Corporate Restructuring

3 Months Ended

Mar. 31, 2022

Corporate Restructuring

Corporate Restructuring

10. Corporate Restructuring

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%. Approximately 75% of the total reduction in workforce occurred in November 2021, and the remainder was completed in February 2022.

For the three months ended March 31, 2022, the Company incurred Restructuring and related expenses of $9.3 million of which $4.7 million was related to R&D expenses and $4.6 million was related to selling, general and administrative expenses. Of the total $9.3 million, cash-related expenses were $4.8 million and non-cash expenses were $4.5 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.

Since the Restructuring announcement in September 2021, the Company has incurred total Restructuring and related expenses of $29.5 million of which $15.3 million was related to R&D expenses and $14.2 million was related to selling, general and administrative expenses. Of the total $29.5 million, cash-related expenses were $16.3 million and non-cash expenses were $13.2 million, which were primarily related to the modification of equity-based awards.

The Company estimates that it will incur total Restructuring and related expenses of approximately $33.0 million comprised of $17.1 million in cash expenses and $15.9 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.

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

(In thousands)
Balance at December 31, 2021	$	9,550
Net accruals		5,131
Cash paid		(11,276)
Balance at March 31, 2022	$	3,405

The Company expects to recognize the remaining Restructuring and related expenses of approximately $3.5 million, comprised of $0.8 million in cash-related expenses and $2.7 million in non-cash expenses 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 evaluated 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 included 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 March 31, 2022, and it has not recognized any impairment charges related to its long-lived assets since the Restructuring announcement.