Annual report pursuant to Section 13 and 15(d)

Lease Obligations

v3.6.0.2
Lease Obligations
12 Months Ended
Dec. 31, 2016
Leases [Abstract]  
Lease Obligations
Lease Obligations
The Company leases office facilities in California and Kansas. These leases expire between 2017 and 2023. Total rent expense, net under all office leases for 2016, 2015 and 2014 was $0.3 million, $0.4 million and $0.7 million, respectively. The following table provides a summary of operating lease obligations and payments expected to be received from sublease agreements as of December 31, 2016 (in thousands):

Operating lease obligations:
 
Lease
Termination
Date
 
Less than 1
year
 
1-2 years
 
3-4 years
 
Thereafter
 
Total
Corporate headquarters-San Diego, CA
 
April 2023
 
$
128

 
$
267

 
$
283

 
$
197

 
$
875

Office and research facility-La Jolla, CA
 
June 2019
 
718

 
1,111

 

 

 
1,829

Bioscience and Technology Business Center-Lawrence, KS
 
December 2017
 
54

 

 

 

 
54

Total operating lease obligations
 
 
 
$
900

 
$
1,378

 
$
283

 
$
197

 
$
2,758

 
 
 
 
 
 
 
 
 
 
 
 
 
Sublease payments expected to be received:
 
 
 
 
 
 
 
 
 
 
 
 
Office and research facility-La Jolla, CA
 
June 2019
 
656

 
1,002

 

 

 
1,658

Net operating lease obligations
 
 
 
$
244

 
$
376

 
$
283

 
$
197

 
$
1,100



Lease termination

In November 2015, the Company entered into a lease termination agreement with its current lessor for the corporate headquarters facility located in La Jolla, California. The termination agreement accelerated the expiration date of the lease to April 2016, through which date, the Company is obligated to pay all base rent, operating expenses and other obligations due under the current lease.

In conjunction with the execution of the termination agreement, the Company entered into a new lease agreement with a different lessor for its corporate headquarters located in San Diego, California. The new lease has an initial term of approximately 7 years and commenced in May 2016. The base rent under the new facility lease agreement is approximately $0.1 million per year for the first year, escalating 3.0% annually thereafter over the initial term. The Company has an option to extend the term of the lease for an additional five years. The lease is subject to additional charges for property management, common area maintenance and other costs.

Lease exit obligations

As of December 31, 2016 and 2015, the Company had lease exit obligations of $0 million and $0.9 million, respectively. The Company no longer records a lease obligation with respect to its vacated space expiring in June 2019 as the sublease proceeds offset the estimated lease exit obligations. For the years ended December 31, 2016 and 2015, the Company made cash payments, net of sublease payments received of $1.7 million and $3.3 million, respectively. The Company recognized adjustments for accretion and changes in leasing assumptions of $0.7 million, $0.9 million and $1.1 million for the years ended December 31, 2016, 2015 and 2014, respectively.