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 allogeneiconcology. Allogeneic hematopoietic stem cell transplant, or allogeneic HSCT, is an existing approach of treating a patient withusing HSCs contributed by a donor other than the patient that contain the properly functioning copy of the gene whose mutation has caused the underlying disease. However, this approach has significant limitations in the treatment of severe genetic diseases, including difficulties in finding appropriate genetically-matchedHLA-matched donors and carries the risk of transplant-related rejection, graft-versus-host disease, or GVHD, and mortality, and is therefore typically only available on a limited basis.death. Our approach is intended to address the significant limitations of allogeneic HSCT while utilizing existing stem cell transplant infrastructure and processes. Also, because our approach has the potential to drive sustained expression of the functional protein encoded by the gene insert after potentially a single-administration,single administration, we believe the value proposition offered by our product candidates for patients, families, health care providers and payorspayers would be significant.

Although our initial focus for severe genetic diseases is

Clinical development of our LentiGlobin product candidate

The Northstar Study (HGB-204) – Phase I/II clinical study in subjectspatients with TDT

Our Northstar Study is a single-dose, open-label, non-randomized, multi-site Phase I/II clinical study in the United States, Australia and Thailand to evaluate the safety and efficacy of the LentiGlobin product candidate in increasing hemoglobin production and eliminating or reducing transfusion dependence 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 age with 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 two years preceding enrollment. The subjects were also eligible for allogeneic HSCT. In September 2016, we announced that our Northstar Study has been fully enrolled.

Efficacy will be evaluated primarily by the production of ≥2.0 g/dL of hemoglobin A containing β^A-T87Q-globin for the six-month period between 18 and 24 months post-transplant. In order to allow for endogenous hemoglobin production following transplant, subjects will be transfused with RBCs only when total hemoglobin decreases below 7.0 g/dL. The rationale for this endpoint is that

SCD:

Starbeam Study (ALD-102) – Phase II/III clinical study in subjects with CALD

In October 2013, we treated the first subject in a Phase II/III clinical study, called the Starbeam Study, of our Lenti-D product candidate,following studies to evaluate itsthe safety and efficacy of eli-cel in subjectsthe treatment of patients with CALD.  CALD:

In addition, we believe ourcenters where both parties contribute expertise in gene editing and cell transduction also provides an opportunity to develop new products for use in the in vivo setting. In this case, homing endonucleases and MegaTALs that provide a highly specific and efficient way to modify DNA sequences to edit or insert genetic components 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 vivo deliver the genetic material to or modify those target cells. We believe in vivo gene editing opens up additional 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 Cancer

We are engaging inenable the discovery and development of novel, disease-alteringpotential product candidates. Currently, our strategic collaborations in severe genetic disease include those with:

cell surface proteins, in the case of chimeric antigen receptors, or CARs, or by recognizing specific protein fragments derived from either intracellular or extracellular protein, in the case of T cell receptors, or TCRs.

Immune System and T Cells

The 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 as the innate immune system, which recognizes non-specific signals of infection or abnormalities as a first line of defense. The innate immune system is the initial 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 the adaptive immune system, which is composed of highly specific, targeted cells and provides long-term recognition and protection from infectious agents and abnormal 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 the thymus. T cells are involved in both sensing and killing infected or abnormal cells,quality experience as well as coordinatingstrong project management discipline to effectively oversee these contract manufacturing activities, and to compile manufacturing and quality information for our regulatory submissions and commercialization efforts. For the activationtreatment of other cellspatients with our drug product in an immune response. These cells canthe commercial setting, we are partnering with participating apheresis centers, which we refer to as qualified treatment centers, to be classifiedcenters for collection of HSCs from the patient and for infusion of drug product to the patient.

Ourmalignancies, including: non-Hodgkin's lymphoma, acute myeloid leukemia (in collaboration with Seattle Children's Research Institute), MAGE-A4 positive solid tumors (in collaboration with Regeneron), and Merkel cell carcinoma (in collaboration with Fred Hutchinson Cancer Research Center). We are also independently researching and developing other CAR T cell product candidates – bb2121against a variety of cancer targets, including next-generation anti-BCMA CAR-T cell products for the treatment of multiple myeloma.

announced in March 2013, we have worked collaboratively to discover, developFDA accepted for Priority Review the BLA submitted by BMS for ide-cel as a treatment for relapsed and commercialize CAR T cell product candidates in oncology.refractory multiple myeloma. The FDA and EMA have granted Orphan Drug status to both the bb2121 product candidateide-cel and bb21217 for the treatment of patients with relapsed/relapsed and refractory multiple myeloma.  The FDA has granted Breakthrough Therapy designation and the EMA has granted PRIME eligibility to the bb2121 product candidateide-cel for relapsed/relapsed and refractory multiple myeloma.

