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Commitments and Contingencies
 6 Months Ended
Jun. 30, 2012
Commitments and Contingencies

5. Commitments and Contingencies

We lease our facilities in Berkeley, California (“the Berkeley Lease”) and Düsseldorf, Germany (“the Düsseldorf Lease”) under operating leases that expire in September 2017 and March 2023, respectively. The Berkeley Lease provides for periods of escalating rent. The total cash payments over the life of the lease are divided by the total number of months in the lease period and the average rent is charged to expense each month during the lease period. We entered into sublease agreements under the Düsseldorf Lease for a certain portion of the leased space. The sublease income is offset against our rent expense. Total net rent expense related to our operating leases for the three months ended June 30, 2012 and 2011 was $0.4 million and $0.5 million, respectively. Total net rent expense related to our operating leases for the six months ended June 30, 2012 and 2011 was $0.8 million and $0.9 million, respectively. Deferred rent was $0.6 million as of June 30, 2012 and December 31, 2011.

Future minimum payments under the non-cancelable portion of our operating leases at June 30, 2012, excluding payments from sublease agreements, are as follows (in thousands):

 

Year ending December 31,

  

2012 (remaining six months)

    $ 888   

2013

      1,785   

2014

      1,751   

2015

      1,787   

2016

      1,824   

Thereafter

      4,342   
  

 

 

  

Total

    $ 12,377   
  

 

 

  

During 2004, we established a letter of credit with Silicon Valley Bank as security for our Berkeley Lease in the amount of $0.4 million. The letter of credit remained outstanding as of June 30, 2012 and is collateralized by a certificate of deposit which has been included in restricted cash in the condensed consolidated balance sheets as of June 30, 2012 and December 31, 2011. Under the terms of the Berkeley Lease, if the total amount of our cash, cash equivalents and marketable securities falls below $20.0 million for a period of more than 30 consecutive days during the lease term, the amount of the required security deposit will increase to $1.1 million, until such time as our projected cash and cash equivalents will exceed $20.0 million for the remainder of the lease term, or until our actual cash and cash equivalents remains above $20.0 million for a period of 12 consecutive months.

We established a letter of credit with Deutsche Bank as security for our Düsseldorf Lease in the amount of 0.2 million Euros. The letter of credit remained outstanding as of June 30, 2012 and is collateralized by a certificate of deposit which has been included in restricted cash in the condensed consolidated balance sheets as of June 30, 2012 and December 31, 2011.

In addition to the non-cancelable commitments included above, we have entered into contractual arrangements that obligate us to make payments to the contractual counterparties upon the occurrence of future events. In addition, in the normal course of operations, we have entered into license and other agreements and intend to continue to seek additional rights relating to compounds or technologies in connection with our discovery, manufacturing and development programs. Under the terms of the agreements, we may be required to pay future up-front fees, milestones, royalties on net sales of products originating from the licensed technologies, if any, or other payments contingent upon the occurrence of future events that cannot reasonably be estimated.

We rely on research institutions, contract research organizations, clinical investigators and clinical material manufacturers. As of June 30, 2012, under the terms of our agreements, we are obligated to make future payments as services are provided of approximately $10.0 million through 2015. These agreements are terminable by us upon written notice. Generally, we are liable only for actual effort expended by the organizations at any point in time during the contract through the notice period.

Under the terms of our exclusive license agreements with The Regents of the University of California, as amended, for certain technology and related patent rights and materials, we pay annual license or maintenance fees and will be required to pay milestones and royalties on net sales of certain products originating from the licensed technologies.