10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2018

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to                 

Commission File Number: 001-35993

OncoMed Pharmaceuticals, Inc.

(Exact name of registrant as specified in its charter)

Delaware	38-3572512
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
800 Chesapeake Drive Redwood City, California	94063
(Address of principal executive offices)	(Zip Code)

(650) 995-8200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common stock, par value $0.001 per share	The Nasdaq Global Select Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ☐    No  ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act.    Yes  ☐    No  ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act).    Yes  ☐    No  ☒

The number of shares outstanding of the registrant’s common stock as of March 5, 2019 was 38,690,089. The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 30, 2018, was $74,821,990. There is no non-voting stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE:

This Form 10-K does not incorporate any document by reference.

OncoMed Pharmaceuticals, Inc.

Annual Report on Form 10-K

TABLE OF CONTENTS

		Page
	PART I
Item 1.	Business		4
Item 1A.	Risk Factors		26
Item 1B.	Unresolved Staff Comments		79
Item 2.	Properties		79
Item 3.	Legal Proceedings		79
Item 4.	Mine Safety Disclosures		79
	PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		80
Item 6.	Selected Financial and Other Data		80
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		82
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		94
Item 8.	Financial Statements and Supplementary Data		95
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		127
Item 9A.	Controls and Procedures		127
Item 9B.	Other Information		130
	PART III
Item 10.	Directors, Executive Officers and Corporate Governance		131
Item 11.	Executive Compensation		138
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		148
Item 13.	Certain Relationships and Related Transactions and Director Independence		152
Item 14.	Principal Accountant Fees and Services		153
	PART IV
Item 15.	Exhibits and Financial Statement Schedules		155
	Signatures		161

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PART I

Forward-Looking Statements and Market Data

This Annual Report on Form 10-K contains forward-looking statements that involve risks and uncertainties. All statements other than statements of historical facts contained in this Annual Report on Form 10-K are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “could,” “will,” “would,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “intend,” “predict,” “seek,” “contemplate,” “potential” or “continue” or the negative of these terms or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:

• the initiation, timing, progress and results of our preclinical studies and clinical trials, and our research and development programs;

• our ability to advance drug candidates into, and successfully complete, clinical trials;

• our receipt of future milestone payments and/or royalties, and the expected timing of such payments;

• our collaborators’ exercise of their license options;

• the structure, timing, and completion of the proposed business combination with Mereo BioPharma Group plc, Mereo US Holdings Inc., a Delaware corporation and a wholly-owned subsidiary of Mereo (“HoldCo”), and Mereo MergerCo One Inc.;

• our continued listing on The Nasdaq Global Select Market until the closing of the Merger;

• our continued compliance with the listing requirements of The Nasdaq Stock Market;

• HoldCo’s anticipated listing of American Depositary Shares on The Nasdaq Stock Market in connection with the closing of the Merger;

• the commercialization of our therapeutic candidates;

• the implementation of our business model, strategic plans for our business, drug candidates and technology;

• the scope of protection we are able to establish and maintain for intellectual property rights covering our drug candidates and technology;

• estimates of our expenses, future revenues, capital requirements and our needs for additional financing;

• the timing or likelihood of regulatory filings, including Investigational New Drug applications, and approvals;

• our ability to maintain and establish collaborations or obtain additional government grant funding;

• our financial performance; and

• developments relating to our competitors and our industry.

These statements relate to future events or to our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under “Risk Factors” and elsewhere in this Annual Report on Form 10-K.

Any forward-looking statement in this Annual Report on Form 10-K reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, industry and future growth. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

This Annual Report on Form 10-K also contains estimates, projections and other information concerning our industry, our business, and the markets for certain drugs, including data regarding the estimated size of those

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markets, their projected growth rates and the incidence of certain medical conditions. Information that is based on estimates, forecasts, projections or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained this industry, business, market and other data from reports, research surveys, studies and similar data prepared by third parties, industry, medical and general publications, government data and similar sources. In some cases, we do not expressly refer to the sources from which this data is derived. In that regard, when we refer to one or more sources of this type of data in any paragraph, you should assume that other data of this type appearing in the same paragraph is derived from the same sources, unless otherwise expressly stated or the context otherwise requires.

Unless the context requires otherwise, in this Annual Report on Form 10-K the terms “OncoMed,” “we,” “us” and “our” refer to OncoMed Pharmaceuticals, Inc.

ITEM 1. BUSINESS

OncoMed is a clinical-stage biopharmaceutical company focused on developing novel therapeutics that address the fundamental biology driving cancer’s growth, resistance, recurrence and metastasis. We have two internally discovered anti-cancer therapeutic candidates currently in active clinical development. The following summarizes the status of our therapeutic candidates, each of which will be described and discussed in further detail below under “Our Therapeutic Candidates.”

• Navicixizumab (Anti-DLL4/VEGF Bispecific, OMP-305B83). Navicixizumab is our bispecific monoclonal antibody that targets and inhibits both Delta-like ligand 4, or DLL4, and vascular endothelial growth factor, or VEGF. We have completed both a Phase Ia single-agent clinical trial of navicixizumab in patients with advanced solid tumors and a Phase Ib clinical trial ofnavicixizumab plus FOLFIRI or FOLFOX in patients with second-line metastatic colorectal cancer. We are currently conducting a Phase Ib clinical trial to assess navicixizumab in combination with a standard chemotherapy regimen of paclitaxel in patients with platinum-resistant ovarian cancer.  Enrollment in the Phase Ib clinical trial in patients with platinum-resistant ovarian cancer has recently been completed. We have worldwide rights to the navicixizumab program.

• Etigilimab (Anti-TIGIT, OMP-313M32).T-cell immunoreceptor with immunoglobulin and ITIM domains, or TIGIT, is an inhibitory receptor that is thought to potentially stop T-cells from attacking certain tumor cells. We are currently conducting a Phase Ia/b clinical trial of etigilimab. Etigilimab was tested as a single agent in patients with advanced or metastatic solid tumors in the now-complete Phase Ia portion of the Phase Ia/b trial, and in combination with nivolumab (anti-PD1) in the ongoing Phase Ib portion of the clinical trial. Enrollment in the Phase Ia/b clinical trial has been completed.  The etigilimab program is part of our collaboration with Celgene, which is discussed below under “Key Collaboration and License Agreements—Strategic Alliance with Celgene.” Celgene has the option to obtain an exclusive license to develop and commercialize etigilimab. If Celgene exercises its option on etigilimab, we would be eligible for a $35.0 million opt-in payment, potential future milestones and royalties, and Celgene would then lead and fully fund further development and commercialization of etigilimab.

Data for these two therapeutic candidates are being gathered to inform the possible advancement of these therapeutic candidates into later stage clinical trials independently or with existing or potential partners, with the goal of ultimately obtaining regulatory approvals and improving patient outcomes.

Potential Business Combination with Mereo BioPharma

On December 5, 2018, we entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) with Mereo BioPharma Group plc, a public limited company incorporated under the laws of England and Wales (“Mereo”), Mereo US Holdings Inc., a Delaware corporation and a wholly-owned subsidiary of Mereo (“HoldCo”), and Mereo MergerCo One Inc., a Delaware corporation and an indirect wholly-owned subsidiary of Mereo (“Merger Sub”), pursuant to which, among other matters, and subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, Merger Sub will merge with and into OncoMed, with OncoMed

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surviving the merger as a wholly owned subsidiary of HoldCo, and an indirect wholly-owned subsidiary of Mereo (the “Merger”). The respective boards of directors of OncoMed and Mereo have each unanimously approved the Merger Agreement.

