Commitments and Contingencies

Operating Leases

We lease office, manufacturing and research and development facilities, and equipment under various non-cancellable operating lease agreements. Facility leases generally provide for periodic rent increases and many contain escalation clauses and renewal options. Certain leases require us to pay property taxes and routine maintenance.

Future minimum annual obligations under all non-cancellable operating lease commitments at December 31, 2015 are as follows (in thousands):



	Total		2016		2017		2018		2019		2020
Operating lease obligations	$	1,380	$	889	$	491	$	—	$	—	$	—

Total rent, property taxes and routine maintenance expense under our operating leases was $862,000, $835,000 and $659,000 during the years ended December 31, 2015, 2014 and 2013, respectively.

We recognize rent expense for our facility operating leases on a straight-line basis. We account for the difference between the minimum lease payments and the straight-line rent expense as deferred rent. Current and long-term deferred rent totaled $140,000 and $101,000 at December 31, 2015 and $126,000 and $241,000 at December 31, 2014, respectively.

Purchase Commitments

The following table summarizes our purchase obligations at December 31, 2015 (in thousands):



	Payments Due by Period
	Total		Less Than 1 Year		2-3 Years		3-5 Years		More Than 5 Years
Purchase obligations	$	621	$	621	$	—	$	—	$	—

As of December 31, 2015, our purchase obligations include existing purchase commitments for future minimum payments of $282,000 with a vendor for raw materials that will be used in manufacturing on an as needed basis. During the years ended December 31, 2015, 2014 and 2013, we purchased $1.2 million, $1.2 million and $724,000, respectively, of materials from this vendor. Our purchase obligations also include a purchase order with a vendor for a component of the ELAD device that will be manufactured and delivered on an agreed upon schedule during 2016 for a future payment of $225,000. During the years ended December 31, 2015, 2014 and 2013, we purchased $97,000, $105,000 and $131,000 of components from this vendor. Additionally, our purchase obligations include a purchase order with a vendor that will be installing an upgrade to our manufacturing facility with an agreed upon payment during 2016 of $114,000. We have not made any purchases from this vendor during the years ended December 31, 2015, 2014 and 2013.

Legal Proceedings

Securities Litigation

On December 2, 2015, a securities class action complaint was filed in the U.S. District Court for the Southern District of California, captioned Patrick A. Griggs v. Vital Therapies, Inc., et al., No. 3:15-cv-02700-JLS-NLS. On December 30, 2015, a substantially similar complaint was filed in the same court, captioned Alicia Beach Halverstadt v. Vital Therapies, Inc., et al., No. 3:15-cv-02951-JLS-NLS. The complaints name as defendants the Company, Terry Winters, and Michael V. Swanson for allegedly misrepresenting material facts and/or misleading investors about the interconnection between the Company’s three clinical trials, the independent significance of each clinical trial, and the potential effects of the failure of one of the clinical trials on the others. The complaints assert a putative class period from April 17, 2014 through August 21, 2015. The complaints allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The complaints seek unspecified damages, costs and attorneys’ fees, and equitable/injunctive or other relief. On February 1, 2016, putative shareholders Kaktrale Austin, Sumesh Kumar, and Nelson Than moved for appointment as lead plaintiff and approval of choice of counsel. Kaktrale Austin and Sumesh Kumar also moved to consolidate the complaints into a single action. A hearing on the motions is set for March 24, 2016. We intend to defend all of the securities lawsuits vigorously. Based on information available to us at present, we cannot reasonably estimate a range of loss for this action. Accordingly, we have not accrued any liability associated with this action. We are expensing legal costs associated with defending this litigation as the costs are incurred.

Other Matters

Our industry is characterized by frequent claims and litigation, including claims regarding patent and other intellectual property rights as well as product liability. As a result, in the future, we may be involved in various legal proceedings from time to time. Other than the securities litigation described above, we believe that there are no other currently pending matters that, if determined adversely to us, would have a material effect on our business, financial condition or results of operations.