6. Accrued Expenses and Other Long-Term Liabilities

 

Effective January 28, 2014, Dr. Kevin Horgan was separated from service with the Company.  Dr. Horgan was the Company’s Chief Medical Officer. In connection with Dr. Horgan’s termination, the Company recorded a severance charge of $0.4 million. During the three and six month period ended June 30, 2014, the Company also paid $0.4 million and $1.4 million, respectively, in severance obligations to its former executives.

 

In March 2014, the Company made the decision to abandon its plans to build-out its Woburn, MA manufacturing facility and to close its New York, NY office. As a result, the Company commenced marketing both facilities for sub-lease. In April 2014, the Company entered into a sub-lease arrangement for its New York, NY office for the remaining term of the lease. During the three and six months ended June 30, 2014, the Company recognized expense related to these decisions of approximately nil and $0.8 million, respectively, which is included in research and development expenses during the six month period ended June 30, 2014. Expense related to the six months ended June 30, 2014 was comprised of $0.7 million related to the decision to delay manufacturing of TSO in the Woburn, MA facility, which included future rent payments of $0.3 million through the lease termination date of February 2018, offset by $0.1 million of rental income from a probable sublease, and $0.4 million related to the write-down, to its estimated net realizable value, of its long-lived assets. The Company also recognized $0.1 million in expense related to a sub-lease for the Company’s New York, NY office space effective May 1, 2014 through the termination of the lease in May 2016. During the six month period ended June 30, 2014, the Company paid $48,000 in rent expense, net of rent receivable from a sub-tenant.

 

In December 2012, the Company acquired certain manufacturing rights from Ovamed and agreed to pay an aggregate of $1.5 million. The accrual is recorded at present value on the Company’s Unaudited Condensed Consolidated Balance Sheets as a current accrued expense of $500,000 and as an other long-term liability of $754,000 as of June 30, 2014. This obligation was recorded at its estimated net present value; accretion of the obligation was $38,000 and $33,500 for the three month period ended June 30, 2014 and 2013, respectively, and $75,000 and $66,000 for the six month period ended June 30, 2014 and 2013, respectively, and is recorded as interest expense.

 

Accrued expenses and other long-term liabilities consisted of the following:

 

($ in thousands)		As of June 30, 2014			As of December 31, 2013
Accrued expenses:
Salaries, bonuses and related benefits		$	430		$	450
Severance			543			1,502
Professional fees			306			351
Research and development expenses			976			1,245
State franchise taxes			—			190
Ovamed manufacturing rights – short-term component			500			500
Lease impairment			165			—
Other			161			192
Total accrued expenses		$	3,081		$	4,430
Other long-term liabilities:
Hercules Note end of term charge			—			398
Ovamed manufacturing rights – long-term component			754			679
Long-term lease impairment charge			302			—
Total other long-term liabilities		$	1,056		$	1,077