Restructuring

9 Months Ended

Sep. 30, 2022

Restructuring and Related Activities [Abstract]

11. Restructuring

On May 3, 2022, the Company implemented a strategic restructuring initiative and corresponding reduction in workforce. The restructuring initiative and corresponding reduction in workforce was designed to reduce costs and reallocate resources towards the Company’s clinical development programs for SPR720 and SPR206, while maintaining key personnel needed to help preserve the value of the Company’s tebipenem HBr program. The restructuring reduced the Company’s workforce from 146 full-time employees as of December 31, 2021 to 41 full-time employees following the restructuring.

During the nine months ended September 30, 2022, the Company recognized a restructuring charge of approximately $11.7 million, the majority of which was incurred in the second quarter of 2022. During the three months ended September 30, 2022, the Company recognized a restructuring charge of $(0.2) million related to restructuring estimate adjustments. Restructuring charges included approximately $8.6 million of employee related termination costs, lease impairment expense of $0.6 million and $2.5 million of other discontinuation costs such as contract termination fees. The following tables summarize the restructuring related charges by line item within the Company’s consolidated statements of operations where they were recorded during the three and nine months ended September 30, 2022 (in thousands):


Three Months Ended September 30, 2022
	Research and development			General and administrative			Total
Severance and other employee costs	$	(53	)	$	(52	)	$	(105	)
Lease impairment		-			-			-
Other		-			(47	)		(47	)
Total restructuring charges	$	(53	)	$	(99	)	$	(152	)


Nine Months Ended September 30, 2022
	Research and development		General and administrative		Total
Severance and other employee costs	$	3,872	$	4,680	$	8,552
Lease impairment		372		263		635
Other		116		2,394		2,510
Total restructuring charges	$	4,360	$	7,337	$	11,697

The restructuring charge was included in accrued expenses and other current liabilities in the Company’s condensed consolidated balance sheet. Activity for the quarter is summarized as follows (amounts in thousands):


	As of September 30, 2022
Balance as of December 31, 2021	$	—
Charge to expense		11,697
Payments made		(7,250	)
Write-offs and impairments		(3,480	)
Balance as of September 30, 2022	$	967

As of September 30, 2022, the Company had $1.0 million remaining in accrued expenses related to restructuring costs on its condensed consolidated balance sheet, which will be paid by the end of the first quarter of 2023.

Retention Awards

In June 2022, upon recommendation of the Company's Human Capital Management Committee (the “HCM Committee”), the Board of Directors approved retention awards for employees of the Company. Subject to remaining actively employed with the Company through May 31, 2023, the aggregate retention awards include (i) a cash bonus of $1.1 million payable on November 30, 2022 and $0.3 million to be paid in cash or as a fully vested RSU grant of the same value and (ii) a cash bonus of $3.4 million payable on May 31, 2023 and $0.9 million to be paid in cash or as a fully vested RSU grant of the same value. These amounts are accrued as services are performed through May 31, 2023.

Executive Retention Awards

On July 1, 2022, upon recommendation of the Company's HCM Committee, the Board of Directors approved a cash and RSU retention award to certain members of the Company's executive leadership team consisting of the following:

•

Subject to the certain members of the Company's executive leadership team remaining actively employed with the Company through May 31, 2023, they shall receive an aggregate of: (i) a cash bonus equal to $0.9 million payable on November 30, 2022 and (ii) if certain performance criteria are achieved, a number of shares of common stock to be issued to them on May 31, 2023 having a value of $1.7 million based on the common stock price at such time, subject to the discretion of the Board or the HCM Committee to pay in cash or a combination of cash and stock.

The RSUs are eligible for vesting based on the achievement of certain performance criteria by May 31, 2023 relating to pipeline execution, business development, and financial stewardship. RSUs for which the performance criteria have not been achieved as specified by May 31, 2023 will lapse and be forfeited. The RSUs will be subject to acceleration of vesting in the event of termination of employment without cause by the Company or by the executive for good reason (each as defined in the executive’s employment agreement).

These awards will be accrued as services are incurred through May 31, 2023. Awards with performance criteria will be accrued as performance metrics are met. During the nine months ended September 30, 2022, the Company recognized $0.5 million of compensation expense associated with these awards (see Note 6).