6. Accrued Expenses and Other Long-Term Liabilities

 

Effective January 28, 2014, Dr. Kevin Horgan was separated from service from 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 month period ended March 31, 2014 the Company also paid $1.0 million 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 months ended March 31, 2014, the Company recognized expense related to these decisions of approximately $0.8 million, which is included in research and development expenses during the three month period ended March 31, 2014. Such expense 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 $0.4 million through the lease termination date of February 2018, offset by $0.1 million of rental income from a probable sublease, and $0.3 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.

 

Ovamed manufacturing rights of $1.5 million for TSO in the Coronado Territory, United States of America, South America and Japan, are recorded on the Company’s Unaudited Condensed Consolidated Balance Sheets as a current accrued expense of $500,000 and as a long-term liability of $716,000. This obligation was recorded at its estimated net present value; accretion of the obligation was $37,000 and $33,000 for the three month period ended March 31, 2014 and 2013, respectively, and is recorded as interest expense.