Merger Consideration

Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each outstanding share of common stock, par value $0.001 per share, of OncoMed (“OncoMed Common Stock”) will be converted into the right to receive (i) a number of American Depositary Shares (the “Mereo Depositary Shares”), each representing a number of ordinary shares, with a nominal value of £0.003 per ordinary share, of Mereo (each, a “Mereo Ordinary Share”), determined by reference to the exchange ratio described below and (ii) one contingent value right (a “CVR”), representing the right to receive contingent payments upon the achievement by certain product candidates of OncoMed of certain performance milestones as described below.

Under the exchange ratio formula set forth in the Merger Agreement, as of immediately following the Effective Time, former security holders of OncoMed are expected to own approximately 25% of the then-outstanding Mereo Ordinary Shares (or approximately 21% of the outstanding Mereo Ordinary Shares on a fully-diluted basis) and existing Mereo security holders are expected to own approximately 75% of the outstanding Mereo Ordinary Shares (or approximately 79% of the outstanding Mereo Ordinary Shares on a fully-diluted basis), subject to adjustments for net cash held by OncoMed at the time of closing of the Merger, as described further in the Merger Agreement.

No fractional Mereo Depositary Shares or CVRs shall be issued in connection with the Merger. Any fractional Mereo Depositary Shares or CVRs shall be rounded down to the nearest whole Mereo Depositary Share or CVR, as applicable, with no cash being paid to compensate for such rounding. Application will be made to list the Mereo Depositary Shares on The Nasdaq Stock Market (“Nasdaq”).

Conditions to the Merger

The consummation of the Merger is subject to customary closing conditions, including (i) the absence of any temporary restraining order, preliminary or permanent injunction or any other order preventing the consummation of the Merger and any law that makes illegal the consummation of the Merger, (ii) the U.S. Securities and Exchange Commission (the “SEC”) having declared effective the Form F-4 Registration Statement of Mereo which will contain the proxy statement of OncoMed in connection with the Merger (the “Registration Statement”), (iii) the adoption of the Merger Agreement by the affirmative vote of the holders of a majority of the outstanding shares of OncoMed Common Stock entitled to vote thereon, (iv) Mereo having obtained all required shareholder approvals in connection with the issuance of Mereo Depositary Shares and the allotment and issuance of the Mereo Ordinary Shares underlying the Mereo Depositary Shares to be issued in the Merger and the grant of the CVRs to the stockholders of OncoMed pursuant to the Merger Agreement, (v) the approval for listing on the Nasdaq, subject to official notice of issuance, of the Mereo Depositary Shares to be issued in the Merger and the approval for admission to trading on the Alternative Investment Market operated by London Stock Exchange plc of the Mereo Ordinary Shares underlying the Mereo Depositary Shares to be issued in the Merger pursuant to the Merger Agreement, and the satisfaction of any other requirements of London Stock Exchange plc, (vi) subject to certain materiality exceptions, the accuracy of certain representations and warranties of each of OncoMed and Mereo contained in the Merger Agreement and the compliance by each party with the covenants contained in the Merger Agreement, and (vii) the absence of a material adverse effect with respect to each of OncoMed and Mereo. The parties expect the Merger will be completed in the second quarter of 2019.

Certain Other Terms of the Merger Agreement

OncoMed, Mereo and Merger Sub each have made certain representations, warranties and covenants in the Merger Agreement, including, among other things, covenants by OncoMed and Mereo to conduct their businesses in the ordinary course during the period between the execution of the Merger Agreement and consummation of the

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Merger, to refrain from taking certain actions specified in the Merger Agreement and to use commercially reasonable efforts to cause to be taken all actions necessary to consummate the Merger.

Neither OncoMed nor Mereo is permitted to solicit, initiate or knowingly encourage, induce or facilitate, any alternative transaction proposals from third parties or to engage in discussions or negotiations with third parties regarding any alternative transaction proposals. Notwithstanding this limitation, prior to OncoMed’s stockholders or Mereo’s shareholders, as applicable, approving the transaction, each party may under certain circumstances provide information to and participate in discussions or negotiations with third parties with respect to an alternative transaction proposal that its board of directors has determined in good faith constitutes or is reasonably likely to lead to a superior proposal. Each party’s board of directors may change its recommendation to its stockholders or shareholders, as applicable, (subject to the other party’s right to terminate the Merger Agreement following such change in recommendation) in response to a superior proposal if the board of directors determines in good faith that the failure to take such action would reasonably be expected to be inconsistent with the directors’ duties under applicable law.

The Merger Agreement provides for certain termination rights for each of OncoMed and Mereo. Upon termination of the Merger Agreement under specified circumstances, either party may be required to pay the other party a termination fee of $1,721,193, and in some circumstances reimburse the other party’s expenses up to a maximum of $750,000, in each case, subject to any adjustment for value added tax.

At the Effective Time, the Board of Directors of Mereo is expected to be expanded to consist of ten members to accommodate the appointment of current OncoMed directors Michael Wyzga and Dr. Deepa Pakianathan as independent non-executive directors. The existing Mereo directors are expected continue to serve in their current positions.

Support Agreements

Simultaneously with the execution and delivery of the Merger Agreement, certain of our officers and directors who are stockholders of OncoMed, in their respective capacities as stockholders of OncoMed (together with certain of their respective affiliates), entered into support agreements with Mereo (the “OncoMed Support Agreements”), pursuant to which such individuals have agreed, among other things, to (i) vote their respective shares of OncoMed Common Stock in favor of the adoption of the Merger Agreement, against any alternative proposal and against any action or agreement that would reasonably be expected to frustrate the purposes, prevent, delay or otherwise adversely affect the consummation of, the transactions contemplated by the Merger Agreement and (ii) grant an irrevocable proxy to Mereo to vote such individual’s shares in the manner contemplated in clause (i) of this paragraph. The persons signing the OncoMed Support Agreements currently beneficially own an aggregate of 11% of the outstanding OncoMed Common Stock.

Simultaneously with the execution and delivery of the Merger Agreement, each of the officers and directors of Mereo holding Mereo stock or options, in their respective capacities as shareholders of Mereo (together with certain of their respective affiliates, collectively, the “Mereo D&Os”), Novartis Pharma AG and certain funds under the management of Invesco Asset Management Limited have entered into support agreements with the OncoMed (the “Mereo Support Agreements”), pursuant to which such individuals and entities have agreed, among other things, to (i) vote their respective shares of Mereo Ordinary Shares in favor of the approval of the issuance of Mereo Depositary Shares and the allotment and issuance of the Mereo Ordinary Shares underlying the Mereo Depositary Shares to be issued in the Merger and the grant of the CVRs pursuant to the Merger Agreement, against any alternative proposal and against any action or agreement that would reasonably be expected to frustrate the purposes, prevent, delay or otherwise adversely affect the consummation of, the transactions contemplated by the Merger Agreement and (ii) solely with respect to the Mereo D&Os and the Mereo Support Agreement entered into by Novartis Pharma AG, execute any forms of an irrevocable proxy required to appoint OncoMed as such individual’s proxy to vote such individual’s shares in the manner contemplated in (i) of this paragraph.  The individuals and entities signing the Mereo Support Agreements currently hold legal title to an aggregate of approximately 52% of the outstanding Mereo Ordinary Shares.