Our collaboration arrangement

It should be noted that these data presented abovebb21217 product candidate, we are current as of data cut-off date and are preliminary in nature, and that 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 these subjects or be repeated or observed in this ongoing study or future studies involving our bb2121 product candidate. It is possible that subjects who initially respond to treatment with our bb2121 drug product may experience disease progression.

Theconducting the CRB-402 study, – Phase I clinical study in subjects with relapsed/refractory multiple myeloma

Our CRB-402 study is a single-dose, open-label, non-randomized, multi-site Phase Iopen label, single-arm, multi-center, phase 1 dose escalation/ dose expansion clinical study in the United States to examine the safety and efficacy of our bb21217 product candidate in up to 50 subjects74 patients with relapsed/relapsed and refractory multiple myeloma. In order to be eligible for CRB-402, subjectspatients must have received three prior regimens, including a proteasome inhibitor (PI: bortezomib or carfilzomib) and immunomodulatory agent (IMid:(IMiD: lenalidomide or pomalidomide), or be “double-refractory” to both a proteasome inhibitor and an immunomodulatory agent.  In the expansion cohort, subjectspatients must have received at least a PI, and IMiD and daratumumab, and be refractory to their last line of therapy.

Following screening, enrolled subjects undergo a leukapheresis procedure to collect autologous T cells for manufacturing our bb21217 drug product. The bb21217 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 bb21217 drug product, subjects Patients receive one cycle of lymphodepletion ofwith cyclophosphamide and fludarabine prior to infusion of the bb21217 drug product.

Each subjectpatient will be followed for up to 2460 months post-treatment, and then will be enrolled in a long-term follow-up protocol that will assess safety and efficacy beyond the 24-month60-month period.

We are collaboratingevaluable at six months, six of eleven patients with Medigene AG, through its subsidiary Medigene Immunotherapies GmbH, to jointly discoverongoing response and develop TCR product candidates directed against up to four antigensevaluable at twelve months, three of six patients with ongoing response and evaluable at 18 months, and two of two patients with ongoing response and evaluable at 24 months.

Our Gene Editing Opportunity

In June 2014, we acquired Pregenen, a privately-held biotechnology company headquartered in Seattle, Washington. Through the acquisition, we obtained rights to Pregenen’s gene editing technology platform and cell signaling technology, and have integrated these technologies and research team and expanded its research efforts.  We are focused on utilizing homing endonuclease and megaTAL gene editing technologies in a variety of potential applications and disease areas, including for oncology and hematology.  

Homing endonucleases and MegaTALs are novel enzymes that provide a highly specific 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, and TALENs, share common features of a DNA binding domain and a DNA cleavage domain.  They all differ in specificity, size, ease of delivery and as naturally occurring versus engineered nucleases.  Homing endonucleases and megaTALs are based on a naturally-occurring class of DNA cleaving enzymes that function as monomeric proteins able to bind DNA in a sequence-specific manner and cleave their target site. We believe there are multiple advantages of homing endonucleases and MegaTALs compared to other gene editing technologies, most notably: they are highly specific and efficient in cutting DNA and their compact size simplifies delivery to therapeutically relevant cell types.  We are using our gene editing platform, along with collaborations with multiple academic institutions, to potentially discover and develop next generation versions of our current ex vivo gene therapy product candidates, and to potentially expand into new disease indications.

Manufacturing

Our 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 cell mass 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.  Adherent cells are transfected with multiple plasmids encoding all the genetic material required to assemble the lentiviral vector carrying the functional gene of interest.  The transfected HEK293T cells then assemble our lentiviral vectors packaged with the functional gene of interest, which bud off into the cell culture media. The media containing the assembled vectors is harvested, purified, concentrated and formulated prior to freezing for storage. These finished lentiviral vectors 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 change only the therapeutic gene “cassette” depending on the disease. In other words, the vector “backbone” stays the same, while only the therapeutic gene and related sequences are changed. If we were to undertake drug development in an additional indication, we believe we could rapidly move forward using this lentiviral vector backbone and associated assays, simply by switching the therapeutic gene insert and associated control elements.

Although we intend to continue manufacturing our Lenti-D vectors in TTCFs, we are adapting our LentiGlobin, bb2121 and bb21217 vector production technology to scalable production systems with the potential to satisfy an increased number26 % of patients per manufacturing cycle. So far, we have demonstrated successful production(18 of LentiGlobin, bb2121 and bb21217 vectors at pilot scale and are transferring the new process to a contract manufacturer to accommodate future demand for our drug candidates, if approved,69).

co-promote the ide-cel product candidate in the United States. Under the terms of the collaboration,co-development and co-promotion agreement that we have with BMS for the development and commercialization of ide-cel, we 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. In 2019, BMS paid us a $10.0 million clinical milestone payment.

