Cost Reduction Plan |
3 Months Ended |
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Mar. 31, 2022 | |
| Restructuring and Related Activities [Abstract] | |
| Cost Reduction Plan | Cost Reduction Plan On March 2, 2022, the Board approved a cost reduction plan to enable the Company to execute its strategy of prioritizing the development of its most promising programs (the “Plan”). As part of the Plan, the Company is winding down internal development efforts of AVTX-006 and is pausing current development efforts of AVTX-802. Additionally, the Company previously announced that it is winding down internal development efforts of AVTX-007 in multiple myeloma. Accordingly, a reduction in workforce plan was approved to reduce headcount and related expenses. The reduction in workforce plan, which is considered a one-time termination benefit, is expected to be completed in the second quarter of 2022.
The one-time termination benefits mainly relate to severance payments to be made to separated employees. As a result, the Company recognized $1.5 million of expense during the three months ended March 31, 2022, of which $0.7 million was recognized in research and development expense, $0.5 million was recognized in sales and marketing expense and $0.3 million was recognized in general and administrative expense.
Of the $1.5 million initial liability recognized in the first quarter of 2022, $40.6 thousand was paid in the first quarter. The remaining severance liability will be paid over the next to twelve months as dictated in each separation agreement. Additionally, $0.4 million of stock-based compensation expense was recognized in the first quarter of 2022 related to the Plan, which was mainly related to accelerated vesting of certain separated employees’ stock options.
In addition, previously and separately, during the three months ended March 31, 2022, the Company separated from certain section 16 executive officers. Each of the former executives are entitled to the benefits provided in their respective separation agreements, which include severance payments to be paid over to eighteen months. As a result, the Company recognized expense of $1.7 million for the three months ended March 31, 2022. Of the total expense, $1.3 million was recognized in general and administrative expense and $0.4 million was recognized in sales and marketing expense. Additionally, the Company accelerated the vesting of certain outstanding stock options and extended the exercisability periods resulting in the recognition of $3.9 million of compensation cost for the three months ended March 31, 2022. Refer to Note 11 for information regarding stock compensation expense related to separations entered into in the first quarter of 2022.
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