Commitments and Contingencies

12 Months Ended

Dec. 31, 2012

Commitments and Contingencies

Commitments and Contingencies

9. Commitments and Contingencies

• Operating Leases

        We lease facilities space and equipment under operating lease arrangements that have terms expiring at various dates through 2020. Certain lease arrangements include renewal options and escalation clauses. In addition, various lease agreements to which we are party require that we comply with certain customary covenants throughout the term of these leases. If we are unable to comply with these covenants and cannot reach a satisfactory resolution in the event of noncompliance, these agreements could terminate.

        Future minimum lease payments under non-cancelable operating leases are as follows (in thousands):

Year Ending December 31,
2013	$	3,378
2014		3,286
2015		3,264
2016		3,031
2017		2,751
Thereafter		2,424
	$	18,134

        Total rent expense was $3.6 million, $4.6 million and $2.7 million for the years ended December 31, 2012, 2011 and 2010, respectively.

• Milestone Payments

        We are party to certain license agreements as described in Note 13—Assignment and License Agreements and acquisition agreements as described in Note 16—Acquisitions below. Generally, these agreements require that we make milestone payments in cash upon the achievement of certain product development and commercialization goals and payments of royalties upon commercial sales.

        Future milestone payments based on our estimates of the timing and probability of achieving milestones specified under these arrangements have been estimated as follows (in thousands):

Year Ending December 31,	(1)
2013	$	1,280
2014		2,010
2015		—
2016		5,910
2017		10,074
Thereafter		8,593
Total	$	27,867

(1)

The amounts and timing of future milestone payments may vary depending on when related milestones will be attained, if at all.

• Research Agreement

        We maintain a research agreement with the University of Oxford (Oxford) to develop antiviral compounds. Research under this agreement is performed by Oxford Glycobiology Institute, which is headed by a member of our Board of Directors and our scientific advisory board. Under the terms of the agreement, we are required to fund related research activities and make milestone payments for the successful completion of clinical trials. We are also obligated to pay royalties to Oxford equal to a percentage of our net sales from any discoveries and products developed by Oxford. Milestone payments and royalties are subject to reduction depending upon third-party contributions to discoveries and/or third-party licenses necessary to develop products. In August 2010, the term of the research agreement, which was to expire on September 30, 2011, was extended through September 2016. In connection with the extension of the term, we agreed to pay Oxford a total of $2.9 million (using the then prevailing exchange rate) in sixty equal installments. As of December 31, 2012, approximately $2.3 million remains outstanding. In addition, in December 2012, we amended our agreement with Oxford, under which we agreed to pay Oxford an additional $871,000 in the aggregate (using the exchange rate as of the amendment date) in thirty-six equal installments for additional work supporting the development of our virology platform beginning in January 2013. During the years ended December 31, 2012, 2011 and 2010, we incurred $577,000, $658,000 and $610,000, respectively, in expenses under the terms of the agreement.

        From time to time, we may enter into other service agreements with Oxford relating to specific development activities that are outside the scope of our research agreement described above. We incurred expenses of $336,000, $550,000 and $401,000 relating to these additional services during the years ended December 31, 2012, 2011 and 2010, respectively.