Contingent Value Rights Agreement

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At the Effective Time, Mereo and Computershare Inc., as rights agent, will enter into a Contingent Value Rights Agreement (the “CVR Agreement”). Pursuant to the CVR Agreement, OncoMed’s stockholders will receive one CVR for each outstanding share of OncoMed Common Stock immediately prior to the Effective Time. Each CVR will represent the right to receive payments related to OncoMed’s etigilimab (anti-TIGIT, OMP-313M32) and navicixizumab (anti-DLL4/VEGF, OMP-305B83) therapeutic candidates, whereby CVR holders will be entitled to receive (i) upon the exercise by Celgene Corporation or certain affiliates thereof (together, “Celgene”) of the exclusive option granted by OncoMed to Celgene in relation to etigilimab pursuant to OncoMed’s collaboration agreement with Celgene, which is discussed below under “Key Collaboration and License Agreements—Strategic Alliance with Celgene” (the “Option Exercise”), and actual receipt by OncoMed of the cash payment payable by Celgene pursuant to such Option Exercise, a number of Mereo Depositary Shares equal to (x) the cash payment received by Mereo upon the Option Exercise, net of any tax and other reasonable expenses, divided by (y) the volume-weighted average price per Mereo Depositary Share for the ten (10) trading day period immediately following the date of the announcement by Mereo of such cash payment, and (ii) certain cash payments related to navicixizumab if, within 18 months of the closing of the Merger, Mereo or any of its subsidiaries enters into a definitive agreement with one or more third parties regarding such products and, within five years of the closing of the Merger, Mereo or any of its subsidiaries receives certain eligible cash milestone payments. In order to be eligible for the CVR, an OncoMed stockholder must be a holder of record at the close of business on the last business day immediately prior to the Effective Time.

The CVR will not be transferable, except in limited circumstances, and will not be registered with the SEC. The Mereo Depositary Shares issuable pursuant to the CVR Agreement will be registered with the SEC under the Registration Statement on Form F-4 referred to in “Merger Agreement—Conditions to the Merger” above.

Strategy

We are focused on developing novel therapeutic candidates directed to fundamental biologic pathways and targets thought to drive cancer’s growth, resistance, recurrence and metastasis. The inability of the immune system to shut down tumor growth, through a series of tumor-associated resistance mechanisms, enables the growth and recurrence of cancers. We have discovered and advanced therapeutic candidates specifically targeting key pathways that drive the growth of cancer, including cancer stem cells, or CSCs, as well as immuno-oncology therapeutic candidates that aim to bolster immune system recognition of cancer cells and/or suppress immune system evasion mechanisms. Key elements of our strategy to achieve this goal are:

• Advance our current therapeutic candidates in clinical trials to determine their utility as treatments for cancer. Our Phase I clinical trials with navicixizumab and etigilimab are designed to establish the maximum tolerated dose and safety profile, identify a therapeutic index, and look for initial indications of efficacy and biomarker effects of our drugs alone or as part of a combination regimen.

• Collaborate with our partner Celgene to advance our partnered program forward in clinical development. We are working closely with our partner to advance our partnered program, etigilimab, in development. Under our collaboration, Celgene has an option during a certain time period through the end of a specified Phase I trial to obtain an exclusive license to etigilimab. In the event that this option is not exercised at the end of the relevant option period, we will retain worldwide rights to the etigilimab program.

• Use collaborations with pharmaceutical and biopharmaceutical companies to provide funding, create value and leverage partners’ expertise to bring medicines to patients. To facilitate the capital-efficient development and commercialization of our unpartnered programs such as navicixizumab, we routinely engage in partnering discussions with a range of pharmaceutical and biopharmaceutical companies.

Our therapeutic candidate navicixizumab targets DLL4 on the Notch pathway in addition to VEGF. Through clinical and preclinical studies, we observed that navicixizumab has a multi-pronged mechanism of action, including anti-CSC, anti-angiogenesis and immuno-oncology properties. We have conducted preclinical studies of anti-DLL4 plus anti-VEGF in combination with anti-PD-1 inhibitors and observed synergistic anti-tumor responses and heightened immune cell memory responses that are greater than can be achieved with any of the agents when used alone.

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Our immuno-oncology therapeutic candidate, etigilimab, targets TIGIT. TIGIT blocks T-cells from attacking tumor cells, and shares some properties with the inhibitory protein PD-1.  Our anti-TIGIT therapeutic candidate is intended to activate the immune system through multiple mechanisms and enable substantial anti-tumor activity.

Our Therapeutic Candidates

Navicixizumab (anti-DLL4/VEGF bispecific, OMP-305B83)

We utilized our proprietary bispecific antibody technology to generate a monoclonal antibody, navicixizumab (anti-DLL4/VEGF bispecific, OMP-305B83), that targets both DLL4 and VEGF. VEGF is the target for bevacizumab (Avastin^®), which is currently approved and used to treat a number of solid tumors including colorectal, NSCLC, breast, renal cell, brain, cervical, and ovarian cancers and had worldwide revenues of $7.4 billion in 2015. DLL4 is a ligand which is responsible in part for tumor growth and angiogenesis. Navicixizumab is designed to inhibit the function of both DLL4 and VEGF and thereby has the potential to induce anti-tumor activity while mitigating certain toxicities.  Preclinical data of dual DLL4 and VEGF inhibition in xenograft tumor models have demonstrated superior anti-tumor activity compared to either anti-DLL4 or anti-VEGF alone and anti-tumor activity was observed in multiple tumor types including colon, ovarian, breast and pancreatic. We have also observed that navicixizumab induced a down-regulation of vasculature-related genes and decreased vasculature density.  An improved cardiac safety profile was also observed in cynomolgus monkeys compared to anti-DLL4 alone.

In 2018, together with our clinical collaborators, we published the results of the Phase Ia clinical trial of single-agent navicixizumab (Jimeno, A., Moore, K.N., Gordon, M. et al. Invest New Drugs (2018)).  The most commonly enrolled tumor types in the trial were ovarian (12), colorectal (11) and cancers of the breast, pancreas, uterus and endometrium (four patients of each). Four patients (three ovarian cancer patients and one uterine carcinosarcoma patient) had a partial response, and 17 patients had stable disease. There were 19 patients that had a reduction in the size of their target lesions, including seven patients with ovarian cancer. Six of these seven ovarian cancer patients had received prior bevacizumab. Four patients remained on study for >300 days and two of these patients were on study for >500 days. The most common drug related adverse events of any grade were hypertension (58%), headache (29%), fatigue (26%), and pulmonary hypertension (18%). Infusion reactions associated with anti-drug antibodies impacting drug exposure occurred in 11% of patients.

A Phase 1b trial of navcixizumab plus FOLFIRI or FOLFOX in patients with second-line metastatic colorectal cancer has been completed. We are currently conducting a Phase Ib clinical trial to assess the safety, preliminary efficacy, immunogenicity and pharmacokinetics of navicixizumab in combination with standard-of-care chemotherapy paclitaxel in ovarian cancer. The patients enrolled in the Phase Ib multicenter, open-label, dose-escalation and expansion trial in ovarian cancer are patients with platinum-resistant ovarian cancer (including fallopian tube or primary peritoneal cancers) who have previously received bevacizumab and/or have failed greater than two prior therapies. Enrollment in the Phase Ib clinical trial in ovarian cancer has been completed.

We presented interim results through August 13, 2018 from the ongoing Phase 1b trial investigating navicixizumab in combination with paclitaxel in patients with platinum-resistant ovarian cancer in October 2018 at the European Society for Medical Oncology meeting (“ESMO 2018”). The patients had received a median of four prior therapies, all of whom had received prior paclitaxel and 69% had received prior bevacizumab. Twenty-two of the 26 patients (85%) treated with the novel regimen experienced clinical benefit. Notably, 11 of the 26 patients (42%) achieved a partial response.  The RECIST response rate in the bevacizumab naïve and bevacizumab pretreated patients was 57% and 33%, respectively.  The overall median progression-free survival was 5.4 months (95% CI:  3.5-8.0 months). The median PFS for the subset of bevacizumab pretreated patients was 3.7 months.   Historical response rates for patients with heavily pretreated platinum-resistant ovarian cancer treated with chemotherapy are typically 15% or less.  

