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Stock-based compensation
 12 Months Ended
Dec. 31, 2021
Share-based Payment Arrangement [Abstract]  
Stock-based compensation Stock-based compensation
In June 2013, the Company’s board of directors adopted its 2013 Stock Option and Incentive Plan (“2013 Plan”), which was subsequently approved by its stockholders and became effective upon the closing of the Company’s IPO. The 2013 Plan replaces the 2010 Stock Option and Grant Plan (“2010 Plan”).
The 2013 Plan allows for the granting of incentive stock options, non-qualified stock options, restricted stock units and restricted stock awards to the Company’s employees, members of the board of directors, and consultants of the Company. The Company initially reserved 1.0 million shares of its common stock for the issuance of awards under the 2013 Plan. The 2013 Plan provides that the number of shares reserved and available for issuance under the 2013 Plan will automatically increase each January 1, beginning on January 1, 2014, by four percent of the outstanding number of shares of common stock on the immediately preceding December 31 or such lesser number of shares as determined by the Company’s compensation committee. In January 2021 and January 2022, the number of common stock available for issuance under the 2013 Plan was increased by approximately 2.7 million and 2.8 million shares, respectively, as a result of this automatic increase provision.
Any options or awards outstanding under the Company’s previous stock option plans, including both the 2010 Plan and the Second Amended and Restated 2002 Employee, Director and Consultant Stock Plan (“2002 Plan”), at the time of adoption of the 2013 Plan remain outstanding and effective. The shares of common stock underlying any awards that are forfeited, canceled, repurchased, expired or are otherwise terminated (other than by exercise) under the 2002 Plan and 2010 Plan are added to the shares of common stock available for issuance under the 2013 Plan. As of December 31, 2021, the total number of common stock that may be issued under all plans is 3.2 million.
The Company does not currently hold any treasury shares. Upon stock option exercise, the Company issues new shares and delivers them to the participant.
Conversion and modification of equity awards outstanding at the Separation
In connection with the Separation on November 4, 2021, under the provisions of the existing plans, the Company adjusted its outstanding equity awards in accordance with the terms of the Employee Matters Agreement (an equitable adjustment) to preserve the intrinsic value of the awards immediately before and after the Distribution. Upon the Distribution, employees holding stock options, restricted stock units (“RSUs”) and performance restricted stock units (“PRSUs”) denominated in pre-Distribution bluebird stock received a number of otherwise-similar awards either in post-Distribution bluebird stock or in a combination of post-Distribution bluebird stock and 2seventy bio stock based on conversion ratios outlined for each group of employees in the Employee Matters Agreement that the Company entered into in connection with the Distribution. The equity awards that were granted prior to 2021 were converted under the shareholder method, wherein employees holding outstanding equity awards received equity awards in both bluebird and 2seventy bio. The conversion ratio for the shareholder method took into consideration a distribution ratio of one share of 2seventy bio common stock for every three shares of bluebird common stock. For equity awards granted in 2021, the number of awards that were outstanding at the Separation were proportionately adjusted to maintain the aggregate intrinsic value of the awards at the date of the Separation. The conversion ratio was determined based on the volume weighted-average trading price for bluebird common stock for the five trading days before and after the Separation.
These modified awards otherwise retained substantially the same terms and conditions, including term and vesting provisions. Due to the modification of the equity awards as a result of the Distribution, the Company compared the fair value of the outstanding equity awards immediately before and after the Distribution. The modification resulted in an incremental fair value of $20.3 million, of which $4.5 million was immediately recognized as of the Distribution date.
Additionally, bluebird will not incur any future compensation cost related to equity awards held by 2seventy bio employees and directors. The Company will incur future compensation cost related to 2seventy bio equity awards held by bluebird employees.
Stock-based compensation expense
The Company recognized stock-based compensation expense totaling $98.7 million, $122.6 million, and $131.1 million during the years ended December 31, 2021, 2020 and 2019, respectively. Stock-based compensation expense recognized by award type is as follows (in thousands):
Year ended December 31,
202120202019
Stock options$54,660 $75,837 $79,912 
Restricted stock units30,767 38,123 50,158 
Employee stock purchase plan and other13,313 8,636 1,013 
$98,740 $122,596 $131,083 
Stock-based compensation expense by classification included within the consolidated statements of operations and comprehensive loss was as follows (in thousands):
Year ended December 31,
202120202019
Research and development$42,989 $49,766 $59,378 
Selling, general and administrative55,751 72,830 71,705 
$98,740 $122,596 $131,083 
Stock-based compensation of $1.0 million was capitalized into inventory during the year ended December 31, 2021. Stock-based compensation of $0.5 million was capitalized into inventory during the year ended December 31, 2020.
