Lease Obligations

6 Months Ended

Jun. 30, 2014

The Company leases office and laboratory facilities in California, Kansas and New Jersey. These leases expire between 2014 and 2019, some of which are subject to annual rent increases which range from 3.0% to 3.5%. The Company currently subleases office and laboratory space in California and New Jersey. The following table provides a summary of operating lease obligations and payments expected to be received from sublease agreements as of June 30, 2014 (in thousands):



Operating lease obligations:	Lease Termination Date	Less than 1 year		1-3 years		3-5 years		More than 5 years		Total
Corporate headquarters- San Diego, CA	July 2019	$	673	$	1,399	$	1,474	$	—	$	3,546
Bioscience and Technology Business Center- Lawrence, KS	December 2017	55		108		27		—		190
Vacated office and research facility-San Diego, CA	July 2015	2,273		190		—		—		2,463
Vacated office and research facility- Cranbury, NJ	August 2016	2,563		3,050		—		—		5,613
Total operating lease obligations		$	5,564	$	4,747	$	1,501	$	—	$	11,812

Sublease payments expected to be received:		Less than 1 year		1-3 years		3-5 years		More than 5 years		Total
Office and research facility- San Diego, CA	July 2015	$	919	$	78	$	—	$	—	$	997
Office and research facility- Cranbury, NJ	August 2014 and 2016	480		566		—		—		1,046
Net operating lease obligations		$	4,165	$	4,103	$	1,501	$	—	$	9,769

In 2010, the Company ceased use of its facility located in New Jersey. As a result, the Company recorded lease exit costs of $9.7 million for costs related to the difference between the remaining lease obligations of the abandoned operating leases, which run through August 2016, and management's estimate of potential future sublease income, discounted to present value. In addition, the Company wrote-off property and equipment with a net book value of approximately $5.4 million related to the facility closure.

As of June 30, 2014 and December 31, 2013, the Company had lease exit obligations of $4.3 million and $5.9 million, respectively. For the three and six months ended June 30, 2014, the Company made cash payments, net of sublease payments received of $0.9 million and $1.8 million, respectively. The Company recognized adjustments for accretion and changes in leasing assumptions of $0.1 million and $0.2 million for the three and six months ended June 30, 2014, respectively. For the three and six months ended June 30, 2013, the Company made cash payments, net of sublease payments received of $0.9 million and $1.9 million, respectively. The Company recognized adjustments for accretion and changes in leasing assumptions of $44,000 and $0.1 million for the three and six months ended June 30, 2013, respectively.

Total rent expense under all office leases for each of the three and six months ended June 30, 2014 and 2013 was $0.2 million and $0.4 million, respectively. The Company recognizes rent expense on a straight-line basis. Deferred rent at June 30, 2014 and December 31, 2013 was $0.3 million and $0.4 million, respectively, and is included in other long-term liabilities.

- Definition

The entire disclosure for lessee entity's leasing arrangements including, but not limited to, all of the following: (a.) The basis on which contingent rental payments are determined, (b.) The existence and terms of renewal or purchase options and escalation clauses, (c.) Restrictions imposed by lease agreements, such as those concerning dividends, additional debt, and further leasing.

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