Interim cancer antigen 125, or CA-125, data from the Phase Ib trial was also presented at ESMO 2018.  CA-125 is a widely utilized tumor marker for ovarian cancer that is used along with radiographic assessments to determine the efficacy outcome to treatment. Of the 23 patients evaluable for a Gynecologic Cancer Intergroup

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(GCIG) CA-125 response outcome, 14 (61%) had a response. Specifically, the GCIG CA-125 response rates in the bevacizumab naïve and bevacizumab pretreated patients were 100% and 47%, respectively.

The interim Phase Ib data presented at ESMO 2018 indicated that the most common related adverse events of any grade related to navicixizumab were hypertension (53%), fatigue (32%), diarrhea (24%) and headache (18%). Other related rare adverse events of special interest were one Grade 2 pulmonary hypertension, one Grade 1 related heart failure, one Grade 4 related gastrointestinal perforation and one Grade 4 thrombocytopenia. Three patients (12%) experienced infusion reactions that were associated with anti-drug antibodies which impacted drug exposure.

Navicixizumab was previously a part of our strategic collaboration with Celgene Corporation, or Celgene, which is discussed below under “Key Collaboration and License Agreements—Strategic Alliance with Celgene.” In September 2018, Celgene informed us of its decision not to exercise its option to license navicixizumab due to strategic product portfolio considerations. Celgene terminated the collaboration agreement with respect to navicixizumab, effective January 23, 2019.  As a result, we have worldwide rights to the navicixizumab program.

Etigilimab (Anti-TIGIT; OMP-313M32)

TIGIT (T-cell immunoreceptor with Ig and ITIM domains) is an inhibitory receptor similar to the inhibitory protein PD-1, and via interactions with its ligands may block T-cells from attacking tumor cells.  Our anti-TIGIT therapeutic candidate, etigilimab (OMP-313M32), is intended to activate the immune system, through multiple mechanisms, and enable anti-tumor activity.  Etigilimab recently completed the single-agent Phase Ia portion of a Phase Ia/b clinical trial, which enrolled patients with advanced or metastatic solid tumors, and is currently in the Phase Ib portion of the clinical trial, which combines etigilimab with anti-PD1 (nivolumab).  Enrollment in the Phase Ia/b clinical trial has been completed.

We presented initial interim results through October 3, 2018 from the Phase 1a dose escalation portion of the Phase 1a/b trial of etigilimab in November 2018 at the Society for Immunotherapy of Cancer meeting.  The interim results that were presented included data from 18 patients with a variety of late stage metastatic cancers including colorectal, endometrial, pancreatic, among others, who were treated with etigilimab at doses ranging from 0.3 to 20 mg/kg every other week. There were no dose-limiting toxicities through the 20 mg/kg every other week dose.  In this "all comers" difficult-to-treat patient population, stable disease was observed in 7 (38.9%) patients with prolonged disease control seen in some patients with the longest durations of stable disease being 205 and 225 days.  Of the remaining 11 patients in the study, ten patients had progressive disease, and one patient did not meet criteria to be evaluated for efficacy. The most frequent treatment-related adverse events were rash (27.8%), fatigue (16.7%), nausea (16.7%), pruritus (16.7%), and cough (11.1%). Immune-related adverse events, signaling immune activation included rash (27.8%), pruritus (16.7%), autoimmune hepatitis (5.6%) and stomatitis (5.6%). Grade 3 or higher treatment-related AEs included rash (16.7%), abdominal pain, embolism, hypertension, and pulmonary embolism (11.1% each).  A biomarker analysis was also presented at the meeting which demonstrated a significant reduction of peripheral T regulatory cells (Tregs), most significant at doses ≥ 10 mg/kg, and signals of immune activation.  These interim results are consistent with preclinical studies with a surrogate anti-TIGIT antibody and suggest select immune cell depletion and activation of T cell signaling in patients treated with the drug.

In preclinical studies with anti-TIGIT antibodies, we have observed immune activation and robust anti-tumor activity — both as a single agent and in combination with other cancer immunotherapeutics including anti-PD1.  At the 2017 American Association of Cancer Research (AACR) meeting, we presented preclinical data demonstrating the capacity of an anti-TIGIT antibody to induce long-term immune memory and durable anti-tumor response. Also, at the 2018 AACR meeting we presented data that showed that anti-TIGIT treatment reduced the abundance of regulatory T-cells (Tregs) within tumors in animal models, and mechanistic studies demonstrated an important contribution of effector function for anti-tumor efficacy in animal models.

Etigilimab is part of our collaboration with Celgene, and Celgene has an option to obtain an exclusive license to etigilimab. If Celgene exercises its option to obtain a license to etigilimab, Celgene would then lead and fully fund further development and commercialization, and we would be entitled to receive a $35.0 million opt-in payment, along with potential future milestones and royalties. Additional details related to our collaboration with Celgene are described below under “Key Collaboration and License Agreements—Strategic Alliance with Celgene.”

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Wnt Pathway Small Molecule Inhibitors

As part of our Bayer collaboration, we and Bayer jointly initiated discovery efforts to identify small molecule inhibitors of the Wnt pathway. We developed assay technologies and transferred those to Bayer. Bayer utilized its extensive medicinal chemistry assets and capabilities to discover small molecule drug candidates that modulate Wnt signaling, and we employed our internal lead validation technologies to evaluate candidate compounds as a basis for advancing them into development. OncoMed participates in a Joint Steering Committee, but is currently conducting no other activities related to the Wnt pathway small molecule program.

Programs Discontinued in 2018-2019

During the course of 2018 and early 2019, we decided to discontinue development of certain therapeutic product candidates. The discontinued programs are as follows:

• GITRL-Fc (OMP-336B11).Glucocorticoid-induced tumor necrosis factor receptor-related protein, or GITR, and its ligand, GITRL, are members of the tumor necrosis factor, or TNF, family of receptors and ligands.  TNF ligands are trimeric proteins and their binding to receptors leads to activation of intracellular signaling.  Our GITR ligand therapeutic candidate, GITRL-Fc, is engineered using a novel single-gene, linkerless trimer technology that is designed to enable effective activation of GITR. Activation of GITR enhances T-cell modulated immune responses, which may be a potential target for stimulating immune system activity against tumor cells. GITRL-Fc is currently in a Phase Ia clinical trial in patients with advanced or metastatic solid tumors, although enrollment in the clinical trial has ended and OncoMed does not plan to advance GITRL-Fc beyond Phase Ia.

• Rosmantuzumab (anti-RSPO3, OMP-131R10). Rosmantuzumab is a monoclonal antibody targeting the RSPO-LGR cancer stem cell, or CSC, pathway, and it was a part of our strategic collaboration with Celgene, which is discussed below under “Key Collaboration and License Agreements—Strategic Alliance with Celgene.”  Rosmantuzumab was recently studied in a Phase Ia/b clinical trial, but the trial failed to provide compelling evidence of clinical benefit. In October 2018, Celgene notified us of its decision not to exercise its option to license rosmantuzumab and terminated our collaboration agreement with respect to rosmantuzumab, effective February 12, 2019. We retain worldwide rights to the rosmantuzumab program.

Key Collaboration and License Agreements

In the normal course of our business, we enter into a variety of collaboration, partnership and license arrangements with third parties, certain of which are discussed below.

Strategic Alliance with Celgene

In December 2013, we entered into a collaboration agreement with Celgene pursuant to which we and Celgene were to collaborate on research and development programs directed to the discovery and development of novel biologic therapeutics, and, if Celgene exercised its option to do so, the discovery, development and commercialization of novel small molecule therapeutics.