Unrestricted stock awards
During the first quarter of 2021, the Company granted 0.4 million unrestricted stock awards to employees as part of its 2020 annual incentive program. In addition, the Company implemented a retention program designed to incentivize and retain employees through the separation of its severe genetic disease and oncology programs. Under the retention program, employees are entitled to a one-time bonus payment, consisting of both a cash payment and unrestricted stock awards, with the condition that the employee remains employed at the end of 2021. For the twelve months ended December 31, 2021, the Company recognized $21.2 million in expense related to this program, which includes $10.6 million in stock compensation expense related to the anticipated grants of stock. During the third quarter of 2021, the Company granted 0.1 million unrestricted stock awards, related to the retention program, to those employees impacted by the orderly wind down of the Company's operations in Europe. During the fourth quarter of 2021, the Company granted 1.0 million unrestricted stock awards to employees as part of its retention program.
As of December 31, 2021, the Company had $34.2 million and $54.3 million of unrecognized compensation expense related to unvested stock options and restricted stock units (exclusive of those with service and performance conditions that have not yet been achieved), respectively, that is expected to be recognized over a weighted-average period of 2.19 years and 2.26 years, respectively.
Stock options
The fair value of each option issued to employees was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:
Year ended December 31,
202120202019
Expected volatility66.7 %69.5 %70.7 %
Expected term (in years)6.06.06.0
Risk-free interest rate0.8 %1.4 %2.3 %
Expected dividend yield0.0 %0.0 %0.0 %
The following table summarizes the stock option activity under the Company’s equity awards plans:
Shares
(in thousands)		Weighted-
average
exercise price
per share		Weighted-
average
contractual
life
(in years)		Aggregate
intrinsic
value (a)
(in thousands)
Outstanding at December 31, 20206,262 $105.02 
Granted1,238 $27.19 
Exercised(218)$6.82 
Canceled or forfeited(2,357)$81.20 
Conversion and modification of awards (1,339)$42.90 
Outstanding at December 31, 20213,586 $39.23 6.8$631 
Exercisable at December 31, 20211,835 $57.09 5.5$380 
Vested and expected to vest at December 31, 20213,586 $39.23 6.8$631 
(a)The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair value of the common stock for the options that were in the money at December 31, 2021.
(b)Pursuant to the terms of Employee Matters Agreement, the company granted 4,375 option conversion awards to bluebird employees which are reflected within the "Conversion and modification of awards" above. The weighted-average exercise price per share reflected above is related to these awards, rather than the number of awards reflected in the table.
The weighted-average fair values of options granted during the years ended December 31, 2021, 2020 and 2019 was $16.32, $43.24, and $83.44, respectively. The intrinsic value of options exercised during the years ended December 31, 2021, 2020 and 2019 was $5.1 million, $4.0 million and $29.0 million, respectively.
Restricted stock units
The following table summarizes the restricted stock unit activity under the Company’s equity award plans:
Shares
(in thousands)		Weighted-average
grant date
fair value
Unvested balance at December 31, 20201,495 $102.34 
Granted3,359 26.43 
Vested(526)112.21 
Forfeited(987)53.58 
Conversion and modification of awards(148)16.84 
Unvested balance at December 31, 20213,193 $16.21 
(a)Pursuant to the terms of Employee Matters Agreement, the company granted 3,327 restricted stock unit conversion awards to bluebird employees which are reflected within the "Conversion and modification of awards" above. The weighted-average exercise price per share reflected above is related to these awards, rather than the number of awards reflected in the table.
The intrinsic value of restricted stock units vested during the years ended December 31, 2021, 2020 and 2019 was $44.0 million, $30.9 million and $28.4 million, respectively.
Employee Stock Purchase Plan
In June 2013, the Company’s board of directors adopted its 2013 Employee Stock Purchase Plan (“2013 ESPP”), which was subsequently approved by its stockholders and became effective upon the closing of the Company’s IPO. The 2013 ESPP authorizes the initial issuance of up to a total of 0.2 million shares of the Company’s common stock to participating employees. In June 2021, the Company amended the 2013 ESPP to authorize an additional 1.4 million shares of the Company’s common stock available to participating employees. During each of the years ended December 31, 2021 and 2020, approximately 0.1 million shares of common stock were issued under the 2013 ESPP.