tsvt-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to ________

Commission file number 001-40791

2seventy bio, Inc.

(Exact name of registrant as specified in its charter)


Delaware						86-3658454
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

2seventy bio, Inc.

60 Binney Street

Suite 200

Cambridge, MA 2142

(339) 499-9300

Registrant's telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	TSVT	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes ☒ No ☐

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 “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


			Large accelerated filer ☐			Accelerated filer ☐
			Non-accelerated filer ☒			Smaller reporting company ☐
						Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The registrant had outstanding 37,622,368 shares of common stock as of May 5, 2022.

TABLE OF CONTENTS


		Page
Part I- Financial Information
Item 1.	Condensed Consolidated Balance Sheet s as of March 31, 2022 and December 31, 2021	1
	Condensed Consolidated and Combined Statements of Operations and Comprehensive Loss for the Three Month s ended March 31, 2022 and March 31, 2021	2
	Condensed Consolidated and Combined Statements of Stockholders ’ Equity for the Three Months Ended March 31, 2022 and March 31, 2021	3
	Condensed Consolidated and Combined Statements of Cash Flows for the Three Months Ended Mar ch 31, 2022 and March 31, 2021	4
	Notes to Condensed Co nsolidated and Combined Financial Statements	5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	38
Item 4.	Controls and Procedures	39
	Part II. Other Information
Item 1	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 3.	Defaults Upon Senior Securities	44
Item 4.	Mine Safety Disclosures	44
Item 5.	Other Information	44
Item 6.	Exhibit Index	45
	Signatures	47

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This information statement and other materials we have filed or will file with the SEC include, or will include, forward-looking statements. All statements in this information statement, in other materials we have filed or will file with the SEC and in related comments by our management, other than statements of historical facts, including statements about future events, future financial position, business strategy, budgets, projected costs, plans and objectives of management for future operations, are forward-looking statements that involve certain risks and uncertainties. Use of the words “may,” “will,” “would,” “could,” “should,” “believes,” “estimates,” “projects,” “potential,” “expects,” “plans,” “seeks,” “intends,” “evaluates,” “pursues,” “anticipates,” “continues,” “designs,” “impacts,” “affects,” “forecasts,” “target,” “outlook,” “initiative,” “objective,” “designed,” “priorities,” “goal” or the negative of those words or other similar expressions may identify forward-looking statements that represent our current judgment about possible future events, but the absence of these words does not necessarily mean that a statement is not forward-looking.

Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, our actual results may differ materially from those contemplated by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include regional, national or global political, economic, business, competitive, market and regulatory conditions and the following:

•our business and operations following the separation and any benefits or costs of the separation, including the tax treatment;

•our post-separation relationships with bluebird bio, third parties, collaborators and our employees;

•our ability to operate as a stand-alone company and execute our strategic priorities;

•our ability to finance our operations and business initiatives and obtain funding for such activities;

•the timing, investment and associated activities involved in developing, obtaining regulatory approval for, launching, and commercializing our product candidates;

•our plans with respect to the development, manufacture or sale of our product candidates and the associated timing thereof, including the design and results of pre-clinical and clinical studies;

•the safety profile and related adverse events of our product candidates;

•the efficacy and perceived therapeutic benefits of our product candidates and the potential indications and market opportunities therefor;

•U.S. and foreign regulatory requirements for our product candidates, including any post-approval development and regulatory requirements, and the ability of our product candidates to meet such requirements;

•our ability to attract and retain key employees needed to execute our business plans and strategies and our expectations regarding our ability to manage the impact of any loss of key employees;

•our ability to obtain and maintain intellectual property protection for our product candidates and the strength thereof;

•our future financial performance, revenues, expense levels, payments, cash flows, profitability, tax obligations, capital raising and liquidity sources, real estate needs and concentration of voting control, as well as the timing and drivers thereof, and internal control over financial reporting;

•our ability to compete with other companies that are or may be developing or selling products that are competitive with our product candidates;

•the status of government regulation in the life sciences industry, particularly with respect to healthcare reform;

•potential indemnification liabilities 2seventy bio may owe to bluebird bio after the separation;

•the tax treatment of the distribution and the limitations imposed on 2seventy bio under the tax matters agreement that 2seventy bio entered into with bluebird bio in connection with the separation and distribution; and

•trends and challenges in our potential markets.