Our etigilimab program is the last remaining biologic therapeutic program that is currently active under our collaboration agreement with Celgene.  Celgene has an option to obtain an exclusive license to develop further and commercialize biologic therapeutics in the etigilimab program, which may be exercised during time periods specified in the collaboration agreement through the earlier of completion of a certain clinical trial or the twelfth anniversary of the date of the collaboration agreement. Pursuant to the agreement, we lead the development of etigilimab prior to Celgene’s exercise of its option for the etigilimab program. We are responsible for funding all research and development activities for therapeutics in the etigilimab program prior to Celgene’s exercise of the option for the program. Upon option exercise by Celgene, we will be required to enter into an agreed form of a license agreement with Celgene, pursuant to which Celgene retains all rights to develop further and commercialize biologic therapeutic products in the etigilimab program on a worldwide basis, with certain support for development from us.  

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We are eligible to receive a $35.0 million opt-in payment upon Celgene’s exercise of the option for the etigilimab program. The collaboration also includes milestone payments for achievement of specified development, regulatory and commercial milestones, paid on a per-product and per-program basis. The option exercise payments and payments for achievement of development, regulatory and commercial milestones under the agreement may total up to $440.0 million, for products in the etigilimab program, including the $35.0 million opt-in payment.  We previously received a $2.5 million milestone payment for the etigilimab program.  Accordingly, the future potential milestone payments for products in the etigilimab program under the collaboration total up to $437.5 million, including the $35.0 million opt-in payment. For the etigilimab program, if the option is exercised and the program is successfully commercialized by Celgene, we are eligible to receive tiered royalties equal to a percentage of net product sales worldwide in the high-single digits to the mid-teens. We are not eligible to receive any further research or development milestone payments for etigilimab prior to Celgene’s decision regarding option exercise with respect to etigilimab.

Our collaboration agreement with Celgene will terminate upon the expiration of all of Celgene’s payment obligations under the license agreement entered into with respect to the etigilimab program following Celgene’s exercise of an option for such program, or if Celgene’s option on the etigilimab program expires without Celgene exercising its option. The collaboration agreement may be terminated by either party for the insolvency of, or an uncured material breach of the collaboration agreement by, the other party. In addition, Celgene may terminate the collaboration agreement in its entirety or with respect to the etigilimab program, for any reason, upon 120 days’ prior written notice to us and upon 60 days’ prior written notice in the event that Celgene reasonably believes that such termination is necessary in order to comply with any antitrust laws. We may also terminate the collaboration agreement with respect to the etigilimab program in the event that Celgene challenges the licensed patents with respect to such program.

If Celgene does not exercise its option with respect to the etigilimab program before the option for that program expires, we will retain worldwide rights to such program. In addition, under certain termination circumstances, we would also have worldwide rights to the etigilimab program.

Our collaboration agreement with Celgene previously included our demcizumab, navicixizumab, and rosmantuzumab biologic therapeutic programs.  Celgene, however, terminated the collaboration agreement with respect to both demcizumab and navicixizumab, effective January 23, 2019, and terminated the collaboration agreement with respect to rosmantuzumab, effective February 12, 2019.  Prior to such terminations, Celgene had options to obtain an exclusive license to develop further and commercialize biologic therapeutics in these programs under the agreement.  As a result of these terminations, we now have worldwide rights to each of these programs, including navicixizumab.  Under certain circumstances, we may owe Celgene single-digit percentage royalties on therapeutic products in these programs if we elect to continue to commercialize them and they are successfully commercialized, subject to a cap.

Celgene previously had the right to designate up to two additional biologic therapeutic programs targeting the RSPO-LGR signaling pathway or an undisclosed pathway for inclusion in the collaboration, but this right expired on the fourth anniversary of the date of the collaboration agreement. Celgene also had an additional option, which expired unexercised on the fourth anniversary of the date of the collaboration agreement, that would have permitted Celgene to discover, develop and commercialize small molecule therapeutics directed to targets in an undisclosed pathway under the collaboration.

In December 2013, we sold 1,470,588 shares of our common stock to Celgene at a price of $15.13 per share, which resulted in gross proceeds to us of $22.2 million. We agreed with Celgene that, after we have qualified for the use of Form S-3 and upon the written request of Celgene, we would prepare and file with the Securities and Exchange Commission a registration statement on Form S-3 for purposes of registering the resale of the shares specified in Celgene’s written request. We also agreed, among other things, to indemnify Celgene under the registration statement from certain liabilities and to pay all fees and expenses (excluding any legal fees of the selling holder(s) above $10,000 per registration statement and any underwriting discounts and selling commissions) incident to our obligations to register the resale of Celgene’s shares of our common stock.

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Strategic Alliance with Bayer

In June 2010, we entered into a strategic alliance with Bayer to discover, develop and commercialize novel anti-CSC biologic and small molecule therapeutics targeting the Wnt signaling pathway. Under this collaboration, Bayer could have exercised its option to obtain an exclusive license to develop and commercialize biologic therapeutics in one or more defined biologic therapeutic classes. However, effective June 16, 2017, Bayer terminated all biologic therapeutic programs under this collaboration. Under this collaboration, we and Bayer also agreed to jointly conduct research to discover potential new small molecule therapeutics targeting the Wnt pathway, and we granted Bayer a non-exclusive license to our Wnt pathway assay technology for the research and development of such small molecule therapeutics. Bayer may, within a specified time period, elect to advance such small molecule therapeutics into development, and obtain an exclusive license to commercialize such therapeutics. Bayer leads discovery, development and commercialization of such small molecule therapeutics. Bayer is obligated to make payments to us upon achievement of research, development, regulatory and commercial milestones for small molecule therapeutics that could total up to $112.0 million per program, in addition to single-digit percentage royalties on net product sales.

Our agreement with Bayer includes several committees, including a Joint Steering Committee and a Joint Development Sub-Committee, among others, that meet periodically to discuss our activities in the collaboration. Decisions are generally made jointly through these committees, however Bayer generally has final decision-making authority with respect to development of small molecule projects.

Our agreement with Bayer and their payment obligations thereunder will expire on a product by product and country by country basis on the last to occur of (i) the expiry of certain patent rights covering the product in such country, (ii) the expiration of any regulatory exclusivity period in such country, or (iii) ten years from first commercial sale of such product in such country. Our agreement will also expire if Bayer does not elect to advance the small molecule therapeutics program into development within the time period specified in the agreement. Either party may terminate the agreement for any material breach by the other party that the breaching party fails to cure. Bayer may terminate the agreement for any reason or no reason upon prior notice to us. Either party may terminate the agreement upon bankruptcy or insolvency of the other party, and we may terminate the agreement if Bayer challenges the licensed patents.

Strategic Alliance with GSK

On December 7, 2007, the Company entered into a Collaboration and Option Agreement with GSK. The agreement was formed to discover, develop and market novel antibody therapeutics to target CSCs. The agreement gave GSK the option to obtain an exclusive license for certain product candidates targeting the Notch signaling pathway. Effective October 28, 2017, GSK terminated the agreement in its entirety.

The University of Michigan

In January 2001, Cancer Stem Cell Genomics, Inc. entered into a license agreement with the Regents of the University of Michigan, or the University of Michigan. In 2004, Cancer Stem Cell Genomics, Inc. merged with and into us, and we assumed this license agreement with the University of Michigan. Under the agreement and in exchange for certain additional consideration, the University of Michigan has granted to us an exclusive, royalty-bearing, worldwide license under certain patent rights, and a nonexclusive, worldwide license under certain technologies, to make, have made, import, use, market, offer for sale or sell products and to practice processes for any use, including human therapeutic or diagnostic use, that are covered by the licensed patents. Technologies covered by the licensed patents include certain enriched CSC compositions, CSC markers, diagnostic methods, as well as certain therapeutic methods using certain anti-CSC antibodies. Additional details regarding certain patent rights exclusively licensed to us under the agreement are described in more detail below under “Intellectual Property.” The University of Michigan reserved certain rights to the licensed patents for noncommercial research and education purposes.

