IMPAIRMENT OF LONG-LIVED ASSETS

9 Months Ended

Sep. 30, 2024

Property, Plant and Equipment [Abstract]

IMPAIRMENT OF LONG-LIVED ASSETS

IMPAIRMENT OF LONG-LIVED ASSETS

The Company at each reporting period reviews for impairment indicators for its long-lived assets. The sustained decline in the Company’s market capitalization as compared to the Company’s net asset value remained as the indicator of impairment, in addition to the Company’s shift in strategy to consider subleasing both the Massachusetts and California facilities. The Company determined all of its long-lived assets represent a single asset group for the purpose of the long-lived asset impairment assessment. The Company concluded that the carrying value of the single asset group was not recoverable as it exceeded the future net undiscounted cash flows. The implied allocated impairment loss to any individual asset within the long-lived asset group shall not reduce the carrying amount of that asset below its fair value. To determine the fair value of the asset group, the Company utilized the discounted cash flow method of the income approach.

During the nine months ended September 30, 2024, the Company recognized non-cash impairment charges of $7.1 million. The Company did not record any non-cash impairment charges during the three months ended September 30, 2024. Impairment charges of $7.1 million for the nine months ended September 30, 2024 included $5.4 million for right-of-use assets and $1.7 million for leasehold improvements.

During the nine months ended September 30, 2023, the Company recognized a non-cash impairment charge of $2.9 million, including $2.3 million for the right-of-use assets and $0.6 million for the leasehold improvements. The Company did not record any non-cash impairment charges during the three months ended September 30, 2023.

The Company applied a discounted cash flow method to estimate the fair value of the asset group, which represents Level 3 non-recurring fair value measurements. The estimated fair value of the asset group was determined by discounting the estimated sublease income using market participant assumptions, including but not limited to, expected sublease rental income of $22.0 million, and an annual discount rate of 10.0%, which the Company evaluated based on current real estate trends and market conditions. The Company’s estimates and assumptions used to determine the estimated fair value of the asset group is subject to risks, uncertainties, and changes in circumstances that may result in adjustments and material changes to the estimated fair values in future periods.