Restructuring

6 Months Ended

Jun. 30, 2019

Restructuring and Related Activities [Abstract]

7. Restructuring

In July 2018, the Company’s Board of Directors approved a restructuring plan to reduce operating costs and better align the Company’s workforce with the needs of its business following the June 27, 2018 announcement that its Phase 3 Leadership 301 clinical trial evaluating once-daily, oral rosiptor for the treatment of IC/BPS failed to meet its primary endpoint. The Company has halted all further development activities with rosiptor.

Under the restructuring plan, the Company reduced its workforce by 30 employees (approximately 53% of total employees) and closed its office in San Bruno, California. Affected employees are eligible to receive severance payments and outplacement services.

The Company incurred aggregate restructuring charges of

$7.4 million related to clinical trial closing costs, contract cancellations, closing of its office in San Bruno, severance payments and other employee-related costs.

Substantially all of these charges were paid as at June 30, 2019.

During the second quarter of 2019, the Company revised its original estimate of aggregate restructuring charges lower by

2.0

million

based upon updated information from its vendors related to a completed project.

The following table shows the total amounts incurred and the liability accrued related to the July 2018 restructuring as at June 30, 2019:

(in thousands)	CLINICAL TRIAL CLOSING COSTS			ONE-TIME EMPLOYEE TERMINATION BENEFITS			CONTRACT TERMINATION COSTS			SAN BRUNO OFFICE CLOSING COSTS			TOTAL EXPENSES
Amounts accrued as at January 1, 2018	$	—		$	—		$	—		$	—		$	—
Charges for the year		5,703			1,879			1,108			465			9,155
Revised estimates during the year		41			2			187			5			235
Total restructuring costs expected to be incurred		5,744			1,881			1,295			470			9,390
Amounts paid during the year		(2,204	)		(1,881	)		(1,201	)		(470	)		(5,756	)
Amounts accrued as at December 31, 2018		3,540			—			94			—			3,634
Revised estimates during the period		(1,935	)		—			(16	)		—			(1,951	)
Amounts paid during the period		(1,552	)		—			(78	)		—			(1,630	)
Amounts accrued as at June 30, 2019	$	53		$	—		$	—		$	—		$	53

On November 6, 2018, the Company’s Board of Directors approved an additional restructuring plan to further reduce operating costs. Under the restructuring plan, the Company reduced its workforce by 16 employees, including its Chief Operating Officer, Mr. Lloyd Mackenzie, effective December 31, 2018. Further reduction of staff may occur in 2019 pending corporate development activities. Affected employees are eligible to receive severance payments and outplacement services. The Company incurred restructuring charges of $1.0 million in 2018 related to one-time termination severance payments and other employee-related costs. Substantially all of these charges were paid as at December 31, 2018. Additional restructuring charges of at least $0.7 million are expected to be incurred in 2019.

The following table shows the total amount expected to be incurred and the liability related to the November 2018 restructuring as at June 30, 2019:

(in thousands)	ONE-TIME EMPLOYEE TERMINATION BENEFITS
Total restructuring costs incurred in 2018	$	984
Amount paid in 2018		(922	)
Amount accrued at December 31, 2018		62
Restructuring costs expected to be incurred in 2019		663
Amount paid during the period ended June 30, 2019		(254	)
Amount accrued at June 30, 2019		(303	)
Amount expected to be incurred in future periods	$	168

Restructuring recoveries of $1.9 million is recorded in research and development expenses and $0.4 million in general and administrative expenses. The majority of the amounts accrued will be paid by September 30, 2019.