 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. Wedisclaim any obligation, except as specifically required by law and the rules of the SEC, to publicly update or revise any such statements to reflect anychange in our expectations or in events, conditions or circumstances on which any such statements may be based, or that may affect the likelihood thatactual results will differ from those set forth in the forward-looking statements.OverviewWe are a clinical-stage biotechnology company committed to developing potentially transformative gene therapies for severe genetic diseases andcancer. With our lentiviral-based gene therapy and gene editing capabilities, we have built an integrated product platform with broad potential application inthese areas. We believe that gene therapy for severe genetic diseases has the potential to change the way these patients are treated by correcting theunderlying genetic defect that is the cause of their disease, rather than offering treatments that only address their symptoms. Our clinical programs in severegenetic diseases include our LentiGlobin® product candidate to treat transfusion-dependent β-thalassemia, or TDT, and to treat severe sickle cell disease, orsevere SCD, and our Lenti-DTM product candidate to treat cerebral adrenoleukodystrophy, or CALD, a rare hereditary neurological disorder. Our programs inoncology are built upon our leadership in lentiviral gene delivery and T cell engineering, with a focus on developing novel T cell-based immunotherapies,including chimeric antigen receptor (CAR) and T cell receptor (TCR) T cell therapies. bb2121, our lead product candidate in oncology, is a CAR T cellproduct candidate for the treatment of multiple myeloma.We are conducting four clinical studies of our LentiGlobin product candidate: a Phase I/II study in the United States, Australia, and Thailand for thetreatment of subjects with TDT, called the Northstar Study (HGB-204); a multi-site, international, Phase III study for the treatment of subjects with TDT and anon-β0/β0 genotype, called the Northstar-2 Study (HGB-207); a single-center Phase I/II study in France for the treatment of subjects who with TDT or withsevere SCD (HGB-205); and a multi-site Phase I study in the United States for the treatment of subjects with severe SCD (HGB-206). We have achieved ourenrollment target of 18 patients in the Northstar Study. In addition, we intend to initiate in 2017 our planned Phase III study of our LentiGlobin productcandidate for patients with TDT and a β0/β0 genotype, called the Northstar-3 Study (HGB-212). Both TDT and severe SCD are rare, hereditary blooddisorders that often lead to severe anemia and shortened lifespans. Our LentiGlobin product candidate has been granted Orphan Drug status by the U.S. Foodand Drug Administration, or FDA, and the European Medicines Agency, or EMA, for both β-thalassemia and SCD. Our LentiGlobin product candidate wasgranted Fast-Track designation by the FDA for the treatment of β-thalassemia major and for the treatment of certain patients with severe SCD. The FDA hasgranted Breakthrough Therapy designation to our LentiGlobin product candidate for the treatment of transfusion-dependent patients with β-thalassemiamajor. The EMA has granted access to its Priority Medicines (PRIME) scheme for our LentiGlobin product candidate for the treatment of TDT.We are conducting a multi-site, international, Phase II/III clinical study of our Lenti-D product candidate, called the Starbeam Study (ALD-102), for thetreatment of subjects with CALD, a rare, hereditary neurological disorder that is often fatal. Our Lenti-D product candidate has been granted Orphan Drugstatus by the FDA and the EMA for the treatment of adrenoleukodystrophy. In October 2013, we announced that the first subject had been treated in thisstudy and in May 2015 we announced the achievement of enrollment of 18 subjects in this study. In December 2016, we announced that we intend to expandthe Starbeam Study to enroll up to75 eight additional subjects. We are also conducting an observational study of subjects with CALD treated by allogeneic hematopoietic stem-cell transplantreferred to as the ALD-103 study. Our Lenti-D product candidate has been granted Orphan Drug status by the FDA and the EMA for the treatment ofadrenoleukodystrophy. In March 2013, we entered into a global strategic collaboration with Celgene Corporation, or Celgene, to discover, develop and commercialize chimericantigen receptor-modified T cells, or CAR T cells, as potentially disease-altering therapies in oncology. This collaboration had an initial term of three years,and Celgene made a $75.0 million up-front, non-refundable cash payment to us as consideration for entering into the collaboration. In June 2015, weamended and restated the collaboration agreement, or the Amended Collaboration Agreement, to focus exclusively on anti-BCMA product candidates for anew three-year term. B-cell maturation antigen, or BCMA, is a cell surface protein that is expressed on normal plasma cells and on most multiple myelomacells, but is absent from other normal tissues. As consideration for the Amended Collaboration Agreement, we received an upfront, non-refundable cashpayment of $25.0 million to fund research and development under the collaboration. During the year ended December 31, 2016, we recognized $6.2 millionof revenue associated with our collaboration with Celgene related to the research and development services performed. As of December 31, 2016, we haveclassified $46.4 million of deferred revenue related to our collaboration with Celgene as current or non-current in the accompanying balance sheets. InFebruary 2016, we initiated a Phase I clinical study of bb2121, the first anti-BCMA product candidate from this collaboration. This study will enroll up to 50patients who have received three prior regimens for treatment of multiple myeloma. In February 2016, we exclusively licensed to Celgene the right todevelop and commercialize bb2121 and as a result, we received an option fee in the amount of $10.0 million in the first quarter of 2016. We may elect to co-develop and co-promote bb2121, and any other product candidates in the United States under this collaboration arrangement. In addition, we anticipateinitiating a Phase I clinical study in the United States to evaluate the safety and efficacy of the next anti-BCMA CAR T cell product candidate arising fromour collaboration with Celgene in 2017, which would result in a $15.0 million payment to us.In June 2014, we acquired Precision Genome Engineering, Inc., or Pregenen, a privately-held biotechnology company headquartered in Seattle,Washington. Through the acquisition, we obtained rights to Pregenen’s gene editing and cell signaling technology. The agreement provides for up to $135.0million in future contingent cash payments by us upon the achievement of certain preclinical, clinical and commercial milestones related to the Pregenentechnology, of which $15.0 million relates to preclinical milestones, $20.1 million relates to clinical milestones and $99.9 million relates to commercialmilestones. During 2016 and 2015, $5.0 million and $1.0 million in preclinical milestones, respectively, were achieved and paid to the former equityholdersof Pregenen. We estimate future contingent cash payments have a fair value of $7.8 million as of December 31, 2016, $4.5 million of which is classified as acurrent liability.As of December 31, 2016, we had cash, cash equivalents and marketable securities of approximately $884.8 million. We expect that our existing cash,cash equivalents and marketable securities will be sufficient to fund our current operations into the second half of 2019.Since our inception in 1992, we have devoted substantially all of our resources to our development efforts relating to our product candidates, includingactivities to manufacture product candidates in compliance with good manufacturing practices, or GMP, to conduct clinical studies of our productcandidates, to provide general and administrative support for these operations and to protect our intellectual property. We do not have any productsapproved for sale and have not generated any revenue from product sales. We have funded our operations primarily through the sale of common stock in ourpublic offerings, private placements of preferred stock and warrants and through collaborations.We have never been profitable and have incurred net losses in each year since inception. Our net losses were $263.5 million for the year ended December31, 2016 and our accumulated deficit was $577.7 million as of December 31, 2016. Substantially all our net losses resulted from costs incurred in connectionwith our research and development programs and from general and administrative costs associated with our operations. We expect to continue to incursignificant expenses and increasing operating losses for at least the next several years. We expect our expenses will increase substantially in connection withour ongoing and planned activities, as we: •conduct clinical studies for our LentiGlobin, Lenti-D, and bb2121 product candidates; •increase research and development-related activities for the discovery and development of oncology product candidates; •continue our research and development efforts; •manufacture clinical study materials and develop large-scale manufacturing capabilities; •seek regulatory approval for our product candidates; and •add personnel to support our product development and commercialization efforts.76 We do not expect to generate revenue from product sales unless and until we successfully complete development and obtain regulatory approval for oneor more of our product candidates, which we expect will take a number of years and is subject to significant uncertainty. We have no commercial-scalemanufacturing facilities, and all of our manufacturing activities are contracted out to third parties. Additionally, we currently utilize third-party contractresearch organizations, or CROs, to carry out our clinical development activities. If we seek to obtain regulatory approval for any of our product candidates,we expect to incur significant commercialization expenses as we prepare for product sales, marketing, manufacturing, and distribution. Accordingly, we willseek to fund our operations through public or private equity or debt financings, strategic collaborations, or other sources. However, we may be unable to raiseadditional funds or enter into such other arrangements when needed on favorable terms or at all. Our failure to raise capital or enter into such otherarrangements 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 increasedexpenses 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 notbecome profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue ouroperations at planned levels and be forced to reduce our operations.Financial operations overviewRevenueTo date, we have not generated any revenues from the sale of products. Our revenues have been derived from collaboration arrangements, research fees,license fees and grant revenues.Collaboration revenue is generated exclusively from our collaboration arrangement with Celgene, which was amended in 2015. The terms of thisamended arrangement contain multiple deliverables, which include at inception: (i) research and development services, (ii) participation on the joint steeringcommittee, or JSC, (iii) participation on the patent committee, (iv) a license to the first product candidate, (v) manufacture of vectors and associated payloadfor incorporation into the first optioned product candidate under the license, and (vi) participation on the joint governance committee, or JGC, under the co-development and co-promotion agreement for the first optioned product candidate under the license. We recognize arrangement consideration allocated toeach unit of accounting when all of the revenue recognition criteria in Financial Accounting Standards Board, or FASB, Accounting Standards Codification,or ASC, Topic 605, Revenue Recognition, or ASC 605, are satisfied for that particular unit of accounting. Revenue from the Celgene arrangement associatedwith discovery, research and development services, joint steering committee services and patent committee services is recognized ratably over the associatedperiod of performance, which is initially three years.Research and license fee revenue is primarily generated through license and research and development agreements with strategic partners and nonprofitorganizations for the development and commercialization of our product candidates. There are no performance, cancellation, termination, or refundprovisions in any of our arrangements that contain material financial consequences to us.Nonrefundable license fees are recognized as revenue upon delivery provided there are no undelivered elements in the arrangement. Research fees arerecognized as revenue over the period we perform the associated services or on a straight-line basis if the pattern of performance cannot be estimated.Research and development expensesResearch 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 clinical study materials; •facilities, depreciation, and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, informationtechnology, insurance, and other supplies; •costs associated with our research platform and preclinical activities; •costs associated with our regulatory, quality assurance and quality control operations; and •amortization of intangible assets.77 Research and development costs are expensed as incurred. Costs for certain development activities are recognized based on an evaluation of the progressto completion of specific tasks using information and data provided to us by our vendors and our clinical sites. We cannot determine with certainty theduration 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 fromthe commercialization and sale of any of our product candidates that obtain regulatory approval. We may never succeed in achieving regulatory approval forany of our product candidates. The duration, costs, and timing of clinical studies and development of our product candidates will depend on a variety offactors, including: •the scope, rate of progress, and expense of our ongoing as well as any additional clinical studies and other research and development activities weundertake; •future clinical study results; •uncertainties in clinical study enrollment rates; •changing standards for regulatory approval; and •the timing and receipt of any regulatory approvals.A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costsand timing associated with the development of that product candidate. For example, if the FDA, or another regulatory authority were to require us to conductclinical studies beyond those that we currently anticipate will be required for the completion of clinical development of a product candidate or if weexperience significant delays in enrollment in any of our clinical studies, we could be required to expend significant additional financial resources and timeon the completion of clinical development for our product candidates.From inception through December 31, 2016, we have incurred $496.9 million in research and development expenses. We plan to increase our researchand development expenses for the foreseeable future as we continue to advance the development of our Lenti-D, LentiGlobin, and bb2121 productcandidates, conduct research and development activities in oncology, including under our strategic collaboration with Celgene, and continue the researchand development of product candidates using our gene editing technology platform. Our research and development activities include the following: •We are conducting the Starbeam Study (ALD-102), a Phase II/III clinical study to examine the safety and efficacy of our Lenti-D product candidate inthe treatment of subjects with CALD. In May 2015, we announced that this study has been fully enrolled. In December 2016, we announced that weare amending the protocol for this study to enroll up to an additional eight subjects. •We are conducting the Northstar Study (HGB-204), a Phase I/II clinical study in the United States, Australia and Thailand to study the safety andefficacy of our LentiGlobin product candidate in the treatment of subjects with TDT. In March 2014, we announced that the first subject had beentreated in this study. In September 2016, we announced that this study has been fully enrolled. •We are conducting the HGB-205 study, a Phase I/II clinical study in France to study the safety and efficacy of our LentiGlobin product candidate inthe treatment of subjects with TDT and of subjects with severe SCD. In December 2013, we announced that the first subject with TDT had been treatedin this study and in October 2014, we announced that the first subject with severe SCD had been treated in this study. •We are conducting the HGB-206 study, a Phase I clinical study in the United States to study the safety and efficacy of our LentiGlobin productcandidate in the treatment of subjects with severe SCD. In June 2015, we announced that the first subject with severe SCD had been treated in thisstudy. In October 2016, we announced that we have amended the protocol for this study to incorporate several process changes and to expandenrollment. •We are conducting the Northstar-2 Study (HGB-207), a Phase III study at multiple sites internationally to examine the safety and efficacy of ourLentiGlobin product candidate in the treatment of subjects with TDT and a non-β0/β0 genotype. In December 2016, we announced that the firstsubject had been treated in this study. •We are planning to initiate in 2017 the Northstar-3 Study (HGB-212), a Phase III study at multiple sites internationally to examine the safety andefficacy of our LentiGlobin product candidate in the treatment of subjects with TDT and a β0/β0 genotype. •We are conducting the CRB-401 study, a Phase I clinical study in the United States to study the safety and efficacy of our bb2121 product candidatein the treatment of subjects with relapsed/refractory multiple myeloma. In February 2016, we announced that the first subject with relapsed/refractorymultiple myeloma had been treated in this study. •We are planning to initiate in 2017 the CRB-402 study, a Phase I clinical study of our next-generation anti-BCMA product candidate in the treatmentof subjects with relapsed/refractory multiple myeloma. •We will continue to manufacture clinical study materials in support of our clinical studies.78 Our direct research and development expenses consist principally of external costs, such as fees paid to investigators, consultants, central laboratories andCROs in connection with our clinical studies, and costs related to acquiring and manufacturing clinical study materials. We allocate salary and benefit costsdirectly related to specific programs. We do not allocate personnel-related discretionary bonus or stock-based compensation costs, costs associated with ourgeneral discovery platform improvements, depreciation or other indirect costs that are deployed across multiple projects under development and, as such, thecosts are separately classified as personnel and other expenses in the table below: Year ended December 31, 2016 2015 2014 (in thousands) LentiGlobin $67,154 $38,515 $21,444 Lenti-D 18,612 13,666 12,137 bb2121 12,690 — — Pre-clinical programs 32,771 15,937 6,651 Total direct research and development expense 131,227 68,118 40,232 Employee- and contractor-related expenses 17,047 11,793 6,771 Stock-based compensation expense 19,690 24,854 5,151 Platform-related expenses 15,359 21,217 5,112 Facility expenses 20,301 7,282 5,292 Other expenses 1,151 774 16 Unallocated personnel and other expenses 73,548 65,920 22,342 Total research and development expense $204,775 $134,038 $62,574 The costs associated with our bb2121 program were included within pre-clinical programs in the table shown above for the years ended December 31,2015 and 2014 and are separately shown for the year ended December 31, 2016.General and administrative expensesGeneral and administrative expenses consist primarily of salaries and related costs for personnel, including stock-based compensation and travel expensesfor our employees in executive, operational, finance, legal, business development, commercial and human resource functions. Other general andadministrative expenses include facility-related costs, professional fees for accounting, tax and legal and consulting services, directors’ fees and expensesassociated with obtaining and maintaining patents.We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support our continued research anddevelopment and the potential commercialization of our product candidates. Additionally, if and when we believe a regulatory approval of the first productcandidate appears likely, we anticipate an increase in payroll and related expenses as a result of our preparation for commercial operations, especially as itrelates to the sales and marketing of our product candidates.Other income, netOther income, net consists primarily of interest income earned on investments, net of amortization of premium and accretion of discount, foreign currencygains or losses and tax incentives from the Massachusetts Life Sciences Center.Critical accounting policies and significant judgments and estimatesOur management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which have beenprepared in accordance with generally accepted accounting principles. The preparation of these financial statements requires us to make estimates andjudgments that affect the reported amounts of assets, liabilities, and expenses and the disclosure of contingent assets and liabilities in our financialstatements. On an ongoing basis, we evaluate our estimates and judgments, including expected business and operational changes, sensitivity and volatilityassociated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends. We base ourestimates on historical experience, known trends and events and various other factors that are believed to be reasonable under the circumstances, the resultsof which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual resultsmay differ from these estimates under different assumptions or conditions. In making estimates and judgments, management employs critical accountingpolicies.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.79 Revenue recognitionWe have primarily generated revenue through collaboration arrangements, research arrangements and license arrangements with strategic partners andnonprofit organizations for the development and commercialization of product candidates. Additionally, we have generated revenue from research anddevelopment grant programs.Collaboration revenueAs of December 31, 2016, our collaboration revenue was generated exclusively from our collaboration arrangement with Celgene. The terms of thisarrangement contains multiple deliverables, which include at inception: (i) research and development services, (ii) participation on the JSC, (iii) participationon the patent committee, (iv) a license to the first product candidate, (v) manufacture of vectors and associated payload for incorporation into the firstoptioned product candidate under the license, and (vi) participation on the JGC under the co-development and co-promotion agreement for the first optionedproduct candidate under the license. Non-refundable payments to us under this arrangement may include: (i) up-front research fees, (ii) product candidatelicense fees, (iii) payments for the manufacture and supply of vectors and payloads, (iv) payments based on the achievement of certain milestones and(v) royalties on product sales. Additionally, we may elect to share in the costs incurred from the development, commercialization and manufacture of productcandidates licensed by our collaborators and earn our share of the net profits or bear our share of the net losses generated from the sale of product candidateslicensed by our collaborators.We analyze multiple-element arrangements based on the guidance in FASB ASC Topic 605-25, Revenue Recognition-Multiple-Element Arrangements, orASC 605-25. Pursuant to the guidance in ASC 605-25, we evaluate multiple-element arrangements to determine (1) the deliverables included in thearrangement and (2) whether the individual deliverables represent separate units of accounting or whether they must be accounted for as a combined unit ofaccounting. This evaluation involves subjective determinations and requires us to make judgments about the individual deliverables and whether suchdeliverables are separable from the other aspects of the contractual relationship. Deliverables are considered separate units of accounting provided that:(i) the delivered item(s) has value to the customer on a standalone basis and (ii) if the arrangement includes a general right of return relative to the delivereditem(s), delivery or performance of the undelivered item(s) is considered probable and substantially in our control. In assessing whether an item hasstandalone value, we consider factors such as the research, manufacturing and commercialization capabilities of the collaboration partner and the availabilityof the associated expertise in the general marketplace. In addition, we consider whether the collaboration partner can use the other deliverable(s) for theirintended purpose without the receipt of the remaining element(s), whether the value of the deliverable is dependent on the undelivered item(s) and whetherthere are other vendors that can provide the undelivered element(s). The collaboration arrangement does not contain a general right of return relative to thedelivered item(s).Arrangement consideration that is fixed or determinable is allocated among the separate units of accounting using the relative selling price method. Then,the applicable revenue recognition criteria in ASC 605 are applied to each of the separate units of accounting in determining the appropriate period andpattern of recognition. We determine the selling price of a unit of accounting following the hierarchy of evidence prescribed by ASC 605-25. Accordingly,we determine the estimated selling price for units of accounting within each arrangement using vendor-specific objective evidence, or VSOE, of selling price,if available, third-party evidence, or TPE, of selling price if VSOE is not available, or best estimate of selling price, or BESP, if neither VSOE nor TPE isavailable. We typically use BESP to estimate the selling price, since we generally do not have VSOE or TPE of selling price for our units of accounting.Determining the BESP for a unit of accounting requires significant judgment. In developing the BESP for a unit of accounting, we consider applicable marketconditions and relevant entity-specific factors, including factors that were contemplated in negotiating the agreement with the customer and estimated costs.We validate the BESP for units of accounting by evaluating whether changes in the key assumptions used to determine the BESP will have a significanteffect on the allocation of arrangement consideration between multiple units of accounting.Options are considered substantive if, at the inception of the arrangement, we are at risk as to whether the collaboration partner will choose to exercise theoption. Factors that we consider in evaluating whether an option is substantive include the overall objective of the arrangement, the benefit the collaboratormight obtain from the arrangement without exercising the option, the cost to exercise the option and the likelihood that the option will be exercised. Forarrangements under which an option is considered substantive, we do not consider the item underlying the option to be a deliverable at the inception of thearrangement and the associated option fees are not included in allocable arrangement consideration, assuming the option is not priced at a significant andincremental discount. Conversely, for arrangements under which an option is not considered substantive or if an option is priced at a significant andincremental discount, we would consider the item underlying the option to be a deliverable at the inception of the arrangement and a corresponding amountwould be included in allocable arrangement consideration. The license to the first product candidate is considered a deliverable at the inception of thearrangement but options to license any additional product candidates are substantive options and therefore are not considered deliverables at inception.80 We recognize arrangement consideration allocated to each unit of accounting when all of the revenue recognition criteria in ASC 605 are satisfied for thatparticular unit of accounting. We will recognize as revenue arrangement consideration attributed to licenses that have standalone value from the otherdeliverables to be provided in an arrangement upon delivery. We will recognize as revenue arrangement consideration attributed to licenses that do not havestandalone value from the other deliverables to be provided in an arrangement over our estimated performance period as the arrangement would be accountedfor as a single unit of accounting.As part of our arrangement with Celgene, we concluded that the license to bb2121 does not have standalone value from one of the undelivered elements,the manufacture of vectors and associated payload for bb2121, because the manufacturing is essential to the use of the license. Accordingly, these twodeliverables qualify as a single combined unit of accounting. We are required to reassess our conclusions on standalone value upon delivery or as a result ofchanges in facts and circumstances that could impact our original conclusion that our manufacturing process is essential to the license.We recognize revenue from the Celgene arrangement associated with discovery, research and development services, joint steering committee services andpatent committee services ratably over the associated period of performance. If there is no discernible pattern of performance and/or objectively measurableperformance measures do not exist, then we recognize revenue under the arrangement on a straight-line basis over the period we are expect to complete ourperformance obligations. Conversely, if the pattern of performance in which the service is provided to the customer can be determined and objectivelymeasurable performance measures exist, then we recognize revenue under the arrangement using the proportional performance method. Revenue recognizedis limited to the lesser of the cumulative amount of payments received or the cumulative amount of revenue earned, as determined using the straight-linemethod or proportional performance method, as applicable, as of the period ending date.At the inception of an arrangement that includes milestone payments, we evaluate whether each milestone is substantive and at risk to both parties on thebasis of the contingent nature of the milestone. This evaluation includes an assessment of whether: (i) the consideration is commensurate with either ourperformance to achieve the milestone or the enhancement of the value of the delivered item(s) as a result of a specific outcome resulting from our performanceto achieve the milestone, (ii) the consideration relates solely to past performance and (iii) the consideration is reasonable relative to all of the deliverablesand payment terms within the arrangement. We evaluate factors such as the scientific, clinical, regulatory, commercial and other risks that must be overcometo achieve the respective milestone and the level of effort and investment required to achieve the respective milestone in