(12) Facility Lease Exit

On May 9, 2012, the Company entered into a lease agreement with BMR-650 E KENDALL B LLC (“BMR”), under which the Company agreed to lease 126,065 square feet of space located at 650 East Kendall Street, Cambridge, Massachusetts to be used for office, research and laboratory space. The initial term of the lease agreement was approximately twelve years and seven months (the “initial term”). The Company had determined that the lease should be classified as an operating lease.

In order to make the space usable for the Company’s operations, substantial improvements were made to the space. These improvements were planned, managed and carried out by the Company and the improvements were tailored to the Company’s needs. BMR agreed to reimburse the Company for up to $14.9 million of the improvements, and the Company bore all risks associated with any cost overruns that may be incurred. As such, the Company determined it was the owner of the improvements and, as such, the Company accounted for tenant improvement reimbursements from BMR as a lease incentive. The Company recorded a deferred lease incentive (included as a component of the deferred rent balance in the accompanying consolidated balance sheets) and the incentive was amortized as an offset to rent expense over the term of the lease. Rent expense, inclusive of the escalating rent payments, was recognized on a straight-line basis over the initial term of the lease agreement.

In September 2014, the Company entered into the Lease Termination Agreement pursuant to which the Company immediately surrendered leased space at 650 East Kendall Street in Cambridge, Massachusetts that it had previously ceased using earlier in 2014. In connection with the Lease Termination Agreement, the Company agreed to pay the landlord a termination fee totaling $15.6 million. The Company also agreed to surrender its remaining leased space upon 90 days written notice prior to September 24, 2015. In February 2015, the Company provided notice that it would surrender the remaining space on May 29, 2015. Accordingly, the Company revised the estimated useful life of its leasehold improvements related to this office space and amortized such assets through May 2015, resulting in an additional $2.9 million of depreciation expense during the six months ended June 30, 2015. Similarly, the Company accelerated the amortization of its deferred rent and leasehold improvement allowance associated with this office space through May 2015, resulting in an additional $3.5 million of amortization during the six months ended June 30, 2015. Upon the surrender of the remaining space, the Company had no further rights or obligations with respect to the lease. The Company secured office space appropriate for its current needs under a cancellable arrangement that began in May 2015. The Company recognized rent expense of approximately ($9.5) million and $4.3 million related to the lease during the years ended December 31, 2015 and 2014, respectively. The net rent credit for the year ended December 31, 2015 and December 31, 2014 were recorded within operating expenses and allocated to research and development and general and administrative expense based upon the use of the underlying facility space. The expense recognized during the years ended December 31, 2015 and 2014 include the recognition of deferred rent credits totaling $10.6 million and $3.8 million, respectively, following the termination of the lease agreement.

The following table summarizes the components of the Company’s lease exit activity recorded in current liabilities at December 31, 2015:

	Lease Exit amounts accrued at December 31, 2014		Accretion Expense incurred during the year ended December 31, 2015		Amounts paid during the year ended December 31, 2015			Additional expense incurred during the year ended December 31, 2015		Amounts accrued at December 31, 2015

Lease exit costs	$	4,981		224	$	(5,477	)	$	272	$	—

No costs were incurred during the year ended December 31, 2016.