Commitments and Contingencies

9 Months Ended

Dec. 31, 2011

Commitments and Contingencies

5. Commitments and Contingencies

Lease Commitments

In 2001, the Company entered into a ten-year lease agreement for approximately 25,000 square feet of space located in Waltham, Massachusetts to be used for its corporate headquarters, manufacturing, research and development, and marketing and administrative operations. In July 2011, the Company amended this agreement to expand the lease to cover approximately 56,000 square feet and to extend the term of the lease by eleven years, which, depending on the commencement date of our occupancy of the expanded premises is expected to expire on or about May 31, 2023. In connection with this lease agreement, the Company issued a letter of credit in the amount of $200,000 to the lessor. The letter of credit is collateralized by a certificate of deposit held by the bank that issued the letter of credit. The certificate of deposit is classified as restricted cash in the accompanying balance sheet as of December 31, 2011 and March 31, 2011.

In 2007, the Company entered into a five-year lease agreement for approximately 2,500 square feet of space in Waltham, Massachusetts to provide for expanded manufacturing operations. Adjacent to this space, the Company entered into a two-year lease in 2008 for approximately 7,350 square feet of additional space to be used for expanded manufacturing and administrative operations. Both of these leases expire on May 31, 2012.

Following the completion of the Novozymes Acquisition, the Company now leases four adjacent buildings in Lund, Sweden totaling approximately 45,000 square feet of space used primarily for biologics manufacturing and administrative operations. The lease for three buildings totaling approximately 41,000 square feet expires on June 30, 2017 while the lease for the fourth building with approximately 4,000 square feet of space expires on September 30, 2019.

Obligations under non-cancelable operating leases, including the facility leases discussed above, as of December 31, 2011 are approximately as follows:

Years Ending	Operating Leases
December 31, 2012	$	2,123,000
December 31, 2013		2,296,000
December 31, 2014		2,293,000
December 31, 2015		2,289,000
December 31, 2016		2,289,000
Thereafter		8,677,000
Minimum lease payments	$	19,967,000

Rent expense charged to operations under operating leases was approximately $528,000 and $510,000 for the nine-month fiscal year ended December 31, 2011 and the nine-month period ended December 31, 2010, respectively, and $686,000 and $689,000 for the fiscal years ended March 31, 2011 and 2010, respectively. As of December 31, 2011 and March 31, 2011, the Company had deferred rent liabilities of $15,000 and $27,000, respectively, related to the escalating rent provisions for the Waltham headquarters.

Licensing and Research Agreements

The Company licenses certain technologies that are, or may be, incorporated into its technology under several agreements and also has entered into several clinical research agreements which require the Company to fund certain research projects. Generally, the license agreements require the Company to pay annual maintenance fees and royalties on product sales once a product has been established using the technologies. The Company has recorded research and development expenses associated with license agreements of approximately $525,000 and $343,000 for the nine-month fiscal year ended December 31, 2011 and the nine-month period ended December 31, 2010, respectively, as well as $374,000 and $643,000 for the fiscal years ended March 31, 2011 and 2010, respectively.

In October 2009, the Company entered into an exclusive worldwide commercial license agreement with Families of Spinal Muscular Atrophy (see Note 10). The initial license fee of $500,000 and a related sublicense fee of $175,000 were charged to research and development expenses in the fiscal year ended March 31, 2010. A related sublicense fee of $65,000 was charged to research and development expenses in the fiscal year ended March 31, 2011. A related milestone payment of $500,000 was charged to research and development expenses in the nine month fiscal year ended December 31, 2011. If all milestones are achieved, total financial obligations under this agreement, including milestone payments, sublicense fees, and other charges, could total approximately $16,000,000. Given the uncertain nature of such a development program, the likelihood that products or services will result from the research program is not known at this time.

Purchase Orders, Supply Agreements and Other Contractual Obligations

In the normal course of business, the Company has entered into purchase orders and other agreement with manufacturers, distributors and others. Outstanding obligations at December 31, 2011 of approximately $2,326,000 are expected to be completed within one year.