Commitments And Contingencies

12 Months Ended

Dec. 31, 2011

Commitments And Contingencies [Abstract]

Commitments And Contingencies

11. COMMITMENTS AND CONTINGENCIES

(a) Operating Leases

The majority of the Company's operating lease payments relate to its corporate headquarters. The Company's corporate headquarters are located at 201 Spear Street, San Francisco, California, where it leases approximately 34,000 square feet of office space pursuant to lease agreements that expire in July 2012 and May 2013.

In December 2011, the Company entered into a lease agreement for approximately 57,000 square feet of office space located at 525 Market Street, San Francisco, California, which is intended to serve as its future corporate headquarters following construction and build-out. The term of the lease is for seven years, with an anticipated commencement date of June 2012. The Company has an option to extend the term of the lease for an additional five years.

The future minimum rentals under the Company's non-cancelable operating leases having initial or remaining terms in excess of one year at December 31, 2011 were as follows:

2012	$	3,599
2013		4,814
2014		4,563
2015		4,620
2016 and after		11,206
Total	$	28,802

Rent expense, net of sublease income, for the years ended December 31, 2011, 2010 and 2009 was $2.8 million, $2.2 million and $2.8 million, respectively. Sublease income was not significant for the periods presented. In addition to the future minimum rental payments included in the table above, certain lease agreements also require the Company to make additional payments during the lease term for taxes, insurance, and other operating expenses.

In March 2010, the Company terminated a lease for approximately 64,000 square feet of office space located at 345 Spear Street, San Francisco, California, that it entered into in November 2009, which was intended to serve as the Company's corporate headquarters. The lease, which was terminated as a result of the negative CONNECTION trial results, resulted in a termination fee of $1.5 million, of which half was recorded as expense in the fourth quarter of 2009 and the remaining half was recorded as expense in the first quarter of 2010.

(b) Restricted Cash

The Company has outstanding letters of credit collateralized by restricted cash totaling $6.0 million and $0.8 million at December 31, 2011 and 2010, respectively, to secure various operating leases. At December 31, 2011, $0.5 million and $5.5 million of restricted cash associated with these letters of credit were classified as current and long-term assets, respectively, on the consolidated balance sheets, and at December 31, 2010, $0.8 million of restricted cash was classified as long-term assets.

(c) Litigation

In March 2010, the first of several putative securities class action lawsuits was commenced in the U.S. District Court for the Northern District of California, naming as defendants the Company and certain of its officers. The lawsuits are largely identical and allege violations of the Securities Exchange Act of 1934, as amended. The plaintiffs allege, among other things, that the defendants disseminated false and misleading statements about the effectiveness of dimebon for the treatment of Alzheimer's disease. The plaintiffs purport to seek damages, an award of their costs and injunctive relief on behalf of a class of stockholders who purchased or otherwise acquired common stock in the Company between September 21, 2006 and March 2, 2010. The actions were consolidated in September 2010 and in April 2011 the court entered an order appointing Catoosa Fund L.P. and its attorneys as lead plaintiff and lead counsel. Thereafter, the lead plaintiff filed a consolidated, amended complaint, which was dismissed without prejudice as to all defendants in August 2011. The lead plaintiff filed a second amended complaint in November 2011. In January 2012, the Company filed a motion to dismiss the second amended complaint, which is scheduled to be heard by the Court on March 16, 2012. This lawsuit is subject to inherent uncertainties, and the actual cost will depend upon many unknown factors. The outcome of the litigation is necessarily uncertain, and the Company could be forced to expend significant resources in the defense of the suit and it may not prevail. The Company has not established any reserve for any potential liability relating to this lawsuit. The Company's management believes that the Company has meritorious defenses and intends to defend the lawsuit vigorously. The Company believes it is entitled to coverage under its relevant insurance policies, subject to a $350,000 retention, but coverage could be denied or prove to be insufficient.