See “Risk Factors” for a further description of these and other factors. Although we have attempted to identify important risk factors, there may be other risk factors not presently known to us or that we presently believe are not material that could cause actual results and developments to differ materially from those made in or suggested by the forward-looking statements contained in this information statement. If any of these risks materialize, or if any of the above assumptions underlying forward-looking statements prove incorrect, actual results and developments may differ materially from those made in or suggested by the forward-looking statements contained in this information statement. For the reasons described above, we caution you against relying on any forward-looking statements, which should also be read in conjunction with the other cautionary statements that are included elsewhere in this information statement. Any forward-looking statement made by us in this information statement speaks only as of the date thereof. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update or to revise any forward-looking statement, whether as a result of new information, future developments, or otherwise, except as may be required by law.

PART I. FINANCIAL INFORMATION

Item 1. Financial Information

2seventy bio, Inc.

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands, except par value amounts)


	As of March 31, 2022		As of December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	270,893	$	130,414
Marketable securities	106,973		134,643
Prepaid expenses	18,002		9,512
Receivables and other current assets	16,931		16,995
Total current assets	412,799		291,564
Property, plant and equipment, net	35,038		34,913
Marketable securities	74,683		97,124
Intangible assets, net	8,774		9,892
Goodwill	12,056		12,056
Operating lease right-of-use assets	270,825		275,534
Restricted cash and other non-current assets	37,746		38,592
Total assets	$	851,921	$	759,675
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	13,647	$	6,024
Accrued expenses and other current liabilities	58,475		55,410
Operating lease liability, current portion	10,066		9,769
Deferred revenue, current portion	5,000		5,000
Collaboration research advancement, current portion	19,125		22,185
Total current liabilities	106,313		98,388
Deferred revenue, net of current portion	25,762		25,762
Collaboration research advancement, net of current portion	710		1,135
Operating lease liability, net of current portion	269,289		272,446
Other non-current liabilities	2,431		2,122
Total liabilities	404,505		399,853
Commitments and contingencies (Note 8)
Stockholders’ equity:
Preferred stock, $0.0001 par value; 10,000 shares authorized, 0 shares issued and outstanding at March 31, 2022 and December 31, 2021	—		—
Common stock, $0.0001 par value; 200,000 shares authorized, 37,616 and 23,585 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively	4		2
Additional paid-in capital	575,421		400,026
Accumulated other comprehensive loss	(2,804)		(712)
Accumulated deficit	(125,205)		(39,494)
Total stockholders’ equity	447,416		359,822
Total liabilities and stockholders’ equity	$	851,921	$	759,675

See accompanying notes to unaudited condensed consolidated and combined financial statements.

2seventy bio, Inc.

Condensed Consolidated and Combined Statements of Operations and Comprehensive Loss

(unaudited)

(in thousands, except per share data)


	For the three months ended March 31,
	2022		2021
Revenue:
Service revenue	$	4,055	$	5,918
Collaborative arrangement revenue	3,487		1,519
Royalty and other revenue	887		4,464
Total revenues	8,429		11,901
Operating expenses:
Research and development	69,245		77,571
Selling, general and administrative	23,861		24,627
Share of collaboration loss	5,352		—
Cost of royalty and other revenue	511		1,704
Change in fair value of contingent consideration	48		369
Total operating expenses	99,017		104,271
Loss from operations	(90,588)		(92,370)
Interest income, net	115		—
Other income, net	4,762		5,174
Loss before income taxes	(85,711)		(87,196)
Income tax (expense) benefit	—		—
Net loss and comprehensive loss	$	(85,711)	$	(87,196)
Net loss per share - basic and diluted	$	(3.20)	$	(3.73)
Weighted-average number of common shares used in computing net loss per share - basic and diluted	26,751		23,369
Other comprehensive loss:
Other comprehensive loss, net of tax benefit (expense) of $0.0 million and $0.0 million for the three months ended March 31, 2022 and 2021, respectively.	$	(2,092)	$	—
Total other comprehensive loss	$	(2,092)	$	—
Comprehensive loss	$	(87,803)	$	(87,196)

