Commitments and Contingencies

3 Months Ended

Mar. 31, 2013

Commitments and Contingencies

Commitments and Contingencies

Note 11. Commitments and Contingencies

Commitments

During 2012, we entered into commercial manufacturing and supply agreements for the production of Kyprolis. As of March 31, 2013, we are committed to purchase products and services of approximately $10.0 million in 2013 under these agreements.

Our corporate headquarters, including our principal offices, are currently located in South San Francisco, California. We began occupying these premises in May 2011. In July 2010, we entered into arrangements to lease and sublease a total of approximately 126,493 square feet located at our corporate headquarters in South San Francisco, California. The sublease and the lease expire in 2015 and 2024, respectively. Upon expiration of the sublease, the lease will be automatically expanded to include the premises subject to the sublease. The lease includes two successive five-year options to extend the term of the lease to 2034. In November 2011, we entered into an arrangement to lease up 170,618 square feet in a building adjacent to our corporate headquarters in South San Francisco, California, and this lease expires in 2024. The construction on this building was completed in December 2012. The lease includes two successive five-year options to extend the term of the lease to 2034. The lease also includes a one-time option to lease additional premises that will be constructed after the exercise of the option. If the option is exercised, the term of the lease will be automatically extended by ten years. In March 2013, the Company exercised its option and entered into an agreement to lease 107,000 square feet in a building to be constructed adjacent to our corporate headquarters. The lease is expected to expire in approximately 2024. For accounting purposes, due to the nature of our involvement with the construction of the buildings subject to the lease agreement, we are considered to be the owner of the assets during the construction period through the lease commencement date, even though the lessor is responsible for funding and constructing the building shell. Construction to this building commenced in April 2013 and as at March 31, 2013, the Company did not incur any construction costs related to the building.

Rent expense for the three months ended March 31, 2013 was $3.6 million compared to $1.1 million for the three months ended March 31, 2012. We received no sublease income during these periods.

Contingencies

From time to time, the Company may become involved in claims and other legal matters arising in the ordinary course of business. Management is not currently aware of any matters that could have a material adverse effect on the financial position, results of operations or cash flows of the Company.