(23) COMMITMENTS AND CONTINGENCIES

Lease Commitments

The Company leases office space and research, testing and manufacturing laboratory space in various facilities under operating agreements expiring at various dates through 2025. Certain of the leases provide for options by the Company to extend the lease for multiple five-year renewal periods and also provide for annual minimum increases in rent, usually based on a consumer price index or annual minimum increases. Minimum lease payments for future years are as follows:

2017	$	9,051
2018		7,739
2019		4,893
2020		3,391
2021		2,728
Thereafter		6,637
Total	$	34,439

Rent expense for the years ended December 31, 2016, 2015 and 2014 was $11.6 million, $9.3 million and $7.9 million, respectively. Deferred rent accruals at December 31, 2016 totaled $2.4 million, of which $2.0 million was current. Deferred rent accruals at December 31, 2015 totaled $1.7 million, of which $1.2 million was current.

Research and Development Funding and Technology Licenses

The Company uses experts and laboratories at universities and other institutions to perform certain R&D activities. These amounts are included as R&D expense as services are provided. The Company has also licensed technology, for which it is required to pay royalties upon future sales, subject to certain annual minimums.

Other Commitments

In the normal course of business, the Company enters into various firm purchase commitments primarily related to active pharmaceutical ingredients and certain inventory related items. As of December 31, 2016, these commitments for the next five years were approximately $45.8 million. The amounts primarily related to active pharmaceutical ingredients represent minimum purchase requirements and post marketing commitments related to the Company’s approved products.

Contingencies

From time to time the Company is involved in legal actions arising in the normal course of its business. The most significant of these actions are described below.

The process of resolving matters through litigation or other means is inherently uncertain and it is possible that an unfavorable resolution of these matters could adversely affect the Company, its results of operations, financial condition and cash flows. The Company’s general practice is to expense legal fees as services are rendered in connection with legal matters, and to accrue for liabilities when losses are probable and reasonably estimable.

Paragraph IV Notices

The Company received a paragraph IV notice letter, dated January 22, 2015, from Par Pharmaceutical, Inc. (Par), notifying it that Par had filed an abbreviated new drug application (ANDA) seeking approval of a proposed generic version of Kuvan (sapropterin dihydrochloride) 100 mg oral tablets prior to the expiration of the Company’s patents listed in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations (the Orange Book). Together with Merck & Cie, on March 6, 2015, the Company filed a lawsuit against Par in the U.S. District Court for the District of New Jersey alleging infringement of its patents relating to Kuvan tablets and seeking an injunction to prevent Par from introducing a generic version of Kuvan tablets that would infringe its patents prior to their expiration. The filing of that lawsuit triggered the automatic 30-month stay on the approval of Par’s ANDA in accordance with the Hatch-Waxman Act, which expires in July 2017. In response, Par alleged, inter alia, that the asserted patents are not infringed and/or are invalid.

The Company also received a paragraph IV notice letter, dated January 14, 2016, from Par, notifying it that Par has filed a separate ANDA seeking approval of a proposed generic version of Kuvan 100 mg oral powder prior to the expiration of the Company’s patents listed in the FDA's Orange Book. On February 22, 2016, the Company filed a lawsuit against Par in the U.S. District Court for the District of New Jersey alleging infringement of its patents relating to Kuvan powder and seeking an injunction to prevent Par from introducing a generic version of Kuvan powder that would infringe its patents prior to their expiration. The filing of that lawsuit triggered the automatic 30-month stay on the approval of Par’s ANDA in accordance with the Hatch-Waxman Act, which expires in July 2018. In response, Par alleged, inter alia, that the asserted patents are not infringed and/or are invalid.

The two cases against Par have been consolidated in the District of New Jersey for all purposes, including pretrial and trial. The Court held a claim construction hearing on May 5, 2016 but has not yet issued its ruling. Fact discovery closed on September 22, 2016, and expert discovery closes on March 31, 2017. No trial date has been set, but the Court has indicated that trial is likely to occur in May or June 2017.

The Company also received a paragraph IV notice letter, dated December 23, 2016, from Dr. Reddy’s Laboratories, Inc. and Dr. Reddy’s Laboratories, Ltd. (DRL), notifying it that DRL has filed a separate ANDA seeking approval of a proposed generic version of Kuvan 100 mg oral powder prior to the expiration of the Company’s patents listed in the FDA's Orange Book. On February 6, 2017, the Company filed a lawsuit against DRL in the U.S. District Court for the District of New Jersey alleging infringement of its patents relating to Kuvan powder and seeking an injunction to prevent DRL from introducing a generic version of Kuvan powder that would infringe the Company’s patents prior to their expiration. The filing of that lawsuit triggered the automatic 30-month stay on the approval of DRL’s ANDA in accordance with the Hatch-Waxman Act, which expires in June 2019. DRL has not yet answered the complaint, and no schedule has been set by the Court to date.

SEC Subpoena

In August 2016, the Company received a subpoena from the staff of the SEC requesting that the Company produce documents in connection with a non-public, fact-finding inquiry related to its former drisapersen program. The letter enclosing the subpoena states that the investigation and the subpoena do not mean that the Company or anyone else has broken the law, or that the SEC has a negative opinion of any person, entity or security. The Company intends to cooperate fully with the SEC in this matter. The Company is not able to predict whether any proceeding may be instituted in connection with the subpoena, or the outcome of any proceeding that may be instituted.

Contingent Payments

As of December 31, 2016, the Company is also subject to contingent payments totaling approximately $576.5 million upon achievement of development and regulatory activities and commercial sales and licensing milestones if they occur before certain dates in the future. Of this amount, $194.3 million (or €185 million based on the exchange rate of 1.05 USD per Euro in effect on December 31, 2016) relates to the Merck PKU Business acquisition and $50.8 million relates to programs that are no longer being developed.

As of December 31, 2016, the Company has recorded $161.6 million of contingent acquisition consideration payable on its Consolidated Balance Sheets in Short-term and Long-term Contingent Acquisition Consideration Payable, of which $46.3 million is expected to be paid in the next twelve months.