9. RESTRUCTURING

In March 2016, the Company announced a long-term plan (“Corvallis plan”) to consolidate all of the Company’s operations to Massachusetts and reduce its workforce by approximately 19% as part of a strategic plan to increase operational efficiency. During the remainder of the year, the Company plans to close its facility in Corvallis, Oregon, which primarily focused on early-stage research and research manufacturing. As part of the consolidation, research activities and some employees will transition to the Company’s facilities in Andover and Cambridge, Massachusetts. The consolidation efforts are planned to occur in four waves - May, October, November and December of 2016, with an estimated completion date of December 30, 2016. The restructuring costs of the Corvallis plan consist of costs associated with its workforce reduction and facility consolidation. The workforce reduction costs primarily relate to employee severance and benefits. Facility consolidation costs are primarily associated with non-cancellable lease obligations as well as accelerated depreciation for certain assets whose expected useful lives are shortened due to the consolidation. The Company has not determined the financial impact related to the non-cancellable lease obligation for the Corvallis facility but is currently obligated to make $4.3 million of lease payments after the estimated completion date of the consolidation plan. The Company estimates restructuring expenses of $1.8 million related to accelerated depreciation and workforce reduction costs, the latter of which will be accrued as earned over the service period for each employee.

In August 2016, the Company implemented a restructuring plan in Cambridge, Massachusetts (“Cambridge plan”) and reduced its workforce by approximately 6%. The restructuring costs associated with the Cambridge plan consist of costs associated with workforce reduction totaling $0.7 million. The Cambridge plan was completed as of October 31, 2016.

For the three and nine months ended September 30, 2016, the Company recognized $1.3 million and $2.4 million of restructuring expenses, respectively, $1.0 million and $2.1 million, respectively, of which related to workforce reduction.

The following table summarizes the restructuring costs by function for the periods indicated:

	For the Three Months Ended September 30, 2016						For the Nine Months Ended September 30, 2016
	(in thousands)
	Cash		Non-cash⁽¹⁾		Total		Cash		Non-cash⁽²⁾		Total
Research and development	$	628	$	143	$	771	$	1,448	$	336	$	1,784
General and administration		367		126		493		471		168		639
Total restructuring expenses	$	995	$	269	$	1,264	$	1,919	$	504	$	2,423

(1)

The non-cash restructuring expense relates to accelerated depreciation for certain assets.

(2)

The non-cash restructuring expense relates to acceleration of stock option vesting and accelerated depreciation for certain assets.

The following table summarizes the restructuring reserve for the periods indicated:

	For the Three Months Ended September 30, 2016			For the Nine Months Ended September 30, 2016
	(in thousands)
Restructuring reserve beginning balance	$	371		$	—
Restructuring expenses incurred during the period		990			1,919
Adjustments to prior period estimates, net		5			—
Amounts paid during the period		(458	)		(1,011	)
Restructuring reserve ending balance	$	908		$	908