Restructuring, Asset Impairment and Related Charges

9 Months Ended

Sep. 30, 2024

Restructuring and Related Activities [Abstract]

Restructuring, Asset Impairment and Related Charges

2024 Restructuring Plan

In August 2024, the Company initiated a strategic restructuring to advance the development of its hepatitis programs and focus on the highest near-term value opportunities (“2024 Restructuring Plan”). The organizational realignment and optimization included phasing out programs in influenza, COVID-19, and the Company's T cell-based viral vector platform, as well as a workforce reduction of approximately 25% or approximately 140 employees. The Company expects to recognize restructuring expenses of approximately $11 million to $13 million, primarily related to employee severance cash payouts, mostly in the second half of 2024.

During the three months ended September 30, 2024, the Company incurred severance and other employee-related expenses of $10.4 million, of which $8.2 million and $2.2 million is classified as research and development and selling, general and administrative expenses, respectively.

2023 Restructuring Plan

In December 2023, the Company initiated strategic steps to reduce operating expenses and focus its capital allocation on programs with the highest potential for patient impact and value creation (“2023 Restructuring Plan”). As part of the steps, the R&D facilities in St. Louis, Missouri and Portland, Oregon were closed in 2024. In addition, approximately 75 net positions, or 12% of the workforce, were eliminated, which included reductions from the Company’s discontinuation of its innate immunity small molecule group that was initiated in the third quarter of 2023.

In the second quarter of 2024, due to the completion of R&D activities at the St. Louis, Missouri site, the Company recorded non-cash impairment charges of $24.2 million primarily related to the write-off of the remaining balance of the ROU asset and related leasehold improvements along with non-cash disposal losses of $2.3 million related to certain lab equipment held for sale. In the third quarter 2024, the Company recognized restructuring charges of $2.3 million for long-lived assets primarily driven by a write-off of $1.4 million representing the remaining balance of ROU asset for Portland, Oregon site due to the cessation of R&D activities. For the nine months ended September 30, 2024, total restructuring charges for long-lived assets amounted to $28.8 million. All actions related to the 2023 Restructuring Plan have been substantially completed by the third quarter of 2024.

The following table is a summary of restructuring charges incurred under both the 2023 and 2024 Restructuring Plans during the three and nine months ended September 30, 2024 and a roll forward of accrued restructuring costs from December 31, 2023 to September 30, 2024 (in thousands).


	Severance and other employee-related expenses		Long-lived assets impairment charges and disposal losses		Total
Accrued restructuring charges at December 31, 2023	$	4,454	$	—	$	4,454
Restructuring charges, net	(48)		—		(48)
Cash payment	(2,592)		—		(2,592)

Accrued restructuring charges at March 31, 2024	$	1,814	$	—	$	1,814
Restructuring charges, net	(200)		26,475		26,275
Cash payment	(710)		—		(710)
Non-cash activity	—		(26,475)		(26,475)
Accrued restructuring charges at June 30, 2024	$	904	$	—	$	904
Restructuring charges, net	10,379		2,333		12,712
Cash payment	(301)		—		(301)
Non-cash activity	—		(2,333)		(2,333)
Accrued restructuring charges at September 30, 2024	$	10,982	$	—	$	10,982

Reconciliation of accrued restructuring charges to the condensed consolidated balance sheets

Accrued and other liabilities	$	10,982	$	—	$	10,982

During the three months ended June 30, 2023, the Company ceased to use the leased space at 499 Illinois Street, San Francisco, California, former corporate headquarter. As a result, the Company assessed the related long-lived assets at the site for impairment and recognized $5.4 million impairment charges, primarily related to the write-off of the remaining balance of ROU asset and leasehold improvements.