Accrued Restructuring

9 Months Ended

Sep. 30, 2020

Restructuring and Related Activities [Abstract]

Accrued Restructuring

4. Accrued Restructuring

In December 2019, the Company commenced a reorganization plan to reduce its operating costs and better align its workforce with the needs of its business following the Company’s November 25, 2019 announcement that it had halted clinical development of seladelpar. As of September 30, 2020, and December 31, 2019, the restructuring liability is included in current liabilities on the condensed consolidated balance sheet.

Restructuring charges incurred to date under this plan primarily consisted of employee termination benefits and contract termination costs associated with nonrefundable prepayments and exit fees relating to third-party manufacturers that the Company

contracted with for clinical supplies. Employee termination benefits include severance costs, employee-related benefits, supplemental one-time termination payments, and non-cash share-based compensation expense related to the acceleration of stock options. Charges and other costs related to the workforce reduction and structure realignment are presented as restructuring charges in the consolidated statements of operations and comprehensive loss. Substantially all cash payments are expected to be paid out by the end of 2020. 

The following table summarizes the accrued restructuring liabilities and utilization by cost type associated with the restructuring activities during the three and nine months ended September 30, 2020 (in thousands):

	Termination Benefits			Contract Termination Costs			Total
Balances as of December 31, 2019	$	2,780		$	413		$	3,193
Restructuring charges		23			—			23
Reductions for cash payments		(1,499	)		—			(1,499	)
Balances as of March 31, 2020		1,304			413			1,717
Restructuring charges		(377	)		—			(377	)
Reductions for cash payments		(461	)		—			(461	)
Balances as of June 30, 2020		466			413			879
Restructuring charges		(174	)		(413	)		(587	)
Reductions for cash payments		(199	)		—			(199	)
Balances as of September 30, 2020	$	93		$	—		$	93

In the three and nine months ended September 30, 2020, the Company adjusted restructuring charges by $0.2 million and $0.5 million, respectively, to reverse a portion of severance liabilities associated with severance benefits that were forfeited by certain executives pursuant to the terms of their respective employment agreements. In the three months ended September 30, 2020, the Company reversed $0.4 million of contract termination costs resulting from an arrangement between the Company and the vendor to waive these costs.

In addition to the activity in the above table, the Company also recognized in restructuring charges zero and $48,000 pertaining to nonrefundable prepaid research and development costs for clinical trial materials no longer expected be delivered for the three and nine months ended September 30, 2020. The Company also recorded zero and $0.2 million in non-cash, stock-based compensation associated with the acceleration of stock options of a departed executive for the three and nine months ended September 30, 2020.