See accompanying notes to unaudited condensed consolidated and combined financial statements.

2seventy bio, Inc.

Condensed Consolidated and Combined Statements of Stockholders’ Equity

(unaudited)

(in thousands)


	Common stock			Net parent investment		Additional paid-in capital		Accumulated other comprehensive loss		Accumulated deficit		Total stockholders’ equity
	Shares	Amount
Balances at December 31, 2021	23,585	$	2	$	—	$	400,026	$	(712)	$	(39,494)	$	359,822
Vesting of restricted stock units	97	—		—		—		—		—		—
Exercise of stock options	—	—		—		1		—		—		1
Issuance of common stock in private placement, net of issuance costs	13,934	2		—		165,655		—		—		165,657
Stock-based compensation	—	—		—		9,739		—		—		9,739
Other comprehensive loss	—	—		—		—		(2,092)		—		(2,092)
Net loss	—	—		—		—		—		(85,711)		(85,711)
Balances at March 31, 2022	37,616	$	4	$	—	$	575,421	$	(2,804)	$	(125,205)	$	447,416


	Common stock			Net parent investment		Additional paid-in capital		Accumulated other comprehensive loss		Accumulated deficit		Total stockholders’ equity
	Shares	Amount
Balances at December 31, 2020	—	$	—	$	74,629	$	—	$	—	$	—	$	74,629
Stock-based compensation - bluebird bio allocation	—	—		17,109		—		—		—		17,109
Transfers from bluebird bio	—	—		71,101		—		—		—		71,101
Net loss	—	—		(87,196)		—		—		—		(87,196)
Balances at March 31, 2021	—	$	—	$	75,643	$	—	$	—	$	—	$	75,643

See accompanying notes to unaudited condensed consolidated and combined financial statements.

2seventy bio, Inc.

Condensed Consolidated and Combined Statements of Cash Flows

(unaudited)

(in thousands)


	For the three months ended March 31,
	2022		2021
Cash flows from operating activities:
Net loss	$	(85,711)	$	(87,196)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Change in fair value of contingent consideration	48		369
Depreciation and amortization	3,530		3,676
Stock-based compensation expense	9,739		17,109
Other non-cash items	1,227		69
Changes in operating assets and liabilities:
Prepaid expenses and other assets	(7,768)		2,262
Operating lease right-of-use assets	4,710		3,652
Accounts payable	6,228		4,535
Accrued expenses and other liabilities	280		(1,248)
Operating lease liabilities	(2,860)		(5,639)
Deferred revenue	—		(820)
Collaboration research advancement	(3,487)		(1,519)
Net cash used in operating activities	(74,064)		(64,750)
Cash flows from investing activities:
Purchases of property, plant and equipment	(3,585)		(6,351)
Purchases of marketable securities	(22,450)		—
Proceeds from maturities of marketable securities	70,784		—
Net cash provided by (used in) investing activities	44,749		(6,351)
Cash flows from financing activities:
Transfers from bluebird bio	—		71,101
Proceeds from issuance of common stock in private placement	170,000		—
Proceeds from exercise of stock options and ESPP contributions	99		—
Net cash provided by financing activities	170,099		71,101
Increase (decrease) in cash, cash equivalents and restricted cash	140,784		—
Cash, cash equivalents and restricted cash at beginning of period	163,266		—
Cash, cash equivalents and restricted cash at end of period	$	304,050	$	—
Reconciliation of cash, cash equivalents, and restricted cash
Cash and cash equivalents	$	270,893	$	—
Restricted cash included in restricted cash and other non-current assets	33,157		—
Total cash, cash equivalents, and restricted cash	$	304,050	$	—
Supplemental cash flow disclosures:
Purchases of property, plant and equipment included in accounts payable and accrued expenses	$	2,925	$	1,954
Private placement issuance costs included in accounts payable and accrued expenses	$	4,343	$	—