making this assessment. There isconsiderable judgment involved in determining whether a milestone satisfies all of the criteria required to conclude that a milestone is substantive. We haveconcluded that all of the clinical and regulatory milestones pursuant to its collaboration arrangement are substantive. Accordingly, in accordance with FASBASC Topic 605-28, Revenue Recognition-Milestone Method, revenue from clinical and regulatory milestone payments will be recognized in its entirety uponsuccessful accomplishment of the milestone, assuming all other revenue recognition criteria are met. Milestones that are not considered substantive would berecognized as revenue over the remaining period of performance, assuming all other revenue recognition criteria are met. Revenue from commercialmilestone payments will be accounted for as royalties and recorded as revenue upon achievement of the milestone, assuming all other revenue recognitioncriteria are met.We will recognize royalty revenue in the period of sale of the related product(s), based on the underlying contract terms, provided that the reported salesare reliably measurable and we have no remaining performance obligations, assuming all other revenue recognition criteria are met.As of December 31, 2016 and December 31, 2015, there was $46.4 million and $41.8 million, respectively, of total deferred revenue related to theCompany’s collaboration with Celgene, which is classified as current or non-current in the consolidated balance sheets, $8.8 million of which is currentlyexpected to be recognized through the first half of 2018 related to discovery, research and development services, joint steering committee services and patentcommittee services. Approximately $37.6 million of non-current deferred revenue relates to the single combined unit of accounting comprised of the licenseto bb2121 and the manufacture of vectors and associated payload for bb2121. We currently expect this recognition may commence in 2017 but haveclassified deferred revenue associated with the combined unit of accounting as “Deferred revenue, net of current portion” on our consolidated balance sheetgiven exact timing is currently unknown and the budget for such services has not yet been agreed to by the parties.Intangible assetsIntangible assets consist of acquired core technology with finite lives. We amortize intangible assets using the straight-line method over their estimatedeconomic lives. We evaluate the potential impairment of intangible assets if events or changes in circumstances indicate that the carrying amount of theassets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. The impairment test is based on a comparison of theundiscounted cash flows expected to be generated from the use of the asset group and its eventual disposition to the carrying value of the asset group. Ifimpairment is indicated, the asset is written down by the amount by which the carrying value of the asset exceeds the related fair value of the asset. We havenot recognized an impairment charge related to intangible assets.81 Construction financing lease obligationBeginning in 2015 and until expected construction completion in 2017, we record certain estimated construction costs incurred and reported to us by thelandlord for our 60 Binney Street location as an asset and corresponding construction financing lease obligation on the consolidated balance sheets becausewe are deemed to be the owner of the building during the construction period for accounting purposes. Any costs incurred by us that have been reimbursedby the landlord or that qualify for reimbursement by the landlord are recorded as an asset and construction financing lease obligation. Any incremental costsincurred directly by us that do not qualify for reimbursement by the landlord are also capitalized. In each reporting period, the landlord estimates and reportsto us costs incurred to date related to our portion of the building using allocation estimates and provides supporting invoices for our review. We periodicallymeet with the landlord and its construction manager to review these estimates and observe construction progress before recording such amounts.Contingent considerationEach reporting period, we revalue the contingent consideration obligations associated with business combinations to their fair value and record increasesin their fair value as contingent consideration expense and decreases in the fair value as contingent consideration income. Changes in contingentconsideration result from changes in the assumptions regarding probabilities of successful achievement of related milestones, the estimated timing in whichthe milestones are achieved and the discount rate used to estimate the fair value of the liability. Contingent consideration may change significantly asdevelopment of our programs progress and additional data are obtained, impacting our assumptions. The assumptions used in estimating fair value requiresignificant judgment and the use of different assumptions and judgments could result in a materially different estimate of fair value.Accrued research and development expensesAs part of the process of preparing our financial statements, we are required to estimate our accrued expenses. This process involves reviewing opencontracts and purchase orders, communicating with our personnel to identify services that have been performed on our behalf and estimating the level ofservice 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 ofour service providers invoice us monthly in arrears for services performed or when contractual milestones are met. We make estimates of our accrued expensesas of each balance sheet date in our financial statements based on facts and circumstances known to us at that time. We periodically confirm the accuracy ofour estimates with the service providers and make adjustments if necessary. Examples of estimated accrued research and development expenses include feespaid to: •CROs in connection with clinical studies; •investigative sites in connection with clinical studies; •vendors in connection with preclinical development activities; and •vendors related to development, manufacturing, and distribution of clinical trial materials.We base our expenses related to clinical studies on our estimates of the services received and efforts expended pursuant to contracts with multiple CROsthat conduct and manage clinical studies on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract andmay 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 ina prepayment of the clinical expense. Payments under some of these contracts depend on factors such as the successful enrollment of subjects and thecompletion of clinical study milestones. In accruing service fees, we estimate the time period over which services will be performed and the level of effort tobe expended in each period. If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrual or prepaidaccordingly. Although we do not expect our estimates to be materially different from amounts actually incurred, if our estimates of the status and timing ofservices performed differs from the actual status and timing of services performed we may report amounts that are too high or too low in any particular period.To date, there has been no material differences from our estimates to the amount actually incurred.Stock-based compensationStock-based awardsWe 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. ASC 718 requires all stock-based payments toemployees, including grants of employee stock options and modifications to existing stock options, to be recognized in the consolidated statements ofoperations and comprehensive income (loss) based on their fair82 values. We account for stock-based awards to non-employees in accordance with FASB ASC Topic 505-50, Equity-Based Payments to Non-Employees, whichrequires the fair value of the award to be re-measured at fair value as the award vests.Our stock-based awards are subject to either service or performance-based vesting conditions. Compensation expense related to awards to employees anddirectors with service-based vesting conditions is recognized on a straight-line basis based on the grant date fair value over the associated service period ofthe award, which is generally the vesting term. Compensation expense related to awards to non-employees with service-based vesting conditions isrecognized on the then-current fair value at each financial reporting date prior to the measurement date over the associated service period of the award, whichis generally the vesting term, using the accelerated attribution method. Compensation expense related to awards to employees with performance-basedvesting conditions is recognized based on the grant date fair value over the requisite service period using the accelerated attribution method to the extentachievement of the performance condition is probable. Compensation expense related to awards to non-employees with performance-based vestingconditions is recognized based on the then-current fair value at each financial reporting date prior to the measurement date over the requisite service periodusing the accelerated attribution method to the extent achievement of the performance condition is probable.We estimate the fair value of our stock-based awards to employees and non-employees using the Black-Scholes option pricing model, which requires theinput of highly 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 the lack of a public market for the trading of our common stock and a lack of company specific historical and impliedvolatility data, we based our estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded. For theseanalyses, we select companies with comparable characteristics to ours including enterprise value, risk profiles, position within the industry, and withhistorical share price information sufficient to meet the expected life of the stock-based awards. We compute the historical volatility data using the dailyclosing prices for the selected companies’ shares during the equivalent period of the calculated expected term of our stock-based awards. We will continue toapply this process until a sufficient amount of historical information regarding the volatility of our own stock price becomes available. We estimate theexpected life of our employee stock options using the “simplified” method, whereby, the expected life equals the average of the vesting term and the originalcontractual term of the option. The risk-free interest rates for periods within the expected life of the option were based on the U.S. Treasury yield curve ineffect during the period the options were granted.We are also required to estimate forfeitures at the time of grant, and revise those estimates in subsequent periods if actual forfeitures differ from itsestimates. We use historical data to estimate pre-vesting option forfeitures and record stock-based compensation expense only for those awards that areexpected to vest. To the extent that actual forfeitures differ from our estimates, the difference is recorded as a cumulative adjustment in the period theestimates were revised. Stock-based compensation expense recognized in the financial statements is based on awards that are ultimately expected to vest.We have computed the fair value of employee and director stock options at date of grant using the following weighted-average assumptions: Year ended December 31, 2016 2015 2014 Expected volatility 74.3% 72.6% 82.3%Expected term (in years) 6.0 5.9 6.0 Risk-free interest rate 1.5% 1.7% 1.8%Expected dividend yield 0.0% 0.0% 0.0%Weighted average exercise price per share $52.10 $113.37 $26.92 Stock-based compensation totaled approximately $39.8 million for the year ended December 31, 2016 and $41.1 million for the year ended December 31,2015. As of December 31, 2016, we had $69.5 million of total unrecognized compensation expense related to unvested stock options, net of related forfeitureestimates, which is expected to be recognized over a weighted-average remaining vesting period of approximately 2.5 years and $11.9 million of totalunrecognized compensation expense related to unvested restricted stock units, net of related forfeiture estimates, which is expected to be recognized over aweighted-average remaining vesting period of 2.8 years. We expect the impact of our stock-based compensation expense for stock options and restrictedstock units granted to employees and non-employees to grow in future periods due to the current year and potential future increases in the value of ourcommon stock and headcount.Recent accounting pronouncementsSee Note 2 to our consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report onForm 10-K for a description of recent accounting pronouncements applicable to our business.83 Results of OperationsComparison of the years ended December 31, 2016 and 2015: Year ended December 31, 2016 2015 Change (in thousands) Revenue: Collaboration revenue $6,155 $14,079 $(7,924)Total revenue 6,155 14,079 (7,924)Operating expenses: Research and development 204,775 134,038 70,737 General and administrative 65,119 46,209 18,910 Change in fair value of contingent consideration 4,091 2,869 1,222 Total operating expenses 273,985 183,116 90,869 Loss from operations (267,830) (169,037) 98,793 Other income, net 3,711 2,314 (1,397)Loss before income taxes (264,119) (166,723) 97,396 Income tax benefit (expense) 612 (60) (672)Net loss $(263,507) $(166,783) $96,724 Revenue. Total revenue was $6.2 million for the year ended December 31, 2016, compared to $14.1 million for the year ended December 31, 2015. Thedecrease of $7.9 million was primarily due to a change in revenue recognition resulting from the amendment to our Celgene collaboration in 2015.Research and development expenses. Research and development expenses were $204.8 million for the year ended December 31, 2016, compared to$134.0 million for the year ended December 31, 2015. The increase of $70.7 million was primarily due to the increase in headcount, in-licensing costs,clinical trial-related costs, and manufacturing-related expenses necessary to support the advancement of our product candidates and included the followingincreases: •Direct research and development expenses: •$9.2 million of employee compensation and benefits, primarily due to a $14.3 million increase in payroll and payroll-related expense due to anincrease in headcount, offset by a $5.2 million decrease in stock-based compensation expense due to non-recurring stock-based compensationcharges incurred in 2015 and not in 2016 related to the modification of awards of our former Chief Scientific Officer and a non-employee founder. •$2.2 million of consulting and contractor costs to support our overall growth. •$26.1 million of manufacturing costs for our ongoing clinical and pre-clinical studies. •$6.6 million of increased license and milestone fees, primarily due to a $15.0 million one-time upfront payment made in 2016 offset by otherlicense and milestone fees incurred during 2015 and 2016. •$4.0 million of clinical trial-related costs to support the advancement of our clinical programs. •$5.7 million of laboratory supplies related to increased headcount and process development activities. •Other expenses: •$13.0 million of facilities and information technology expenses. •$2.1 million of ongoing expenses related to sponsored research agreements.General and administrative expenses. General and administrative expenses were $65.1 million for the year ended December 31, 2016, compared to $46.2million for the year ended December 31, 2015. The increase of $18.9 million was primarily due an increase of $11.1 million in employee-related costs tosupport our overall growth and $8.0 million of consulting costs to support our overall growth as well as pre-commercial efforts.Change in fair value of contingent consideration. The change in fair value of contingent consideration of $1.2 million was primarily related to thesuccessful achievement of two milestones in 2016 and an increase in the probability of successful achievement of a future milestone expected to be achievedwithin the next twelve months.84 Other income, net. Other income, net, was $3.7 million for the year ended December 31, 2016, compared to $2.3 million for the year ended December 31,2015. The increase of $1.4 million was primarily related to interest income earned on marketable securities.Comparison of the years ended December 31, 2015 and 2014: Year ended December 31, 2015 2014 Change (in thousands) Revenue: Collaboration revenue $14,079 $25,031 $(10,952)Research and license fees — 390 (390)Total revenue 14,079 25,421 (11,342)Operating expenses: Research and development 134,038 62,574 71,464 General and administrative 46,209 23,227 22,982 Change in fair value of contingent consideration 2,869 246 2,623 Total operating expenses 183,116 86,047 97,069 Loss from operations (169,037) (60,626) 108,411 Other income (expense), net 2,314 120 (2,194)Loss before income taxes (166,723) (60,506) 106,217 Income tax (expense) benefit (60) 11,797 11,857 Net loss $(166,783) $(48,709) $118,074 Revenue. Total revenue was $14.1 million for the year ended December 31, 2015, compared to $25.4 million for the year ended December 31, 2014. Thedecrease of $11.3 million was primarily due to a change in revenue recognition resulting from the amendment to our Celgene collaboration in 2015.Research and development expenses. Research and development expenses were $134.0 million for the year ended December 31, 2015, compared to $62.6million for the year ended December 31, 2014. The increase of $71.5 million was primarily due to the increase in headcount, clinical trial-related costs andmanufacturing-related expenses necessary to support the advancement of our product candidates into clinical trials and included in the following increases: •Direct research and development expenses: •$31.3 million of employee compensation and benefits, of which $19.7 million was related to stock-based compensation expense ($10.1 million ofwhich is non-recurring and related to modifications of awards of a non-employee founder and two former employees) and $7.3 million related toincreased payroll expense related to increased headcount to support our advancing pipeline. •$12.0 million of non-recurring in-license milestones and fees, of which $5.4 million related to an upfront payment for amending and restating anexisting patent sublicense agreement; $3.3 million (€3.0 million) related to an upfront payment for amending an existing license agreement withInstitut Pasteur; and $2.5 million related to upfront payments for new license agreements with collaborators to support our preclinical oncologyprograms. •$8.9 million of manufacturing costs for our ongoing clinical and pre-clinical studies. •$5.3 million of clinical trial-related costs to support the advancement of our clinical programs. •$4.9 million of direct project laboratory supplies related to increased headcount and process development activities. •Other expenses: •$1.9 million in amortization of our gene editing platform intangible asset related to our acquisition of Pregenen in mid-2014. •$1.9 million in expenses related to ongoing collaboration agreements.General and administrative expenses. General and administrative expenses were $46.2 million for the year ended December 31, 2015, compared to $23.2million for the year ended December 31, 2014. The increase of $23.0 million was primarily due to the following increases in expenses: $15.1 million ofemployee-related costs to support our overall growth, of which $10.6 million was related to stock-based compensation expense and $2.5 million was relatedincreased payroll expense due to increased headcount; $2.385 million of consulting costs to support our overall growth; $1.2 million in rent and other facility-related expenses related to accommodate increasedheadcount; $1.1 million of commercial market research and $1.1 million of professional fees.Change in fair value of contingent consideration. The change in fair value of contingent consideration of $2.6 million was primarily related to thesuccessful achievement of a milestone in 2015 and an increase in the probability of successful achievement of future milestones expected to be achievedwithin the next twelve months.Other income, net. Other income, net, was $2.3 million for the year ended December 31, 2015, compared to $0.1 million for the year ended December 31,2014. The increase of $2.2 million was primarily related to interest income earned on marketable securities purchased in the second half of 2015 and incomefrom the disgorgement of short-swing profits arising from trades by a bluebird officer under Section 16(b) of the Securities Exchange Act of 1934.Income tax (expense) benefit. The change in income tax benefit was primarily attributable to a non-recurring tax benefit recognized in 2014 as a result ofthe acquisition of Pregenen.Liquidity and Capital ResourcesAs of December 31, 2016, we had cash, cash equivalents and marketable securities of approximately $884.8 million. We expect cash, cash equivalentsand marketable securities to fund operations into the second half of 2019. Cash in excess of immediate requirements is invested in accordance with ourinvestment policy, primarily with a view to liquidity and capital preservation. As of December 31, 2016, our funds are held in U.S. Treasury securities, U.S.government agency securities, federally insured deposits, certificates of deposit 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, 2016, we had anaccumulated deficit of $577.7 million. We anticipate that we will continue to incur losses for at least the next several years. We expect that our research anddevelopment and general and administrative expenses will continue to increase and, as a result, we will need additional capital to fund our operations, whichwe may raise through public or private equity or debt financings, strategic collaborations, or other sources.We have funded our operations principally from the sale of common stock, preferred stock and through the Celgene collaboration. On July 14, 2014, wesold 3,450,000 shares of common stock (inclusive of 450,000 shares of common stock sold by us pursuant to the full exercise of an overallotment optiongranted to the underwriters in connection with the offering) through an underwritten public offering at a price of $34.00 per share for aggregate net proceedsto us of $109.8 million. On December 19, 2014, we sold 3,047,500 shares of common stock (inclusive of 397,500 shares of common stock sold by us pursuantto the full exercise of an overallotment option granted to the underwriters in connection with the offering) through an underwritten public offering at a priceof $85.00 per share for aggregate net proceeds to us of $243.3 million. On June 29, 2015, we sold 2,941,176 shares of common stock through an underwrittenpublic offering at a price of $170.00 per share for aggregate net proceeds to us of $477.2 million. On December 12, 2016, we sold 3,289,473 shares ofcommon stock through an underwritten public offering at a price of $76.00 per share for aggregate net proceeds to us of $234.7 million.Sources of LiquidityCash FlowsThe following table sets forth the primary sources and uses of cash for each of the periods below: Year ended December 31, 2016 2015 2014 (in thousands) Net cash provided by (used in): Operating activities$(189,647) $(98,429) $(59,693)Investing activities 62,731 (571,867) (157,193)Financing activities 241,534 486,720 358,452 Net increase (decrease) in cash and cash equivalents$114,618 $(183,576) $141,566 Cash Flows from Operating Activities. The net cash used in operating activities was $189.6 million for the year ended December 31, 2016 and primarilyconsisted of a net loss of $263.5 million adjusted for non-cash items including stock-based compensation of $39.8 million, depreciation and amortization of$9.6 million and a net increase in operating assets and liabilities of $19.0 million. The increase in operating assets and liabilities is driven by an increase inprepaid expenses and other current assets of86 $14.3 million for upfront payments to contract manufacturing organizations offset by an increase of $20.9 million in accrued expenses and other liabilitiesrelated to an increase in manufacturing and clinical-trial related costs for our ongoing clinical and pre-clinical studies .The net cash used in operating activities was $98.4 million for the year ended December 31, 2015 primarily consisted of a net loss of $166.8 millionadjusted for non-cash items including stock-based compensation of $41.1 million, depreciation and amortization of $7.4 and a net increase in operatingassets and liabilities of $16.0 million. The significant items in the increase in operating assets and liabilities include an increase in deferred revenue of $11.2million related to the amendment to our collaboration with Celgene and an increase in accrued expenses of $9.4 million related to an increase in accruedgoods and services and an increase in the contingent consideration, offset by a decrease in prepaid expenses and other assets of $6.8 million due to purchasesof marketable securities at a premium.The net cash used in operating activities was $59.7 million for the year ended December 31, 2014 and primarily consisted of a net loss of $48.7 millionadjusted for non-cash items including a noncash benefit on release of tax valuation allowance of $11.8 million, stock-based compensation of $10.8 million,depreciation and amortization of $4.2 and a net decrease in operating assets and liabilities of $14.7 million. The significant items in the decrease in operatingassets and liabilities include a decrease in deferred revenue of $24.9 million due to amortization of the up-front payment related to the Celgene collaboration,a decrease in accounts payable of $2.2 million and a decrease in prepaid expenses and other assets of $0.3 million offset by an increase in accrued expensesand other liabilities of $10.0 million and an increase in deferred rent of $2.0 million.Cash Flows from Investing Activities. Net cash provided by investing activities for the year ended December 31, 2016 was $62.7 million and wasprimarily due to proceeds from the maturities of available-for-sale marketable securities of $443.4 million offset by the purchase of $348.2 million ofavailable-for-sale marketable securities.Net cash used in investing activities for the year ended December 31, 2015 was $571.9 million and was primarily due to the purchase of $755.2 million ofavailable-for-sale marketable securities offset by $199.2 million in proceeds from the maturities of available-for-sale marketable securities.Net cash used in investing activities for the year ended December 31, 2014 was $157.2 million and was primarily due to the purchase of $175.0 million ofavailable-for-sale marketable securities, purchase of fixed assets of $8.7 million and cash paid in connection with the acquisition of Pregenen of $4.7 million.The fixed asset purchases primarily consisted of leasehold improvements for the build-out of our new corporate headquarters. These decreases were partiallyoffset by $31.0 million in proceeds from the maturities of investments.Cash Flows from Financing Activities: Net cash provided by financing activities for the year ended December 31, 2016 was $241.5 million and wasprimarily due to net cash proceeds from our December 2016 common stock offering.Net cash provided by financing activities for the year ended December 31, 2015 was $486.7 million and was primarily due to proceeds from our June2015 common stock offering and $10.1 million proceeds from the issuance of common stock, primarily related to the exercise of stock options.Net cash provided by financing activities for the year ended December 31, 2014 was $358.5 million and was primarily due to proceeds from our July andDecember 2014 common stock offerings.87 Contractual Obligations and CommitmentsThe following table summarizes our contractual obligations at December 31, 2016. Total 2017 2018through2019 2020through2021 After2022 (in thousands) 150 Second Street Lease (1)$1,359 $1,359 $- $- $- 60 Binney Street Lease 198,546 13,102 37,621 38,949 108,874 Other operating leases (2) 84,579 11,963 20,209 19,682 32,725 License costs (3) 4,972 922 2,005 2,045 - Sponsored research agreements 376 376 - - - Total$289,832 $27,722 $59,835 $60,676 $141,599 (1)Amounts assume we will vacate the leased premise during the second quarter of 2017.(2)Includes costs of our 215 First Street, Cambridge, Massachusetts office lease through the termination of the lease on April 12, 2017, the lease for our laband office space in Seattle, Washington and rental payments associated with two embedded operating leases at contract manufacturing organizations.