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 to develop 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 in connection with the amendment in June 2015. The collaboration term ends in June 2018. Either party may terminate the agreementagreements upon written notice to the other party in the event of the other party’s uncured material breach. CelgeneBMS may terminate the agreement for any reason upon prior written notice to us. If the agreement isagreements are terminated, rights to product candidates in development at the time of such termination will be allocated to the parties through a mechanism included in the agreement.agreements. In addition, if Celgene terminatesBMS has the right to terminate any co-development and co-promotion agreement or license agreement for our breach, any then- existing co-development and co-promotionBMS may elect to continue such agreement will be automatically terminated and replaced with a license agreement for such product candidate andhowever, any amounts payable by CelgeneBMS to us under any then-existing product license agreementssuch agreement will be reduced.

reasonable efforts to research and develop one or more licensed products in the license field during the term of the agreement. Additionally, we have assumed certain development and regulatory milestone obligations and must report on our progress in achieving those milestones on a periodic basis. We may be obligated to pay up to $9.7 million in the aggregate for a licensed product upon the achievement of these milestones. We may unilaterally terminate the license 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 and following an opportunity for us to cure the material breach. The NIH may also terminate the agreement in the event bankruptcy proceedings are opened against us and are not dismissed within a specified period of time.  Absent early termination, the agreement will automatically terminate upon the expiration of the patent rights covered by the agreement. The longest lived patent rights licensed to us under the Agreement are currently expected to expire in 2034.

GlaxoSmithKline

Novartis Pharma AG

In April 2017, we entered into a license agreement with Novartis Pharma AG, or Novartis, pursuant to which Novartis non-exclusively licensed certain of our patent rights related to lentiviral vector technology to develop and commercialize chimeric antigen receptor T cell (CAR T) therapies for oncology, including Novartis’ approved CAR-T therapy Kymriah.  Financial terms of the agreement include an upfront payment to us as well as potential development and regulatory milestone payments and low single digit royalties on net sales of covered products.

There are other organizations working to improve existing therapies or to develop new therapies for our initially selected indications. Depending on how successful these efforts are, it is possible they may increase the barriers to adoption and success for our LentiGlobin, Lenti-D, bb2121 and bb21217 product candidates, and our preclinical T cell-based cancer immunotherapy product candidates. These efforts include the following:

Many of our competitors, either alone or with their strategic partners, have substantially greater financial, technical and human resources than we do and significantly greater experience in the discovery and development of product candidates, obtaining FDA and other regulatory approvals of treatments and the commercialization of those treatments. Accordingly, our competitors may be more successful than us in obtaining approval for treatments and achieving widespread market acceptance. Our competitors’ treatments may be more effective, or more effectively marketed and sold, than any

payers.

Depending on how successful these competitive efforts are, it is possible they may increase the barriers to adoption and success for our product candidates, and our preclinical T cell-based cancer immunotherapy product candidates. These efforts include the following:

subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources and we may not be able to obtain the required regulatory approvals.

proceed.

places the clinical study on a clinical hold within that 30-day time period. 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 its IND review that sponsors delay initiation of the protocol until after completion of the RAC review process. The FDA may also impose clinical holds on a biological 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 submission of 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.

be enrolled in the studies in order to establish the 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 support marketing approval. The NIH has a publicly accessible database, the Genetic Modification Clinical Research Information System which includes information on gene transfer studies and serves as an electronic tool to facilitate the reporting and analysis of adverse events on these studies.

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 recommended actions that the applicant might take to place the application in a condition for approval. If a complete response letter is issued, the applicant may either resubmit the BLA, addressing all of the deficiencies identified in the letter, or withdraw the application.

application, or request a hearing.

therapy where no satisfactory alternative therapy exists or a significant improvement in the treatment, diagnosis or prevention of a disease compared to marketed products. The FDA will attempt to direct additional resources 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 or life-threatening illnesses and that provide meaningful therapeutic benefit over existing treatments may receive accelerated approval, which means that they may be approved on the basis of adequate and well-controlled clinical studies establishing that the product has an effect on a surrogate endpoint that is reasonably 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 condition of 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 could adversely impact the timing of the commercial launch of the product. Fast Track designation, Breakthrough Therapy designation, priority review and accelerated approval do not change the standards for approval but may expedite the development or approval process.

We also must comply with the FDA’s advertising and promotion requirements, such as those related to direct-to-consumer advertising, the prohibition on promoting 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 failure to comply with the applicable regulatory requirements may result in restrictions on the marketing of a product or withdrawal of the product from the market as 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 adverse publicity. FDA sanctions could include refusal to approve pending applications, withdrawal of an approval, clinical hold, warning or

Additional regulation

applicable environmental laws and that continued compliance therewith will not have a material adverse effect on our business. We cannot predict, however, how changes in these laws may affect our future operations.

