Restructuring Liabilities

Research and Development Restructuring

In February 2017, the Company decided to consolidate its research activities into its Boston, Milton Park and San Diego locations and closed its research site in Canada affecting approximately 70 positions. The Company has incurred aggregate restructuring charges of approximately $12.3 million in the nine months ended September 30, 2017. As of September 30, 2017, the restructuring liability primarily relates to laboratory and office space for the research site in Canada that terminates in October 2018. The Company does not anticipate any significant additional charges related to this restructuring event in the future.

The restructuring charge and other activities recorded during the the three and nine months ended September 30, 2017 and the related liability balance as of September 30, 2017 were as follows:



	Three Months Ended September 30,			Nine Months Ended September 30,
	2017			2017
	(in thousands)
Liability, beginning of the period	$	3,507		$	—
Restructuring (credits) expense	(125		)	12,315
Cash payments	(750		)	(7,869		)
Asset impairments and other non-cash items	—			(1,814		)
Liability, end of the period	$	2,632		$	2,632

2003 Kendall Restructuring

In 2003, the Company adopted a plan to restructure its operations to coincide with its increasing internal emphasis on advancing drug candidates through clinical development to commercialization. The restructuring liability relates to specialized laboratory and office space that is leased to the Company pursuant to a 15-year lease that terminates in April 2018. The Company has not used more than 50% of this space since it adopted the plan to restructure its operations in 2003. This unused laboratory and office space currently is subleased to third parties.

The activities related to the restructuring liability for the three and nine months ended September 30, 2017 and 2016 were as follows:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
	(in thousands)
Liability, beginning of the period	$	1,990		$	6,388		$	4,328		$	7,944
Restructuring expense	227			30			1,054			222
Cash payments	(4,003		)	(5,340		)	(12,962		)	(13,104		)
Cash received from subleases	2,732			2,866			8,526			8,882
Liability, end of the period	$	946		$	3,944		$	946		$	3,944

Fan Pier Move Restructuring

In connection with the relocation of its Massachusetts operations to Fan Pier in Boston, Massachusetts, which commenced in 2013, the Company is incurring restructuring charges related to its remaining lease obligations at its facilities in Cambridge, Massachusetts. The majority of these restructuring charges were recorded in the third quarter of 2014 upon decommissioning three facilities in Cambridge. During 2015, the Company terminated two of these lease agreements resulting in a credit to restructuring expense equal to the difference between the Company’s estimated future cash flows related to its lease obligations for these facilities and the termination payment paid to the Company’s landlord on the effective date of the termination. The third major facility included in this restructuring activity is 120,000 square feet of the Kendall Square Facility that the Company continued to use for its operations following its 2003 Kendall Restructuring. The rentable square footage in this portion of the Kendall Square Facility was subleased to a third party in February 2015. The Company will continue to incur charges through April 2018 related to the difference between the Company’s estimated future cash flows related to this portion of the Kendall Square Facility, which include an estimate for sublease income to be received from the Company’s sublessee and its actual cash flows. The Company discounted the estimated cash flows related to this restructuring activity at a discount rate of 9%.

The activities related to the restructuring liability for the three and nine months ended September 30, 2017 and 2016 were as follows:



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
	(in thousands)
Liability, beginning of the period	$	1,521		$	4,863		$	3,626		$	5,964
Restructuring expense	235			90			490			472
Cash payments	(3,262		)	(4,199		)	(10,578		)	(10,451		)
Cash received from subleases	2,279			2,539			7,235			7,308
Liability, end of the period	$	773		$	3,293		$	773		$	3,293

Other Restructuring Activities

The Company has engaged in several other restructuring activities that are unrelated to its Research and Development Restructuring, 2003 Kendall Restructuring and Fan Pier Move Restructuring. The most significant activity commenced in October 2013 when the Company adopted a restructuring plan that included (i) a workforce reduction primarily related to the commercial support of INCIVEK following the continued and rapid decline in the number of patients being treated with INCIVEK as new medicines for the treatment of HCV infection neared approval and (ii) the write-off of certain assets. This action resulted from the Company’s decision to focus its investment on future opportunities in CF and other research and development programs.

The remaining restructuring activities were completed in 2016. As such, there was no outstanding liability as of September 30, 2017. The activities related to the Company’s other restructuring liabilities for the three and nine months ended September 30, 2016 were as follows:



	Three Months Ended September 30,			Nine Months Ended September 30,
	2016			2016
	(in thousands)
Liability, beginning of the period	$	1,233		$	1,450
Restructuring expense	(112		)	344
Cash payments	(1,121		)	(1,794		)
Liability, end of the period	$	—		$	—