Restructuring Expenses

6 Months Ended

Jun. 30, 2014

(6)	Restructuring Expenses

During 2013, the Company implemented workforce restructurings to better focus its organizational structure, increase efficiency and concentrate financial resources on its clinical development program and European commercialization activity. This resulted in a total reduction in the Company’s workforce by 50 employees. During the second quarter of 2014, the Company implemented additional workforce restructurings that resulted in a total reduction in the Company’s workforce by seven employees. As a result of termination benefits provided to these 57 employees the Company has incurred a total restructuring charge of approximately $4.8 million for employee related expenses. At June 30, 2014, the remaining restructuring reserve of approximately $1.5 million is included in Accrued expenses and Other non-current liabilities on the Condensed Consolidated Balance Sheets for approximately $1.4 million and $0.1 million, respectively.

In order to more appropriately align its office space with the reduced size of its workforce, during the quarter ended June 30, 2014, the Company implemented a plan to vacate and sub-lease office space at its 810 Seventh Avenue location in New York, NY. On May 22, 2014, the Company entered into a sub-lease agreement for approximately one-half of the office space at this location and had vacated and relinquished the premises to the sub-tenant as of June 30, 2014. At June 30, 2014, future rent obligations for the vacated space under the Company’s Prime Lease over the remaining lease term of 81 months totaled approximately $3.6 million. Under its new sub-lease agreement for the vacated space the Company will receive future sub-lease rental receipts totaling approximately $2.6 million, resulting in net future cash outflows of approximately $1.0 million. In accordance with ASC 420, Exit or Disposal Cost Obligations, the Company calculated the fair value of the remaining net cash flow liability for the vacated space and recorded a lease restructuring reserve of approximately $0.9 million. Additionally, during the quarter ended June 30, 2014, the Company recorded contract termination costs related to the sub-lease of approximately $150,000 and wrote off approximately $50,000 of unamortized leasehold improvements related to the vacated space. The expenses related to this lease restructuring have been recorded in Selling, general and administrative on the Condensed Consolidated Statements of Operations while the fair value of the liability has been included in both Accrued expenses and Other non-current liabilities on the Condensed Consolidated Balance Sheets.

The following table provides the year-to-date activity of the Company’s restructuring reserves as of June 30, 2014:

(in thousands)	Employee Costs			Operating Lease
Reserve balance as of December 31, 2013	$	2,019		$	–
Charges		722			855
Payments / utilizations		(1,287	)		–
Reserve balance as of June 30, 2014	$	1,454		$	855

- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

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