Corporate Restructuring Update

9 Months Ended

Sep. 30, 2022

Corporate Restructuring Update

Corporate Restructuring Update

13. Corporate Restructuring Update

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 an approximate 75% reduction in workforce. A majority of the reduction in workforce occurred in November 2021, and the remainder was completed in February 2022.

For the three and nine months ended September 30, 2022, the Company incurred Restructuring and related expenses of $0.5 million and $11.4 million, respectively, of which $0.1 million and $5.3 million were related to R&D expenses and $0.4 million and $6.2 million were related to selling, general and administrative expenses, respectively. Of the total $0.5 million, net, recognized for the three months ended September 30, 2022, cash-related credits were $0.2 million and non-cash expenses were $0.7 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. Of the total $11.4 million recognized for the nine months ended September 30, 2022, cash-related expenses were $5.8 million and non-cash expenses were $5.6 million which were also 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 was announced and through its completion in September 2022, the Company has incurred total Restructuring and related expenses of $31.6 million of which $15.8 million was each related to R&D expenses and selling, general and administrative expenses. Of the total $31.6 million, cash-related expenses were $17.4 million and non-cash expenses were $14.2 million, which were primarily related to the modification of equity-based awards. As of September 30, 2022, all Restructuring and related expenses have been fully recognized by the Company.

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

(In thousands)
Balance at December 31, 2021	$	9,550
Net accruals		6,074
Cash paid		(15,624)
Balance at September 30, 2022	$	—

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 September 30, 2022, and it has not recognized any impairment charges related to its long-lived assets since the Restructuring announcement.