(3)License costs include annual license maintenance fee payments. We have not included annual license maintenance fees or minimum royalty paymentsafter December 31, 2021, as we cannot estimate if they will occur.We also have obligations to make future payments to third parties that become due and payable on the achievement of certain development, regulatoryand commercial milestones (such as the start of a clinical trial, filing of a BLA, approval by the FDA or product launch). We have not included thesecommitments on our balance sheet or in the table above because the achievement and timing of these milestones is not fixed and determinable. Thesecommitments include: •In connection with the Pregenen acquisition, we agreed to make contingent cash payments to the former equity holders of Pregenen. In accordancewith accounting for business combinations guidance, these contingent cash payments are recorded as contingent consideration liabilities on ourconsolidated balance sheets at fair value. During the second quarter of 2016, $5.0 million in milestones were achieved, which resulted in a $5.0million payment to the former equityholders of Pregenen during the second quarter of 2016. The aggregate remaining undiscounted amount ofcontingent consideration potentially payable is $129.0 million. •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-licensedintellectual property. The maximum aggregate payments we may be obligated to pay for each of these milestone categories per product is €0.3, €0.2and €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 thelow 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 tomake 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 milestonecategories 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 intellectual property in the low single digits, which varies slightly depending on the indication of the product. We have the right tosublicense our rights under this agreement, and we will be required to pay a percentage of such license income varying from the low single digits tomid-range double digits depending on the nature of the sublicense and stage of development. We are required to make an annual maintenancepayment, which is creditable against royalty payments on a year-by-year basis. On April 1, 2015, we amended this license agreement with InstitutPasteur, which resulted in a payment of $3.3 million (€3.0 million) that was paid during the second quarter of 2015. •Under a license agreement with the Board of Trustees of the Leland Stanford Junior University, or Stanford, pursuant to which we license theHEK293T 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 intellectualproperty 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 respectto 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 payingStanford an annual maintenance fee, which will be creditable against our royalty payments.88 •Under a license agreement with the Massachusetts Institute of Technology, or MIT, pursuant to which we license various patents, we will be requiredto 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 coveredby 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 thirdparties, 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 rightsunder 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. Weare 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, we will berequired to make payments of $1.0 million based upon a regulatory milestone for each product covered by the in-licensed intellectual property. Wewill 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 reducedby half if during the ten year following first marketing approval the last valid claim within the licensed patent that covers the licensed product expiresor ends. •Under a license agreement with Biogen Inc., pursuant to which we license certain patents and patent applications related to our bb2121 productcandidate, we will be required to make certain payments related to certain development milestone obligations and must report on our progress inachieving these milestones on a periodic basis. We may be obligated to pay up to $24.0 million in the aggregate for a licensed product upon theachievement of these milestones. Upon commercialization of our products covered by the in-licensed intellectual property, we will be obligated topay a percentage of net sales as a royalty in the low single digits. •Under a license agreement with the National Institutes of Health, or NIH, pursuant to which we license certain patent applications related to ourbb2121 product candidate, we have agreed to certain development and regulatory milestone obligations and must report on our progress in achievingthese 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 ofthese milestones. Upon commercialization of our products covered by the in-licensed intellectual property, we will be obligated to pay NIH apercentage of net sales as a royalty in the low single digits. The royalties payable under this license agreement are subject to reduction for any thirdparty payments required to be made, with a minimum floor in the low single digits. •Under a license agreement related to certain aspects of our manufacturing process, we will be required to make certain payments related to certaindevelopment milestone obligations and must report on our progress in achieving these milestones on a periodic basis. We may be obligated to pay upto $13.4 million in the aggregate for each product covered by the in-licensed intellectual property. Upon commercialization of our products coveredby the in-licensed intellectual property, we will be obligated to pay the third party a percentage of net sales as a royalty in the low single digits. Theroyalties payable under this license agreement are subject to reduction for any third party payments required to be made, with a minimum floor in thelow single digits.We enter into contracts in the normal course of business with CROs for preclinical research studies and clinical trials, research supplies and other servicesand products for operating purposes. These contracts generally provide for termination on notice, and therefore are cancelable contracts and not included inthe table of contractual obligations and commitments.On June 3, 2013, we entered into a nine-year building lease for approximately 43,600 square feet of space located at 150 Second Street, Cambridge,Massachusetts, which commenced in December 2013. This lease was amended in June 2014 to add approximately 9,900 square feet. The lease originally hadmonthly lease payments of $0.2 million for the first 12 months, which increased to $0.3 million per month beginning in December 2014 due to the leaseamendment, with annual rent escalations thereafter. The lease provided a contribution from the landlord towards the initial build-out of the space of up to$7.8 million. In accordance with the lease, we entered into a cash-collateralized irrevocable standby letter of credit in the amount of $1.3 million, naming thelandlord as beneficiary, which has a balance of $0.6 million as of December 31, 2016. On September 30, 2016, we entered into an Assignment and Assumption of Lease relating to our lease at 150 Second Street. Under the Assignment andAssumption of Lease, we will assign all of our rights, interests, obligations and responsibilities under the lease, to be effective as of the later of May 1, 2017or the first day following our surrender of the leased premises in accordance with the lease. We expect to vacate the premises during the second quarter of2017. If we do not vacate the premise at 150 as planned, we will be responsible for additional amounts per the terms of the lease.On June 29, 2015, we entered into a lease agreement for additional office space located at 215 First Street, Cambridge, Massachusetts. Under the terms ofthe lease, we leased approximately 15,120 square feet starting on July 13, 2015 for $0.5 million per year in base rent, which is subject to a 3% annual rentincrease plus certain operating expenses and taxes. The lease will continue until the end of the 60th full calendar month following the date the landlorddelivers the premises to us, and includes early termination provisions that would allow us to terminate the lease without penalty at the end of the 20th fullcalendar month following the delivery89 of the premises if we meet certain conditions specified within the lease. Under the terms of the lease, we have also leased an additional 8,075 square feet ofoffice space in the same premises starting on January 1, 2016 for an additional $0.3 million per year in base rent, which is subject to a 3% annual rent increaseplus certain operating expenses and taxes. We have provided our landlord with notice of termination of this lease, with termination to be effective April 12,2017.On September 21, 2015, we entered into a lease agreement for additional office and laboratory space located in a building under construction at 60Binney Street, Cambridge, Massachusetts. Under the terms of the lease, starting on October 1, 2016, we leased approximately 253,108 square feet at $72.50per square foot per year, or $18.4 million per year in base rent, which is subject to scheduled annual rent increases of 1.75% plus certain operating expensesand taxes. We also executed a $9.2 million letter of credit upon signing the lease, which was required to be collateralized with a bank account at a financialinstitution in accordance with the lease agreement. This letter of credit was increased to $13.8 million during the third quarter of 2016 as required under theterms of the lease. Subject to the terms of the lease and certain reduction requirements specified therein, including market capitalization requirements, thisamount may decrease back to $9.2 million over time. The lease will continue until the end of the 120th full calendar month following April 2017 or theearlier the date we occupy the building or other conditions specified in the lease occur. Pursuant to a work letter entered into in connection with the lease,the landlord will contribute an aggregate of $42.4 million toward the cost of construction and tenant improvements for the building. The purpose of the leaseis to supplement and eventually replace our current leased premises at 150 Second Street and 215 First Street in Cambridge, Massachusetts and we intend tomove our corporate headquarters to 60 Binney Street during the second quarter of 2017. We have the option to extend the lease for two successive five-yearterms.We also lease approximately 7,800 square feet of office and laboratory space in Seattle, Washington, which lease expires in December 2017.On June 3, 2016, we entered into a strategic manufacturing agreement for the future commercial production of our Lenti-D and LentiGlobin productcandidates 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, weare required to pay $12.5 million upon the achievement of certain contractual milestones, and may pay up to $8.0 million in additional contractualmilestones if we elect the option to lease additional suites. We paid $5.0 million for the achievement of the first and second contractual milestones during2016 and paid the third milestone of $3.0 million in January 2017, which is reflected as a component of accrued expenses and other current liabilities withinthe consolidated balance sheet at December 31, 2016. Following construction completion, we will pay $5.1 million per year in fixed suite fees as well ascertain fixed labor, raw materials, testing and shipping costs for manufacturing services, and may pay additional suite fees if it elects its option to reserve orlease additional suites. We may terminate this agreement any time after July 1, 2016 upon payment of a one-time termination fee and up to 24 months offixed suite and labor fees.On November 18, 2016, we entered into an agreement for future clinical and commercial production of our LentiGlobin gene therapy drug products with acontract manufacturing organization at an existing facility. The term of the agreement is five years with a three year renewal at the option of each party.Under the agreement, we are required to pay an up-front fee of €3.0 million, €2.0 million of which was paid in the fourth quarter of 2016 and €1.0 million ofwhich is expected to be paid in mid-2018, and annual maintenance and production fees of up to €9.8 million, depending on our production needs. We mayterminate this agreement with six months’ notice and a one-time termination fee prior to July 1, 2018, or twelve months’ notice and a one-time terminationfee million fee thereafter. Off-Balance Sheet ArrangementsAs of December 31, 2016, we did not have any off-balance sheet arrangements as defined in the rules and regulations of the SEC. Item 7A. Quantitative and Qualitative Disclosures about Market RisksWe are exposed to market risk related to changes in interest rates. As of December 31, 2016 and 2015, we had cash, cash equivalents and marketablesecurities of $884.8 million and $865.8 million, respectively, primarily invested in U.S. government agency securities, federally insured certificates ofdeposit and money market mutual funds invested in U.S. Treasuries or U.S. government agency securities. Our primary exposure to market risk is interest ratesensitivity, which is affected by changes in the general level of U.S. interest rates, particularly because our investments are in short-term securities. Ouravailable 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 increaseimmediately and uniformly by 100 basis points, or one percentage point, from levels at December 31, 2016, the net fair value of our interest-sensitivemarketable securities would have resulted in a hypothetical decline of $5.4 million. 90 Item 8. Financial Statements and Supplementary DataThe 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 DisclosureNone. Item 9A. Controls and ProceduresEvaluation of Disclosure Controls and ProceduresOur management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosurecontrols and procedures (as defined in Rules 13a- 15(e) and 15d- 15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as ofthe end of the period covered by this Annual Report on Form 10-K. Based on such evaluation, our principal executive officer and principal financial officerhave concluded that as of such date, our disclosure controls and procedures were effective.Management’s Annual Report on Internal Control Over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financialreporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, ourprincipal executive and principal financial officers and effected by our board of directors, management and other personnel, to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally acceptedaccounting 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 generallyaccepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management anddirectors; and •Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have amaterial effect on the financial statements. Under the supervision and with the participation of management, including our principal executive andfinancial officers, we assessed our internal control over financial reporting as of December 31, 2016, based on criteria for effective internal control overfinancial reporting established in Internal Control — Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of theTreadway Commission (COSO). Our management’s assessment of the effectiveness of our internal control over financial reporting included testing andevaluating the design and operating effectiveness of our internal controls. In our management’s opinion, we have maintained effective internalcontrol over financial reporting as of December 31, 2016, based on criteria established in the COSO 2013 framework.The effectiveness of the our internal control over financial reporting as of December 31, 2016 has been audited by Ernst & Young LLP, an independentregistered public accounting firm, as stated in their report which is included herein.Inherent Limitations of Internal ControlsOur management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or ourinternal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, notabsolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls canprovide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations includethe realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls canbe 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 anysystem 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 willsucceed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, orthe degree of compliance with the policies or procedures may deteriorate. Projections of any evaluation of effectiveness to future periods are subject to therisk that controls may become inadequate because of91 changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effectivecontrol system, misstatements due to error or fraud may occur and not be detected.Changes in Internal Control over Financial ReportingWith the exception of the migration of certain of our financial processing systems to an enterprise-wide systems solution, there have been no changes inour 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 of1934 during the fourth quarter of 2016 that have materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.In connection with this implementation and the resulting business process changes, we continue to enhance the design and documentation of our internalcontrol over financial reporting processes to maintain effective controls over our financial reporting.Report of Independent Registered Public Accounting FirmThe Board of Directors and Stockholders ofbluebird bio, Inc.We have audited bluebird bio, Inc.’s internal control over financial reporting as of December 31, 2016, 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). bluebirdbio, Inc.’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internalcontrol over financial reporting included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Ourresponsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in allmaterial respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weaknessexists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures aswe considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention ortimely 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 evaluationof effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree ofcompliance with the policies or procedures may deteriorate.In our opinion, bluebird bio, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2016, based onthe COSO criteria.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balancesheets of bluebird bio, Inc. as of December 31, 2016 and 2015, and the related consolidated statements of operations and comprehensive income (loss),stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2016 of bluebird bio, Inc. and our report dated February 22,2017 expressed an unqualified opinion thereon./s/ Ernst & Young LLP Boston, MassachusettsFebruary 22, 2017 92 Item 9B. Other InformationOur policy governing transactions in our securities by our directors, officers, and employees permits our officers, directors and certain other persons toenter into trading plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. We have been advised that certain of ourofficers (including Nick Leschly (Chief Executive Officer), Jeffrey Walsh (Chief Financial and Strategy Officer), David Davidson (Chief Medical Officer),Jason Cole (Chief Legal Officer) and Eric Sullivan (Vice President, Finance and Principal Accounting Officer) and certain of our directors (including DanielLynch and James Mandell) have entered into trading plans covering periods after the date of this annual report on Form 10-K in accordance with Rule 10b5-1and our policy governing transactions in our securities. Generally, under these trading plans, the individual relinquishes control over the transactions oncethe trading plan is put into place. Accordingly, sales under these plans may occur at any time, including possibly before, simultaneously with, or immediatelyafter 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 inthe future, or to report any modifications or termination of any publicly announced trading plan, except to the extent required by law. 93 PART III Item 10. Directors, Executive Officers, and Corporate GovernanceIncorporated by reference from the information in our Proxy Statement for our 2017 Annual Meeting of Stockholders, which we will file with the SECwithin 120 days of the end of the fiscal year to which this Annual Report on Form 10-K relates. Item 11. Executive CompensationIncorporated by reference from the information in our Proxy Statement for our 2017 Annual Meeting of Stockholders, which we will file with the SECwithin 120 days of the end of the fiscal year to which this Annual Report on Form 10-K relates. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersIncorporated by reference from the information in our Proxy Statement for our 2017 Annual Meeting of Stockholders, which we will file with the SECwithin 120 days of the end of the fiscal year to which this Annual Report on Form 10-K relates. Item 13. Certain Relationships and Related Transactions and Director IndependenceIncorporated by reference from the information in our Proxy Statement for our 2017 Annual Meeting of Stockholders, which we will file with the SECwithin 120 days of the end of the fiscal year to which this Annual Report on Form 10-K relates. Item 14. Principal Accountant Fees and ServicesIncorporated by reference from the information in our Proxy Statement for our 2017 Annual Meeting of Stockholders, which we will file with the SECwithin 120 days of the end of the fiscal year to which this Annual Report on Form 10-K relates. 94 PART IV Item 15. Exhibits, Financial Statements and 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 orNotes thereto set forth under Item 8 above.(a)(3) Exhibits.See the Exhibit Index immediately following the signature page of this Annual Report on Form 10-K. The exhibits listed in the Exhibit Index below arefiled or incorporated by reference as part of this Annual Report on Form 10-K. Item 16. Form 10-K SummaryNot applicable. 95 bluebird bio, Inc.Index to consolidated financial statements PagesReport of independent registered public accounting firm F-2 Consolidated Balance Sheets F-3 Consolidated Statements of Operations and Comprehensive Income (Loss) F-4 Consolidated Statements of Stockholders’ Equity F-5 Consolidated Statements of Cash Flows F-7 Notes to consolidated financial statements F-8 F-1 Report of independent registered public accounting firmThe Board of Directors and Stockholders ofbluebird bio, Inc. We have audited the accompanying consolidated balance sheets of bluebird bio, Inc. as of December 31, 2016 and 2015, and the related consolidatedstatements of operations and comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended December 31,2016. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financialstatements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our auditsprovide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of bluebird bio, Inc. atDecember 31, 2016 and 2015, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31,2016, 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), bluebird bio, Inc.’s internalcontrol over financial reporting as of December 31, 2016, based on criteria established in Internal Control-Integrated Framework issued by the Committee ofSponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 22, 2017 expressed an unqualified opinion thereon./s/ Ernst & Young LLPBoston, MassachusettsFebruary 22, 2017 F-2 bluebird bio, Inc.Consolidated Balance Sheets(in thousands, except per share data) December 31, 2016 2015 Assets Current assets: Cash and cash equivalents$278,887 $164,269 Marketable securities 425,491 353,680 Prepaid expenses and other current assets 19,836 6,016 Total current assets 724,214 523,965 Marketable securities 180,452 347,814 Property and equipment, net 156,955 82,614 Intangible assets, net 20,694 24,456 Goodwill 13,128 13,128 Restricted cash and other non-current assets 22,679 10,360 Total assets$1,118,122 $1,002,337 Liabilities and stockholders' equity Current liabilities: Accounts payable$13,664 $6,334 Accrued expenses and other current liabilities 54,660 28,145 Deferred revenue, current portion 6,209 5,889 Total current liabilities 74,533 40,368 Deferred rent, net of current portion 10,408 8,294 Deferred revenue, net of current portion 40,204 35,959 Contingent consideration, net of current portion 3,277 5,082 Construction financing lease obligation 120,140 61,901 Other non-current liabilities 120 237 Total liabilities 248,682 151,841 Commitments and contingencies (Note 8) Stockholders' equity: Preferred stock, $0.01 par value, 5,000 shares authorized; 0 shares issued and outstanding at December 31, 2016 and December 31, 2015 — — Common stock, $0.01 par value, 125,000 shares authorized; 40,691 and 36,894 shares issued and outstanding at December 31, 2016 and December 31, 2015, respectively 407 369 Additional paid-in capital 1,447,856 1,166,585 Accumulated other comprehensive loss (1,149) (2,291)Accumulated deficit (577,674) (314,167)Total stockholders' equity 869,440 850,496 Total liabilities and stockholders' equity$1,118,122 $1,002,337 See accompanying notes to consolidated financial statements. F-3 bluebird bio, Inc.Consolidated Statements of Operations and Comprehensive Income (Loss)(in thousands, except per share data) Year ended December 31, 2016 2015 2014 Revenue: Collaboration revenue$6,155 $14,079 $25,031 Research and license fees — — 390 Total revenue 6,155 14,079 25,421 Operating expenses: Research and development 204,775 134,038 62,574 General and administrative 65,119 46,209 23,227 Change in fair value of contingent consideration 4,091 2,869 246 Total operating expenses 273,985 183,116 86,047 Loss from operations (267,830) (169,037) (60,626)Other income, net 3,711 2,314 120 Loss before income taxes (264,119) (166,723) (60,506)Income tax benefit (expense) 612 (60) 11,797 Net loss$(263,507) $(166,783) $(48,709)Net loss per share - basic and diluted$(7.07) $(4.81) $(1.83)Weighted-average number of common shares used in computing net loss per share - basic and diluted 37,284 34,669 26,546 Other comprehensive income (loss): Unrealized gain (loss) on available-for-sale securities, net of tax expense of $0.6 and $0.0 million for the years ended December 31, 2016 and 2015, respectively 1,142 (2,220) (71)Total other comprehensive income (loss) 1,142 (2,220) (71)Comprehensive loss$(262,365) $(169,003) $(48,780) See accompanying notes to consolidated financial statements. F-4 bluebird bio, Inc.Consolidated Statements of Stockholders’ Equity(in thousands) Accumulated Additional other Total Common stock paid-in comprehensive Accumulated stockholders' Shares Amount capital income (loss) deficit equity Balance at December 31, 2013 23,940 $239 $250,103 $— $(98,675) $151,667 Vesting of restricted stock issued in exchange for nonrecourse note 69 1 (1) — — — Issuance of common stock upon public offering, net of issuance costs of $23,295 6,498 65 352,977 — — 353,042 Issuance of common stock in connection with acquisition 411 4 19,470 — — 19,474 Exercise of common stock warrants 114 1 (1) — — — Exercise of stock options 1,306 13 5,036 — — 5,049 Issuance of common stock in exchange for consulting services to non-employees 2 — 42 — — 42 Stock-based compensation — — 10,763 — — 10,763 Unrealized loss on available-for-sale securities, net of tax — — — (71) — (71)Net loss — — — — (48,709) (48,709)Balance at December 31, 2014 32,340 $323 $638,389 $(71) $(147,384) $491,257 Accumulated Additional other Total Common stock paid-in comprehensive Accumulated stockholders' Shares Amount capital income (loss) deficit equity Balance at December 31, 2014 32,340 323 638,389 (71) (147,384) $491,257 Vesting of restricted stock units 62 1 (1) — — — Issuance of common stock upon public offering, net of issuance costs of $22,753 2,941 29 477,218 — — 477,247 Issuance of common stock to Pregenen equityholders 94 1 (1) — — — Exercise of common stock warrants 164 2 (2) — — — Exercise of stock options 1,282 13 9,370 — — 9,383 Purchase of common stock under ESPP 11 — 492 — — 492 Stock-based compensation — — 41,120 — — 41,120 Unrealized loss on available-for-sale securities, net of tax — — — (2,220) — (2,220)Net loss — — — — (166,783) (166,783)Balance at December 31, 2015 36,894 $369 $1,166,585 $(2,291) $(314,167) $850,496 F-5 bluebird bio, Inc.Consolidated Statements of Stockholders’ Equity(in thousands) Accumulated Additional other Total Common stock paid-in comprehensive Accumulated stockholders' Shares Amount capital income (loss) deficit equity Balance at December 31, 2015 36,894 369 1,166,585 (2,291) (314,167) 850,496 Vesting of restricted stock units 113 1 (1) — — — Issuance of common stock upon public offering, net of issuance costs of $15,269 3,289 33 234,698 — — 234,731 Exercise of stock options 377 4 6,141 — — 6,145 Purchase of common stock under ESPP 18 — 677 — — 677 Stock-based compensation — — 39,756 — — 39,756 Unrealized gain on available-for-sale securities, net of tax — — — 1,142 — 1,142 Net loss — — — — (263,507) (263,507)Balance at December 31, 2016 40,691 $407 $1,447,856 $(1,149) $(577,674) $869,440 See accompanying notes to consolidated financial statements. F-6 bluebird bio, Inc.Consolidated Statements of Cash Flows(in thousands) Year ended December 31, 2016 2015 2014 Operating activities Net loss$(263,507) $(166,783) $(48,709)Adjustments to reconcile net loss to net cash (used in) provided by operating activities: Change in fair value of contingent consideration 2,675 2,344 246 Depreciation and amortization 9,648 7,419 4,228 Stock-based compensation expense 39,756 41,120 10,763 Issuance of restricted common stock in exchange for consulting services to non-employees — — 168 Noncash benefit on release of tax valuation allowance — — (11,797)Other non-cash items 2,825 1,513 142 Changes in operating assets and liabilities: Prepaid expenses and other current assets (14,318) (6,847) 307 Accounts payable 6,658 2,541 (2,249)Accrued expenses and other liabilities 20,889 9,423 9,969 Deferred revenue 4,565 11,171 (24,871)Deferred rent 1,162 (330) 2,110 Net cash used in operating activities (189,647) (98,429) (59,693)Investing activities Restricted cash (4,379) (8,816) 209 Purchase of property and equipment (15,995) (7,055) (8,708)Payments made for tenant improvements for capital lease (12,034) — — Purchases of marketable securities (348,225) (755,175) (174,981)Proceeds from maturities of marketable securities 443,364 199,179 30,960 Acquisition of business, net of cash acquired — — (4,673)Net cash provided by (used in) investing activities 62,731 (571,867) (157,193)Financing activities Cash paid for contingent purchase price consideration (2,025) (453) — Reimbursement of tenant improvements for capital lease 1,663 — — Proceeds from public offering of common stock, net of issuance costs 234,962 477,064 353,226 Proceeds from issuance of common stock 6,934 10,109 5,226 Net cash provided by financing activities 241,534 486,720 358,452 Increase (decrease) in cash and cash equivalents 114,618 (183,576) 141,566 Cash and cash equivalents at beginning of period 164,269 347,845 206,279 Cash and cash equivalents at end of period$278,887 $164,269 $347,845 Non-cash investing and financing activities: Construction financing lease obligation$48,034 $61,901 $— Purchases of property and equipment included in accounts payable and accrued expenses$6,363 $2,089 $387 Tenant improvements under capital lease included in prepaid expenses and other assets$8,542 $— $— Offering expenses included in accounts payable and accrued expenses$231 $— $183 See accompanying notes to consolidated financial statements. F-7 bluebird bio, Inc.Notes to Consolidated Financial Statements 1. Description of the businessbluebird bio, Inc. (the “Company” or “bluebird”) was incorporated in Delaware on April 16, 1992, and is headquartered in Cambridge, Massachusetts. TheCompany researches, develops, manufactures and plans to commercialize gene therapies for severe genetic diseases and cancer. Since its inception, theCompany has devoted substantially all of its resources to its research and development efforts relating to its product candidates, including activities tomanufacture product candidates, conduct clinical studies of its product candidates, perform preclinical research to identify new product candidates andprovide general and administrative support for these operations.On June 30, 2014, the Company acquired all of the outstanding capital stock of Precision Genome Engineering, Inc. (“Pregenen”) and in connectiontherewith, obtained the rights to Pregenen’s gene editing and cell signaling technology.In July 2014, the Company sold 3,450,000 shares of common stock (inclusive of 450,000 shares of common stock sold by the Company pursuant to thefull exercise of an overallotment option granted to the underwriters in connection with the offering) through an underwritten public offering at a price of$34.00 per share for aggregate net proceeds of $109.8 million. In December 2014, the Company sold 3,047,500 shares of common stock (inclusive of397,500 shares of common stock sold by the Company pursuant to the full exercise of an overallotment option granted to the underwriters in connection withthe offering) through an underwritten public offering at a price of $85.00 per share for aggregate net proceeds of $243.3 million. In June 2015, the Companysold 2,941,176, shares of common stock through an underwritten public offering at a price of $170.00 per share for aggregate net proceeds of $477.2million. In December 2016, the Company sold 3,289,473 shares of common stock through an underwritten public offering at a price of $76.00 per share foraggregate net proceeds of $234.7 million.As of December 31, 2016, the Company had cash, cash equivalents and marketable securities of $884.8 million. Although the Company has incurredrecurring losses and expects to continue to incur losses for the foreseeable future, the Company expects its cash, cash equivalents and marketable securitieswill be sufficient to fund current operations for at least the next twelve months. 