Annual report pursuant to Section 13 and 15(d)

Restructuring

v3.21.1
Restructuring
12 Months Ended
Dec. 31, 2020
Restructuring and Related Activities [Abstract]  
Restructuring and Related Activities Disclosure
12. Restructuring
In December 2019, the Company commenced a reorganization plan to reduce its operating costs and better align its workforce with the needs of its business following the Company’s November 2019 announcement that it had halted clinical development of seladelpar. The restructuring liability is included in current liabilities on the consolidated balance sheets. The Company incurred restructuring charges of $5.1 million for the year ended December 31, 2019 and a restructuring benefit of $0.7 million for the year ended December 31, 2020.
Restructuring charges incurred under this plan primarily consisted of employee termination benefits and contract termination costs associated with nonrefundable prepayments and exit fees relating to third-party manufacturers that the Company contracted with for clinical supplies. Employee termination benefits include severance costs, employee-related benefits, supplemental
one-time
termination payments, and
non-cash
share-based compensation expense related to the acceleration of stock options. Charges and other costs related to the workforce reduction and structure realignment are presented as restructuring charges in the consolidated statements of operations and comprehensive loss.
The following table summarizes the accrued restructuring liabilities and utilization by cost type associated with the restructuring activities (in thousands):
 
    
Termination
Benefits
    
Contract
Termination
Costs
    
Total
 
Balances as of December 31, 2018
   $ —        $ —        $ —    
Restructuring charges
     2,912        413        3,325  
Reductions for cash payments
     (132      —          (132
    
 
 
    
 
 
    
 
 
 
Balances as of December 31, 2019
     2,780        413        3,193  
Change in estimates
     (539      (413      (952
Reductions for cash payments
     (2,223      —          (2,223
    
 
 
    
 
 
    
 
 
 
Balances as of December 31, 2020
   $ 18      $      $ 18  
    
 
 
    
 
 
    
 
 
 
In addition to the activity in the above table, during the year ended December 31, 2019, the Company also recognized $1.8 million in restructuring charges related to $0.9 million of nonrefundable prepaid research and development costs for clinical trial materials no longer expected be delivered and $0.9 million of accelerated vesting for stock-based compensation for executives subject to the reorganization plan.
During the year ended December 31, 2020, the activity in the table above reflects a $0.5 million reversal of severance liabilities associated with severance benefits that were forfeited by certain executives pursuant to the terms of their respective employment agreements, and a reversal of $0.4 million of contract termination costs resulting from a subsequent arrangement between the Company and the vendor to waive these costs. In addition to the activity in the above table, during the year ended December 31, 2020, the Company also recognized in restructuring charges $0.2 million of
non-cash,
stock-based compensation associated with the acceleration of stock options of a departed executive.
Substantially all the cash payments the Company is obligated to make pursuant to its restructuring plan were paid during 2020.