8. Restructuring Charges

On December 19, 2016, the Board of Directors approved a restructuring of the Company’s business based on its decision to focus the Company’s efforts on clinical development, with an initial focus on the X358 clinical programs. The restructuring included a reduction-in-force in which the Company terminated 57 employees. In early 2017, the Company further revised its strategy to prioritize out-licensing activities and further curtail research and development spending and terminated five additional employees. Charges related to these initiatives were complete by the end of fiscal 2017.

At June 30, 2018, the Company completely vacated one of its two leased facilities in Berkeley, California and subleased the majority of the leased space to two subtenants. In connection with the sublease agreement executed in April 2018, the Company recognized a loss on the sublease of $0.6 million, which was recorded in the restructuring charges line item of the condensed consolidated statements of operations and comprehensive (loss) income (see Note 11). In connection with vacating this space, the Company recorded a discounted lease-related restructuring liability of $0.4 million as of June 30, 2018, which was calculated as the present value of the estimated future facility costs for which the Company would obtain no future economic benefit over the term of the lease, net of estimated future sublease income, and adjusted for the remaining balance of deferred rent of $0.6 million. This resulted in the Company recording a credit to restructuring costs of $0.1 million in its condensed consolidated statements of operations and comprehensive (loss) income. As of September 30, 2018, the Company remeasured the restructuring liability based on changes to the timing and amount of estimated future sublease income, which resulted in the Company recording $0.1 million of additional restructuring costs.  

As of September 30, 2018, the Company completely vacated the other leased facility in Berkeley, California. In connection with vacating this space, the Company recorded a discounted lease-related restructuring liability of $1.0 million as of September 30, 2018, which was calculated as the present value of the estimated future facility costs for which the Company would obtain no future economic benefit over the term of the lease, net of estimated future sublease income, and adjusted for the remaining balance of deferred rent of $0.2 million. This resulted in the Company recording restructuring costs of $0.8 million in its condensed consolidated statements of operations and comprehensive (loss) income for the three months ended September 30, 2018.  

The Company classified the current portion of the combined lease-related liabilities of $1.3 million within accrued and other liabilities and the non-current portion of $0.5 million within other liabilities- non-current in its condensed consolidated balance sheet as of September 30, 2018.