2. Summary of significant accounting policies and basis of presentationBasis of presentation and principles of consolidationThe accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries: Precision GenomeEngineering, Inc., bluebird bio France – SARL, bluebird bio Australia Pty Ltd., bluebird bio (Bermuda) Ltd., bluebird bio (UK) Ltd., and bluebird bioSecurities Corporation. All intercompany balances and transactions have been eliminated in consolidation. The assets acquired and liabilities assumed inconnection with the Company’s acquisition of Pregenen were recorded at their fair values as of June 30, 2014, the date of the acquisition, and the operatingresults of Pregenen have been consolidated with those of the Company from the date of acquisition. These consolidated financial statements have beenprepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Any reference in these notes to applicableguidance is meant to refer to the authoritative United States generally accepted accounting principles as found in the Accounting Standards Codification(“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”).Certain aggregations of prior year amounts have been made to conform to current year presentation. In the prior year statement of operations andcomprehensive income (loss), interest income, net and other income (expense), net are included within other income, net.Foreign currency translationThe Company’s consolidated financial statements are prepared in U.S. dollars. The Company’s foreign subsidiaries use the U.S. dollar as their functionalcurrency and maintains records in the local currency. Nonmonetary assets and liabilities are re-measured at historical rates and monetary assets and liabilitiesare re-measured at exchange rates in effect at the end of the reporting period. Income statement accounts are re-measured at average exchange rates for thereporting period. The resulting gains or losses are included in other income (expense), net in the consolidated statements of operations and comprehensiveincome (loss).F-8 Use of estimatesThe preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reportedamounts in the financial statements and accompanying notes. Actual results could materially differ from those estimates. Management considers many factorsin selecting appropriate financial accounting policies and controls, and in developing the estimates and assumptions that are used in the preparation of thesefinancial statements. Management must apply significant judgment in this process. In addition, other factors may affect estimates, including: expectedbusiness and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends areexpected to be representative of future trends. The estimation process often may yield a range of potentially reasonable estimates of the ultimate futureoutcomes and management must select an amount that falls within that range of reasonable estimates. This process may result in actual results differingmaterially from those estimated amounts used in the preparation of the financial statements. Estimates are used in the following areas, among others:acquisition-date fair value and subsequent fair value estimates used to assess potential impairment of long-lived assets, including goodwill and intangibleassets, construction financing lease obligations, contingent consideration, stock-based compensation expense, accrued expenses, revenue and income taxes.Segment informationOperating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by thechief operating decision maker, or decision making group, in making decisions on how to allocate resources and assess performance. The Company views itsoperations and manages its business in one operating segment. All material long-lived assets of the Company reside in the United States.Cash and cash equivalentsThe Company considers all highly liquid investments purchased with original final maturities of three months or less from the date of purchase to be cashequivalents. Cash and cash equivalents comprise funds in cash, money market accounts, U.S. Treasury securities and federally insured deposits. Cashequivalents are reported at fair value.Marketable securitiesThe Company classifies marketable securities with a remaining maturity when purchased of greater than three months as available-for-sale. Marketablesecurities with a remaining maturity date greater than one year are classified as non-current. Available-for-sale securities are maintained by an investmentmanager and consist of U.S. Treasury securities, U.S. government agency securities, and certificates of deposit. Available-for-sale securities are carried at fairvalue with the unrealized gains and losses included in other comprehensive income (loss) as a component of stockholders’ equity until realized. Anypremium or discount arising at purchase is amortized and/or accreted to interest income and/or expense over the life of the instrument. Realized gains andlosses are determined using the specific identification method and are included in other income (expense), net.If any adjustment to fair value reflects a decline in value of the investment, the Company considers all available evidence to evaluate the extent to whichthe decline is “other-than-temporary” and, if so, marks the investment to market through a charge to the Company’s statement of operations andcomprehensive income (loss).Concentrations of credit risk and off-balance sheet riskFinancial instruments that subject the Company to credit risk primarily consist of cash and cash equivalents and available-for-sale securities. TheCompany maintains its cash and cash equivalent balances with high-quality financial institutions and, consequently, the Company believes that such fundsare subject to minimal credit risk. The Company’s available-for-sale investments primarily consist of U.S. Treasury securities, U.S. government agencysecurities and certificates of deposit, and potentially subject the Company to concentrations of credit risk. The Company has adopted an investment policywhich 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+/Aa1rated, thereby reducing credit risk exposure.Fair value of financial instrumentsThe Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used indetermining the reported fair values. FASB ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), establishes a hierarchy of inputs used inmeasuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the observable inputs beused when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained fromsources independent of the Company.F-9 Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability,and are developed based on the best information available in the circumstances. The fair value hierarchy applies only to the valuation inputs used indetermining the reported fair value of the investments and is not a measure of the investment credit quality. The three levels of the fair value hierarchy aredescribed below:Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access atthe measurement date.Level 2—Valuations based on quoted prices for similar assets or liabilities in markets that are not active or for which all significant inputs are observable,either directly or indirectly.Level 3—Valuations that require inputs that reflect the Company’s own assumptions that are both significant to the fair value measurement andunobservable.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 requiresmore judgment. Accordingly, the degree of judgment exercised by the Company in 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 (Note 3 and Note 4) and contingent consideration (Note 4). The carryingamounts of accounts payable and accrued expenses approximate their fair values due to their short-term maturities.Business combinationsOn June 30, 2014, the Company completed its acquisition of Pregenen for total consideration of $31.0 million, consisting of cash consideration of $5.1million, common stock consideration of $19.3 million and contingent consideration with an estimated fair value of $6.6 million on the date of purchase. Theestimated fair value of the contingent consideration is based upon significant assumptions regarding probabilities of successful achievement of relatedmilestones, the estimated timing in which the milestones are achieved and discount rates. The estimated fair value could materially differ from actual valuesor fair values determined using different assumptions. See Note 4, “Fair value measurements,” for additional information.This transaction was accounted for as a business combination under the acquisition method of accounting. Accordingly, the tangible assets andidentifiable intangible assets acquired and liabilities assumed were recorded at fair value as of the date of acquisition, with the excess purchase price recordedas goodwill. The estimated fair values of acquired assets and assumed liabilities were determined using the methods discussed in the following paragraphsand require significant judgment and estimates, which could materially differ from actual values and fair values determined using different methods orassumptions.GoodwillGoodwill represents the excess of the purchase price over the fair value of the net assets acquired when accounted for using the acquisition method ofaccounting for business combinations. Goodwill is not amortized but is evaluated for impairment within the Company’s single reporting unit on an annualbasis, 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 theCompany’s reporting unit below its carrying amount. The Company has not recognized any impairment charges related to goodwill.Intangible assetsIntangible assets consist of acquired core technology with finite lives. The Company amortizes its intangible assets using the straight-line method overtheir estimated economic lives. The Company evaluates the potential impairment of intangible assets if events or changes in circumstances indicate that thecarrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. The impairment test is based on acomparison of the undiscounted cash flows expected to be generated from the use of the asset group and its eventual disposition to the carrying value of theasset group. If impairment is indicated, the asset is written down by the amount by which the carrying value of the asset exceeds the related fair value of theasset. The Company has not recognized an impairment charge related to intangible assets.Contingent considerationEach reporting period, the Company revalues the contingent consideration obligations associated with business combinations to their fair value andrecords within operating expenses increases in their fair value as contingent consideration expense and decreasesF-10 in the fair value as contingent consideration income. Changes in contingent consideration result from changes in the assumptions regarding probabilities ofsuccessful achievement of related milestones, the estimated timing in which the milestones are achieved and the discount rate used to estimate the fair valueof the liability. Contingent consideration may change significantly as development of the Company’s programs in certain indications progress andadditional data are obtained, impacting the Company’s assumptions. The assumptions used in estimating fair value require significant judgment. The use ofdifferent assumptions and judgments could result in a materially different estimate of fair value. See Note 4, “Fair value measurements,” for additionalinformation.Property and equipmentProperty and equipment is stated at cost. Maintenance and repairs that do not improve or extend the lives of the respective assets are expensed tooperations as incurred. Upon disposal, the related cost and accumulated depreciation is removed from the accounts and any resulting gain or loss is includedin the results of operations. Depreciation and amortization is calculated using the straight-line method over the estimated useful lives of the assets, which areas follows: Asset Estimated useful lifeComputer equipment and software 3 yearsOffice and laboratory equipment 2 -5 yearsLeasehold improvements Shorter of the useful life or remaining lease term The Company records certain estimated construction costs incurred and reported by a landlord as an asset and corresponding construction financing leaseobligation on the consolidated balance sheets. See Note 8, “Commitments and contingencies,” for additional information.Impairment of long-lived assetsThe 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. Ifsuch 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 fairvalue, which is measured based on the projected discounted future net cash flows arising from the assets. No impairment losses have been recorded during theyears ended December 31, 2016, 2015 and 2014.Construction financing lease obligationBeginning in 2015 and until expected construction completion in 2017, the Company records certain estimated construction costs incurred and reportedto us by the landlord for our 60 Binney Street location as an asset and corresponding construction financing lease obligation on the consolidated balancesheets because it is deemed to be the owner of the building during the construction period for accounting purposes. Any costs incurred by the Company thathave been reimbursed by the landlord or that qualify for reimbursement by the landlord are recorded as an asset and construction financing lease obligation.Any incremental costs incurred directly by the Company that do not qualify for reimbursement by the landlord are also capitalized. In each reporting period,the landlord estimates and reports to the Company any costs incurred to date related to its portion of the building using allocation estimates and providessupporting invoices for the Company’s review. The Company periodically meets with the landlord and its construction manager to review these estimatesand observe construction progress before recording such amounts.Revenue recognitionThe Company has primarily generated revenue through collaboration arrangements, research arrangements and license arrangements with strategicpartners and nonprofit organizations for the development and commercialization of product candidates. Additionally, the Company has generated revenuefrom research and development grant programs.The Company recognizes revenue in accordance with FASB ASC Topic 605, Revenue Recognition (“ASC 605”). Accordingly, revenue is recognized foreach unit of accounting when all of the following criteria are met: •Persuasive evidence of an arrangement exists •Delivery has occurred or services have been rendered •The seller’s price to the buyer is fixed or determinable •Collectability is reasonably assuredF-11 Amounts received prior to satisfying the revenue recognition criteria are recorded as deferred revenue in the Company’s consolidated balance sheets.Amounts expected to be recognized as revenue within the 12 months following the balance sheet date are classified as deferred revenue, current portion.Amounts not expected to be recognized as revenue within the 12 months following the balance sheet date are classified as deferred revenue, net of currentportion.Collaboration revenueAs of December 31, 2016, the Company’s collaboration revenue is generated exclusively from its collaboration arrangement with Celgene Corporation(“Celgene”), which was originally entered into in March 2013 and was subsequently amended in June 2015 (the “Amended Collaboration Agreement”). Theamended terms of this arrangement contain multiple deliverables, which include at inception: (i) research and development services, (ii) participation on ajoint steering committee (“JSC”), (iii) participation on the patent committee, (iv) a license to the first product candidate, (v) manufacture of vectors andassociated payload for incorporation into the first optioned product candidate under the license, and (vi) participation on a joint governance committee(“JGC”) under the co-development and co-promotion agreement for the first optioned product candidate under the license.In connection with the Amended Collaboration Agreement, the Company received an upfront, one-time, non-refundable, non-creditable payment of $25.0million to fund research and development under the collaboration. Other non-refundable payments to the Company under this arrangement may include:(i) product candidate license fees, (ii) payments in the event the Company does not exercise its option to co-develop and co-promote in the United States,(iii) payments for the manufacture and supply of vectors and payloads, (iv) payments based on the achievement of certain clinical, regulatory, andcommercials milestones and (v) royalties on product sales.The Company analyzes multiple-element arrangements based on the guidance in FASB ASC Topic 605-25, Revenue Recognition-Multiple-ElementArrangements (“ASC 605-25”). Pursuant to the guidance in ASC 605-25, the Company evaluates multiple-element arrangements to determine (1) thedeliverables included in the arrangement and (2) whether the individual deliverables represent separate units of accounting or whether they must beaccounted for as a combined unit of accounting. This evaluation involves subjective determinations and requires management to make judgments about theindividual deliverables and whether such deliverables are separable from the other aspects of the contractual relationship. Deliverables are consideredseparate units of accounting provided that: (i) the delivered item(s) has value to the customer on a standalone basis and (ii) if the arrangement includes ageneral right of return relative to the delivered item(s), delivery or performance of the undelivered item(s) is considered probable and substantially in thecontrol of the Company. In assessing whether an item has standalone value, the Company considers factors such as the research, manufacturing andcommercialization capabilities of the collaboration partner and the availability of the associated expertise in the general marketplace. In addition, theCompany considers whether the collaboration partner can use the other deliverable(s) for their intended purpose without the receipt of the remainingelement(s), whether the value of the deliverable is dependent on the undelivered item(s) and whether there are other vendors that can provide the undeliveredelement(s). The Company’s collaboration arrangement does not contain a general right of return relative to the delivered item(s).Arrangement consideration that is fixed or determinable is allocated among the separate units of accounting using the relative selling price method. Then,the applicable revenue recognition criteria in ASC 605-25 are applied to each of the separate units of accounting in determining the appropriate period andpattern of recognition. The Company determines the selling price of a unit of accounting following the hierarchy of evidence prescribed by ASC 605-25.Accordingly, the Company determines the estimated selling price for units of accounting within each arrangement using vendor-specific objective evidence(“VSOE”) of selling price, if available, third-party evidence (“TPE”) of selling price if VSOE is not available, or best estimate of selling price (“BESP”) ifneither VSOE nor TPE is available. The Company typically uses BESP to estimate the selling price, since it generally does not have VSOE or TPE of sellingprice for its units of accounting. Determining the BESP for a unit of accounting requires significant judgment. In developing the BESP for a unit ofaccounting, the Company considers applicable market conditions and relevant entity-specific factors, including factors that were contemplated innegotiating the agreement with the customer and estimated costs. The Company validates the BESP for units of accounting by evaluating whether changes inthe key assumptions used to determine the BESP will have a significant effect on the allocation of arrangement consideration between multiple units ofaccounting.Options are considered substantive if, at the inception of the arrangement, the Company is at risk as to whether the collaboration partner will choose toexercise the option. Factors that the Company considers in evaluating whether an option is substantive include the overall objective of the arrangement, thebenefit the collaborator might obtain from the arrangement without exercising the option, the cost to exercise the option and the likelihood that the optionwill be exercised. For arrangements under which an option is considered substantive, the Company does not consider the item underlying the option to be adeliverable at the inception of the arrangement and the associated option fees are not included in allocable arrangement consideration, assuming the optionis not priced at a significant and incremental discount. Conversely, for arrangements under which an option is not considered substantive or if an option ispriced at a significant and incremental discount, the Company would consider the item underlying the option to be a deliverable at the inception of thearrangement and a corresponding amount would be included in allocable arrangement consideration.F-12 At execution of the Amended Collaboration Agreement, one of the options was determined not to be substantive and any other options were determined to besubstantive. None of the options were priced at a significant and incremental discount.The Company recognizes arrangement consideration allocated to each unit of accounting when all of the revenue recognition criteria in ASC 605-25 aresatisfied for that particular unit of accounting. The Company will recognize as revenue arrangement consideration attributed to licenses that have standalonevalue from the other deliverables to be provided in an arrangement upon delivery. The Company will recognize as revenue arrangement considerationattributed to licenses that do not have standalone value from the other deliverables to be provided in an arrangement over the Company’s estimatedperformance period as the arrangement would be accounted for as a single unit of accounting.The Company recognizes revenue from the Celgene arrangement associated research and development services, joint steering committee services andpatent committee services ratably over the associated period of performance, which is initially estimated to be three years. If there is no discernible pattern ofperformance and/or objectively measurable performance measures do not exist, then the Company recognizes revenue under the arrangement on a straight-line basis over the period the Company is expected to complete its performance obligations. Conversely, if the pattern of performance in which the service isprovided to the customer can be determined and objectively measurable performance measures exist, then the Company recognizes revenue under thearrangement using the proportional performance method. Revenue recognized is limited to the lesser of the cumulative amount of payments received or thecumulative amount of revenue earned, as determined using the straight-line method or proportional performance method, as applicable, as of the periodending date.At the inception of an arrangement that includes milestone payments, the Company evaluates whether each milestone is substantive and at risk to bothparties on the basis of the contingent nature of the milestone. This evaluation includes an assessment of whether: (i) the consideration is commensurate witheither the Company’s performance to achieve the milestone or the enhancement of the value of the delivered item(s) as a result of a specific outcome resultingfrom the Company’s performance to achieve the milestone, (ii) the consideration relates solely to past performance and (iii) the consideration is reasonablerelative to all of the deliverables and payment terms within the arrangement. The Company evaluates factors such as the scientific, clinical, regulatory,commercial and other risks that must be overcome to achieve the respective milestone and the level of effort and investment required to achieve therespective milestone in making this assessment. There is considerable judgment involved in determining whether a milestone satisfies all of the criteriarequired to conclude that a milestone is substantive. The Company has concluded that all of the clinical and regulatory milestones pursuant to itscollaboration arrangement are substantive. Accordingly, in accordance with FASB ASC Topic 605-28, Revenue Recognition-Milestone Method, revenuefrom clinical and regulatory milestone payments will be recognized in its entirety upon successful accomplishment of the milestone, assuming all otherrevenue recognition criteria are met. Milestones that are not considered substantive would be recognized as revenue over the remaining period ofperformance, assuming all other revenue recognition criteria are met. All commercial milestones will be accounted for in the same manner as royalties andrecorded as revenue upon achievement of the milestone, assuming all other revenue recognition criteria are met.The Company will recognize royalty revenue in the period of sale of the related product(s), based on the underlying contract terms, provided that thereported sales are reliably measurable and the Company has no remaining performance obligations, assuming all other revenue recognition criteria are met.Research fees and license feesThe terms of the Company’s research agreements and license agreements have previously included delivery of an intellectual property license or theperformance of research and development activities. The Company does not have any material research arrangements or license arrangements that containmultiple deliverables. The Company is compensated under research arrangements and license arrangements through nonrefundable up-front payments andfuture royalties on net product sales. Research fees are recognized as revenue on a straight-line basis over the period that the research services are expected tobe performed unless the Company’s pattern of performance can be determined to be other than straight-line, in which case, the Company uses theproportional performance method. Nonrefundable license fees are recognized as revenue upon delivery provided there are no undelivered elements in thearrangement.Research and development expensesResearch and development costs are charged to expense as costs are incurred in performing research and development activities, including salaries andbenefits, facilities costs, overhead costs, clinical study and related clinical manufacturing costs, contract services and other related costs. Research anddevelopment costs, including up-front fees and milestones paid to collaborators, are also expensed as incurred. In circumstances where amounts have beenpaid in excess of costs incurred, the Company records a prepaid expense.F-13 Stock-based compensationThe Company accounts for its stock-based compensation awards in accordance with FASB ASC Topic 718, Compensation—Stock Compensation (“ASC718”). ASC 718 requires all stock-based payments to employees, including grants of employee stock options and restricted stock units and modifications toexisting stock options, to be recognized in the consolidated statements of operations and comprehensive income (loss) based on their fair values. TheCompany uses the Black-Scholes option pricing model to determine the fair value of options granted.The Company’s stock-based awards are subject to either service or performance-based vesting conditions. Compensation expense related to awards toemployees and directors with service-based vesting conditions is recognized on a straight-line basis based on the grant date fair value over the associatedservice period of the award, which is generally the vesting term. Compensation expense related to awards to non-employees with service-based vestingconditions is recognized based on the then-current fair value at each financial reporting date prior to the measurement date over the associated service periodof the award, which is generally the vesting term, using the accelerated attribution method. Compensation expense related to awards to employees withperformance-based vesting conditions is recognized based on the grant date fair value over the requisite service period using the accelerated attributionmethod to the extent achievement of the performance condition is probable. Compensation expense related to awards to non-employees with performance-based vesting conditions is recognized based on the then-current fair value at each financial reporting date prior to the measurement date over the requisiteservice period using the accelerated attribution method to the extent achievement of the performance condition is probable.The Company expenses restricted stock unit awards to employees based on the fair value of the award on a straight-line basis over the associated serviceperiod of the award. Awards of restricted stock units to non-employees are adjusted through stock-based compensation expense at each reporting period endto reflect the current fair value of such awards and expensed using an accelerated attribution model.The Company estimates the fair value of its option awards to employees and directors using the Black-Scholes option pricing model, which requires theinput of and subjective assumptions, including (i) the expected stock price volatility, (ii) the calculation of expected term of the award, (iii) the risk-freeinterest rate, and (iv) expected dividends. Due to the lack of company specific historical and implied volatility data of its common stock, the Company hasbased its estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded. When selecting these publiccompanies on which it has based its expected stock price volatility, the Company selected companies with comparable characteristics to it, includingenterprise value, risk profiles, position within the industry, and with historical share price information sufficient to meet the expected term of the stock-basedawards. The Company computes historical volatility data using the daily closing prices for the selected companies’ shares during the equivalent period of thecalculated expected term of the stock-based awards. The Company will continue to apply this process until a sufficient amount of historical informationregarding the volatility of its own stock price becomes available, which is expected in 2017. The Company has estimated the expected term of its employeestock options using the “simplified” method, whereby, the expected term equals the arithmetic average of the vesting term and the original contractual termof 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 topay dividends in the foreseeable future.The Company is also required to estimate forfeitures at the time of grant, and revise those estimates in subsequent periods if actual forfeitures differ fromits estimates. The Company uses historical data to estimate pre-vesting option forfeitures and records stock-based compensation expense only for thoseawards that are expected to vest. To the extent that actual forfeitures differ from the Company’s estimates, the differences are recorded as a cumulativeadjustment in the period the estimates were revised. Stock-based compensation expense recognized in the financial statements is based on awards that areultimately expected to vest.Consistent with the guidance in FASB ASC Topic 505-50, Equity-Based Payments to Non-Employees, the fair value of each non-employee stock optionand warrant award is estimated at the date of grant using the Black-Scholes option pricing model with assumptions generally consistent with those used foremployee stock options, with the exception of expected term, which is over the contractual life.Other income, netOther income, net consists primarily of interest income earned on investments, net of amortization of premium and accretion of discount. Other income,net also includes foreign currency gains or losses and tax incentives from the Massachusetts Life Sciences Center.F-14 Net loss per shareBasic net loss per share is calculated by dividing net loss attributable to common stockholders by the weighted average number of common sharesoutstanding during the period. Diluted net income per share is calculated by dividing the net income attributable to common stockholders by the weighted-average number of common equivalent shares outstanding for the period, including any dilutive effect from outstanding stock options, unvested restrictedstock, restricted stock units, and employee stock purchase plan stock using the treasury stock method.The Company follows the two-class method when computing net income (loss) per share in periods when issued shares that meet the definition ofparticipating securities are outstanding. The two-class method determines net income (loss) per share for each class of common and participating securitiesaccording to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available tocommon stockholders for the period to be allocated between common and participating securities based upon their respective rights to received dividends asif all income for the period had been distributed. Accordingly, in periods in which the Company reports a net loss attributable to common stockholders whenparticipating securities are outstanding, losses are not allocated to the participating securities.Income taxesIncome taxes are recorded in accordance with FASB ASC Topic 740, Income Taxes (“ASC 740”), which provides for deferred taxes using an asset andliability approach. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included inthe financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basesof assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided, ifbased 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 Companyrecognizes 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 benefitwill 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.As of December 31, 2016 and 2015, the Company does not have any significant uncertain tax positions.Comprehensive income (loss)Comprehensive income (loss) is comprised of net loss and other comprehensive income or loss. Other comprehensive income (loss) consists of unrealizedgains and losses on marketable securities.Subsequent eventsThe Company considers events or transactions that occur after the balance sheet date, but prior to the issuance of the financial statements to provideadditional evidence relative to certain estimates or to identify matters that require additional disclosure. Recent accounting pronouncementsIn May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“Topic 606”), which supersedes all existing revenuerecognition requirements, including most industry-specific guidance. The new standard requires a company to recognize revenue when it transfers goods orservices to customers in an amount that reflects the consideration that the company expects to receive for those goods or services. The new standard will beeffective on January 1, 2018 and earlier application is permitted only for annual reporting periods beginning after December 15, 2016, including interimreporting periods within that reporting period. Topic 606 allows for either a full retrospective adoption, in which the standard is applied to all of the periodspresented, or a modified retrospective application, in which the standard is applied to the most current period presented in the financial statements. As ofDecember 31, 2016, revenue is generated exclusively from the Company’s collaboration arrangement with Celgene. The Company is currently evaluating thepotential impact that Topic 606 may have on its financial position and results of operations as it relates to this single arrangement, and expects to elect themodified retrospective application as its transition method.F-15 In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements – Going Concern (“ASU 2014-15”), which requires a companyto evaluate the existence of conditions or events that raise substantial doubt about its ability to continue as a going concern within one year of the issuancedate of its financial statements. The standard is effective for interim and annual periods ending after December 15, 2016 with early adoption permitted. Thestandard did not have a material impact on the Company’s consolidated financial statements or footnote disclosures as of the December 31, 2016 adoptiondate, but may require additional disclosures in future periods.In February 2016, the FASB issued ASU 2016-02, Leases, (“ASU 2016-02”), which requires a lessee to recognize assets and liabilities on the balance sheetfor operating leases and changes many key definitions, including the definition of a lease. The new standard includes a short-term lease exception for leaseswith a term of 12 months or less, as part of which a lessee can make an accounting policy election not to recognize lease assets and lease liabilities. Lesseeswill continue to differentiate between finance leases (previously referred to as capital leases) and operating leases using classification criteria that aresubstantially similar to the previous guidance. The new standard will be effective beginning January 1, 2019, and early adoption is permitted for publicentities. The Company is currently evaluating the potential impact ASU 2016-02 may have on its financial position and results of operations.In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (“ASU No. 2016-09”), which simplifiesshare-based payment accounting through a variety of amendments. The new standard will be effective for the Company on January 1, 2017. The adoption ofthis standard is expected to impact income tax footnote disclosures only and is not expected to have a material impact on the Company’s consolidatedfinancial statements.In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments (“Topic 230”). Thenew standard clarifies certain aspects of the statement of cash flows, including the classification of contingent consideration payments made after a businesscombination, the clarification of restricted cash, and several clarifications not currently applicable to the Company. The new standard also clarifies that anentity should determine each separately identifiable source or use within the cash receipts and cash payments on the basis of the nature of the underlyingcash flows. In situations in which cash receipts and payments have aspects of more than one class of cash flows and cannot be separated by source or use, theappropriate classification should depend on the activity that is likely to be the predominant source or use of cash flows for the item. The new standard will beeffective for the Company on January 1, 2018. The adoption of this standard is not expected to have a material impact on the Company’s consolidatedstatements of cash flows upon adoption. 3. Marketable securitiesThe following table summarizes the available-for-sale securities held at December 31, 2016 and 2015 (in thousands): Description Amortized Cost UnrealizedGains UnrealizedLosses Fair Value December 31, 2016 U.S. government agency securities and treasuries $600,001 $34 $(575) $599,460 Certificates of deposit 6,480 6 (3) 6,483 Total $606,481 $40 $(578) $605,943 December 31, 2015 U.S. government agency securities and treasuries $689,425 $22 $(2,300) $687,147 Certificates of deposit 14,360 — (13) 14,347 Total $703,785 $22 $(2,313) $701,494 No available-for-sale securities held as of December 31, 2016 or 2015 had remaining maturities greater than three years. F-16 4. Fair value measurementsThe following table sets forth the Company’s assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2016 and 2015(in thousands): Description Total Quotedprices inactivemarkets(Level 1) Significantotherobservableinputs(Level 2) Significantunobservableinputs(Level 3) December 31, 2016 Assets: Cash and cash equivalents $278,887 $278,887 $— $— Marketable securities: U.S. government agency securities and treasuries 599,460 — 599,460 — Certificates of deposit 6,483 — 6,483 — Total assets $884,830 $278,887 $605,943 $— Liabilities: Contingent consideration $7,756 $— $— $7,756 Total liabilities $7,756 $— $— $7,756 December 31, 2015 Assets: Cash and cash equivalents $164,269 $158,269 $6,000 $— Marketable securities: U.S. government agency securities 687,147 — 687,147 — Certificates of deposit 14,347 — 14,347 — Total assets $865,763 $158,269 $707,494 $— Liabilities: Contingent consideration $8,665 $— $— $8,665 Total liabilities $8,665 $— $— $8,665 Cash and cash equivalentsThe Company considers all highly liquid securities with original final maturities of three months or less from the date of purchase to be cash equivalents.As of December 31, 2016, cash and cash equivalents comprise funds in cash, money market accounts, and federally insured deposits. As of December 31,2015, cash and cash equivalents comprise funds in cash, money market accounts, U.S. Treasury securities and federally insured deposits.Marketable securitiesThe amortized cost of available-for-sale securities is adjusted for amortization of premiums and accretion of discounts to maturity. At December 31, 2016and 2015, the balance in the Company’s accumulated other comprehensive income (loss) was composed solely of activity related to the Company’savailable-for-sale marketable securities. There were no material realized gains or losses recognized on the maturity of available-for-sale securities during theyears ended December 31, 2016 or 2015, and as a result, the Company did not reclassify any amount out of accumulated other comprehensive income (loss)for the same periods.The aggregate fair value of securities held by the Company in an unrealized loss position for less than twelve months as of December 31, 2016 and 2015was $376.1 million and $638.1 million, respectively. As of December 31, 2016, there were $95.5 million in securities held by the Company in an unrealizedloss position for more than twelve months. There were no securities held by the Company in an unrealized loss position for more than twelve months as ofDecember 31, 2015. The Company has the intent and ability to hold such securities until recovery. The Company determined that there was no materialchange in the credit risk of the above investments. As a result, the Company determined it did not hold any investments with an other-than-temporaryimpairment as of December 31, 2016 and 2015.F-17 Contingent considerationIn connection with the acquisition of Pregenen, the Company recorded contingent consideration pertaining to the amounts potentially payable toPregenen’s former equityholders pursuant to the Stock Purchase Agreement by and among the Company, Pregenen and Pregenen’s former equityholders.Contingent consideration is measured at fair value and is based on significant inputs not observable in the market, which represents a Level 3 measurementwithin 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 ofcontingent consideration related to updated assumptions and estimates are recognized within the consolidated statements of operations and comprehensiveincome (loss).Contingent consideration may change significantly as development progresses and additional data are obtained, impacting the Company’s assumptionsregarding probabilities of successful achievement of related milestones used to estimate the fair value of the liability and the timing in which they areexpected to be achieved. In evaluating the fair value information, considerable judgment is required to interpret the market data used to develop theestimates. The estimates of fair value may not be indicative of the amounts that could be realized in a current market exchange. Accordingly, the use ofdifferent 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 successfulachievement of preclinical, clinical and commercial milestones, the period in which these milestones are expected to be achieved ranging from 2017 to 2026and discount rates ranging from 10.1% to 13.1%. Significant increases or decreases in any of the probabilities of success would result in a significantly higheror lower fair value measurement, respectively. Significant increases or decreases in these other inputs would result in a significantly lower or higher fair valuemeasurement, respectively.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, 2016 2015 Beginning balance$8,665 $6,796 Additions — — Changes in fair value 4,091 2,869 Payments (5,000) (1,000)Ending balance$7,756 $8,665 As of December 31, 2016 and 2015, $4.5 million and $3.6 million, respectively, of the fair value of the Company’s total contingent considerationobligations was reflected as components of accrued expenses and other current liabilities within the consolidated balance sheets, with the remaining balancesof $3.3 million and $5.1 million, respectively, reflected as a non-current liability. Milestones of $5.0 million and $1.0 million under the Stock PurchaseAgreement were achieved and paid to the former equityholders of Pregenen during 2016 and 2015, respectively. Please refer to Note 8, “Commitments andcontingencies,” for further information. 5. Property and equipment, netProperty and equipment, net, consists of the following (in thousands): December 31, 2016 2015 Computer equipment and software$1,655 $1,259 Office equipment 1,427 1,104 Laboratory equipment 16,305 10,520 Leasehold improvements 13,697 11,010 Construction-in-progress 136,315 65,542 Total property and equipment 169,399 89,435 Less accumulated depreciation and amortization (12,444) (6,821)Property and equipment, net$156,955 $82,614 F-18 Depreciation and amortization expense related to property and equipment was $5.9 million, $3.7 million, and $2.3 million for the years endedDecember 31, 2016, 2015, and 2014, respectively. Construction-in-progress as of December 31, 2016 includes $126.9 million related to the construction of60 Binney Street in Cambridge, Massachusetts, of which $120.1 million was incurred by the landlord. Please refer to Note 8, “Commitments andcontingencies,” for further information. 6. Restricted cashAs of December 31, 2016 and 2015, the Company maintained letters of credit of $14.4 million and $10.0 million, respectively, which are required to becollateralized with a bank account at a financial institution in accordance with the Company’s current and future headquarters’ lease agreements. AtDecember 31, 2016, $13.8 million relates to the 60 Binney Street Lease. Subject to the terms of the lease and certain reduction requirements specified therein,including market capitalization requirements, this amount may decrease by $1.5 million on the third, fourth, and fifth anniversaries of the date the Companyoccupies the building. 7. Accrued expenses and other current liabilitiesAccrued expenses and other current liabilities consist of the following (in thousands): December 31, 2016 2015 Employee compensation $11,296 $5,935 Accrued goods and services 34,275 15,876 Accrued license and milestone fees 2,464 277 Accrued professional fees 1,492 1,014 Deferred rent, current portion 11 964 Contingent consideration, current portion 4,479 3,584 Other 643 495 Total accrued expenses and other current liabilities $54,660 $28,145 The change in employee compensation was primarily driven by an increase in accrued bonus of $4.9 million, primarily related to an increase inheadcount. The change in accrued goods and services was primarily driven by a $4.5 million accrual for construction at 60 Binney Street as well as a $6.2million accrual relating to services performed by a contract manufacturing organization. 8. Commitments and contingenciesOn June 3, 2013, the Company entered into a nine-year building lease for approximately 43,600 square feet of space located at 150 Second Street,Cambridge, Massachusetts, which commenced in December 2013. This lease was amended in June 2014 to add approximately 9,900 additional square feet.The lease originally had monthly lease payments of $0.2 million for the first 12 months, which increased to $0.3 million per month beginning in December2014 due to the lease amendment, with annual rent escalations thereafter. Rent expense is recognized on a straight-line basis over the term of the lease. Thelease provided a contribution from the landlord towards the initial build-out of the space of up to $7.8 million. The Company capitalizes the leaseholdimprovements as property and equipment and records the landlord incentive payments received as deferred rent and amortizes these amounts as reductions torent expense over the lease term. In addition, in accordance with the lease, the Company entered into a cash-collateralized irrevocable standby letter of creditin the amount of $1.3 million, naming the landlord as beneficiary, which had a balance of $0.6 as of December 31, 2016 and 2015. On September 30, 2016, the Company entered into an Assignment and Assumption of Lease (“Assignment”) relating to its lease at 150 Second Street.Under the Assignment, the Company will assign all of its rights, interests, obligations and responsibilities under the lease, to be effective as of the later ofMay 1, 2017 or the first day following the Company’s surrender of the leased premises in accordance with the lease. The Company expects to vacate thepremises during the second quarter of 2017.On June 29, 2015, the Company entered into a lease agreement for additional office space located at 215 First Street, Cambridge, Massachusetts. Underthe terms of the lease, the Company leased approximately 15,120 square feet starting on July 13, 2015 for $0.5 million per year in base rent, which is subjectto a 3% annual rent increase plus certain operating expenses and taxes. The lease may continue until the end of the 60th full calendar month following thedate the landlord delivers the premises to the Company, and includes early termination provisions that allows the Company to terminate the lease at the endof the 20th full calendar month following the delivery of the premises now that the Company has met certain conditions specified within the lease. Under theterms of the lease, the Company has also leased an additional 8,075 square feet of office space in the same premises starting on January 1, 2016F-19 for an additional $0.3 million per year in base rent, which is subject to a 3% annual rent increase plus certain operating expenses and taxes. The Company hasprovided its landlord with notice of termination of this lease, with termination to be effective April 12, 2017. On June 3, 2016, the Company entered into a strategic manufacturing agreement for the future commercial production of the Company’s Lenti-D andLentiGlobin product candidates with a contract manufacturing organization. Under this 12 year agreement, the contract manufacturing organization willcomplete the design, construction, validation and process validation of the leased suites prior to anticipated commercial launch of the product candidates.During construction, the Company is required to pay $12.5 million upon the achievement of certain contractual milestones, and may pay up to $8.0 millionin additional contractual milestones if the Company elects its option to lease additional suites. The Company paid $5.0 million for the achievement of thefirst and second contractual milestones during 2016 and paid the third milestone of $3.0 million in January 2017, which is reflected as a component ofaccrued expenses and other current liabilities within the consolidated balance sheet at December 31, 2016. Following construction completion, the Companywill pay $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 maypay additional suite fees if it elects its option to reserve or lease additional suites. The Company estimates completion to occur in 2018. The Company mayterminate this agreement any time after July 1, 2016 upon payment of a one-time termination fee and up to 24 months of fixed suite and labor fees. TheCompany concluded that this agreement contains an embedded lease as the suites are designated for the Company’s exclusive use during the term of theagreement. The Company concluded that it is not the deemed owner during construction nor is it a capital lease under ASC 840-10, Leases - Overall. As aresult, the Company will account for the agreement as an operating lease and expense the rental payments on a straight-line basis over the term of theembedded lease. On November 18, 2016, the Company entered into an agreement for future clinical and commercial production of the Company’s LentiGlobin genetherapy drug products with a contract manufacturing organization at an existing facility. The term of the agreement is five years with a three year renewal atthe mutual option of each party. Under the agreement, the Company is required to pay an up-front fee of €3.0 million, €2.0 million of which was paid in thefourth quarter of 2016 and €1.0 million of which is expected to be paid in mid-2018, and annual maintenance and production fees of up to €9.8 million,depending on its production needs. The Company may terminate this agreement with six months’ notice and a one-time termination fee prior to July 1, 2018,or twelve months’ notice and a one-time termination fee thereafter. The Company concluded that this agreement contains an embedded lease as the cleanrooms are designated for the Company’s exclusive use during the term of the agreement, and determined that it is not a capital lease under ASC 840-10,Leases – Overall. As a result, the Company will account for the agreement as an operating lease and expense the rental payments on a straight-line basis overthe term of the embedded lease. 60 Binney Street Lease CommitmentsOn September 21, 2015, the Company entered into a lease agreement for additional office and laboratory space located in a building (the “Building”)under construction at 60 Binney Street, Cambridge, Massachusetts (the “60 Binney Street Lease”). Under the terms of the 60 Binney Street Lease, starting onOctober 1, 2016, the Company will lease approximately 253,108 square feet of office and laboratory space at $72.50 per square foot per year, or $18.4million per year in base rent, which is subject to scheduled annual rent increases of 1.75% plus certain operating expenses and taxes. The Company alsoexecuted a $9.2 million letter of credit upon signing the 60 Binney Street Lease, which was required to be collateralized with a bank account at a financialinstitution in accordance with the 60 Binney Street Lease agreement. This letter of credit was increased to $13.8 million during the third quarter of 2016 asrequired under the terms of the lease. Subject to the terms of the lease and certain reduction requirements specified therein, including market capitalizationrequirements, this amount may decrease back to $9.2 million over time. The 60 Binney Street Lease will continue until the end of the 120th full calendarmonth following April 2017 or the earlier the date the Company occupies the Building or other conditions specified in the 60 Binney Street Lease occur. Pursuant to a work letter entered into in connection with the 60 Binney Street Lease, the landlord will contribute an aggregate of $42.4 million toward thecost of construction and tenant improvements for the Building. The purpose of the 60 Binney Street Lease is to supplement and eventually replace theCompany’s current leased premises at 150 Second Street and 215 First Street in Cambridge, Massachusetts and the Company intends to move its corporateheadquarters to 60 Binney Street during the second quarter of 2017. The Company has the option to extend the 60 Binney Street Lease for two successivefive-year terms.F-20 Because the Company is involved in the construction project, including having responsibility to pay for a portion of the costs of finish work andmechanical, electrical, and plumbing elements of the Building, among other items, the Company is deemed for accounting purposes to be the owner of theBuilding during the construction period. Accordingly, construction costs that have been incurred by the landlord directly or indirectly throughreimbursement to the Company as part of its tenant improvement allowance have been recorded as an asset in “Property and equipment, net” with a relatedfinancing obligation in “Construction financing lease obligation” on the Company’s consolidated balance sheets. Tenant improvement costs that arereimbursable by the landlord and have not yet been paid to the Company are also recorded in “Prepaid expenses and other current assets” on the Company’sconsolidated balance sheets. Tenant improvement costs that are not reimbursable by the landlord are only recorded in “Property and equipment, net” on theCompany’s consolidated balance sheets.As of December 31, 2016, Property and equipment, net, includes $126.9 million related to construction costs for the Building, of which $120.1 millionhas been incurred by the landlord. As of December 31, 2016, Prepaid expenses and other current assets includes $8.5 million of tenant improvement costsreimbursable by the landlord that had not yet been received, $7.8 million of which was received by the Company in January 2017. The Company incurredtenant improvement costs of $1.8 million through December 31, 2016 that are not reimbursable by the landlord. No payments were made by the Company tothe landlord during the twelve months ended December 31, 2016.The Company bifurcates its future lease payments pursuant to the 60 Binney Street Lease into (i) a portion that is allocated to the Building and (ii) aportion that is allocated to the land on which the Building is being constructed, which is recorded as rental expense. Although the Company estimates thatthe Company will not begin making lease payments pursuant to the 60 Binney Street Lease until April 2017, the portion of the lease obligation allocated tothe land is treated for accounting purposes as an operating lease that commenced upon execution of the 60 Binney Street Lease in September 2015. Duringthe year ended December 31, 2016, the Company recognized $1.9 million of non-cash rental expense attributable to the land.In the event that the landlord completes the construction of the Building in 2017 as planned, the Company will evaluate the 60 Binney Street Lease inorder to determine whether or not the 60 Binney Street Lease meets the criteria for “sale-leaseback” treatment. If the 60 Binney Street Lease meets the “sale-leaseback” criteria, the Company will remove the asset and the related liability from its consolidated balance sheet and treat the 60 Binney Street Lease aseither an operating or a capital lease based on the Company’s assessment of the accounting guidance. The Company expects that upon completion ofconstruction of the Building the 60 Binney Street Lease will not meet the “sale-leaseback” criteria. If the 60 Binney Street Lease does not meet “sale-leaseback” criteria, the Company will treat the 60 Binney Street Lease as a financing obligation and will depreciate the asset in accordance with theCompany’s accounting policy.As of December 31, 2016, future minimum commitments under the 60 Binney Street Lease and facility operating leases were as follows (in thousands): Years ended December 31, 60 BinneyStreet Lease 150 SecondStreet Lease Other OperatingLeases Total LeaseCommitments 2017 $13,102 $1,359 $11,963 $26,424 2018 18,647 - 10,368 29,015 2019 18,974 - 9,841 28,815 2020 19,305 - 9,841 29,146 2021 19,643 - 9,841 29,484 2022 and thereafter 108,875 - 32,725 141,600 Total minimum lease payments $198,546 $1,359 $84,579 $284,484 (1)Amounts are subject to increase if the Company does not vacate the leased premise during the second quarter of 2017 as planned. For the 60 Binney Street Lease, the table above sets forth the future minimum rental payments that the Company is obligated to pay after takingoccupancy including amounts reflected on the consolidated balance sheet under the caption “Construction financing lease obligation.” The Companyexpects to commence these rental payments upon completion of the Building in April 2017.Rent expense is calculated on a straight-line basis over the term of the lease. Rent expense recognized under all leases, including additional rent chargesfor utilities, parking, maintenance, and real estate taxes, and including rental expense attributable to the 60 Binney Street Lease land was $8.3 million, $5.7million, and $4.3 million for the years ended December 31, 2016, 2015 and 2014, respectively.The Company is party to various agreements, principally relating to licensed technology, that require future payments relating to milestones not met atDecember 31, 2016 and December 31, 2015 or royalties on future sales of specified products.F-21 The Company enters into standard indemnification agreements in the ordinary course of business. Pursuant to the agreements, the Company indemnifies,holds harmless, and agrees to reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally the Company’s businesspartners. The term of these indemnification agreements is generally perpetual any time after execution of the agreement. The maximum potential amount offuture payments the Company could be required to make under these indemnification agreements is unlimited. The Company has never incurred costs todefend lawsuits or settle claims related to these indemnification agreements.On June 30, 2014, the Company acquired Pregenen. During 2016, two milestones under the Stock Purchase Agreement were achieved, which resulted in a$5.0 million payment to the former equityholders of Pregenen during 2016. During 2015, one milestone was achieved, which resulted in a $1.0 millionpayment to the former equityholders of Pregenen. The Company may be required to make up to an additional $129.0 million in future contingent cashpayments to the former equityholders of Pregenen upon the achievement of certain preclinical, clinical and commercial milestones related to the Pregenentechnology, of which $9.0 million relates to preclinical milestones, $20.1 million relates to clinical milestones and $99.9 million relates to commercialmilestones. In accordance with accounting for business combinations guidance, contingent consideration liabilities are required to be recognized on theconsolidated balance sheets at fair value. Estimating the fair value of contingent consideration requires the use of significant assumptions primarily relatingto probabilities of successful achievement of certain preclinical, clinical and commercial milestones, the expected timing in which these milestones will beachieved and discount rates. The use of different assumptions could result in materially different estimates of fair value. See Note 4, “Fair valuemeasurements” for additional information. 