Quarterly report pursuant to Section 13 or 15(d)

Sublease Agreement

Sublease Agreement
3 Months Ended
Mar. 31, 2015
Sublease Agreement  
Sublease Agreement

11.Sublease Agreement


In December 2014, we entered into a sublease agreement with an unrelated third party to occupy a portion of our research and office space pursuant to which we expect to receive over $7.8 million in sublease income (excluding our subtenant’s share of facilities operating expenses) over the remaining term of the sublease. In connection with this sublease, we recognized a loss on sublease of $9.3 million during the fourth quarter of 2014. We record rent expense on a straight-line basis for our lease, net of sublease income, wherein such arrangements contain scheduled rent increases over the term of the lease and sublease, respectively. For our sublease arrangement which we classified as an operating lease, our loss on the sublease is comprised of the present value of our future payments to our landlord less the present value of our future rent payments expected from our subtenant over the term of the sublease. The liability arising from this sublease agreement was determined using a credit-adjusted risk-free rate to discount the estimated future net cash flows. The changes in the liability related to the sublease agreement for the three months ended March 31, 2015 were as follows (in thousands):


Balance at January 1, 2015





Accretion of deferred liability




Amortization of deferred liability




Balance at March 31, 2015