Restructuring Charges

6 Months Ended

Jun. 30, 2020

Restructuring Charge.

Restructuring Charges

G.Restructuring Charge

2019 Corporate Restructuring

On June 26, 2019, the Board of Directors approved a plan to restructure the business to focus resources on continued development of mirvetuximab soravtansine and a select portfolio of three earlier-stage product candidates, resulting in a significant reduction of the Company’s workforce, with a majority of these employees separating from the business by mid-July 2019 and most of the remaining affected employees transitioning over varying periods of time of up to 12 months. Communication of the plan to the affected employees was substantially completed on June 27, 2019.

As a result of the workforce reduction, during the three months ended June 30, 2019, the Company recorded a $16.0 million charge for severance related to a pre-existing plan in accordance with ASC 712, Compensation-Nonretirement Postemployment Benefits, as such amounts were probable and reasonably estimable. The estimate was later reduced to $15.3 million due to minor adjustments to the plan. The related cash payments were substantially paid out by June 30, 2020. In addition, a charge of $4.0 million was incurred for incremental retention benefits over the same time

period, of which $2.4 million was recorded during the year ended December 31, 2019 and $1.6 million was recorded during the six months ended June 30, 2020.

A summary of activity against the corporate restructuring charge related to the employee terminations in 2020 is as follows:

	Employee
	Termination
	Benefits Costs
Balance at December 31, 2019	$	4,087
Additional charges/adjustments during the period		(116)
Payments during the period		(2,242)
Balance at June 30, 2020	$	1,729

In addition to the termination benefits and other related charges, the Company is seeking to sub-lease laboratory and office space at 830 Winter Street in Waltham, Massachusetts no longer used in the business. The financial impact of these efforts is dependent on the length of time it takes to find tenant(s) and the terms of the sub-lease(s). The decision to vacate part of its corporate office resulted in a change in asset groupings and also represented an impairment indicator. The Company determined and continues to believe that the right-of-use asset and leasehold improvements are recoverable based on expected sub-lease income, and therefore, no impairment has been recorded.

Charge Related to Unoccupied Office Space

The Company has sought to sub-lease 10,281 square feet of unoccupied office space at 930 Winter Street in Waltham, Massachusetts that was leased in 2016. During the six months ended June 30, 2019, the Company recorded a $559,000 impairment charge related to this lease, which represented the remaining balance of the right to use asset as the likelihood of finding a sub-lessor had diminished significantly as the lease approached termination.