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We are required to pay to the University of Michigan an annual license maintenance fee and reimburse the University of Michigan for expenses associated with the prosecution and maintenance of the licensed patents, both of which are credited towards future royalty payments. We are also required to pay to the University of Michigan percentage royalties in the low single digits based on net sales by us or our sublicensees of products or processes covered by the licensed patents until expiry of the patents. With respect to one family of licensed patent applications that does not relate to any of our lead therapeutic programs, we are also required to pay a tiered, single-digit percentage of any sublicense revenues, including any upfront or milestone payments, received from any sublicensees under such family of patents. Once the University of Michigan has received $10.0 million in royalties, we may, at our option, convert the license to a fully paid-up license provided we transfer to the University of Michigan shares of our non-voting capital stock equal to 0.25% of the fully diluted number of shares outstanding at the time of our election. We are required to use commercially reasonable efforts to develop and commercialize products and processes within certain time periods.

If not terminated earlier, this agreement terminates upon the expiration of all patent rights licensed under this agreement. Either party may terminate the agreement for any material breach by the other party that the breaching party fails to cure. We may terminate the agreement at any time upon expiration of a defined notice period.

Lonza Sales AG

In August 2012, we entered into a multi-product license agreement with Lonza Sales AG, or Lonza. This agreement relates to the process development and manufacturing of our biologics portfolio with Lonza. Under the multi-product license agreement, we receive licenses to utilize Lonza’s glutamine synthetase gene expression system and related technologies for commercial production of our product candidates. Under this license agreement, we paid an upfront payment of $488,000 and are obligated to pay Lonza payments up to £200,000 (approximately $254,000) per licensed product on achievement of specified milestones, and royalties up to the very low single digits on sales of licensed products. The multi-product license agreement shall remain in force on a product by product and country by country basis until expiration of our obligation to make payments to Lonza with respect to such product in such country. The agreement can otherwise be terminated by us for any reason or no reason upon advance written notice to Lonza, or by either us or Lonza upon the other party’s material breach of the agreement, or if the other party ceases to carry on business. Lonza may also terminate the licenses granted under the agreement if we challenge any of the Lonza patent rights.

Intellectual Property

Our commercial success depends in part on our ability to obtain and maintain proprietary protection for our product candidates, novel biological discoveries, antibody technologies, biomarkers, screening technologies and other know-how, to operate without infringing on the proprietary rights of others and to prevent others from infringing our proprietary rights. Our policy is to seek to protect our proprietary position by, among other methods, filing U.S., international and foreign patent applications related to our proprietary technology, inventions and improvements that are important to the development and implementation of our business. We also rely on trade secrets, know-how and continuing technological innovation to develop and maintain our proprietary position.

As a normal course of business, we pursue both composition-of-matter patents and method-of-use patents for our product candidates. We also seek patent protection with respect to novel biological discoveries, including new targets and applications, as well as to biomarkers and novel antibody technologies.

In addition to the patents and patent applications owned solely by us, our patent portfolio also includes patents and patent applications licensed from the University of Michigan. As of December 31, 2018, we had an exclusive, worldwide license from the University of Michigan to over 40 issued U.S. and foreign patents. A few of the patents in the portfolio licensed from the University of Michigan are jointly owned by us.

The patent portfolios for navicixizumab and etigilimab as of December 31, 2018, are summarized below.

• Navicixizumab (Anti-DLL4/VEGF bispecific, OMP-305B83). Our navicixizumab portfolio includes a core patent family that is solely owned by us and covers both the composition of matter and methods of use of navicixizumab.  As of December 31, 2018, this family includes four issued U.S. patents and two

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pending U.S. patent applications, as well as corresponding patents or patent applications in certain foreign jurisdictions. Patents that have issued or will issue in this core family are generally expected to expire in 2032.

Our portfolio also includes several other issued U.S. and foreign patents that relate to navicixizumab, certain methods of its use, and/or related biomarkers, which expire between 2021 and 2033.  An issued U.S. patent exclusively licensed by us from the University of Michigan that broadly covers the use of anti-DLL4 antibodies for the treatment of cancer expires in 2022.

Additional U.S. and foreign patent applications solely owned by us that relate to navicixizumab, certain methods of its use, and/or related biomarkers are also pending and, to the extent they issue, are expected to expire between 2027 and 2036.

• Etigilimab (Anti-TIGIT, OMP-313M32).  A core patent family in our etigilimab portfolio is solely owned by us and covers both the composition of matter and methods of use of etigilimab. This family includes an issued U.S. composition-of-matter patent, which expires in 2037, pending patent applications in the U.S. and certain foreign jurisdictions, and a foreign patent.  To the extent that patent applications in this core patent family issue as patents, they are generally expected to expire in 2036.

Also included in our etigilimab portfolio is a PCT application that relates to certain uses of our etigilimab therapeutic candidate.  To the extent that this application is used to establish U.S. and/or foreign patent applications that issue as patents, the patents are generally expected to expire in 2037.

The term of individual patents depends upon the legal term for patents in the countries in which they are obtained. In most countries, including the United States, the patent term is 20 years from the earliest filing date of a non-provisional patent application. In the United States, a patent’s term may be lengthened by patent term adjustment, which compensates a patentee for administrative delays by the U.S. Patent and Trademark Office, or the USPTO, in examining and granting a patent, or may be shortened if a patent is terminally disclaimed over an earlier filed patent. The term of a patent that covers a drug or biological product may also be eligible for patent term extension when FDA approval is granted, provided statutory and regulatory requirements are met. Under the Biologics Price Competition and Innovation Act of 2009, or BPCIA, products approved as a biological product under a biologics license application, or BLA, in the United States may qualify for a 12-year period of non-patent exclusivity. See “Government Regulation—Biologics License Applications” below for additional information on such exclusivity. In the future, if and when our product candidates receive approval by the FDA or foreign regulatory authorities, we expect to apply for patent term extensions on issued patents covering those products, depending upon the length of the clinical trials for each drug and other factors, including those involved in the filing of a BLA.

As with other biotechnology and pharmaceutical companies, our ability to maintain and solidify our proprietary position for our product candidates and technologies will depend on our success in obtaining effective claims and enforcing those claims once granted. However, patent applications that we may file or license from third parties may not result in the issuance of patents. We also cannot predict the breadth of claims that may be allowed or enforced in our patents. The issued patents that we own or license, or may receive in the future, may be challenged, invalidated or circumvented. For example, we cannot be certain of the priority of inventions covered by pending third-party patent applications. If third parties have prepared and filed patent applications in the United States that also claim technology or therapeutics to which we have rights, we may have to participate in interference proceedings in the USPTO to determine priority of invention, which could result in substantial costs to us, even if the eventual outcome is favorable to us. We may also need to participate in legal proceedings before courts in the U.S. or foreign countries, inter partes or post-grant review proceedings before the USPTO, or opposition proceedings before the EPO regarding patents in our portfolio. In addition, because of the extensive time required for clinical development and regulatory review of a product candidate we may develop, it is possible that, before any of our product candidates can be commercialized, any related patent may expire or remain in force for only a short period following commercialization, thereby reducing any advantage of any such patent.

