Annual report pursuant to Section 13 and 15(d)

Restructuring Charges

v3.7.0.1
Restructuring Charges
12 Months Ended
Dec. 31, 2016
Restructuring and Related Activities [Abstract]  
Restructuring Charges
11. Restructuring Charges
 
Restructuring charges incurred during the nine months ended September 30, 2015 primarily consist of severance and other post-termination benefit costs resulting from the cost reduction program implemented by the Company in January 2015. These activities primarily consisted of 20% reduction of the Company’s workforce.  Restructuring charges incurred during the three months ended December 31, 2015 primarily relates to a board-approved restructuring plan announced in November 2015 to reduce costs and extend the cash runway in order to allow the Company to evaluate strategic alternatives for the products and the Company. As part of the restructuring plan, the Company elected to exercise its right to prepay the Loan and Security Agreement and paid MidCap Financial $6.6 million in full settlement of the remaining outstanding principal balance, accrued interest, the exit fee and a reduced prepayment fee of 1%.  In addition, the Company undertook a reduction in force that eliminated the positions of 17 employees or more than 60% of the Company’s workforce.
 
Per ASC 420-10-05-1, Exit or Disposal Cost Obligations, include, but are not limited to, involuntary termination benefits provided to employees under the terms of a one-time benefit arrangement that, in substance, is not an ongoing benefit arrangement or a deferred compensation contract, and certain contract termination costs. Restructuring costs are expensed during the period in which the Company determines it will incur those costs and all requirements of accrual are met.
 
A summary of the activity is presented below:
 
(in thousands)
 
Contract
termination
costs - R&D
   
Salaries and
benefits - R&D
   
Salaries and
benefits - G&A
   
Total
 
Balance as of December 31, 2014
  $
1,185
    $
-
    $
-
    $
1,185
 
Accrued
   
-
     
1,167
     
1,011
     
2,178
 
Adjustments
   
(78
)
   
-
     
-
     
(78
)
Paid
   
(1,107
)
   
(1,167
)
   
(1,000
)
   
(3,274
)
Balance as of December 31, 2015
 
$
-
   
$
-
   
$
11
   
$
11
 
Accrued
   
-
     
-
     
-
     
-
 
Adjustments
   
-
     
-
     
(11
)
   
(11
)
Paid
   
-
     
-
     
-
     
-
 
Balance as of December 31, 2016
 
$
-
   
$
-
   
$
-
   
$
-
 
 
As disclosed in Note 10, in addition to the restructuring charges in the table above, the Company recorded stock based compensation expense of $959,000 during the twelve months ended December 31, 2015 related to the fair value of stock options of former employees which were modified such that they did not expire upon termination. The Company classified $542,000 and $417,000 as general and administrative expenses and research and development expenses, respectively.