See accompanying notes to unaudited condensed consolidated and combined financial statements.

2seventy bio, Inc.

Notes to Condensed Consolidated and Combined Financial Statements

(unaudited)

1. Description of the business

2seventy bio, Inc. (the “Company” or “2seventy bio”) was incorporated in Delaware on April 26, 2021 and is a cell and gene therapy company focused on the research, development, and commercialization of transformative treatments for cancer. The Company’s approach combines its expertise in T cell engineering technology and lentiviral vector gene delivery approaches, experience in research, development, and manufacturing of cell therapies and a suite of technologies that can be selectively deployed to develop highly innovative, targeted cellular therapies for patients with cancer. The Company is advancing multiple preclinical and clinical programs in oncology and, together with Bristol Myers Squibb (“BMS”), delivering the first FDA-approved CAR T therapy in multiple myeloma, ABECMA (idecabtagene vicleucel, or ide-cel), to patients in the United States. Please refer to Note 9, Collaborative arrangements and strategic partnerships for further discussion of the collaboration with BMS.

2seventy bio Securities Corporation is a wholly-owned subsidiary of the Company which was incorporated in Massachusetts on December 13, 2021 and was granted securities corporation status in Massachusetts for the 2021 tax year. 2seventy bio Securities Corporation has no employees.

The separation from bluebird bio, Inc.

In January 2021, bluebird bio, Inc. (“bluebird bio”) announced its plans to separate its oncology portfolio and programs from its severe genetic disease portfolio and programs, and spin off its oncology portfolio and programs into a separate, publicly traded company. In furtherance of this plan, on September 30, 2021, bluebird bio’s board of directors approved the distribution of all of the issued and outstanding shares of 2seventy bio common stock on the basis of one share of 2seventy bio common stock for every three shares of bluebird bio common stock issued and outstanding on October 19, 2021, the record date for the distribution. As a result of the distribution, which occurred on November 4, 2021, 2seventy bio became an independent, publicly traded company.

On November 3, 2021, the Company also entered into a separation agreement with bluebird bio, which is referred to in this quarterly report as the separation agreement, as well as various other agreements with bluebird bio, including a tax matters agreement, an employee matters agreement, an intellectual property license agreement, a transition services agreement under which 2seventy bio temporarily receives certain services from bluebird bio, and a second transition services agreement under which 2seventy bio temporarily provides certain services to bluebird bio. These agreements also govern certain of 2seventy bio’s relationships with bluebird bio after the separation. For additional information regarding the separation agreement and the other related agreements, refer to Note 13, Related-party transactions and the section captioned “Transactions with Related and Certain Other Parties” in this Quarterly Report on Form 10-Q.

Going concern

In accordance with Accounting Standards Codification 205-40, Going Concern, the Company evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the date that the condensed consolidated and combined financial statements are issued. The Company has incurred losses and has experienced negative operating cash flows for all historical periods presented. During the three months ended March 31, 2022, the Company incurred a net loss of $85.7 million and used $74.1 million of cash in operations. The Company expects to continue to generate operating losses and negative operating cash flows for the next few years. The Company's continued operations are dependent on its ability to raise additional funding.

