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Commitments and Contingencies
3 Months Ended
Mar. 31, 2016
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies
Commitments and Contingencies
Operating Leases
We lease office, manufacturing and research and development facilities, and equipment under various non-cancellable operating lease agreements with expiration dates into 2017. 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. Total rent, property taxes and routine maintenance expense under our operating leases was $217,000 and $225,000 for the three months ended March 31, 2016 and 2015, 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 amount as deferred rent. Current and long-term deferred rent totaled $143,000 and $56,000 at March 31, 2016, and $140,000 and $101,000 at December 31, 2015, respectively.
Legal Proceedings
Securities Litigation
On December 2, 2015, a putative 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 Vital Therapies, Inc., Terry Winters, and Michael V. Swanson for allegedly misrepresenting material facts and/or misleading investors about the interconnection between our 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 are filed on behalf of all persons who purchased or otherwise acquired Vital Therapies stock between April 17, 2014 through August 21, 2015, inclusive. 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 and class members 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. Sumesh Kumar and Nelson Than withdrew their motions for appointment as lead plaintiff on February 23, 2016, and March 3, 2016, respectively. On May 2, 2016, the court entered an order granting plaintiff Kaktrale Austin’s motion for consolidation and appointing plaintiff Kaktrale as lead plaintiff and his counsel as lead counsel. The consolidated action is captioned In re Vital Therapies, Inc. Securities Litigation, No. 15-CV-2700 JLS (NLS). The court also set a deadline of June 1, 2016 for lead plaintiff to file an amended complaint and ordered Vital Therapies, Inc. and Messrs. Winters and Swanson to respond to the amended complaint within thirty days of its filing. We intend to defend the securities lawsuit 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.