U.S. Foreign Corrupt Practices Act

The U.S. Foreign Corrupt Practices Act, to which we are subject,or the FCPA, prohibits corporations and individuals from engaging in certain activities to obtain or retain 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 any foreign government official of another country, government staff member, political party or political candidate in an attempt to obtain or retain business or to otherwise influence a person working in that capacity. In many other countries, healthcare professionals who prescribe pharmaceuticals are employed by government entities, and the purchasers of pharmaceuticals are government entities. Our dealings with these prescribers and purchasers may be subject to the FCPA.

Regulatory requirements governing generesult in significant fines and cell therapy products have evolvedliability.

If the resultstiming of our clinical studies are inconclusive or if there are safety concerns or adverse events associated withdepends on the speed at which we can recruit eligible patients to participate in testing our product candidates,candidates. The conditions for which we may:

Treatment with our gene therapy product candidates involves chemotherapy and myeloablative treatments, which can cause side effects or adverse events that are unrelated to our product candidates, but may still impact the successstudies. The eligibility criteria of our clinical studies. Additionally,studies will further limit the pool of available study participants, and the process of finding and diagnosing patients may prove costly. Patients may be unwilling to participate in our product candidates could potentially cause otherstudies because of negative publicity from adverse events that havein the biotechnology or gene therapy industries or for other reasons, including competitive clinical studies for similar patient populations. We may not yet been predicted. The inclusionbe able to identify, recruit and enroll a sufficient number of critically ill patients, or those with required or desired characteristics to achieve diversity in a study, to complete our clinical studies may result in deaths or other adverse medical events due to other therapies or medications that such patients may be using, or the progression of their disease. As described above, any of these events could prevent us from achieving or maintaining market acceptancea timely manner. We have experienced delays in some 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 of results obtained when these studies are completed. Furthermore, success in early clinical studies may not be indicative of results obtained in later studies.

Our product candidates first initiated evaluation in human clinical studies in 2013,the past, and we may experience unexpected resultssimilar delays in the future.

Patients with different genotypes of TDT We may experience different outcomesdelays or rejections based upon additional government regulation from future legislation or administrative action, changes in regulatory agency policy, or additional regulatory feedback or guidance during the period of product development, clinical studies and the review process. The field of cell and gene therapy is evolving, and as more products are reviewed by regulatory authorities, regulatory authorities may impose additional requirements that were not previously anticipated. Regulatory agencies also may approve a treatment withcandidate for fewer or more limited indications than requested or may grant approval subject to the performance of post-marketing studies. In addition, regulatory agencies may not approve the labeling claims that are necessary or desirable for the successful commercialization of our treatment candidates. For example, the development of our product candidates which may result in the delayfor pediatric use is an important part of our clinical developmentcurrent business strategy, and commercialization plans.

Initial results from our ongoing clinical studies suggest that patients with TDT and a non-β⁰/β⁰ genotype experienced better outcomesif we are unable to treatment with our LentiGlobin product candidate than patients with TDT and a β⁰/β⁰ genotype. Consequently, we expect to seek FDAobtain marketing approval of our LentiGlobin product candidate initially for the treatment of patients with TDTdesired age ranges, our business may suffer. Furthermore, approvals by the EMA and a non-β⁰/β⁰ genotype. In order to support an application for FDA approval of our LentiGlobin product candidate in patients with TDT and a β⁰/β⁰ genotype, we initiated the HGB-212 study, but we do not know if or when our LentiGlobin product candidate may be commercially available to patients with all genotypes.

The results from our Starbeam StudyEuropean Commission may not be sufficiently robust to support the submissionindicative 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, conduct additional 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 product candidate to halt the progression of CALD, may not be deemed to be a pivotal study or may not provide sufficient support for a Biologics License Application, or BLA, submission. The FDA normally requires two pivotal clinical studies to approve a drug or biologic product, and thuswhat the FDA may require that we conduct larger or additional clinical studies of our Lenti-D product candidate prior to a BLA submission. The FDA typically does not consider a single clinical study to be adequate to serve as a pivotal study unless it is, among other things, well-controlled and demonstrates a clinically meaningful effect on mortality, irreversible morbidity, or prevention of a disease with potentially serious outcome, and a confirmatory study would be practically or ethically impossible. Due to the nature of CALD and the limited number of patients with this condition, we believe a placebo-controlled and blinded study is not 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 require us to enroll additional subjects or conduct additional clinical studies, possibly involving a larger sample size or a different clinical study design, particularly if 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 we conduct 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 and efficacy 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-103 study. 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 the ALD-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 Starbeam Study. 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 BLA submission for our Lenti-D product candidate. Based on this assessment, the FDA may require that we conduct additional preclinical or clinical studies prior to 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 this indication. If the FDA or the EMA requires additional studies, we would incur increased costs and delays in the marketing approval process, which may require 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 the elements 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.