As of March 31, 2022, the Company had cash, cash equivalents, and marketable securities of $452.5 million. The Company expects that its cash, cash equivalents, and marketable securities will be sufficient to fund current planned operations for at least the next twelve months from the date of issuance of these financial statements. The

Company intends to pursue additional cash resources through a combination of public or private equity offerings, debt financings, collaborations, strategic alliances or licensing arrangements with third parties. There can be no assurance that such financing will be available in sufficient amounts or on acceptable terms, if at all, and some could be dilutive to existing stockholders. If the Company is unable to obtain additional funding on a timely basis, it may be forced to significantly curtail, delay, or discontinue one or more of its planned research or development programs or be unable to expand its operations.

2. Summary of significant accounting policies and basis of presentation

Significant accounting policies

The significant accounting policies used in preparation of these condensed consolidated and combined financial statements for the three months ended March 31, 2022 and 2021 are consistent with those discussed in Note 2 to the consolidated and combined financial statements for the year ended December 31, 2021 included in the Company’s 2021 Annual Report on Form 10-K.

Basis of presentation

The Company did not operate as a separate, stand-alone entity prior to its separation from bluebird bio. Accordingly, the Company’s consolidated and combined statements of operations and comprehensive loss, stockholders’ equity and cash flows for the three months ended March 31, 2021, have been prepared on a carve out basis, derived from bluebird bio’s consolidated financial statements and accounting records.

The accompanying condensed consolidated and combined financial statements reflect the historical results of the operations, financial position and cash flows of the Company and have been prepared by the Company in accordance with accounting principles generally accepted in the United States (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as included in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASUs”) of the Financial Accounting Standards Board (“FASB”).

The historical results of operations and cash flows of 2seventy bio presented in these condensed consolidated and combined financial statements for periods prior to the separation may not be indicative of what they would have been had 2seventy bio operated as an independent, stand-alone entity for those periods. The historical results of operations, financial position and cash flows of 2seventy bio presented in these condensed consolidated and combined financial statements for periods subsequent to the separation are not necessarily indicative of 2seventy bio's future results of operations, financial position and cash flows.

In the opinion of management, the unaudited interim condensed consolidated and combined financial statements reflect all normal recurring adjustments considered necessary for a fair presentation of the Company’s financial position and the results of its operations for the interim periods presented.

Use of estimates

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

process may result in actual results differing materially from those estimated amounts used in the preparation of the financial statements.

Estimates and judgments are used in the following areas, among others: allocations of revenue, expenses, assets and liabilities from bluebird bio's historical consolidated financial statements to the Company for periods prior to the separation, future undiscounted cash flows and subsequent fair value estimates used to assess potential and measure any impairment of long-lived assets, including goodwill and intangible assets, the measurement of right-of-use assets and lease liabilities, contingent consideration, stock-based compensation expense, accrued expenses, income taxes, and the assessment of the Company's ability to fund its operations for at least the next twelve months from the date of issuance of these financial statements. In addition, estimates and judgments are used in the Company’s accounting for its revenue-generating arrangements, in particular as it relates to determining the stand-alone selling price of performance obligations, evaluating whether an option to acquire additional goods and services represents a material right, estimating the total transaction price, including estimating variable consideration and the probability of achieving future potential development and regulatory milestones, assessing the period of performance over which revenue may be recognized, and accounting for modifications to revenue-generating arrangements.

3. Marketable securities

The following table summarizes the marketable securities held at March 31, 2022 and December 31, 2021 (in thousands):


	Amortized cost/ cost		Unrealized gains		Unrealized losses		Fair Value
March 31, 2022
U.S. government agency securities and treasuries	$	140,192	$	3	$	(2,028)	$	138,167
Corporate bonds	33,803		—		(136)		33,667
Commercial paper	9,822		—		—		9,822
Total	$	183,817	$	3	$	(2,164)	$	181,656
December 31, 2021
U.S. government agency securities and treasuries	$	128,899	$	—	$	(507)	$	128,392
Corporate bonds	49,368		—		(58)		49,310
Commercial paper	54,065		—		—		54,065
Total	$	232,332	$

SEC Form 10-Q filed by 2seventy bio Inc.