As discussed in Note 1, because our registrational trials in bempegaldesleukin did not meet their primary endpoints, we decided to discontinue all development of bempegaldesleukin and wind down the clinical trials studying bempegaldesleukin. In April 2022, we announced the 2022 Restructuring Plan pursuant to which we completed an approximate 70% reduction of our workforce during 2022. We also sold our research facility in India in December 2022 and decided to sublease certain of our leased premises in San Francisco, CA, including our office leased space on Third St. and portions of our office and laboratory space on Mission Bay Blvd. South.

Restructuring, impairment and other costs of terminated program pertaining to the 2022 Restructuring Plan includes the following (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Clinical trial expense, other third-party and employee costs for the wind down of the bempegaldesleukin program	$	1,356	$	20,408	$	2,954	$	20,408
Severance and benefits expense	—		27,750		—		27,750
Impairment of right-of-use assets and property, plant and equipment	13,255		57,321		13,255		57,321
Contract termination and other restructuring costs	—		566		878		2,041
Restructuring, impairment and costs of terminated program	$	14,611	$	106,045	$	17,087	$	107,520

The clinical trial expense, other third-party and employee costs for the wind down of the bempegaldesleukin program for the three and six months ended June 30, 2022 includes a reduction of $7.6 million for the net reimbursement from BMS. The net reimbursement payable to BMS for the three and six months ended June 30, 2023 was not significant.

As further described below, the impairment charge in the three and six months ended June 30, 2022, includes $52.2 million for the impairment of spaces we planned to sublease under the 2022 Restructuring Plan, primarily for our office lease space on Third St. As the San Francisco office lease market has continued to deteriorate over the past year, we have recognized additional impairment charges for the Third St. space, totaling $12.0 million in the three months ended December 31, 2022, and $6.2 million in the three months ended June 30, 2023. For the portions of our office and laboratory space on Mission Bay Blvd. South that we decided to sublease, we recorded an impairment charge in the three months ended June 30, 2022, based on our initial estimates of sublease income, and an additional $7.1 million impairment charge in the three months ended June 30, 2023 due to the weakening life sciences sublease market.

Restructuring, impairment and other costs of terminated program pertaining to the 2023 Restructuring Plan includes the following (in thousands):


	Three Months Ended June 30, 2023		Six Months Ended June 30, 2023
Severance and benefit expense	$	1,943	$	7,426
Impairment of right-of-use assets and property, plant and equipment	—		13,200
Contract termination and other restructuring costs	—		34
Restructuring, impairment and costs of terminated program	$	1,943	$	20,660

For the 2022 Restructuring Plan, we recognized severance and benefit expense in full for employees who had no requirements for future service upon approval of the 2022 Restructuring Plan by the Board in April 2022. We recognized severance and benefit expense for employees who were required to render services to receive their severance and benefits ratably over the service period. This service period began on the communication date in April 2022 and was completed for all employees during 2022. We recognized $30.9 million in total severance and benefit expense during 2022 and paid the remaining liability of $3.3 million in January 2023.

For the 2023 Restructuring Plan, we recognized a liability of $5.5 million of severance and benefit expense as of March 31, 2023, reflecting severance and benefits which the employees had vested into and for which payment was probable and reasonably estimable as of March 31, 2023. During the three months ended June 30, 2023, we recognized an additional $1.9 million of severance and benefit expense. We do not expect to recognize significant severance expense for the remainder of 2023.

The following table provides details regarding the severance and benefit expense for the three and six months ended June 30, 2023 pursuant to the 2023 Restructuring Plan and a reconciliation of the severance and benefits liability for the three and six months ended June 30, 2023 pursuant to the 2022 and 2023 Restructuring Plans, which we report within accrued expenses on our Condensed Consolidated Balance Sheet (in thousands):


	Six Months Ended June 30, 2023
	2023 Restructuring Plan		2022 Restructuring Plan		Total
Liability balance as of December 31, 2022	$	—	$	3,299	$	3,299
Expense recognized during the period	5,483		—		5,483
Payments during the period	—		(3,299)		(3,299)
Liability balance as of March 31, 2023	$	5,483	$	—	$	5,483
Expense recognized during the period	1,943		—		1,943
Payments during the period	(6,624)		—		(6,624)
Liability balance as of June 30, 2023	$	802	$	—	$	802

In connection with our 2022 Restructuring Plan, we consolidated our operations by exiting all of the office space from our leased facility at 360 Third St. and certain laboratory and office spaces at our leased facility at 455 Mission Bay Blvd. South, both in San Francisco, CA. We have sought to sublease these spaces. We also terminated all research and development activities at our owned facility in India, which we sold in December 2022.