9. Common stock and preferred stockThe Company is authorized to issue 125,000,000 shares of common stock. Holders of common stock are entitled to one vote per share. Holders ofcommon 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 assetslegally available for distribution to the Company’s shareholders in the event of liquidation. Holders of common stock have no preemptive, subscription,redemption or conversion rights.The Company is authorized to issue 5,000,000 shares of preferred stock in one or more series and to fix the powers, designations, preferences and relativeparticipating option or other rights thereof, including dividend rights, conversion rights, voting rights, redemption terms, liquidation preferences and thenumber of shares constituting any series, without any further vote or action by the Company’s shareholders. As of December 31, 2016 and 2015, theCompany had no shares of preferred stock issued or outstanding.Reserved for future issuanceThe Company has reserved for future issuance the following number of shares of common stock (in thousands): December 31, 2016 2015 Options to purchase common stock 3,735 3,532 Restricted stock units 263 148 2013 Stock Option and Incentive Plan 1,226 565 2013 Employee Stock Purchase Plan 209 227 5,433 4,472 10. Significant agreementsCelgene CorporationOriginal Collaboration AgreementOn March 19, 2013, the Company entered into a Master Collaboration Agreement (the “Collaboration Agreement”) with Celgene Corporation(“Celgene”) to discover, develop and commercialize potentially disease-altering gene therapies in oncology. The collaboration is focused on applying genetherapy 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 Celgenepursuant to which the Company obtained a sublicense to certain intellectual property from Celgene, originating under Celgene’s license from Baylor Collegeof Medicine, for use in the collaboration.Under the terms of the Collaboration Agreement, the Company received a $75.0 million up-front, non-refundable cash payment. The Company wasresponsible for conducting discovery, research and development activities through completion of Phase I clinicalF-22 studies, if any, during the initial term of the 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 Celgene. The JSC, among other activities, reviews the collaboration program, reviewsand evaluates product candidates and approves regulatory plans. In addition to the JSC, the Collaboration Agreement provides that the Company andCelgene each appoint representatives to a patent committee, which is responsible for managing the intellectual property developed and used during thecollaboration.Amended Collaboration AgreementOn June 3, 2015, the Company and Celgene amended and restated the Collaboration Agreement (the “Amended Collaboration Agreement”). Under theAmended Collaboration Agreement, the parties will now focus the collaboration exclusively on anti- B-cell maturation antigen (“BCMA”) productcandidates for a new three-year term. In connection with the Amended Collaboration Agreement, the Company received an upfront, one-time, non-refundable, non-creditable payment of $25.0 million to fund research and development under the collaboration. The collaboration will continue to begoverned by the JSC. Under the terms of the Amended Collaboration Agreement, for up to two product candidates selected for development under the collaboration, theCompany is responsible for conducting and funding all research and development activities performed up through completion of the initial Phase I clinicalstudy, if any, of such product candidate.On a product candidate-by-product candidate basis, up through a specified period following enrollment of the first patient in an initial Phase I clinicalstudy for such product candidate (the “Option Period”), the Company has granted Celgene an option to obtain an exclusive worldwide license to developand commercialize such product candidate pursuant to a written agreement, the form of which the Company has already agreed upon. In the event thatCelgene exercises its option with respect to any product candidate, the Company may elect to co-develop and co-promote the product candidate in theUnited States, provided that, if the Company does not exercise its option co-develop and co-promote the first product candidate in-licensed by Celgeneunder the Amended Collaboration Agreement, then the Company will not be permitted to exercise its option to co-develop and co-promote any futureproduct candidates under the Amended Collaboration Agreement. If Celgene elects to exercise its option to exclusively in-license a product candidate, itmust pay the Company an option fee in the amount of $10.0 million for the first product candidate and $15.0 million for any additional product candidates.On February 10, 2016, Celgene exercised its option to obtain an exclusive worldwide license to develop and commercialize bb2121, the first productcandidate under the Amended Collaboration Agreement, pursuant to an executed license agreement entered into by the parties on February 16, 2016 andpaid the associated $10.0 million option fee. The Company may now elect to co-develop and co-promote the product candidate within the UnitedStates. The Company will share equally in all costs relating to developing, commercializing and manufacturing the product candidate within the UnitedStates if it elects to co-develop and co-promote bb2121 with Celgene. In the event the Company does not exercise its option to co-develop and co-promotebb2121, the Company will receive an additional fee in the amount of $10.0 million. February 17, 2016, the parties further amended the AmendedCollaboration Agreement to update the timing of certain deliverables in connection with Celgene’s option exercise for the license of the bb2121 productcandidate.Accounting AnalysisThe Company’s Amended Collaboration Agreement with Celgene contains the following deliverables: (i) research and development services,(ii) participation on the JSC, (iii) participation on the patent committee, (iv) a license to the first product candidate, (v) manufacture of vectors and associatedpayload for incorporation into the first optioned product candidate under the license, and (vi) participation on the JGC under the co-development and co-promotion agreement for the first optioned product candidate under the license.The license to the first product candidate was considered a deliverable at the inception of the arrangement and therefore the associated option fee wasincluded in allocable arrangement consideration as the Company believed there was minimal risk with regard to whether Celgene will exercise the optionbased on the successful completion of preclinical activities and proximity of enrollment of the first patient in an initial Phase I clinical study for this productcandidate. The Company determined that the obligation within the license to manufacture or have manufactured supplies of vectors and associated payloadsfor incorporation into the first optioned product candidate is a deliverable, consistent with the option to license the first product candidate.However, the Company determined that the options to license any additional product candidates are substantive options and therefore were notconsidered deliverables at execution of the Amended Collaboration Agreement. Celgene is not contractually obligated to exercise the options. Additionally,as a result of the uncertain outcome of the discovery, research and development activities, the Company is at risk with regard to whether Celgene willexercise the options to license additional product candidates. Moreover, the Company determined that the options are not priced at a significant andincremental discount. Accordingly, the options to other product candidates are not considered deliverables and the associated option fees are not included inallocable arrangement consideration.F-23 Upon execution of the Amended Collaboration Agreement in June 2015, the Company concluded that each of the three delivered elements at theinception of the agreement (research and development services, participation on the JSC and participation on the patent committee) had standalone valuefrom the other undelivered elements. Additionally, the Amended Collaboration Agreement does not include return rights related to the collaboration term.Accordingly, each deliverable qualified as a separate unit of accounting.The Company determined that each of the delivered elements had the same period of performance (the three year term through projected initial Phase Iclinical study substantial completion) and the same pattern of revenue recognition, ratably over the period of performance as there was no other discerniblepattern of recognition. The Company identified the allocable arrangement consideration as the $25.0 million up-front research and development fundingpayment, $10.0 million option fee for the first product candidate, $20.0 million related to remaining deferred revenue from the original CollaborationAgreement, and $54.1 million of contingent revenue related to the estimated amounts that will be received from Celgene for manufacturing services. The$109.0 million total allocable arrangement consideration was allocated based on the relative estimated selling price of the separate units of accounting at theinception of the amended agreement, resulting in $17.3 million allocated to the three delivered elements at the inception of the agreement, which will berecognized over an initial three year term.The Company is required to reassess its conclusions on standalone value of deliverables upon delivery, and therefore, upon Celgene’s exercise of itsoption to obtain an exclusive worldwide license to develop and commercialize bb2121 in February 2016, the Company updated its assessment. TheCompany determined that there were no changes in standalone value of the research and development services as the option was previously determined to benon-substantive, the Company continues to have an obligation to provide research and development services for bb2121 and other product candidates, andthis obligation is separate and unrelated to the execution of the license agreement. Participation on the JSC and participation on the patent committee alsocontinue to have standalone value from the other undelivered elements as there has been no change in facts that would change this conclusion. Accordingly,each of these three deliverables continues to qualify as a separate unit of accounting.The Company determined that each of the identified deliverables that qualify as a separate unit of accounting continue to have the same period ofperformance (the three year term through projected initial Phase I clinical study substantial completion) and the same pattern of revenue recognition, ratablyover the period of performance as there is no other discernible pattern of recognition, and therefore there is no change in the recognition of $17.3 millionallocated to these three elements. As of December 31, 2016, this will continue to be recognized over a three year term that began in June 2015.However, the Company concluded that the license to bb2121 does not have standalone value from one of the undelivered elements, the post-initial PhaseI manufacture of vectors and associated payload for bb2121 under the license, because the manufacturing is essential to the use of the license. Accordingly,these two deliverables qualify as a single combined unit of accounting.The single combined unit of accounting comprised of the license to bb2121 and the manufacture of vectors and associated payload for bb2121 wereallocated consideration of $91.7 million, which will begin to be recognized upon the commencement of post-initial Phase I manufacturing services forbb2121 for Celgene, not in excess of the fixed consideration and assuming other revenue recognition criteria have been met. The Company currently expectsthis recognition may commence in 2017 but has classified deferred revenue associated with the combined unit of accounting as deferred revenue, net ofcurrent portion on its consolidated balance sheet given exact timing is currently unknown and the budget for such services has not yet been agreed to by theparties. Revenue for the combined unit of account will be recognized on a proportional performance method or ratably over the period of performance if thereis no other discernible pattern of recognition. This period of performance and recognition pattern will be revisited as the development plan changes or ifother events impacting the deliverables occur.The Company evaluated all of the milestones that may be received in connection with Celgene’s option to license a product candidate resulting from thecollaboration. In evaluating if a milestone is substantive, the Company assesses whether: (i) the consideration is commensurate with either the Company’sperformance to achieve the milestone or the enhancement of the value of the delivered item(s) as a result of a specific outcome resulting from the Company’sperformance to achieve the milestone, (ii) the consideration relates solely to past performance and (iii) the consideration is reasonable relative to all of thedeliverables and payment terms within the arrangement. All clinical and regulatory milestones that may be received under the option to the licenseagreement are considered substantive on the basis of the contingent nature of the milestone, specifically reviewing factors such as the scientific, clinical,regulatory, commercial and other risks that must be overcome to achieve the milestone as well as the level of effort and investment required. Accordingly,such amounts will be recognized as revenue in full in the period in which the associated milestone is achieved, assuming all other revenue recognitioncriteria are met. All commercial milestones will be accounted for in the same manner as royalties and recorded as revenue upon achievement of the milestone,assuming all other revenue recognition criteria are met.During the years ended December 31, 2016, 2015 and 2014, the Company recognized $6.2 million, $14.1 million and $25.0 million, respectively, ofrevenue associated with its collaboration with Celgene related to the recognition of discovery, research andF-24 development services. As of December 31, 2016 and December 31, 2015, there was $46.4 million and $41.8 million, respectively, of total deferred revenuerelated to the Company’s collaboration with Celgene, which is classified as current or non-current in the consolidated balance sheets, $8.8 million of which iscurrently expected to be recognized through the first half of 2018 with the remaining amount deferred until a later date, as described above. 11. Business combinations On June 30, 2014, the Company completed its acquisition of Pregenen, a privately-held biotechnology company, upon which Pregenen became a wholly-owned subsidiary. 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 is intended tobe used in certain ongoing research and development activities. From the date of acquisition, the gene editing platform intangible asset will be amortized toresearch and development expense over its expected useful life of approximately eight years.Amortization expense for the gene editing platform intangible asset was $3.8 million and $3.8 million for the years ended December 31, 2016 and 2015,respectively, and accumulated amortization as of December 31, 2016 and 2015 was $9.4 million and $5.6 million, respectively. The estimated amortizationof intangible assets for the year ended December 31, 2016 and for each of the five succeeding years and thereafter is as follows (in thousands): 2017$3,763 2018 3,763 2019 3,763 2020 3,763 2021 3,763 2022 1,879 Total$20,694 12. Stock-based compensationOn June 3, 2013, the Company’s board of directors adopted its 2013 Stock Option and Incentive Plan (“2013 Plan”), which was subsequently approvedby its stockholders and became effective upon the closing of the Company’s IPO on June 24, 2013. The 2013 Plan replaces the 2010 Stock Option and GrantPlan (“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 theCompany’s employees, members of the board of directors, and consultants of the Company. The Company initially reserved 955,000 shares of its commonstock 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 2013Plan will automatically increase each January 1, beginning on January 1, 2014, by four percent of the outstanding number of shares of common stock on theimmediately preceding December 31 or such lesser number of shares as determined by the Company’s compensation committee. In January 2016 and January2017, the number of common stock available for issuance under the 2013 Plan was increased by approximately 1.5 million and 1.6 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 andRestated 2002 Employee, Director and Consultant Stock Plan (“2002 Plan”), at the time of adoption of the 2013 Plan remain outstanding and effective. Theshares of common stock underlying any awards that are forfeited, canceled, repurchased, expire or are otherwise terminated (other than by exercise) under the2002 Plan and 2010 Plan are added to the shares of common stock available for issuance under the 2013 Plan. As of December 31, 2016, the total number ofcommon stock that may be issued under all plans is 1.2 million.The Company does not currently hold any treasury shares. Upon stock option exercise, the Company issues new shares and delivers them to theparticipant.F-25 Stock-based compensation expenseThe Company recognized stock-based compensation expense totaling $39.8 million, $41.1 million, and $10.8 million during the years endedDecember 31, 2016, 2015 and 2014, respectively. Stock-based compensation expense recognized by award type is as follows (in thousands): Year ended December 31, 2016 2015 2014 Stock options$33,966 $37,536 $9,487 Restricted stock awards — — 52 Restricted stock units 5,374 3,325 1,158 Employee stock purchase plan 416 259 66 $39,756 $41,120 $10,763 Stock-based compensation expense by classification included within the consolidated statements of operations and comprehensive loss was as follows (inthousands): Year ended December 31, 2016 2015 2014 Research and development$19,690 $24,854 $5,151 General and administrative 20,066 16,266 5,612 $39,756 $41,120 $10,763 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 followingweighted-average assumptions: Year ended December 31, 2016 2015 2014 Expected volatility 74.3% 72.6% 82.3%Expected term (in years) 6.0 5.9 6.0 Risk-free interest rate 1.5% 1.7% 1.8%Expected dividend yield 0.0% 0.0% 0.0% The intrinsic value of options exercised during the years ended December 31, 2016, 2015, and 2014, was $15.3 million, $147.9 million and $41.4million, respectively.The weighted-average fair values of options granted during 2016, 2015 and 2014 was $34.22, $74.65, and $18.53, respectively.There were no unvested restricted stock awards as of December 31, 2016 and 2015 and no restricted stock awards were granted during 2016. Theaggregate fair value of restricted stock awards that vested during the year ended December 31, 2014, based on the estimated fair value of the underlying stockon the day of vesting was $1.9 million.As of December 31, 2016, there was $69.5 million, $11.9 million and $0.1 million of unrecognized compensation expense related to unvested stockoptions, restricted stock units and the employee stock purchase plan, respectively, that is expected to be recognized over a weighted-average period of 2.5,2.8, and 0.1 years.In 2015, the Company modified outstanding options held by its former Chief Scientific Officer as part of his separation agreement, modified the vestingconditions of a stock option award held by a non-employee founder, and modified the vesting conditions of stock option awards held by two employeesimmediately following their separation from the Company. As a result of these modifications, the Company recognized $10.3 million of incremental stock-based compensation expense during 2015.During the year ended December 31, 2014, the Company modified the vesting conditions of stock option awards held by several former employees, whichresulted in $0.6 million of incremental expense recognized within general and administrative expenses.F-26 Stock optionsThe following table summarizes the stock option activity under the Company’s equity awards plans (shares and aggregate intrinsic value in thousands): Shares Weighted-averageexercise priceper share Weighted-averagecontractuallife (in years) Aggregateintrinsicvalue (a)(in thousands) Outstanding at December 31, 2015 3,532 $48.74 Granted 1,047 $52.09 Exercised (377) $16.30 Canceled or forfeited (467) $55.04 Outstanding at December 31, 2016 3,735 $52.17 7.5 $93,081 Exercisable at December 31, 2016 1,926 $39.23 6.5 $70,991 Vested and expected to vest at December 31, 2016 3,735 $52.17 7.5 $93,081 (a)The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the estimated fair value of thecommon stock for the options that were in the money at December 31, 2016.Restricted stock unitsThe following table summarizes the restricted stock unit activity under the Company’s equity award plans (shares in thousands): Shares Weighted-averagegrant datefair value Unvested balance at December 31, 2015 148 $65.79 Granted 263 52.12 Vested (113) 46.17 Forfeited (35) 46.65 Unvested balance at December 31, 2016 263 $63.07 Employee Stock Purchase PlanOn June 3, 2013, the Company’s board of directors adopted its 2013 Employee Stock Purchase Plan (“2013 ESPP”), which was subsequently approved byits stockholders and became effective upon the closing of the Company’s IPO on June 24, 2013. The 2013 ESPP authorizes the initial issuance of up to a totalof 238,000 shares of the Company’s common stock to participating employees. The first offering period under the 2013 ESPP opened on August 1, 2014.During the years ended December 31, 2016 and 2015, 18,338 and 10,545 shares of common stock were issued under the 2013 ESPP. 13. 401(k) Savings planIn 1997, the Company established a defined-contribution savings plan under Section 401(k) of the Internal Revenue Code (“the 401(k) Plan”). The401(k) Plan covers all employees who meet defined minimum age and service requirements, and allows participants to defer a portion of their annualcompensation on a pretax basis. The Company did not make any contributions to the 401(k) Plan through December 31, 2014. In February 2017 and 2016,the Company made contributions of approximately $1.0 million and $0.6 million, respectively, related to employee contributions made during 2016 and2015, which is included in accrued expenses and other current liabilities as of December 31, 2016 and 2015. F-27 14. Income taxesThe components of loss before income taxes were as follows (in thousands): Year ended December 31, 2016 2015 2014 U.S.$(210,188) $(162,287) $(61,118)Foreign (53,931) (4,436) 612 Total$(264,119) $(166,723) $(60,506) The (benefit from) provision for income taxes were as follows (in thousands): Year ended December 31, 2016 2015 2014 Current Federal$— $— $— State — — 1 Foreign — 60 — Deferred Federal (588) — (9,390)State (24) — (2,408)Foreign — — — Total income tax expense (benefit)$(612) $60 $(11,797) A reconciliation of income tax (benefit) provision computed at the statutory federal income tax rate to the Company’s effective income tax rate (benefit)provision as reflected in the financial statements is as follows: Year ended December 31, 2016 2015 2014 Federal income tax expense at statutory rate 34.0% 34.0% 34.0%State income tax, net of federal benefit 3.3% 4.2% 4.0%Permanent differences (5.3%) (6.4%) (3.2%)Research and development credit 15.0% 14.6% 25.7%Foreign differential (7.0%) (1.0%) 0.0%Other 0.0% (0.5%) 0.0%Change in valuation allowance (39.9%) (44.9%) (41.0%)Effective income tax rate benefit 0.1% 0.0% 19.5% For the years ended December 31, 2016, 2015 and 2014, the Company recognized an income tax benefit (expense) of $0.6 million or 0.1%, $(0.1) millionor 0.0% and $11.8 million or 19.5%, respectively. In 2014, the Company recorded a non-recurring tax benefit of $11.8 million due to the release of a portionof the valuation allowance due to taxable temporary differences available as a source of income to realize certain pre-existing deferred tax assets as a result ofthe acquisition of Pregenen. Excluding the impact of this item, the Company’s overall tax provision and effective tax rate would have been zero. TheCompany did not recognize any significant tax benefit for the years ended December 31, 2016 and December 31, 2015 as the Company was subject to a fullvaluation allowance.F-28 Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes. Thesignificant components of the Company’s deferred tax assets and liabilities are comprised of the following (in thousands): Year ended December 31, 2016 2015 Deferred tax assets: U.S. net operating loss carryforwards$106,064 $62,844 Foreign net operating loss carryforwards — 194 Tax credit carryforwards 87,117 47,386 Capitalized research and development expenses, net 631 979 Capital lease 47,191 24,315 Deferred revenue 18,231 16,438 Capitalized license fees 11,752 5,488 Accruals and other 32,172 19,486 Total deferred tax assets 303,158 177,130 Intangible assets (8,129) (9,606)Fixed assets (48,902) (26,681)Less valuation allowance (246,127) (140,843)Net deferred taxes$— $— 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. Dueto the uncertainty surrounding the realization of the favorable tax attributes in future tax returns, the Company has recorded a full valuation allowanceagainst the Company’s otherwise recognizable net deferred tax assets. The valuation allowance increased on a net basis by approximately $105.3 millionduring the year ended December 31, 2016 due primarily to net operating losses and tax credit carryforwards.As of December 31, 2016, 2015 and 2014, the Company had U.S. federal net operating loss carryforwards of approximately $466.8 million, $347.5million, and $130.0 million, respectively, which may be available to offset future income tax liabilities and expire at various dates through 2036. As ofDecember 31, 2016, 2015 and 2014, the Company also had U.S. state net operating loss carryforwards of approximately $456.8 million, $335.0 million, and$115.5 million, respectively, which may be available to offset future income tax liabilities and expire at various dates through 2036. At December 31, 2016,$195.4 million and $195.4 million of federal and state net operating losses, respectively, relate to excess equity based compensation tax deductions, thebenefits for which will be recorded to additional paid-in capital when recognized through a reduction of cash taxes paid. At December 31, 2016, 2015 and2014, the Company also had approximately $0.0 million, $0.6 million, and $2.7 million, respectively, of foreign net operating loss carryforwards that may beavailable to offset future income tax liabilities; these carryforwards do not expire.As of December 31, 2016, 2015 and 2014, the Company had federal research and development and orphan drug tax credit carryforwards of approximately$83.2 million, $44.9 million, and $22.0 million, respectively, available to reduce future tax liabilities which expire at various dates through 2036. As ofDecember 31, 2016, 2015 and 2014, the Company had state credit carryforwards of approximately $6.0 million, $3.8 million, and $2.0 million, respectively,available to reduce future tax liabilities which expire at various dates through 2031.Under the provisions of the Internal Revenue Code, the net operating loss and tax credit carryforwards are subject to review and possible adjustment bythe Internal Revenue Service and state tax authorities. Net operating loss and tax credit carryforwards may become subject to an annual limitation in theevent of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50 percent, as defined underSections 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 beutilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the value of the Companyimmediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. The Company has completedseveral 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 will recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2016, 2015 and 2014,the Company had no significant accrued interest or penalties related to uncertain tax positions and no significant amounts have been recognized in theCompany’s consolidated statements of operations and comprehensive income (loss).F-29 For all years through December 31, 2016, the Company generated research credits but has not conducted a study to document the qualified activities.This study may result in an adjustment to the Company’s research and development credit carryforwards; however, until a study is completed and anyadjustment is known, no amounts are being presented as an uncertain tax position. A full valuation allowance has been provided against the Company’sresearch and development credits and, if an adjustment is required, this adjustment would be offset by an adjustment to the deferred tax asset established forthe research and development credit carryforwards and the valuation allowance.The Company or one of its subsidiaries files income tax returns in the United States, and various state and foreign jurisdictions. The federal, state andforeign income tax returns are generally subject to tax examinations for the tax years ended December 31, 2013 through December 31, 2016. To the extentthe Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the InternalRevenue Service, state or foreign tax authorities to the extent utilized in a future period. 15. Net loss per shareThe following common stock equivalents were excluded from the calculation of diluted net loss per share for the periods indicated because includingthem would have had an anti-dilutive effect (in thousands): Year ended December 31, 2016 2015 2014 Warrants — — 177 Outstanding stock options 3,735 3,532 3,652 Restricted stock units 263 148 179 ESPP shares 11 3 6 Acquisition holdback — — 94 4,009 3,683 4,108 16. Selected Quarterly Financial Data (Unaudited)The following table contains quarterly financial information for 2016 and 2015. The Company believes that the following information reflects all normalrecurring adjustments necessary for a fair presentation of the information for the periods presented. The operating results for any quarter are not necessarilyindicative of results for any future period. 2016 FirstQuarter SecondQuarter ThirdQuarter FourthQuarter Total (in thousands, except per share data) Total revenue $1,499 $1,552 $1,552 $1,552 $6,155 Total operating expenses 58,879 61,527 79,692 73,887 273,985 Loss from operations (57,380) (59,975) (78,140) (72,335) (267,830)Net loss (56,274) (58,844) (77,025) (71,364) (263,507)Net loss per share applicable to common stockholders - basic and diluted $(1.52) $(1.59) $(2.07) $(1.88) $(7.07) 2015 FirstQuarter SecondQuarter ThirdQuarter FourthQuarter Total (in thousands, except per share data) Total revenue $6,344 $4,940 $1,324 $1,471 $14,079 Total operating expenses 31,270 56,963 44,451 50,432 183,116 Loss from operations (24,926) (52,023) (43,127) (48,961) (169,037)Net loss (24,787) (51,795) (42,924) (47,277) (166,783)Net loss per share applicable to common stockholders - basic and diluted $(0.76) $(1.57) $(1.18) $(1.29) $(4.81) F-30 17. Subsequent events The Company has evaluated all events or transactions that occurred after December 31, 2016. In the judgment of management, there were no materialevents that impacted the consolidated financial statements or disclosures. F-31 SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized. bluebird bio, Inc. By: /s/ Nick Leschly Nick Leschly President, Chief Executive Officer and DirectorSIGNATURES AND POWER OF ATTORNEYWe, the undersigned directors and officers of bluebird bio, Inc. (the “Company”), hereby severally constitute and appoint Nick Leschly and Jeffrey Walsh,and each of them singly, our true and lawful attorneys, with full power to them, and to each of them singly, to sign for us and in our names in the capacitiesindicated below, any and all amendments to this Annual Report on Form 10-K, and to file or cause to be filed the same, with all exhibits thereto and otherdocuments in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys, and each of them, full power and authorityto do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as each of usmight or could do in person, and hereby ratifying and confirming all that said attorneys, and each of them, or their substitute or substitutes, shall do or causeto be done by virtue of this Power of Attorney.Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of theregistrant and in the capacities and on the dates indicated. Name Title Date /s/ Nick Leschly President, Chief Executive Officer and Director February 22, 2017Nick Leschly (Principal Executive Officer and Duly Authorized Officer) /s/ Jeffrey Walsh Chief Financial and Strategy Officer February 22, 2017Jeffrey Walsh (Principal Financial Officer and Duly Authorized Officer) /s/ Eric Sullivan Vice President, Finance and Treasurer February 22, 2017Eric Sullivan (Principal Accounting Officer) /s/ Daniel S. Lynch Director February 22, 2017Daniel S. Lynch /s/ Wendy L. Dixon, Ph.D. Director February 22, 2017Wendy L. Dixon, Ph.D. /s/ James Mandell, M.D.. Director February 22, 2017James Mandell, M.D. /s/ John M. Maraganore, Ph.D.. Director February 22, 2017John M. Maraganore, Ph.D. /s/ David P. Schenkein, M.D. Director February 22, 2017David P. Schenkein, M.D. /s/ Mark Vachon Director February 22, 2017Mark Vachon  Exhibit Index Incorporated by ReferenceExhibitNumber Exhibit Title Form File no. Exhibit Filing Date 2.1 Stock Purchase Agreement by and between the Registrant and Precision GenomeEngineering, Inc. 8-K 001-35966 2.1 June 30, 2014 3.1 Amended and Restated Certificate of Incorporation of the Registrant 8-K 001-35966 3.1 June 24, 2013 3.2 Amended and Restated By-laws of the Registrant 8-K 001-35966 3.2 June 24, 2013 3.3 Amendment No. 1 to Amended and Restated By-laws of the Registrant 8-K 001-35966 3.1 February 11, 2016 4.1 Specimen Common Stock Certificate S-1/A 333-188605 4.1 June 4, 2013 4.2 Amended and Restated Investors’ Rights Agreement, dated as of July 23, 2012, byand among the Registrant and the Investors listed therein. S-1/A 333-188605 4.5 May 14, 2013 4.3 Amendment to Amended and Restated Investors’ Rights Agreement, dated as ofJuly 8, 2014, by and among the Registrant and the Investors listed therein. 10-Q 001-35966 4.6 August 12, 2014 10.1# Second Amended and Restated 2002 Employee, Director and Consultant Plan, asamended, and forms of award agreement thereunder S-1/A 333-188605 10.1 May 14, 2013 10.2# 2010 Stock Option and Grant Plan, as amended, and forms of award agreementthereunder S-1/A 333-188605 10.2 May 14, 2013 10.3# 2013 Stock Option and Incentive Plan and forms of award agreement thereunder S-1/A 333-188605 10.3 June 4, 2013 10.4 Form of Indemnification Agreement between the Registrant and each of itsExecutive Officers and Directors S-1/A 333-188605 10.4 May 14, 2013 10.5 Amended and Restated Lease Agreement, dated May 18, 2007, by and between theRegistrant and Rivertech Associates II, LLC, as amended 10-Q 001-35966 10.1 November 14, 2013 10.6† Patent License Agreement, dated December 11, 1996, by and between theRegistrant (formerly known as Genetix Pharmaceuticals Inc., successor-in-interestto Innogene Pharmaceuticals Inc.) and Massachusetts Institute of Technology, asamended S-1/A 333-188605 10.6 May 14, 2013 10.7† Fourth Amendment to Patent License Agreement, dated October 28, 2016, by andbetween the Registrant and Massachusetts Institute of Technology — — — Filed herewith 10.8† Patent and Know-How License Agreement No. 07554F30, dated May 14, 2009, byand between the Registrant (formerly known as Genetix Pharmaceuticals Inc.) andINSERM-TRANSFERT, as amended S-1/A 333-188605 10.7 May 14, 2013 10.9† License Agreement, dated September 13, 2011, by and between the Registrant andInstitut Pasteur, as amended S-1/A 333-188605 10.8 May 14, 2013 10.10† Amendment No. 3 to License Agreement, dated September 10, 2013, by andbetween the Registrant and Institut Pasteur 10-Q 001-35966 10.2 November 14, 2013 10.11† Amendment No. 4 to License Agreement, dated April 1, 2015, by and between theRegistrant and Institut Pasteur 10-Q 001-35966 10.10 May 6, 2015 10.12† License Agreement, dated December 7, 2011, by and between the Registrant andResearch Development Foundation S-1/A 333-188605 10.9 May 14, 2013  Incorporated by ReferenceExhibitNumber Exhibit Title Form File no. Exhibit Filing Date 10.13† Novation Agreement, dated April 2, 2012, by and between the Registrant and TheBoard of Trustees of the Leland Stanford Junior University S-1/A 333-188605 10.10 May 14, 2013 10.14† Master Collaboration Agreement by and between the Registrant and CelgeneCorporation, dated March 19, 2013 S-1/A 333-188605 10.11 May 14, 2013 10.15† Amended and Restated Master Collaboration Agreement by and between theRegistrant and Celgene Corporation, dated June 3, 2015 10-Q 001-35966 10.14 August 6, 2015 10.16 Amendment No. 1 to Amended and Restated Master Collaboration Agreement byand between the Registrant and Celgene Corporation, dated February 17, 2016 10-Q 001-35966 10.15 May 4, 2016 10.17† Amended and Restated License Agreement by and between the Registrant andCelgene Corporation, dated February 16, 2016 10-Q 001-35966 10.16 November 2, 2016 10.18† License Agreement by and between the Registrant and Biogen Idec MA Inc., datedAugust 13, 2014 10-Q 001-35966 10.17 November 2, 2016 10.19† Exclusive Patent License Agreement by and between the Registrant and theNational Institutes of Health, dated August 31, 2015 10-Q 001-35966 10.18 November 2, 2016 10.20# Amended and Restated Employment Agreement by and between the Registrant andNick Leschly S-1/A 333-188605 10.12 June 4, 2013 10.21# Amended and Restated Employment Agreement by and between the Registrant andJeffrey T. Walsh S-1/A 333-188605 10.13 June 4, 2013 10.22# Amended and Restated Employment Agreement by and between the Registrant andMitch Finer S-1/A 333-188605 10.14 June 4, 2013 10.23# Transitional Services and Separation Agreement by and between the Registrant andMitch Finer 10-Q 001-35966 10.17 May 6, 2015 10.24# Amended and Restated Employment Agreement by and between the Registrant andDavid M. Davidson, M.D. S-1/A 333-188605 10.15 June 4, 2013 10.25# Employment Agreement, dated February 3, 2014, by and between the Registrantand Jason F. Cole 10-Q 001-35966 10.18 May 13, 2014 10.26# Amendment to Employment Agreement, dated March 7, 2016, by and between theRegistrant and Jason F. Cole 10-Q 001-35966 10.25 May 4, 2016 10.27# Amendment No. 2 to Employment Agreement, dated November 3, 2016, by andbetween the Registrant and Jason F. Cole — — — Filed herewith 10.28# Employment Agreement, dated October 20, 2014, by and between the Registrantand James DeTore 8-K 001-35966 10.1 November 10, 2014 10.29# Separation Agreement, dated February 24, 2016, by and between the Registrant andJames DeTore 10-Q 001-35966 10.27 May 4, 2016 10.30# Employment Agreement, dated May 30, 2015, by and between the Registrant andPhilip D. Gregory 10-Q 001-35966 10.21 August 6, 2015 10.31# Amendment to Employment Agreement, dated November 3, 2016, by and betweenthe Registrant and Philip D. Gregory — — — Filed herewith 10.32# Employment Agreement, dated November 23, 2016, by and between the Registrantand Susanna High — — — Filed herewith 10.33# Offer Letter, dated October 14, 2013, by and between the Registrant and EricSullivan 10-Q 001-35966 10.19 May 13, 2014 10.34# 2013 Employee Stock Purchase Plan S-1/A 333-188605 10.17 June 4, 2013  Incorporated by ReferenceExhibitNumber Exhibit Title Form File no. Exhibit Filing Date 10.35# Executive Cash Incentive Bonus Plan S-1/A 333-188605 10.18 May 14, 2013 10.36 Lease, dated June 3, 2013, by and between the Registrant and 150Second Street, LLC, as amended S-1/A 333-188605 10.19 June 4, 2013 10.37 Lease Amendment, dated November 15, 2013, by and between theRegistrant and 150 Second Street, LLC, as amended 10-K 001-35966 10.19 March 5, 2014 10.38 Lease Amendment, dated June 9, 2014, by and between the Registrantand 150 Second Street, LLC, as amended 10-Q 001-35966 10.24 August 12, 2014 10.39 Consent to Assignment, dated September 30, 2016, by and among theRegistrant, ARE-MA Region No. 50, LLC, and Foundation Medicine,Inc. 10-Q 001-35966 10.35 November 2, 2016 10.40 Assignment and Assumption of Lease, dated September 30, 2016, byand between the Registrant and Foundation Medicine, Inc. 10-Q 001-35966 10.36 November 2, 2016 10.41 Lease, dated June 29, 2015, by and between the Registrant and ARE-MA Region No. 38, LLC 10-Q 001-35966 10.29 August 6, 2015 10.42† Lease, dated September 21, 2015, by and between the Registrant andARE-MA Region No. 40 LLC 10-Q 001-35966 10.30 November 5, 2015 10.43 First Amendment to Lease, dated June 21, 2016, by and between theRegistrant and ARE-MA Region No. 40 LLC 10-Q 001-35966 10.37 May 6, 2016 10.44 Second Amendment to Lease, dated November 14, 2016, by andbetween the Registrant and ARE-MA Region No. 40 LLC — — — Filed herewith 10.45 Termination of Lease, dated February 10, 2017, by and between theRegistrant and ARE-MA Region No. 38, LLC — — — Filed herewith 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 adoptedpursuant 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 adoptedpursuant to Section 302 of the Sarbanes-Oxley Act of 2002. — — — Filed herewith 32.1 Certification of Principal Executive Officer and Principal FinancialOfficer pursuant to 18 U.S.C. Section 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002. — — — Furnished herewith 101 The following materials from the Company’s Annual Report on Form10-K for the year ended December 31, 2016, formatted in XBRL(eXtensible Business Reporting Language): (i) Consolidated BalanceSheets, (ii) Consolidated Statements of Operations and ComprehensiveIncome (Loss), (iii) Consolidated Statements of Stockholders’ Equity,(iv) Consolidated Statements of Cash Flows and (v) Notes toConsolidated Financial Statements. — — — Filed herewith †Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment and this exhibit has been submittedseparately to the SEC.#Indicates a management contract or any compensatory plan, contract or arrangement. [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCHOMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATEDUNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED Exhibit 10.7FOURTH AMENDMENTThis Fourth Amendment, effective as of the date set forth above the signatures of the parties below (the “FOURTH AMENDMENTEFFECTIVE DATE”), is between the Massachusetts Institute of Technology (“M.I.T.”) a Massachusetts corporation having itsprincipal office at 77 Massachusetts Avenue, Cambridge, MA 02139 and bluebird bio, Inc. (formerly Innogene Pharmaceuticals, Inc.,formerly Genetix Pharmaceuticals Inc.), a Delaware corporation with a principal place of business at 150 Second Street, Third Floor,Cambridge, MA 02141 (“LICENSEE”).WHEREAS, LICENSEE and M.I.T. wish to modify the provision of the Exclusive Patent License Agreement datedDecember 11, 1996 as subsequently amended by the First Amendment dated December 12, 2003, the Second Amendment dated May6, 2004, and the Third Amendment dated June 1, 2011 (“LICENSE AGREEMENT”).NOW, THEREFORE, in consideration of the promises and mutual covenants contained herein, the parties hereby agree tomodify the LICENSE AGREEMENT as follows: 1.Paragraph 4.1(d) (ii) as amended in the Third Amendment, shall be replaced with the following: “(ii) If the sublicense revenue is paid for a package including the PATENT RIGHTS and products developed by LICENSEE and/orsubstantial technology and/or intellectual property developed by LICENSEE, [***], excluding, however:((a)) [***]; and((b)) [***]; and((c)) [***]; and((d)) [***][***]Notwithstanding the [***] above, LICENSEE shall not [***] that is less than [***].” [***] INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED. ALL SUCHOMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 PROMULGATEDUNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED 2.Except as specifically amended herein, the LICENSE AGREEMENT will remain in full force and effect.In Witness Whereof, the authorized representatives of the parties have executed this Fourth Amendment as of October 28, 2016. BLUEBIRD BIO, INC. MASSACHUSETTS INSTITUTE OF TECHNOLOGY By /s/ Jason F. Cole By /s/ Lesley Millar-NicholsonName Jason F. Cole Name Lesley Millar-NicholsonTitle Chief Legal Officer Title Director Technology Licensing Office EXHIBIT 10.27AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENTThis is an Amendment No. 2 dated November 3, 2016 (this “Amendment”) to the Employment Agreement betweenbluebird bio, Inc., a Delaware corporation (the “Company”), and Jason F. Cole (the “Executive”) dated February 3, 2014 (asamended on March 7, 2016, the “Employment Agreement”).WHEREAS, the Company desires to continue to employ the Executive and the Executive desires to continue to beemployed by the Company on the terms and conditions of the Employment Agreement as amended by this Amendment.NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good andvaluable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby amend the EmploymentAgreement as follows:1. Section 5(a)(i) of the Employment Agreement is deleted and replaced with:“(i) the Company shall pay the Executive a lump sum in cash in an amount equal to one times the sumof (A) the Executive’s current Base Salary (or the Executive’s Base Salary in effect immediately prior to theChange in Control, if higher), plus (B) the Executive’s Target Incentive Compensation. For purposes of thisAgreement, “Target Incentive Compensation shall mean the Executive’s target annual incentive compensation asset forth in Section 2(b); and”2. All other provisions of the Employment Agreement, including the Assignment of Invention, Nondisclosure andNoncompetition Agreement attached as Exhibit A thereto, are unaffected by this Amendment and shall remain in full force and effect.* * * * * IN WITNESS WHEREOF, the parties have executed this Agreement effective on the date and year first above written. BLUEBIRD BIO, INC. By:/s/ Nick Leschly Nick LeschlyIts:Chief Executive Officer /s/ Jason F. ColeJason F. Cole  EXHIBIT 10.31AMENDMENT TO EMPLOYMENT AGREEMENTThis is an Amendment dated November 3, 2016 (this “Amendment”) to the Employment Agreement between bluebird bio,Inc., a Delaware corporation (the “Company”), and Dr. Philip Gregory (the “Executive”) dated May 30, 2015 (the “EmploymentAgreement”).WHEREAS, the Company desires to continue to employ the Executive and the Executive desires to continue to beemployed by the Company on the terms and conditions of the Employment Agreement as amended by this Amendment.NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good andvaluable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby amend the EmploymentAgreement as follows:1. Section 5(a)(i) of the Employment Agreement is deleted and replaced with:“(i) the Company shall pay the Executive a lump sum in cash in an amount equal to one times the sumof (A) the Executive’s current Base Salary (or the Executive’s Base Salary in effect immediately prior to theChange in Control, if higher), plus (B) the Executive’s Target Incentive Compensation. For purposes of thisAgreement, “Target Incentive Compensation shall mean the Executive’s target annual incentive compensation asset forth in Section 2(b); and”2. All other provisions of the Employment Agreement, including the Assignment of Invention, Nondisclosure andNoncompetition Agreement attached as Exhibit A thereto, are unaffected by this Amendment and shall remain in full force and effect.* * * * *  IN WITNESS WHEREOF, the parties have executed this Agreement effective on the date and year first above written. BLUEBIRD BIO, INC. By: /s/ Nick Leschly Nick LeschlyIts: Chief Executive Officer /s/ Philip GregoryDr. Philip Gregory  EXHIBIT 10.32EMPLOYMENT AGREEMENTThis Employment Agreement (“Agreement”) is between bluebird bio, Inc., a Delaware corporation (the “Company”), andSusanna High (the “Executive”) and is made effective as of November 23, 2016 (the “Effective Date”).WHEREAS, the Company desires to employ the Executive and the Executive desires to be employed by the Company onthe terms and conditions contained herein.NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good andvaluable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:1. Employment.(a) Term. The term of this Agreement shall commence on or before November 30, 2016, on a date to be mutuallyagreed to by Executive and the Company and shall continue until terminated in accordance with the provisions of Section 3 (the“Term”). The actual first day of Executive’s employment shall be referred to as the “Start Date”.(b) Position and Duties. During the Term, the Executive shall serve as the Chief Operating Officer of theCompany (“COO”), and shall have such powers and duties as may from time to time be prescribed by the Chief Executive Officer ofthe Company (the “CEO”) or other authorized executive, provided that such duties are consistent with the Executive’s position orother positions that she may hold from time to time. The Executive shall report to the CEO. The Executive shall devote her fullworking time and efforts to the business and affairs of the Company; provided, however, during the transition period from the StartDate until December 31, 2016 (the “Transition Period”), the Executive shall devote fifty percent (50%) of her working time andefforts to the Company. Notwithstanding the foregoing, the Executive may serve on boards of directors of another Company, with theprior written approval of the Company’s Board of Directors (the “Board”), and may engage in religious, charitable or othercommunity activities as long as such services and activities do not pose a conflict of interest or interfere with the Executive’sperformance of her duties to the Company as provided in this Agreement.2. Compensation and Related Matters.(a) Base Salary. During the Transition Period, the Executive shall be paid a base salary at the rate of $182,500 peryear. After the Transition Period, the Executive’s base salary rate shall be $365,000 per year. The Executive’s base salary shall be re-determined annually by the Board or the Compensation Committee of the Board of Directors (the “Compensation Committee”). Theannual base salary rate in effect at any given time is referred to herein as “Base Salary.” The Executive’s Base Salary shall be payablein a manner that is consistent with the Company’s usual payroll practices for senior executives.  (b) Incentive Compensation. After the Transition Period, the Executive shall be eligible to receive cash incentivecompensation as determined by the Board or the Compensation Committee from time to time. The Executive’s target annual incentivecompensation shall be forty percent (40%) of her Base Salary, although any the actual incentive compensation amount shall bediscretionary. To earn incentive compensation, the Executive must be employed by the Company on the day such incentivecompensation is paid.(c) Equity. The Executive shall be awarded an option to purchase 60,000 shares of the Common Stock of theCompany at an exercise price equal to the closing price of the Company’s common stock on the NASDAQ Global Select Market onthe first trading day of the first calendar month following the Executive’s Start Date and to be memorialized in an Incentive StockOption Agreement pursuant to the Company’s 2013 Stock Option and Incentive Plan. On the Start Date, the Executive shall beawarded restricted stock units for 15,000 shares of the Common Stock of the Company to be memorialized in a Restricted Stock UnitAgreement pursuant to the Company’s 2013 Stock Option and Incentive Plan.(d) Expenses. The Executive shall be entitled to receive prompt reimbursement for all reasonable expensesincurred by her during the Term in performing services hereunder, in accordance with the policies and procedures then in effect andestablished by the Company for its senior executive officers.(e) Other Benefits. During the Term, the Executive shall be eligible to participate in or receive benefits under theCompany’s employee benefit plans in effect from time to time, subject to the terms and conditions of such plans.(f) Vacations. During the Term, the Executive shall be entitled to accrue paid vacation in accordance with theCompany’s applicable policy.3. Termination. During the Term, the Executive’s employment hereunder may be terminated without any breach of thisAgreement under the following circumstances:(a) Death. The Executive’s employment hereunder shall terminate upon her death.(b) Disability. The Company may terminate the Executive’s employment if she is disabled and unable to performthe essential functions of the Executive’s then existing position or positions under this Agreement with or without reasonableaccommodation for a period of 180 days (which need not be consecutive) in any 12-month period. If any question shall arise as towhether during any period the Executive is disabled so as to be unable to perform the essential functions of the Executive’s thenexisting position or positions with or without reasonable accommodation, the Executive may, and at the request of the Company shall,submit to the Company a certification in reasonable detail by a physician selected by the Company to whom the Executive or theExecutive’s guardian has no reasonable objection as to whether the Executive is so disabled or how long such disability is expected tocontinue, and such certification shall for the purposes of this Agreement be conclusive of the issue. The Executive shall cooperate withany reasonable request of the physician in connection with such certification. If such question shall arise and the Executive shall fail tosubmit such certification,2 the Company’s determination of such issue shall be binding on the Executive. Nothing in this Section 3(b) shall be construed to waivethe Executive’s rights, if any, under existing law including, without limitation, the Family and Medical Leave Act of 1993, 29 U.S.C.§2601 et seq. and the Americans with Disabilities Act, 42 U.S.C. §12101 et seq. (c) Termination by Company for Cause. The Company may terminate the Executive’s employment hereunder forCause. For purposes of this Agreement, “Cause” shall mean: (i) the Executive’s dishonest statements or acts with respect to theCompany, any affiliate of the Company or any of the Company’s current or prospective customers, suppliers, vendors or other thirdparties with which such entity does business; (ii) the Executive’s commission of a felony or any misdemeanor involving moralturpitude, deceit, dishonesty or fraud; (iii) the Executive’s failure to perform her assigned duties to the reasonable satisfaction of theCompany, which failure, if curable, continues, in the reasonable judgment of the Company, after written notice given to the Executiveby the Company; (iv) the Executive’s gross negligence, willful misconduct or insubordination with respect to the Company or anyaffiliate of the Company; or (v) the Executive’s violation of any provision of any agreement(s) between the Executive and theCompany relating to noncompetition, nondisclosure and/or assignment of inventions.(d) Termination Without Cause. The Company may terminate the Executive’s employment hereunder at any timewithout Cause. Any termination by the Company of the Executive’s employment under this Agreement which does not constitute atermination for Cause under Section 3(c) and does not result from the death or disability of the Executive under Section 3(a) or (b) shallbe deemed a termination without Cause.(e) Termination by the Executive. The Executive may terminate her employment hereunder at any time for anyreason, including but not limited to Good Reason. For purposes of this Agreement, “Good Reason” shall mean that the Executive hascomplied with the “Good Reason Process” (hereinafter defined) following the occurrence of any of the following events without theExecutive’s express written consent: (i) a material diminution in the Executive’s responsibilities, authority and function; (ii) a materialreduction in the Executive’s Base Salary except pursuant to a salary reduction program affecting substantially all of the employees ofthe Company, provided, that it does not adversely affect the Executive to a greater extent than other similarly situated employees and,provided further, that any reduction in the Executive’s Base Salary of more than ten percent (10%) shall constitute Good Reason; (iii) amaterial change of more than 30 miles in the geographic location at which the Executive must provide services to the Company (exceptfor required travel on Company business to an extent substantially consistent with the Executive’s usual business travel obligations); or(iv) the material breach by the Company of the Company’s equity incentive plan or the stock option agreement governing the stockoption granted to the Executive in connection with her hire (as described in the Offer Letter) or any other material agreement betweenthe Executive and the Company, if any, concerning the terms and conditions of the Executive’s employment, benefits orcompensation. “Good Reason Process” shall mean that (i) the Executive reasonably determines in good faith that a “Good Reason”condition has occurred; (ii) the Executive notifies the Company in writing of the first occurrence of the Good Reason condition within60 days of the first occurrence of such condition; (iii) the Executive cooperates in good faith with the Company’s efforts, for a periodnot less than 30 days following such notice (the “Cure Period”) to remedy the condition; (iv) notwithstanding such efforts, the GoodReason condition continues to exist; and (v) the3 Executive terminates her employment within 60 days after the end of the Cure Period. If the Company cures the Good Reasoncondition during the Cure Period, Good Reason shall be deemed not to have occurred.(f) Notice of Termination. Except for termination as specified in Section 3(a), any termination of the Executive’semployment by the Company or any such termination by the Executive shall be communicated by written Notice of Termination to theother party hereto. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specifictermination provision in this Agreement relied upon.(g) Date of Termination. “Date of Termination” shall mean: (i) if the Executive’s employment is terminated byher death, the date of her death; (ii) if the Executive’s employment is terminated on account of disability under Section 3(b) or by theCompany for Cause under Section 3(c), the date on which Notice of Termination is given; (iii) if the Executive’s employment isterminated by the Company under Section 3(d), the date on which a Notice of Termination is given; (iv) if the Executive’s employmentis terminated by the Executive under Section 3(e) without Good Reason, 30 days after the date on which a Notice of Termination isgiven, and (v) if the Executive’s employment is terminated by the Executive under Section 3(e) with Good Reason, the date on whicha Notice of Termination is given after the end of the Cure Period. Notwithstanding the foregoing, (A) in the event that the Executivegives a Notice of Termination to the Company, the Company may unilaterally accelerate the Date of Termination and suchacceleration shall not result in a termination by the Company for purposes of this Agreement, and (B) in the event that the Companyterminates the Executive’s employment without Cause under Section 3(d), the Company may unilaterally accelerate the Date ofTermination to any earlier effective date provided that the Company continues to pay the Executive the Base Salary for the 30-dayperiod immediately following the date on which a Notice of Termination is given to the Executive.4. Compensation Upon Termination.(a) Termination Generally. If the Executive’s employment with the Company is terminated for any reason, theCompany shall pay or provide to the Executive (or to her authorized representative or estate) (i) any Base Salary earned through theDate of Termination, unpaid expense reimbursements, and unused vacation that accrued through the Date of Termination, suchpayments to be made on or before the time required by law but in no event more than 30 days after the Executive’s Date ofTermination; and (ii) any vested benefits the Executive may have under any employee benefit plan of the Company through the Dateof Termination, which vested benefits shall be paid and/or provided in accordance with the terms of such employee benefit plans(collectively, the “Accrued Benefit”).4 (b) Termination by the Company Without Cause or by the Executive with Good Reason. During the Term, if theExecutive’s employment is terminated by the Company without Cause as provided in Section 3(d), or the Executive terminates heremployment for Good Reason as provided in Section 3(e), then the Company shall pay the Executive her Accrued Benefit. Inaddition, subject to the Executive signing a separation agreement containing, among other provisions, a general release of claims infavor of the Company and related persons and entities, confidentiality, return of property and non-disparagement, in a form and mannersatisfactory to the Company (the “Separation Agreement and Release”) and the Separation Agreement and Release becoming fullyeffective, all within the time frame set forth in the Separation Agreement and Release:(i) the Company shall pay the Executive an amount equal to one times the Executive’s Base Salary (the“Severance Amount”); and(ii) if the Executive was participating in the Company’s group health plan immediately prior to the Dateof Termination and elects COBRA health continuation, then the Company shall pay to the Executive a monthly cashpayment for 12 months or the Executive’s COBRA health continuation period, whichever ends earlier, in an amount equalto the monthly employer contribution that the Company would have made to provide health insurance to the Executive if theExecutive had remained employed by the Company; and(iii) the amounts payable under this Section 4(b) shall be paid out in substantially equal installments inaccordance with the Company’s payroll practice over 12 months commencing within 60 days after the Date of Termination;provided, however, that if the 60-day period begins in one calendar year and ends in a second calendar year, the SeveranceAmount shall begin to be paid in the second calendar year by the last day of such 60-day period; provided, further, that theinitial payment shall include a catch-up payment to cover amounts retroactive to the day immediately following the Date ofTermination. Each payment pursuant to this Agreement is intended to constitute a separate payment for purposes ofTreasury Regulation Section 1.409A-2(b)(2).(iv) The receipt of any severance payments or benefits pursuant to Section 4 will be subject toExecutive not violating the Restrictive Covenant Agreement referenced in Section 7 of this Agreement and attached heretoas Exhibit A, the terms of which are hereby incorporated by reference. In the event Executive breaches the RestrictiveCovenant Agreement, in addition to all other legal and equitable remedies, the Company shall have the right to terminate orsuspend all continuing payments and benefits to which Executive may otherwise be entitled pursuant to Section 4 withoutaffecting the Executive’s release or Executive’s obligations under the Separation Agreement and Release.5 5. Change in Control Payment. The provisions of this Section 5 set forth certain terms of an agreement reached between theExecutive and the Company regarding the Executive’s rights and obligations upon the occurrence of a Change in Control of theCompany. These provisions are intended to assure and encourage in advance the Executive’s continued attention and dedication to herassigned duties and her objectivity during the pendency and after the occurrence of any such event. These provisions shall apply inlieu of, and expressly supersede, the provisions of Section 4(b) regarding severance pay and benefits upon a termination ofemployment, if such termination of employment occurs within 12 months after the occurrence of the first event constituting a Changein Control. These provisions shall terminate and be of no further force or effect beginning 12 months after the occurrence of a Changein Control.