These provisions, as well as Delaware law, including Section 203 of the Delaware General Corporation Law,
and other of our agreements, may discourage certain types of transactions in which our stockholders might
otherwise receive a premium for their shares over then current market prices, and may limit the ability of our
stockholders to approve transactions that they think may be in their best interests.
Future sales of our common stock in the public market could adversely affect the trading price of our
securities.
Future sales of substantial amounts of our common stock in the public market, or the perception that such
sales could occur, could adversely affect trading prices of our securities. For example, we may issue
approximately 11.2 million shares of our common stock upon conversion of our convertible senior notes. The
addition of any of these shares into the public market may have an adverse effect on the price of our securities.
Our business is subject to changing regulations for corporate governance and public disclosure that has
increased both our costs and the risk of noncompliance.
Each year we are required to evaluate our internal controls systems in order to allowmanagement to report
on and our Independent Registered PublicAccounting Firm to attest to, our internal controls as required by
Section 404 of the Sarbanes-OxleyAct. As a result, we continue to incur additional expenses and divert our
management’s time to comply with these regulations. In addition, if we cannot continue to comply with the
requirements of Section 404 in a timely manner, we might be subject to sanctions or investigation by regulatory
authorities, such as the SEC, the Public CompanyAccounting Oversight Board, or PCAOB, or The Nasdaq
Global Market. Any such action could adversely affect our financial results and the market price of our common
stock.
The SEC and other regulators have continued to adopt new rules and regulations and make additional
changes to existing regulations that require our compliance. On July 21, 2010, the Dodd-FrankWall Street
Reform and ProtectionAct, or the Dodd-FrankAct, was enacted. There are significant corporate governance and
executive compensation-related provisions in the Dodd-FrankAct that require the SEC to adopt, or where the
SEC has adopted, additional rules and regulations in these areas such as ‘‘say on pay’’ and proxy access.
Stockholder activism, the current political environment and the current high level of government intervention and
regulatory reformmay lead to substantial new regulations and disclosure obligations, which may lead to
additional compliance costs and impact the manner in which we operate our business.
Negative conditions in the global credit markets and financial services and other industries may adversely
affect our business.
The global credit markets, the financial services industry, the U.S. capital markets, and the U.S. economy as
a whole have in the past experienced periods of substantial turmoil and uncertainty characterized by
unprecedented intervention by the U.S. federal government and the failure, bankruptcy, or sale of various
financial and other institutions. It is possible that a crisis in the global credit markets, the U.S. capital markets,
the financial services industry or the U.S. economy may adversely affect our business, vendors and prospects as
well as our liquidity and financial condition. More specifically, our insurance carriers and insurance policies
covering all aspects of our business may become financially unstable or may not be sufficient to cover any or all
of our losses and may not continue to be available to us on acceptable terms, or at all.
Item1B. Unresolved Staff Comments
Not applicable.
Item2. Properties
As of February 17, 2015, we occupied three buildings in Carlsbad, California totaling approximately
231,000 square feet of laboratory, manufacturing and office space. Our facilities include a 176,000 square foot
facility that we use for our primary research and development activities, a 28,700 square foot manufacturing
facility and a 25,800 square foot building adjacent to our manufacturing facility. Our 28,700 square foot facility
houses manufacturing suites for our drug development business built to meet cGMP requirements and our
25,800 square foot facility has laboratory and office space that we use to support our manufacturing activities.
We lease all three buildings under lease agreements. The leases on our 176,000 square foot facility and our
28,700 square foot manufacturing facility expire in 2031 and have four five-year options to extend. Under these
lease agreements, we have the option to purchase the facilities, independent of each other at the end of each year
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