As a result of these plans, we reviewed each of our excess spaces for impairment during the three months ended June 30, 2022. As part of our impairment evaluation of each excess space, we separately compared the estimated undiscounted income for each sublease to the net book value of the related long-term assets, which include right-of-use assets and certain property, plant and equipment, primarily for leasehold improvements (collectively, sublease assets). We estimated sublease income using market participant assumptions, including the length of time to enter into a sublease and lease payments, which we evaluated using current real estate trends and market conditions. If such income exceeded the net book value of the related assets, we did not record an impairment charge. Otherwise, we recorded an impairment charge by reducing the net book value of the assets to their estimated fair value, which we determined by discounting the estimated sublease income using the estimated borrowing rate of a market participant subtenant, which we estimated to be 6.4%. Additionally, we recorded an impairment expense primarily for software which we planned to abandon and certain excess equipment based on the estimated income from selling such assets. We recorded impairment charges as follows (in thousands):


	Three and Six months ended June 30, 2022
	Property, Plant and Equipment		Operating Lease Right-of-Use Assets		Total
Net book value of impaired facilities before write-off	$	16,348	$	70,920	$	87,268
Less: Fair value of impaired facilities — Level 3 of Fair Value Hierarchy	(6,976)		(28,091)		(35,067)
Impairment expense for facilities	9,372		42,829		52,201
Impairment of other property, plant and equipment	5,120		—		5,120
Total impairment of right-of-use assets and property, plant and equipment	$	14,492	$	42,829	$	57,321

During the three months ended March 31, 2023, our stock price and resulting market capitalization experienced a significant, sustained decline. Accordingly, we assessed our long-lived assets, including our property, plant and equipment, right-of-use assets and goodwill, for impairment.

We concluded that the long-lived assets associated with our leased spaces that we had previously decided to sublease under our 2022 Restructuring Plan continue to have cash flows that are independent of our entity-wide group. We concluded that these sublease assets, for which we had recognized impairment charges during 2022, were recoverable based on estimated sublease income, and therefore we did not record any impairment charges for these long-lived assets for the three months ended March 31, 2023.

During the three months ended March 31, 2023, we next evaluated our remaining long-lived assets for impairment and performed a recoverability test using the undiscounted cash flows approach. We concluded that our net assets were not recoverable within the remaining useful lives. Accordingly, we estimated the fair value of each asset or asset group based on discounted future cash flows of the asset or asset group using a discount rate commensurate with the related risk. For the operating lease asset related to our Mission Bay facility, we estimated the fair value based on market participant assumptions, including the length of time to enter into a sublease, sublease payments, tenant improvement allowances and broker commissions, which we evaluated using current real estate trends and market conditions. We discounted the sublease income using the estimated borrowing rate of a market participant subtenant, which we estimated to be 7.9%. As a result of this analysis, we recorded a non-cash impairment charge of $11.5 million. We also recorded an additional non-cash impairment charge of $1.7 million for certain laboratory equipment.

During the three months ended June 30, 2023, due to the weakening life sciences sublease market, we recorded a non-cash impairment charge of $7.1 million for our lease assets at our Mission Bay facility, and due to the continued depression of the office lease market, we recorded an impairment charge of $6.2 million for our lease assets at our Third. St. facility, both of which we had intended to sublease under our 2022 Restructuring Plan, based on market participant assumptions as described above. We discounted the sublease income using the estimated borrowing rate of a market participant subtenant, which we estimated to be 8.5%.

We report the aggregate non-cash impairment charge of $13.3 million and $26.5 million for the three and six months ended June 30, 2023, respectively, in restructuring, impairment and costs of terminated program in our Condensed Consolidated Statement of Operations. The following table presents a reconciliation of the non-cash impairment charges we recorded for these long-lived assets for the three and six months ended June 30, 2023 (in thousands):


	Three Months Ended June 30, 2023
	Property, Plant and Equipment		Operating Lease Right-of-Use Assets		Total
Net book value of impaired facilities before write-off	$	2,092	$	16,392	$	18,484
Less: Fair value of impaired facilities — Level 3 of Fair Value Hierarchy	(529)		(4,700)		(5,229)
Total impairment of right-of-use assets and property, plant and equipment	1,563		11,692		13,255


	Six Months Ended June 30, 2023
	Property, Plant and Equipment		Operating Lease Right-of-Use Assets		Total
Net book value of impaired facilities before write-off	$	7,206	$	44,826	$	52,032
Less: Fair value of impaired facilities — Level 3 of Fair Value Hierarchy	(3,843)		(23,434)		(27,277)
Impairment expense for facilities	3,363		21,392		24,755
Impairment of other property, plant and equipment	1,700		—		1,700
Total impairment of right-of-use assets and property, plant and equipment	$	5,063	$	21,392	$	26,455

During the three months ended March 31, 2023, due to the significant, sustained decline of our stock price and resulting market capitalization, after we recorded the non-cash impairment charges for our long-lived assets described above, we next assessed goodwill for impairment. We had previously recognized goodwill primarily from our acquisitions of Shearwater Corp. and Aerogen, Inc. in 2001 and 2005, respectively. Accordingly, in accordance with ASC 350-20 Goodwill and ASC 820-10 Fair Value Measurement, we measured the fair value of our reporting unit utilizing both income and market approaches for our entity-wide asset impairment analysis. Based on this analysis, we wrote off all of our goodwill, resulting in a non-cash impairment charge of $76.5 million during the three months ended March 31, 2023, which we reported as impairment of goodwill in our Condensed Consolidated Statements of Operations for the six months ended June 30, 2023.