Quarterly report pursuant to Section 13 or 15(d)

Property Leases

v2.3.0.15
Property Leases
9 Months Ended
Sep. 30, 2011
Property Leases [Abstract]  
Property Leases

5. Property Leases

In August 2009, the Company entered into a lease termination agreement for its 82,500 square foot office and laboratory facility in San Diego, California, which had a lease term through November 2021. Under the terms of the termination agreement, the Company paid a termination fee of $14.3 million as follows: $4.5 million was paid upon signing, $4.5 million was paid in July 2010 and $5.3 million was paid in April 2011. In addition, the Company entered into a lease for a period of 27 months commencing October 2009, for premises consisting of approximately 30,000 square feet of office and lab space located in San Diego to serve as its corporate headquarters. Under the terms of the lease, the Company pays a basic annual rent of $1.2 million (subject to an annual fixed percentage increase, as set forth in the agreement), plus other normal and necessary expenses associated with the lease. In October 2011, the Company entered into an extension of the lease through June 30, 2012, for a portion of the premises. Under the terms of the extension, beginning on January 1, 2012, the Company will pay monthly rent of $26,448, plus other normal and necessary expenses associated with the lease.

On September 5, 2011, the Company entered into a new lease for a period of 84 months commencing July 1, 2012, for premises consisting of approximately 16,500 square feet of office and laboratory space located in San Diego to serve as its new corporate headquarters. Pursuant to the terms of the lease, annual base rent will be approximately $0.5 million, subject to a 3% annual increase.

The Company also leases an office and research facility in San Diego, California under an operating lease arrangement through July 2015. The Company fully vacated this facility in February 2008. The lease agreement provides for increases in annual rents based on changes in the Consumer Price Index or fixed percentage increases ranging from 3% to 7%. Commencing January 2008, the Company sublet this facility through July 2015. The sublease agreement provides for a 3% increase in annual rents. As of September 30, 2011 and December 31, 2010, the lease exit obligation related to this lease was $3.1 million and $3.6 million, respectively.

The Company leases approximately 99,000 square feet in three facilities in Cranbury, New Jersey under leases that expire in 2016. The leases for the New Jersey facilities provide generally for scheduled rent increases, options to extend the leases with certain changes to the terms of the lease agreement, and refurbishment allowances. Commencing September 2009, the Company sublet 5,100 square feet of space through August 2014. As of September 30, 2011, the Company expects to receive $0.3 million in aggregate future lease payments over the duration of the sublease agreement.

 

In September 2010, the Company ceased use of its facility located in New Jersey. As a result, during the quarter ended September 30, 2010, 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. As of September 30, 2011 and December 31, 2010, the lease exit obligation related to this lease was $8.0 million and $9.4 million, respectively.