Commitments

Operating Leases

The Company entered into an operating lease for expanded office facilities in San Diego, California, which commenced December 1, 2014 at its previously leased location. The lease term is initially 64 months with an option to renew for an additional 60 months. The base rent will increase approximately 3.25% on an annual basis throughout the initial term. The lease also requires the Company to pay additional rent consisting of a portion of common area and pass-through expenses in excess of base year amounts. This space is used for general and administrative and sales and marketing operations and personnel.

The Company received incentives of abated rent for approximately 4.5 months of the lease term totaling $221,000, additional rent abatements of $36,000 and a tenant improvement allowance of up to $382,000. The Company has capitalized assets purchased in conjunction with the tenant improvement allowance and will amortize them when placed in service through the end of the initial lease term.

The Company also leases office space for its supply chain and inventory management and research and product development operations in Emeryville, California under a non-cancelable operating lease that expires, as extended, in September 2015. The base rent is subject to a 3% increase each year for the duration of the lease. Under the terms of the lease, as amended, the Company received an option to expand into additional space. The Company also received free rent for two months and a tenant improvement allowance of $305,000.

In August 2009, the Company entered an operating lease agreement to lease vehicles for the Company's field sales force. Each vehicle has a lease term of 36 months with a fixed monthly rental payment. As security for the vehicle leases, the lessor required a letter of credit for $200,000, which was collateralized by a certificate of deposit in the same amount. The letter of credit was released was replaced by a cash deposit in 2014.

The Company recognizes rent expense on a straight-line basis over the non-cancelable term of its operating leases. Rent expense for the years ended December 31, 2014, 2013 and 2012 was $870,000, $829,000 and $828,000, respectively.

Future minimum lease payments required under operating leases that have initial or remaining noncancelable lease terms in excess of one year as of December 31, 2014 are as follows (in thousands):



2015	$	1,874
2016	2,216
2017	1,593
2018	979
2019	1,011
Thereafter	260
Total	$	7,933

Manufacturing and Supply Agreements

The Company has a manufacturing services agreement with Patheon UK Limited (Patheon) for the aseptic capsule assembly, filling and inspection, final system assembly and purchasing of Sumavel DosePro, as well as other manufacturing and support services. In August 2013, the Company entered into an amended manufacturing services agreement (the Amended Services Agreement), with Patheon which replaced the Company's original manufacturing services agreement upon its expiration on October 31, 2013. The Amended Services Agreement has similar terms to the original agreement and will expire on April 30, 2016. The parties may mutually agree in writing to renew the term for additional terms prior to the expiration of the then-current term.

The Company has manufacturing and supply agreements with several third-party suppliers for the production of key components of Sumavel DosePro, which expire on various dates between 2012 and 2020. As of December 31, 2014, the Company has non-cancellable purchase orders for 2015 totaling approximately $4,028,000 (based on the exchange rate as of December 31, 2014) under these arrangements. In addition, the Company is required to pay Patheon a monthly manufacturing fee of £419,000, or approximately $651,000 (based on the exchange rate as of December 31, 2014) through the end of the term of the Amended Services Agreement. As of December 31, 2014, the Company was committed to pay Patheon a total manufacturing fee of £6,704,000, or approximately $10,416,000 (based on the exchange rate as of December 31, 2014), which is payable monthly over the remaining term of the Amended Services Agreement.

The Company also has a Supply Agreement for Zohydro ER finished commercial product with Daravita (see Note 5). Under the Supply Agreement, Daravita is the exclusive manufacturer and supplier to the Company (subject to certain exceptions) of Zohydro ER. The Company must purchase all of its requirements of Zohydro ER, subject to certain exceptions, from Daravita. As of December 31, 2014, the Company has non-cancellable purchase orders for 2015 for its current formulation of Zohydro ER totaling approximately $2,435,000 under the Supply Agreement. A liability has been established at December 31, 2014 for these purchase orders as the Company intends to transition to Zohydro ER with BeadTek in the second quarter of 2015.