12. Restructuring Activities

In December 2016, the Company announced their intention to implement a reduction in personnel to focus on an updated business plan. In January 2017, the Board of Directors approved a plan to implement a reduction in personnel that is expected to involve approximately 80% of the Company’s workforce based on the number of employees at the time the plan was approved. As of March 31, 2017, the Company reduced its workforce by 74 employees in connection with the reduction in personnel and expects the reduction of the additional 45 affected employees to be substantially complete during the second and third quarters of 2017. In connection with such reduction in personnel, the Company estimates that it will incur approximately $13.2 million of pre-tax charges through the third quarter of 2017, of which approximately $12.2 million is expected to result in future cash expenditures. These pre-tax charges relate to (a) expected severance and other employee costs of approximately $11.1 million and (b) expected lease termination costs of approximately $2.1 million. As of March 31, 2017, the Company's cash expenditures related to such reduction in personnel totaled $4.8 million.

In connection with the reduction in personnel, the Company recognized approximately $6.7 million of severance and other employee costs for the three months ended March 31, 2017, of which $4.8 million were recorded in "Research and development" expense and $1.9 million were recorded in "General and administrative" expense in the Company's Statements of Operations.

As of March 31, 2017, the Company's accrual balance for severance and benefit costs was $3.8 million which was recorded in "Accounts payable and accrued expenses" in the Company's Balance Sheet. The severance and other employee cost accruals as of March 31, 2017 are expected to be paid during the second and third quarters of 2017.

The following is a reconciliation of the severance-related accrual activity for the period:



	Accrued Severance and Other Employee Costs
Beginning Balance	$	—
Accrued restructuring expenses	8,565
Payments	(4,781		)
Ending Balance	$	3,784

On January 26, 2017, the Company issued a notice of termination under the Lease Agreement, dated as of September 30, 2007, between the Company and One Penn Plaza LLC, as previously supplemented and amended (as so supplemented and amended, the “Lease”) for office space at One Penn Plaza in New York, New York. The termination of the Lease triggered an early termination payment by the Company of approximately $0.9 million and will be effective in January 2018, through which time the Company will be responsible for paying continuing rental fees, as well as taxes, operating expenses and utility and other charges related to the leased premises.

On January 26, 2017, the Company issued a notice of termination under the Sublease Agreement between the Company and Otsuka America Pharmaceutical, Inc. (the “Sublease”) for office space at One University Square, Princeton, New Jersey. The termination of the Sublease triggered an early termination payment by the Company of approximately $1.2 million and will be effective in February 2018, through which time the Company will be responsible for paying continuing rental fees, as well as taxes, operating expenses and utility and other charges related to the subleased premises.

On January 26, 2017, the Company issued a notice of termination under its Office Lease Agreement between the Company and PSN Partners, L.P. (the “Office Lease”) for office space in Palmer Square in Princeton, New Jersey. The termination of the Office Lease did not trigger any early termination payment and will be effective in October 2017, through which time the Company will be responsible for paying continuing rental fees.

During January 2017, the Company made the early termination payments as described above and recognized $2.1 million of additional facilities costs which were recorded in "General and administrative" expense in the Company's Statements of Operations.