(a) Change in Control. During the Term, if within 12 months after a Change in Control, the Executive’semployment is terminated by the Company without Cause as provided in Section 3(d) or the Executive terminates her employment forGood Reason as provided in Section 3(e), then, subject to the signing of the Separation Agreement and Release by the Executive andthe Separation Agreement and Release becoming irrevocable, all within 60 days after the Date of Termination,(i) the Company shall pay the Executive a lump sum in cash in an amount equal to one times the sum of(A) the Executive’s current Base Salary (or the Executive’s Base Salary in effect immediately prior to the Change inControl, if higher), plus (B) the Executive’s Target Incentive Compensation. For purposes of this Agreement, “TargetIncentive Compensation” shall mean the Executive’s target annual incentive compensation as set forth in Section 2(b); and(ii) notwithstanding anything to the contrary in any applicable option agreement or stock-based awardagreement, all stock options and other stock-based awards granted to the Executive after the date of this Agreement shallimmediately accelerate and become fully exercisable or nonforfeitable as of the Date of Termination. The treatment of stockoptions and other stock-based awards held by the Executive as of the date of this Agreement shall be governed by the termsof the applicable option agreement or other stock-based award agreement; and(iii) if the Executive was participating in the Company’s group health plan immediately prior to the Dateof Termination and elects COBRA health continuation, then the Company shall pay to the Executive a monthly cashpayment for 12 months or the Executive’s COBRA health continuation period, whichever ends earlier, in an amount equalto the monthly employer contribution that the Company would have made to provide health insurance to the Executive if theExecutive had remained employed by the Company; and(iv) The amounts payable under this Section 5(a) shall be paid or commence to be paid within 60 daysafter the Date of Termination; provided, however, that if the 60-day period begins in one calendar year and ends in a secondcalendar year, such payment shall be paid or commence to be paid in the second calendar year by the last day of such 60-dayperiod.6 (b) Additional Limitation.(i) Anything in this Agreement to the contrary notwithstanding, in the event that the amount of anycompensation, payment or distribution by the Company to or for the benefit of the Executive, whether paid or payable ordistributed or distributable pursuant to the terms of this Agreement or otherwise, calculated in a manner consistent withSection 280G of the Internal Revenue Code of 1986, as amended (the “Code”) and the applicable regulations thereunder(the “Severance Payments”), would be subject to the excise tax imposed by Section 4999 of the Code, the followingprovisions shall apply:(A) If the Severance Payments, reduced by the sum of (1) the Excise Tax and (2) the total ofthe federal, state, and local income and employment taxes payable by the Executive on the amount of theSeverance Payments which are in excess of the Threshold Amount, are greater than or equal to the ThresholdAmount, the Executive shall be entitled to the full benefits payable under this Agreement.(B) If the Threshold Amount is less than (x) the Severance Payments, but greater than (y) theSeverance Payments reduced by the sum of (1) the Excise Tax and (2) the total of the federal, state, and localincome and employment taxes on the amount of the Severance Payments which are in excess of the ThresholdAmount, then the Severance Payments shall be reduced (but not below zero) to the extent necessary so that thesum of all Severance Payments shall not exceed the Threshold Amount. In such event, the Severance Paymentsshall be reduced in the following order: (1) cash payments not subject to Section 409A of the Code; (2) cashpayments subject to Section 409A of the Code; (3) equity-based payments and acceleration; and (4) non-cashforms of benefits. To the extent any payment is to be made over time (e.g., in installments, etc.), then thepayments shall be reduced in reverse chronological order.(ii) For the purposes of this Section 5(b), “Threshold Amount” shall mean three times the Executive’s“base amount” within the meaning of Section 280G(b)(3) of the Code and the regulations promulgated thereunder less onedollar ($1.00); and “Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code, and any interest orpenalties incurred by the Executive with respect to such excise tax.(iii) The determination as to which of the alternative provisions of Section 5(b)(i) shall apply to theExecutive shall be made by a nationally recognized accounting firm selected by the Company (the “Accounting Firm”),which shall provide detailed supporting calculations both to the Company and the Executive within 15 business days of theDate of Termination, if applicable, or at such earlier time as is reasonably requested by the Company or the Executive. Forpurposes of determining which of the alternative provisions of Section 5(b)(i) shall apply, the Executive shall be deemed topay federal income taxes at the highest marginal rate of federal income taxation applicable to individuals for the calendaryear in which the determination is to be made, and state and local income taxes at the highest marginal rates of individualtaxation in the state and7 locality of the Executive’s residence on the Date of Termination, net of the maximum reduction in federal income taxeswhich could be obtained from deduction of such state and local taxes. Any determination by the Accounting Firm shall bebinding upon the Company and the Executive.(b) Definitions. For purposes of this Section 5, the following terms shall have the following meanings:“Change in Control” shall mean “Sale Event,” as such term is defined in the Company’s 2013 Stock Option and IncentivePlan.6. Section 409A.(a) Anything in this Agreement to the contrary notwithstanding, if at the time of the Executive’s separation fromservice within the meaning of Section 409A of the Code, the Company determines that the Executive is a “specified employee” withinthe meaning of Section 409A(a)(2)(B)(i) of the Code, then to the extent any payment or benefit that the Executive becomes entitled tounder this Agreement on account of the Executive’s separation from service would be considered deferred compensation otherwisesubject to the 20 percent additional tax imposed pursuant to Section 409A(a) of the Code as a result of the application of Section409A(a)(2)(B)(i) of the Code, such payment shall not be payable and such benefit shall not be provided until the date that is the earlierof (A) six months and one day after the Executive’s separation from service, or (B) the Executive’s death. If any such delayed cashpayment is otherwise payable on an installment basis, the first payment shall include a catch-up payment covering amounts that wouldotherwise have been paid during the six-month period but for the application of this provision, and the balance of the installments shallbe payable in accordance with their original schedule.(b) All in-kind benefits provided and expenses eligible for reimbursement under this Agreement shall be providedby the Company or incurred by the Executive during the time periods set forth in this Agreement. All reimbursements shall be paid assoon as administratively practicable, but in no event shall any reimbursement be paid after the last day of the taxable year following thetaxable year in which the expense was incurred. The amount of in-kind benefits provided or reimbursable expenses incurred in onetaxable year shall not affect the in-kind benefits to be provided or the expenses eligible for reimbursement in any other taxable year(except for any lifetime or other aggregate limitation applicable to medical expenses). Such right to reimbursement or in-kind benefitsis not subject to liquidation or exchange for another benefit.(c) To the extent that any payment or benefit described in this Agreement constitutes “non-qualified deferredcompensation” under Section 409A of the Code, and to the extent that such payment or benefit is payable upon the Executive’stermination of employment, then such payments or benefits shall be payable only upon the Executive’s “separation from service.” Thedetermination of whether and when a separation from service has occurred shall be made in accordance with the presumptions set forthin Treasury Regulation Section 1.409A‑1(h).8 (d) The parties intend that this Agreement will be administered in accordance with Section 409A of the Code. Tothe extent that any provision of this Agreement is ambiguous as to its compliance with Section 409A of the Code, the provision shallbe read in such a manner so that all payments hereunder comply with Section 409A of the Code. Each payment pursuant to thisAgreement is intended to constitute a separate payment for purposes of Treasury Regulation Section 1.409A‑2(b)(2). The parties agreethat this Agreement may be amended, as reasonably requested by either party, and as may be necessary to fully comply with Section409A of the Code and all related rules and regulations in order to preserve the payments and benefits provided hereunder withoutadditional cost to either party.(e) The Company makes no representation or warranty and shall have no liability to the Executive or any otherperson if any provisions of this Agreement are determined to constitute deferred compensation subject to Section 409A of the Code butdo not satisfy an exemption from, or the conditions of, such Section.(f) Confidential Information, Noncompetition and Cooperation. The Executive agrees to terms of the Assignmentof Invention, Nondisclosure and Noncompetition Agreement (“Restrictive Covenant Agreement”) attached hereto as Exhibit A, theterms of which are hereby incorporated by reference as material terms of this Agreement. Nothing in this Agreement or the RestrictiveCovenant Agreement, and nothing in any policy or procedure, in any other confidentiality, employment, separation agreement or inany other document or communication from the Company limits the Executive’s ability to file a charge or complaint with anygovernment agency concerning any acts or omissions that the Executive may believe constitute a possible violation of federal or statelaw or making other disclosures that are protected under the whistleblower provisions of applicable federal or state law regulation oraffects the Executive’s ability to communicate with any government agency or otherwise participate in any investigation or proceedingthat may be conducted by a government agency, including by providing documents or other information, without notice to theCompany. In addition, for the avoidance of doubt, pursuant to the federal Defend Trade Secrets Act of 2016, the Executive shall notbe held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (i) is made (A) inconfidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (B) solely for the purposeof reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed in a lawsuit or otherproceeding, if such filing is made under seal. 7. Consent to Jurisdiction. The parties hereby consent to the jurisdiction of the Superior Court of the Commonwealth ofMassachusetts and the United States District Court for the District of Massachusetts. Accordingly, with respect to any such courtaction, the Executive (a) submits to the personal jurisdiction of such courts; (b) consents to service of process; and (c) waives any otherrequirement (whether imposed by statute, rule of court, or otherwise) with respect to personal jurisdiction or service of process.8. Integration. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereofand supersedes all prior agreements between the parties concerning such subject matter.9 9. Withholding. All payments made by the Company to the Executive under this Agreement shall be net of any tax or otheramounts required to be withheld by the Company under applicable law.10. Successor to the Executive. This Agreement shall inure to the benefit of and be enforceable by the Executive’s personalrepresentatives, executors, administrators, heirs, distributees, devisees and legatees. In the event of the Executive’s death after hertermination of employment but prior to the completion by the Company of all payments due her under this Agreement, the Companyshall continue such payments to the Executive’s beneficiary designated in writing to the Company prior to her death (or to her estate, ifthe Executive fails to make such designation).11. Enforceability. If any portion or provision of this Agreement (including, without limitation, any portion or provision ofany section of the Restrictive Covenant Agreement) shall to any extent be declared illegal or unenforceable by a court of competentjurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those asto which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shallbe valid and enforceable to the fullest extent permitted by law.12. Survival. The provisions of this Agreement shall survive the termination of this Agreement and/or the termination of theExecutive’s employment to the extent necessary to effectuate the terms contained herein.13. Waiver. No waiver of any provision hereof shall be effective unless made in writing and signed by the waivingparty. The failure of any party to require the performance of any term or obligation of this Agreement, or the waiver by any party ofany breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of anysubsequent breach.14. Notices. Any notices, requests, demands and other communications provided for by this Agreement shall be sufficient ifin writing and delivered in person or sent by a nationally recognized overnight courier service or by registered or certified mail, postageprepaid, return receipt requested, to the Executive at the last address the Executive has filed in writing with the Company or, in the caseof the Company, at its main offices, attention of the Board.15. Amendment. This Agreement may be amended or modified only by a written instrument signed by the Executive andby a duly authorized representative of the Company.16. Governing Law. This is a Massachusetts contract and shall be construed under and be governed in all respects by thelaws of the Commonwealth of Massachusetts, without giving effect to the conflict of laws principles of such Commonwealth. Withrespect to any disputes concerning federal law, such disputes shall be determined in accordance with the law as it would be interpretedand applied by the United States Court of Appeals for the First Circuit.17. Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed anddelivered shall be taken to be an original; but such counterparts shall together constitute one and the same document.10 18. Successor to Company. The Company shall require any successor (whether direct or indirect, by purchase, merger,consolidation or otherwise) to all or substantially all of the business or assets of the Company expressly to assume and agree to performthis Agreement to the same extent that the Company would be required to perform it if no succession had taken place. Failure of theCompany to obtain an assumption of this Agreement at or prior to the effectiveness of any succession shall be a material breach of thisAgreement.19. Gender Neutral. Wherever used herein, a pronoun in the masculine gender shall be considered as including the femininegender unless the context clearly indicates otherwise. 11 IN WITNESS WHEREOF, the parties have executed this Agreement effective on the date and year first above written. BLUEBIRD BIO, INC. By:/s/ Nick LeschlyIts:Chief Executive Officer /s/ Susanna HighSusanna High  EXHIBIT 10.44SECOND AMENDMENT TO LEASEThis Second Amendment to Lease (“Second Amendment”) is made as of November 14, 2016, by and between ARE-MAREGION NO. 40, LLC, a Delaware limited liability company (“Landlord”), and BLUEBIRD BIO, INC., a Delaware corporation(“Tenant”).RECITALSA. Landlord and Tenant have entered into that certain Lease Agreement dated as of September 21, 2015, as amended by aFirst Amendment to Lease (“First Amendment”) dated June 21, 2016 (as so amended, the “Lease”), wherein Landlord leases toTenant certain premises (“Premises”) located at 60 Binney Street, Cambridge, Massachusetts, which Premises are more particularlydescribed in the Lease.B. Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to them in the Lease.C. Landlord and Tenant desire to amend the Lease to add certain storage space to the Premises and reconfigure certainstorage space in the Premises, modify the rentable square feet of the Premises and related terms accordingly and otherwise to amendthe Lease as provided herein. AGREEMENTNow, therefore, the parties hereto agree as follows and agree that the Lease is amended, effective as of the date first writtenabove, as set forth below:1. Recitals. The Recitals set forth above are true and correct and are incorporated as if fully set forth herein.2. Storage Space; Amended Exhibit A. (a)The Premises demised under the Lease are hereby expanded to include the storage space located on Levels P4, P5and P6 of the Garage in the locations shown on the pages showing Levels P4, P5 and P6 of Exhibit A attachedhereto. The storage space located on Levels P2 and P3 of the Garage is hereby reconfigured so that all the storagespace included in the Premises on the Garage levels is shown on Exhibit A attached hereto. As a result of theaddition and reconfiguration of such storage space, the rentable area of the storage space in the Premises prior tothis Second Amendment is hereby increased by 1,383 rentable square feet (the “Additional Storage Space”), andthe rentable square feet in the Premises is increased accordingly, as provided below. (b)Exhibit A attached to the Lease is hereby deleted and replaced with Exhibit A attached hereto and incorporatedherein by this reference. 1 3. Base Rent on Additional Storage Space. The Base Rent for the Additional Storage Space shall be at the rate of $40.00 perrentable square foot per year of Additional Storage Space, adjusted as provided in Section 4 of the Lease. No TI Allowance orAdditional TI Allowance shall apply to the Additional Storage Space. 4. Amendment of Certain Basic Lease Provisions. The defined terms in the Basic Lease Provisions listed below are hereby deletedand replaced with the following: Premises: That portion of the Project containing approximately 254,491 rentable square feet,as shown on Exhibit A, which Premises are located on Levels 1 through 10 andLevels P1 through P6.Base Rent: $72.50 per rentable square foot per year, adjusted as provided in Section 4, and ifTenant elects pursuant to Section 6.2 of the Work Letter to receive the AdditionalTI Allowance (as defined in the Work Letter) adjusted as provided in Section 4below; except that for the 1,383 rentable square feet of Additional Storage Space,the Base Rent shall be at the rate of $40.00 per rentable square foot per year,adjusted as provided in Section 4 of this Lease. The Additional Storage Space shallnot be included in the calculation of the TI Allowance or Additional TI Allowanceunder the Work Letter, and accordingly, the Base Rent for the Additional StorageSpace shall not be subject to adjustment if Tenant elects to receive Additional TIAllowance as aforesaid. Base Rent for the entire Premises (including withoutlimitation all the storage space included in the Premises on the Garage levels asshown on Exhibit A attached hereto) shall be payable at the times set forth in theLease.Rentable Area ofBuilding: 532,395 rentable square feet.Rentable Area ofPremises: 254,491 rentable square feet.Tenant’s Share ofOperating Expenses forthe Project: 47.80% (except as set forth in Section 3 for the 2-month period following the StartDate).Tenant’s Share ofCampus Expenses: 18.53% (except as set forth in Section 3 for the 2-month period following the StartDate) Tenant’s Share of 60Binney BuildingExpenses: 99.16% (except as set forth in Section 3 for the 2-month period following the StartDate)Tenant’s Share ofOperating Expensesfor the Premises: 100% (except as set forth in Section 3 for the 2-month period following the StartDate) 2 Post Rent Credit Date: As to the Initial Floors: The Post Rent Credit Date as to the Initial Floors shall be the earlier of(w) and (x), where (w) is the later of (i) April 1, 2017, or (ii) SubstantialCompletion of the Shell and Core Improvements (as defined in the WorkLetter), and (x) the date on which Tenant first occupies any portion ofthe Initial Floors for the Permitted Uses. As to the Remaining Floors: Tenant is deemed to have elected under Section 3.1 of the Work Letterto use a general contractor for the Tenant Improvements for theRemaining Floors other than the Construction Manager (a “Non-CMBuild Election”), and accordingly, the Post Rent Credit Date as to theRemaining Floors shall be the earlier of (w) and (x), where (w) is thelater of (i) April 1, 2017, or (ii) ninety-one (91) days after SubstantialCompletion of the Shell and Core Improvements on the RemainingFloors, and (x) is the date on which Tenant first occupies any portion ofthe Remaining Floors for the Permitted Uses. 5. First Amendment and Non-CM Build Election. As Tenant is deemed to have elected the Non-CM Build Election as to theRemaining Floors in the 60 Binney Building, then as provided in the First Amendment, the Rent Abatement (as defined in Section 2(c)of the Lease), the Completion Deadline (as defined in Section 2(d) of the Lease), the timing of the payment of Utilities (as provided inSection 3(b) of the Lease) and the timing of access for the completion of the Tenant Improvements (as provided in Section 3.1 of theWork Letter) shall be treated separately for the Initial Floors and the Remaining Floors, except as expressly set forth in the FirstAmendment. In addition, the provisions of Section 5 and Section 6 of the First Amendment shall apply as set forth therein. 6. Additional Amended Exhibits. (a)Exhibit A-1 attached to the Lease is hereby deleted, and is replaced by the new Exhibit A‑1 attached hereto andincorporated herein by this reference. (b)Exhibit B-1 is hereby deleted, and is replaced by the new Exhibit B-1 attached hereto and incorporated herein bythis reference. 3 7. Delivery under Section 2.7 of Work Letter. Landlord and Tenant acknowledge and agree that Landlord has delivered to Tenantthe certification from the Project Architect, dated September 30, 2016, regarding the status of completion of the Shell and CoreImprovements, and that the Delivery Date is deemed to have occurred on September 30, 2016.8. Miscellaneous. (a)As amended and/or modified by this Second Amendment, the Lease is hereby ratified and confirmed. All otherterms of the Lease shall remain in full force and effect, unaltered and unchanged by this SecondAmendment. This Second Amendment (and the exhibits attached hereto) and the Lease, as amended hereby,constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all priorand contemporaneous oral and written agreements and discussions. This Second Amendment may be amendedonly by an agreement in writing, signed by the parties hereto. (b)Landlord and Tenant each represents and warrants to the other that it has not dealt with any broker, agent or otherperson (collectively, “Broker”) in connection with this Second Amendment and that no Broker brought about thisSecond Amendment other than CB Richard Ellis-N.E. Partners LP, acting for Landlord, and ColliersInternational, acting for Tenant. Landlord and Tenant each hereby agrees to indemnify and hold the otherharmless from and against any claims by any broker, finder or salesperson, other than the Brokers named in thisSection, for brokerage or other commissions relating to this Second Amendment asserted by any broker, agent orfinder engaged by such party or with whom such party has dealt. (c)This Second Amendment is binding upon and shall inure to the benefit of the parties hereto and their respectivepermitted successors in interest and permitted assigns. (d)This Second Amendment may be executed in any number of counterparts, each of which shall be deemed anoriginal, but all of which when taken together shall constitute one and the same instrument. Landlord and Tenanteach warrant to the other that the person or persons executing this Second Amendment on its behalf has or haveauthority to do so and that such execution has fully obligated and bound such party to all terms and provisions ofthis Second Amendment. (e)In the event of any conflict between the provisions of this Second Amendment and the provisions of the Lease,the provisions of this Second Amendment shall prevail. Whether or not specifically amended by this SecondAmendment, all of the terms and provisions of the Lease are hereby amended to the extent necessary to give effectto the purpose and intent of this Second Amendment. All references in the Lease to the “Lease” or this “Lease”shall be deemed to be references to the Lease, as modified by this Second Amendment.(Signatures on Next Page) 4 IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment as of the day and year first abovewritten. TENANT BLUEBIRD BIO INC.,a Delaware corporation By: /s/ Jason F. ColeName: Jason F. ColeTitle: Chief Legal Officer LANDLORD ARE-MA REGION NO. 40, LLC, a Delawarelimited liability company By: ALEXANDRIA REAL ESTATE EQUITIES, L.P., a Delaware limited partnership, managing member By: ARE-QRS CORP., a Maryland corporation, general partner By: /s/ Eric S. JohnsonName: Eric S. JohnsonIts: SVP, RE Legal Affairs 5 EXHIBIT APREMISES DESCRIPTION 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 EXHIBIT A-1PRELIMINARY MEASUREMENTS 24 EXHIBIT B-1FLOOR PLANS SHOWING 50 BINNEY BUILDINGAND 60 BINNEY BUILDINGSee attached 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 LENDER CONSENT TO SECOND AMENDMENT TO LEASEThe undersigned, The Bank of Nova Scotia, having a place of business at 40 King Street West, 62nd floor, Toronto, ON, CanadaM5W 2X6, as administrative agent (in its capacity as administrative agent, the “Agent”), for itself and any other lenders (collectively,the “Lenders”) which may from time to time become parties to that certain Loan Agreement (including any extensions, renewals,replacements, modifications and amendments thereof) dated October 29, 2015, among Agent, the Lenders and ARE-MA Region No.40, LLC, as the Borrower, hereby consents to the within Second Amendment to Lease between ARE-MA Region No. 40, LLC, asLandlord, and bluebird bio, Inc., as Tenant, dated on or about the date hereof (the “Second Amendment”). This Lender Consent isattached to said Second Amendment. AGENT: THE BANK OF NOVA SCOTIA By: Name: Title: Date: ActiveUS 158507510v.4 EXHIBIT 10.45Via Express MailFebruary 10, 2017ARE-MA Region No. 38, LLC365 East Colorado BoulevardSuite 299Pasadena, CA 91101Attention: Corporate SecretaryRe Early Termination of Lease Agreement between ARE-MA Region No. 38, LLC (“Landlord”) and bluebird bio, Inc. (“Tenant”) date June 29, 2015 (“Lease”)Dear Sir/Madam,The purpose of this letter is to notify Landlord of Tenant’s intent to terminate the above-referenced Lease. Pursuant to Section 39“Early Termination Right”, Tenant shall have the right to terminate the Lease by giving Landlord sixty (60) days prior written notice(“Termination Notice”). Tenant is hereby giving the Landlord Termination Notice effective April 12, 2017 (“Early Termination Date”)and Tenant agrees to vacate the Premises, as defined in the Lease, by the Early Termination Date. Upon the Early Termination Date,Tenant shall surrender the Premises in accordance with Section 28,“Surrender” of the Lease.Please contact me at jcole@bluebirdbio.com should you have any questions.Sincerely,/s/ Jason F. ColeJason F. ColeChief Legal Officer  Exhibit 21.1BLUEBIRD BIO, INC.The following is a list of subsidiaries of the Company as of December 31, 2016: Name Jurisdiction of Incorporationbluebird bio, Inc. Delawarebluebird bio Securities Corporation Massachusettsbluebird bio France, SARL Francebluebird bio Australia PTY LTD Australiabluebird bio (Bermuda) Ltd. Bermudabluebird bio (UK) Ltd. United KingdomPrecision Genome Engineering, Inc. Washington Exhibit 23.1Consent of Independent Registered Public Accounting FirmWe consent to the incorporation by reference in the following Registration Statements: (1)Registration Statement (Form S-3 No. 333-197192) of bluebird bio, Inc., (2)Registration Statement (Form S-8 No. 333-189560) pertaining to the Second Amended and Restated 2002 Employee, Director and ConsultantPlan, 2010 Stock Option and Grant Plan, 2013 Stock Option and Incentive Plan, and 2013 Employee Stock Purchase Plan of bluebird bio, Inc.,and (3)Registration Statement (Form S-8 Nos. 333-194340, 333-202283 and 333-209715) pertaining to the 2013 Stock Option and Incentive Plan ofbluebird bio, Inc.;of our reports dated February 22, 2017, with respect to the consolidated financial statements of bluebird bio, Inc. and the effectiveness of internal control overfinancial reporting of bluebird bio, Inc., included in this Annual Report (Form 10-K) of bluebird bio, Inc. for the year ended December 31, 2016. /s/ Ernst & Young LLP Boston, Massachusetts February 22, 2017 Exhibit 31.1CERTIFICATIONSI, Nick Leschly, certify that:1. I have reviewed this Annual Report on Form 10-K of bluebird bio, Inc.;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have:(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles;(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect,the registrant’s internal control over financial reporting; and5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting. Date: February 22, 2017By: /s/ Nick Leschly Nick Leschly President and Chief Executive Officer (Principal Executive Officer and Duly Authorized Officer) Exhibit 31.2CERTIFICATIONSI, Jeffrey Walsh, certify that:1. I have reviewed this Annual Report on Form 10-K of bluebird bio, Inc.;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for theregistrant and have:(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,particularly during the period in which this report is being prepared;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles;(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recentfiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect,the registrant’s internal control over financial reporting; and5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controlover financial reporting. Date: February 22, 2017By: /s/ Jeffrey Walsh Jeffrey Walsh Chief Financial and Strategy Officer (Principal Financial Officer and Duly Authorized Officer) Exhibit 32.1CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report on Form 10-K of bluebird bio, Inc. (the “Company”) for the year ended December 31, 2016 as filed with theSecurities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company hereby certifies, pursuant to 18U.S.C. Section 1350, that to his or her knowledge:(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: February 22, 2017By: /s/ Nick Leschly Nick Leschly President and Chief Executive Officer (Principal Executive Officer and Duly Authorized Officer) Date: February 22, 2017By: /s/ Jeffrey Walsh Jeffrey Walsh Chief Financial and Strategy Officer (Principal Financial Officer and Duly Authorized Officer) 

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