Our commercial success, like the commercial success of other companies in our industry, will depend in part on not infringing upon the proprietary rights of third parties. It is uncertain whether the issuance of any third-party patent would require us to alter our development or commercial strategies, or our product candidates or processes, obtain licenses or cease certain activities. We or our collaborators may not have rights under some patents that may

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cover the composition of matter, manufacture or use of product candidates that we seek to develop and commercialize, drug targets to which our product candidates bind, or technologies that we use in our research and development activities. As a result, our ability to develop and commercialize our product candidates may depend on our ability to obtain licenses or other rights under such patents. The third parties who own or control such patents may be unwilling to grant those licenses or other rights to us or our collaborators under terms that are commercially viable or at all. We may become involved in legal proceedings before courts in the U.S. or foreign countries or other proceedings, such as opposition proceedings before the EPO or inter partes review, post-grant review, or interference proceedings before the USPTO, challenging the validity or enforceability of such patents owned by third parties, but such proceedings may not be resolved in our favor. Third parties who own or control such patents could bring claims based on patent infringement against us or our collaborators and seek monetary damages and to enjoin further clinical testing, manufacturing and marketing of the affected product candidates or products. The biotechnology and pharmaceutical industries are characterized by extensive litigation regarding patents and other intellectual property rights. If a third party commences a patent infringement action against us, or our collaborators, it could consume significant financial and management resources, regardless of the merit of the claims or the outcome of the litigation. If we do not settle and are not successful in defending against any such patent infringement action, we could be required to pay substantial damages or we, or our collaborators, could be forced to stop or delay research, development, manufacturing or sales of the product or product candidate that is claimed by the third party’s patent. For more information related to third party rights, see "Risk Factors – Risks related to our Intellectual Property".

In addition to patents, we rely upon unpatented trade secrets and know-how and continuing technological innovation to develop and maintain our competitive position. We seek to protect our proprietary information, in part, using confidentiality agreements with our collaborators, employees and consultants, and invention assignment agreements with our employees. We also have agreements requiring assignment of inventions with selected consultants and collaborators. The confidentiality agreements are designed to protect our proprietary information and, in the case of agreements or clauses requiring invention assignment, to grant us ownership of technologies that are developed through a relationship with a third party.

Competition

We compete in the pharmaceutical, biotechnology and other related markets that address solid tumor cancers and hematologic cancers. We face significant competition from many pharmaceutical and biotechnology companies that are also researching and selling products designed to address these markets. Many of our competitors have materially greater financial, manufacturing, marketing, legal, research and drug development resources than we do. Large pharmaceutical companies in particular have extensive expertise in preclinical and clinical testing and in obtaining regulatory approvals for drugs. In addition, academic institutions, government agencies, and other public and private organizations conducting research may seek patent protection with respect to potentially competitive products or technologies. These organizations may also establish exclusive collaborative or licensing relationships with our competitors.

It is possible that our competitors will develop and market drugs or other treatments that are less expensive and more effective than our product candidates, or that will render our product candidates obsolete. It is also possible that our competitors will commercialize competing drugs or treatments before we or our current or future partners can launch any products developed from our product candidates. If approved for marketing by the FDA or other regulatory agencies worldwide, our product candidates would compete against existing cancer treatments such as Avastin^®, Erbitux^®, Yervoy™, Keytruda^®, Opdivo^®, chemotherapies, and potentially against other novel drug candidates or treatments that are currently in development. There have been several additional monoclonal antibodies in development for cancer, such as Abbvie’s ABT-165, an anti-DLL4/VEGF dual variable domain immunoglobulin, and ABL Bio’s ABL001, an anti-DLL4/VEGF antibody, both of which are reportedly being studied in clinical trials. In the immuno-oncology field, there are several approved therapeutic agents against other immuno-oncology targets and there are several companies reportedly advancing antibody programs modulating TIGIT in early stage research and development, including Genentech (Roche), Merck, Bristol-Myers Squibb or BMS, and Arcus Biosciences.

Established pharmaceutical and biotechnology companies that are known to be involved in oncology research and currently sell or are developing drugs in our markets of interest include Amgen, AbbVie, Astellas, AstraZeneca,

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Bayer, BMS, Celgene, Genentech (Roche), GSK, Johnson & Johnson, Lilly, Merck, Merck Serono, Novartis, Pfizer, Regeneron, Sanofi, Teva and others. There are also biotechnology companies of various sizes that are developing therapies against immuno-oncology targets, and others also compete with us in recruiting and retaining qualified scientific and management personnel, and in acquiring technologies complementary to, or necessary for, our programs.

Manufacturing

Our current product candidates are manufactured using specialized biopharmaceutical process techniques. We generally conduct mammalian cell line development and process development in house, and then transfer the production cell line and process to our contract manufacturers for bulk protein production. Our contract manufacturers to date have included Lonza and Bayer. If Celgene exercises its option for the further development of the etigilimab program under its collaboration agreement, it would assume manufacturing responsibility for the applicable product candidates. We rely on contract manufacturing organizations to produce other product candidates in accordance with the FDA’s current good manufacturing practices, or cGMP, regulations for use in our clinical trials. However, we currently rely on a single source supplier for our requirements of the bulk drug substance of each of our product candidates. The manufacture of drug and biologic products is subject to extensive cGMP regulations, which impose various procedural and documentation requirements and govern all areas of recordkeeping, production processes and controls, personnel and quality control. We expect to rely on contract manufacturers for the manufacture of clinical and commercial supplies of our compounds other than those product candidates for which Celgene has exercised its option.

We purchase quantities of our product candidates from our contract manufacturers pursuant to purchase orders that we place from time to time. If we were unable to obtain sufficient quantities of product candidates or receive raw materials in a timely manner, we could be required to delay our ongoing clinical trials and seek alternative manufacturers, which would be costly and time-consuming. We may consider adding secondary sources for manufacturing in the future.

Government Regulation

The FDA and comparable regulatory authorities in state and local jurisdictions and in other countries impose substantial and burdensome requirements on the clinical development, manufacture, marketing and distribution of our product candidates. These agencies and other federal, state and local entities regulate research and development activities and the testing, manufacture, quality control, safety, effectiveness, labeling, storage, record keeping, approval, advertising and promotion, and export and import of our product candidates.

In the United States, the FDA regulates drugs, medical devices and biologic products under the Federal Food, Drug, and Cosmetic Act, or FFDCA, its implementing regulations and other laws, including, in the case of biologics, the Public Health Service Act. Our product candidates are subject to regulation by the FDA as biologics. Biologics require the submission of a Biologics License Application, or BLA, and approval by the FDA before being marketed in the United States. None of our product candidates has been approved by the FDA for marketing in the United States, and we currently have no BLAs pending. If we fail to comply with applicable FDA or other requirements at any time during the product development process, clinical testing, the approval process or after approval, we may become subject to administrative or judicial sanctions. These sanctions could include the FDA’s refusal to approve pending applications, license suspension or revocation, withdrawal of an approval, warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties or criminal prosecution. Any FDA enforcement action could have a material adverse effect on us. The process required by the FDA before our biologic product candidates may be marketed in the United States generally involves the following:

• completion of extensive preclinical laboratory tests, preclinical animal studies and formulation studies all performed in accordance with the FDA’s good laboratory practice, or GLP, regulations;

• submission to the FDA of an IND application which must become effective before human clinical trials in the United States may begin;

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• performance of adequate and well-controlled human clinical trials all performed in accordance with the FDA’s good clinical practice, or GCP, regulations, to establish the safety and efficacy of the drug candidate for each proposed indication;

• submission to the FDA of a BLA;

• satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with cGMP regulations; and

• FDA review and approval of the BLA prior to any commercial marketing, sale or shipment of the product.

The testing and approval process requires substantial time, effort and financial resources, and we cannot be certain that any approvals for our drug candidates will be granted on a timely basis, if at all.

Once a product candidate is identified for development, it enters the preclinical testing stage. Preclinical studies include laboratory evaluations of drug chemistry, formulation and stability, as well as studies to evaluate toxicity in animals. The results of the preclinical studies, together with manufacturing information and analytical data, are submitted to the FDA as part of an IND application. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time period, raises concerns or questions about the conduct of the clinical trial, including concerns that human research subjects will be exposed to unreasonable health risks. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. Submission of an IND may result in the FDA not allowing the clinical trials to commence or not allowing the clinical trials to commence on the terms originally specified in the IND. A separate submission to an existing IND must also be made for each successive clinical trial conducted during drug development, and the FDA must grant permission, either explicitly or implicitly by not objecting, before each clinical trial can begin.

