11. Restructuring and Impairment Charges

On July 8, 2024, the Company announced the discontinuation of further development of HIL-214 in infants. The Company implemented a reduction in headcount in order to reduce operating expenses as the Company continues to explore and evaluate the development of its norovirus vaccine candidates as well as business development-related activities for these vaccine candidates and other strategic alternatives. The Company did not incur any restructuring and impairment charges during the three and six months ended June 30, 2025 and 2024.

Employee Termination Benefits

Employees affected by the reductions in workforce obtained involuntary termination benefits that are provided pursuant to a one-time benefit arrangement. The workforce reductions were completed in January 2025. For employees who were notified of their termination and have no requirements to provide future service, the Company recognized the liability for the termination benefits in full at fair value as of the date of communication in 2024. The remaining payments are expected to be paid by the third quarter of 2025.

Impairment of Property and Equipment

During the year ended December 31, 2024, as a result of the Company’s decision to discontinue further development of HIL-214 in infants and the sustained decline observed in the Company’s stock price and related market capitalization, the Company performed an impairment assessment of its long-lived assets. The Company determined that the asset group consisted of the long-lived assets held and had identifiable cash flows that were largely independent of the cash flows of other assets and liabilities. The Company concluded that the carrying value of the asset group was not recoverable as it exceeded the future net undiscounted cash flows. To measure, allocate and recognize the impairment loss, the Company determined individual fair values of its long-lived assets. The Company utilized the income approach for estimating the fair value of right-of-use assets and related leasehold improvements by estimating the potential cash flows from a hypothetical fully-furnished sublease and applying a discount rate and estimated time to lease the space. The Company utilized trend factors applied to historical costs, estimates of economic depreciation, normal useful lives, and benchmark values for orderly liquidations of the assets in secondary markets to estimate the fair value of the property and equipment. Based on its evaluation, the Company recorded $9.3 million of impairment charges on its right-of-use asset and $7.3 million of impairment charges on its property and equipment during the year ended December 31, 2024. The Company did not incur any impairment charges on its property and equipment during the three and six months ended June 30, 2025.

During the first quarter of 2025, the Company committed to a plan to sell its lab equipment consisting of $0.6 million. The Company determined that this equipment met the requirements to be classified as held for sale. The Company expects the sale of the assets to be completed by the third quarter of 2025 and does not expect any material losses to its current book value in connection with this classification.

Contract Termination Costs

The discontinuation of the further development of HIL-214 in infants resulted in the termination of vendor contracts prior to the end of their term. The Company recognized these contract termination costs in full in the current period.