11. Commitments and Contingencies

Lease Commitments

The Company rents office and laboratory space at its corporate headquarters at 301 Binney Street, Cambridge, Massachusetts (the “Facility”) under a non‑cancelable operating lease, entered into in January 2007, as amended (“2007 Lease Agreement”).

In March 2017, the Company and BMR-Rogers Street LLC (the “Landlord”) entered into an additional amendment (the “2017 Amendment”) to the 2007 Lease Agreement. The 2017 Amendment extends the term of the 2007 Lease Agreement through January 31, 2025 for the approximately 223,000 square feet of the Facility that the Company currently occupies. The 2017 Amendment also provides that the Landlord will resume possession of the approximately 93,000 square feet of additional space in the Facility that the Company previously subleased to a third party in 2014. The 2007 Lease Agreement, as amended by the 2017 Amendment, contains various provisions including an option to extend the term of the lease for an additional five years at a market base rental rate, a 3% annual rent escalation, and in certain cases, free rent periods. The rent expense, inclusive of the escalating rent payments and free rent periods, is recognized on a straight‑line basis over the lease term through January 2025. Additionally, the 2017 Amendment reduces the required letter of credit to secure the Company’s obligations under the lease agreement to approximately $6.4 million, which is recorded as restricted cash.

During 2014, the Company entered into an agreement, with the Landlord’s consent, to sublease a portion of its corporate headquarters that it did not intend to use for its operation. In connection with the sublease, as well as a rent escalation tied to the Consumer Price Index and fair market rent pursuant to the terms of the 2007 Lease Agreement, the Company had previously recorded losses related to its obligations to the Landlord associated with the sublet space, net of sublease income in accordance with ASC Topic 420, “Exit or Disposal Cost Obligations”. Pursuant to the 2017 Amendment, the Landlord resumed possession of the space that the Company previously subleased to a third party, and the Company is no longer obligated for the sublease associated with this space. The provisions of the 2007 Lease Agreement governing the space which was previously subleased were terminated and as such, the Company revised its accounting estimates associated with its rent expense and sublease income. Upon the relief of these future liabilities, the Company recorded a gain on the extinguishment of sublease loss of approximately $1.6 million during the three months ended March 31, 2017. The change in accounting estimate associated with rent expense was recognized on a prospective, straight-line basis through May 2017. Rent expenses related to the 2007 Lease Agreement and the 2017 Amendment, net of sublease income, recorded during the three and six months ended June 30, 2017 were approximately $4.5 million and approximately $5.5 million, respectively, and approximately $2.0 million and approximately $7.5 million for the three and six months ended June 30, 2016, respectively.

At June 30, 2017, future minimum lease payments under all non‑cancelable operating lease arrangements were as follows (in thousands):



	Total Operating
	Lease Payments
2017 (1)	$	7,143
2018		16,931
2019		17,609
2020		18,137
2021 and thereafter		79,857
Total future minimum lease payments	$	139,677

(1)

Amounts are for the six months ending December 31, 2017.

Commercial Supply Commitments

The Lesinurad CSA with AstraZeneca provides for commercial supply and samples of ZURAMPIC, and, if approved by the FDA, DUZALLO. The Lesinurad CSA includes certain purchase obligations based on the Company’s forecasted demand for commercial product and samples. During the Lesinurad TSA period, title for ZURAMPIC commercial supply and samples do not pass to the Company. Accordingly, the Company records purchases of ZURAMPIC commercial supply and samples from AstraZeneca as prepaid assets until they are sold or used. During the three months ended June 30, 2017, the Company wrote-down an insignificant amount of prepaid ZURAMPIC commercial supply as a result of revised demand forecasts. The write-down was recorded as write-down of lesinurad commercial supply to net realizable value and loss on non-cancelable purchase commitments in the Company’s condensed consolidated statement of operations. During the three months ended March 31, 2017, the Company recorded an expense of approximately $1.3 million for excess non-cancelable ZURAMPIC sample purchase commitments, pursuant to the Company’s forecasts, as a result of a reduction in near-term forecasted demand. This write-down was recorded in selling, general and administrative expenses in the Company's condensed consolidated statement of operations.

Commitments Related to the Collaboration and License Agreements

Pursuant to the Lesinurad License, during the three months ended June 30, 2017, the Company and AstraZeneca agreed to transition the obligation for post-marketing activities required by the FDA from AstraZeneca to the Company in accordance with an agreed upon timeline. The Company estimates that it will incur less than $100.0 million over up to ten years from the Acquisition Date related to these requirements. AstraZeneca is currently obligated to conduct certain of these post-marketing requirement activities on the Company’s behalf, for which the Company is obligated to reimburse AstraZeneca up to $2.0 million during the year ended December 31, 2017.