Commitments and Contingencies

The Company's long-term contractual obligations include commitments and estimated purchase obligations entered into in the normal course of business. These obligations include commitments related to purchases of inventory of our products, research and development service agreements, income tax contingencies, operating leases, selling, general and administrative obligations, leased office space for our principal office in Parsippany, New Jersey and additional leased office space in San Diego, California, royalties, milestone payments and other contingent payments due under the Company's license and acquisition agreements.

Future estimated contractual obligations as of December 31, 2014 are:



Contractual Obligations ^{(1) (2)}	2015		2016		2017		2018		2019		Later Years		Total
	(In thousands)
Inventory related commitments	$	52,174	$	783	$	130	$	130	$	130	$	—	$	53,347
Long-term debt obligations	3,781		3,781		276,576		—		—		—		284,138
Research and development	72,617		1,952		3,210		44		10		—		77,833
Operating leases	8,221		7,556		8,235		7,230		7,277		48,540		87,059
Selling, general and administrative	2,589		1,167		74		—		—		—		3,830
Total contractual obligations	$	139,382	$	15,239	$	288,225	$	7,404	$	7,417	$	48,540	$	506,207


(1)	This table does not include any milestone and royalty payments which may become payable to third parties for which the timing and likelihood of such payments are not known, as discussed below.


(2)	This table does not include $400.0 million aggregate principal amount of the convertible senior notes due 2022 issued by us in January 2015 (see Footnote No. 22).

All of the inventory related commitments included above are non-cancellable. Included within the inventory related commitments above are purchase commitments for 2015 totaling $20.1 million, $23.8 million and $4.5 million for Angiomax, Orbactiv and Recothrom bulk drug substances, respectively. Of the total estimated contractual obligations for research and development and selling, general and administrative activities, $9.6 million are non-cancellable.

The Company's long-term debt obligations reflect its obligations under the 2017 Notes to pay interest on the $275.0 million aggregate principal amount of the 2017 Notes and to make principal payments on the 2017 Notes at maturity or upon conversion.

The Company leases its principal offices in Parsippany, New Jersey. The lease covers 173,146 square feet and expires January 2024. On October 1, 2014, the Company entered into an agreement to lease 63,000 square feet of office space with ARE-SD Region No. 35, LLC, or ARE, for new office and laboratory space in San Diego. This lease has a term of 144 months from the first day of the first full month after the commencement date, which is currently expect to be on or about September 2016.

The agreement is for the build out of the space with a targeted commencement date in September of 2016. The lease will qualify for operating lease treatment with recorded annual rent expense from commencement date to expiration of $2.9 million, with adjustments for customary triple-net lease operating expenses. The Company's expected total obligation for this space is $35.3 million.

Approximately 88.8% of the total operating lease commitments above relate to the Company’s principal office building in Parsippany, New Jersey and the Company's office in San Diego, California. Also included in total property lease commitments are automobile leases, computer leases and other property leases that the Company entered into while expanding its global infrastructure.

Aggregate rent expense under the Company’s property leases was approximately $8.5 million in 2014, $7.3 million in 2013 and $5.8 million in 2012.

In addition to the amounts shown in the above table, the Company is contractually obligated to make potential future success-based development, regulatory and commercial milestone payments and royalty payments in conjunction with collaborative agreements or acquisitions it has entered into with third-parties. These contingent payments include royalty payments with respect to Angiomax under the Company’s license agreements with Biogen and HRI, royalty and/or milestone payments with respect to Cleviprex, cangrelor, Orbactiv, MDCO-216, IONSYS, Raplixa, PreveLeak and Carbavance and profit sharing with respect to the Company's sales of ready-to-use Argatroban. The Company made payments in February 2015 of $28.4 million to the equityholders of Annovation and $127.7 million to BMS when the Company exercised the options granted to it (see Footnote No. 22). The Company may be obligated to pay Annovation's equityholders up to an additional $26.3 million upon achievement of certain clinical and regulatory milestones and up to $6.5 million in additional payments to other third parties.

The Company may have to make these significant contingent cash payments in connection with its acquisition and licensing activities upon the achievement of specified regulatory, sales and other milestones as follows:


•	$49.4 million due to the former shareholders of Targanta and up to $25.0 million in additional payments to other third parties;


•	up to $189.3 million due to the former shareholders of Incline and up to $113.0 million in additional payments to other third parties;


•	up to $140.0 million due to the former shareholders of ProFibrix;


•	up to $315.7 million due to the former shareholders of Rempex;


•	up to $112.0 million due to the former shareholders of Tenaxis;


•	up to $170.0 million due to the Alnylam license and collaboration agreement;


•	up to $422.0 million due to the Company's license agreement with Pfizer Inc. related to MDCO-216; and


•	up to $54.5 million due to the Company's license agreement with AstraZeneca related to cangrelor.

Given the nature of these events, it is unclear when, if ever, the Company may be required to pay such amounts. Accordingly, these contingent payments have not been included in the table above as the timing of any future payment is not reasonable estimable.

In 2014, 2013 and 2012, the Company incurred aggregate royalties to Biogen and HRI of $131.3 million, $140.7 million and $122.2 million, respectively, and royalties to AstraZeneca with respect to Cleviprex of $0.8 million, $1.0 million and $1.0 million, and royalties to BMS with respect to Recothrom of $7.5 million and $7.4 million, respectively.

Contingencies

The Company may be, from time to time, a party to various disputes and claims arising from normal business activities. The Company accrues for loss contingencies when information available indicates that it is probable that a liability has been incurred and the amount of such loss can be reasonably estimated.

The Company is currently party to the other legal proceedings described in Part I, Item 3. Legal Proceedings of this Annual Report on Form 10-K, which are principally patent litigation matters. The Company has assessed such legal proceedings and does not believe that it is probable that a liability has been incurred or that the amount of any potential liability can be reasonably estimated. As a result, the Company did not record any loss contingencies for any of these matters. While it is not possible to determine the outcome of the matters described in Part I, Item 3. Legal Proceedings, of this Annual Report on Form 10-K, the Company believes that the resolution of all such matters will not have a material adverse effect on its consolidated financial position or liquidity, but could possibly be material to the it's consolidated results of operations in any one accounting period.