Corporate Restructuring

12 Months Ended

Dec. 31, 2021

Corporate Restructuring

Corporate Restructuring

14. Corporate Restructuring

Following unfavorable clinical results related to 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 initiated a reduction in workforce of approximately 75%, an estimated 270 positions. Approximately 75% of the total reduction in workforce was completed at the end of November 2021, and the remainder will be completed by the end of February 2022.

The Company estimates that it will incur total Restructuring and related expenses of approximately $32.0 million comprised of $17.0 million in cash expenses and $15.0 million in non-cash expenses. These expenses are primarily comprised of severance and other related costs which are being recognized ratably over the future service period.

For the year ended December 31, 2021, the Company incurred Restructuring and related expenses of $20.1 million of which $10.6 million related R&D expenses and $9.5 million related to selling, general and administrative expenses. Of the total $20.1 million, cash-related expenses were $11.5 million and non-cash expenses were $8.6 million which were primarily related to the modification of equity-based awards for employees affected by the Restructuring and certain related awards for other employees.

Selected information relating to accrued cash-related Restructuring expenses was as follows:

(In thousands)
Balance at December 31, 2020	$	—
Net accruals		11,867
Cash paid		(2,317)
Balance at December 31, 2021	$	9,550

The Company expects to recognize the majority of the remaining Restructuring and related expenses of approximately $12.0 million, comprised of $5.0 million in cash-related expenses and $7.0 million in non-cash expenses, in the first quarter of 2022 and the balance by the third quarter of 2022. The remaining Restructuring and related expense estimates are subject to a number of assumptions, and actual amounts may differ. The Company may also incur additional costs not currently contemplated due to events that may occur as a result of, or that are associated with, the Restructuring.

The Company also completed an evaluation of 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. Based on its evaluation, the Company determined that its long-lived assets were not impaired as of December 31, 2021, and it did not recognize any impairment charges related to its long-lived assets for the year ended December 31, 2021. The Company may incur additional costs not currently contemplated due to events that may occur because of, or that are associated with, the Restructuring.