Corporate Restructuring

9 Months Ended

Sep. 30, 2021

Corporate Restructuring

Corporate Restructuring

12. Corporate Restructuring

Following recent unfavorable clinical results from the Company’s late-stage development programs, on September 15, 2021, the Company announced a strategic update and corporate restructuring (the “Restructuring”) to focus on leveraging its expertise in developing and commercializing respiratory therapeutics. As part of the Restructuring, the Company is reducing headcount by approximately 75% through a reduction in its workforce. Approximately 75% of the total reduction in workforce will take place by November 2021, and the remainder will be completed in February 2022.

The Company incurred the following Restructuring charges consisting of one-time severance payments and other employee-related separation costs which are being recognized ratably over the future service period:

	Three Months Ended
	September 30,
(In thousands)	2021		2020
Employee-related separation costs	$	1,771	$	—

Selected information relating to accrued restructuring, severance costs and one-time termination costs is as follows:

(In thousands)
Balance at December 31, 2020	$	—
Net accruals		1,771
Cash paid		—
Balance at September 30, 2021	$	1,771

Of the total $1.8 million in Restructuring charges recognized during the period, $1.0 million was related to R&D expenses and $0.8 million was related to selling, general and administrative expenses. The majority of cash payments for employee-related Restructuring charges are expected to be paid through the first quarter of 2022 and are primarily comprised of severance and other related costs. The Company estimates that it will incur total cash expenses of approximately $18.0 million to $20.0 million related to the Restructuring of which the majority will be incurred by the first quarter of 2022. The

Company will also incur non-cash charges relating to the acceleration of equity-awards during the fourth quarter of 2021 and the first quarter of 2022 for employees affected by the Restructuring.

The Company is also in the process of evaluating the impact of the Restructuring on the carrying value of its long-lived assets, such as property and equipment and operating lease assets. This process includes evaluating the estimated remaining lives, significant changes in the use, and potential impairment charges related to its long-lived assets which will be impacted by decisions to be finalized late in the fourth quarter of 2021. As of September 30, 2021, the Company did not recognize any impairment charges related to its long-lived assets as those amounts were deemed immaterial. The Company may also incur additional costs not currently contemplated due to events that may occur because of, or that are associated with, the Restructuring.