Clinical trials involve the administration of the product candidate to human subjects under the supervision of qualified investigators. Clinical trials are conducted under protocols detailing, among other things, the objectives of the clinical trial, the parameters to be used in monitoring safety and the effectiveness criteria to be used. Each protocol must be submitted to the FDA as part of the IND. An independent institutional review board, or IRB, for each medical center proposing to conduct a clinical trial must also review and approve a plan for any clinical trial before it can begin at that center and the IRB must monitor the clinical trial until it is completed. The FDA, the IRB, or the sponsor may suspend or discontinue a clinical trial at any time on various grounds, including a finding that the subjects are being exposed to an unacceptable health risk. Clinical testing also must satisfy extensive GCP requirements, including the requirements for informed consent.

All clinical research performed in the United States in support of a BLA must be authorized in advance by the FDA under the IND regulations and procedures described above. However, a sponsor who wishes to conduct a clinical trial outside the United States may, but need not, obtain FDA authorization to conduct the clinical trial under an IND. If a foreign clinical trial is not conducted under an IND, the sponsor may submit data from the clinical trial to the FDA in support of a BLA so long as the clinical trial is conducted in compliance with GCP and the FDA is able to validate the data from the study through an onsite inspection if the FDA deems it necessary. We currently conduct trials only in the United States. However, we have previously conducted trials in many countries and regions including the United States, Canada, Europe, the United Kingdom, Australia, and New Zealand, and we may include clinical trial centers in these and other territories in any other clinical trials that we may initiate for our therapeutic candidates in the future, including later-stage clinical development programs for our therapeutic candidates that we develop independently, prior to submitting a BLA to the FDA, or comparable applications to the European Medicines Agency, or EMA, and other relevant regulatory agencies in global markets. We have designed our clinical trials to comply with FDA regulatory requirements for the use of foreign clinical data in support of a BLA, and we intend to utilize data from our current clinical trials in support of our future U.S. and worldwide development and potential commercialization.

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Clinical Trials

For purposes of BLA submission and approval, clinical trials are typically conducted in three sequential phases, which may overlap or be combined.

• Phase I clinical trials are initially conducted in a limited population of subjects to test the product candidate for safety, dose tolerance, absorption, metabolism, distribution and excretion in healthy humans or, on occasion, in patients with severe problems or life-threatening diseases to gain an early indication of its effectiveness.

• Phase II clinical trials are generally conducted in a limited patient population to: evaluate preliminarily the efficacy of the product candidate for specific targeted indications in patients with the disease or condition under study; evaluate dosage tolerance and appropriate dosage; and identify possible adverse effects and safety risks.

• Phase III clinical trials are commonly definitive efficacy studies of the experimental medication. Phase III trials are typically conducted when Phase II clinical trials demonstrate that a dose range of the product candidate is effective and has an acceptable safety profile. Phase III clinical trials are generally undertaken with large numbers of patients, such as groups of several hundred to several thousand, to provide substantial evidence of clinical efficacy and to further test for safety in an expanded patient population at multiple, geographically-dispersed clinical trial sites.

In some cases, the FDA may condition approval of a BLA on the sponsor’s agreement to conduct additional clinical trials to further assess the biologic’s safety and effectiveness after BLA approval. Such post-approval clinical trials are typically referred to as Phase IV clinical trials.

Concurrent with clinical trials, companies usually complete additional animal trials and must also develop additional information about the chemistry and physical characteristics of the biologic and finalize a process for manufacturing the biologic in commercial quantities in accordance with cGMP requirements. The manufacturing process must be capable of consistently producing quality batches of the product candidate and, among other things, the manufacturer must develop methods for testing the identity, strength, quality and purity of the final biologic product. Additionally, appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that the product candidate does not undergo unacceptable deterioration over its shelf life.

Biologics License Applications

The results of preclinical studies and of the clinical trials, together with other detailed information, including extensive manufacturing information and information on the composition of the biologic, are submitted to the FDA in the form of a BLA requesting approval to market the biologic for one or more specified indications. The FDA reviews a BLA to determine, among other things, whether a biologic is safe and effective for its intended use.

Once a BLA has been accepted for filing, by law the FDA has 180 days to review the application and respond to the applicant. However, the review process is often significantly extended by FDA requests for additional information or clarification. Under the Prescription Drug User Fee Act, the FDA has a goal of responding to 90% of standard original BLA submissions within ten months of the filing date, but this timeframe is often extended. The FDA may refer the application to an advisory committee for review, evaluation and recommendation as to whether the application should be approved. The FDA is not bound by the recommendation of an advisory committee, but it generally follows such recommendations. The FDA may deny approval of a BLA if the applicable statutory and regulatory criteria are not satisfied, or it may require additional clinical data or an additional Phase III clinical trial. Even if such data are submitted, the FDA may ultimately decide that the BLA does not satisfy the criteria for approval. Data from clinical trials are not always conclusive and the FDA may interpret data differently than we interpret data. Once the FDA approves a BLA, or supplement thereto, the FDA may withdraw the approval if ongoing regulatory requirements are not met or if safety problems are identified after the biologic reaches the market. Where a withdrawal may not be appropriate, the FDA still may seize existing inventory of such biologic or require a recall of any biologic already on the market. In addition, the FDA may require testing, including Phase IV clinical trials and surveillance programs to monitor the effect of approved biologics which have been commercialized. The FDA has the authority to prevent or limit further marketing of a biologic based on the results of these post-marketing programs.

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A sponsor may also seek approval of its product candidates under programs designed to accelerate FDA review and approval of BLAs. For instance, a sponsor may seek FDA designation of a product candidate as a “fast track” product. Fast track products are those products intended for the treatment of a serious or life-threatening disease or condition and which demonstrate the potential to address unmet medical needs for such diseases or conditions. If fast track designation is obtained, the FDA may initiate review of sections of a BLA before the application is complete. This “rolling review” is available if the applicant provides and the FDA approves a schedule for the remaining information. In some cases, a fast track product may be approved on the basis of either a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments, under the FDA’s accelerated approval program. Approvals of this kind typically include requirements for appropriate post-approval Phase IV clinical trials to validate the surrogate endpoint or otherwise confirm the effect of the clinical endpoint.

In addition, the Food and Drug Administration Safety and Innovation Act, or FDASIA, which was enacted and signed into law in 2012, established a category of drugs referred to as “breakthrough therapies.” A sponsor may seek FDA designation of a drug candidate as a “breakthrough therapy” if the drug is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. Breakthrough therapy designation provides all of the features of fast track designation in addition to intensive guidance on an efficient drug development program beginning as early as Phase I, and FDA organizational commitment to expedited development, including involvement of senior managers and experienced review staff in a cross-disciplinary review, where appropriate. Product candidates may also be eligible for “priority review,” or review within a six month timeframe from the date a complete BLA is accepted for filing, if a sponsor shows that its product candidate, if approved, would provide a significant improvement in safety and effectiveness compared to available therapies. When appropriate, we intend to seek fast track designation for our product candidates. We cannot predict whether any of our product candidates will obtain a fast track and/or accelerated approval designation, or the ultimate impact, if any, of the fast track designation on the timing or likelihood of FDA approval of any of our proposed biologics.

Biologics may be marketed only for the FDA approved indications and in accordance with the provisions of the approved labeling. Further, if there are any modifications to the biologic, including changes in indications, labeling, or manufacturing processes or facilities, the applicant may be required to submit and obtain FDA approval of a new BLA or BLA supplement, which may require us to develop additional data or conduct additional preclinical studies and clinical trials.

Before approving an application, the FDA will inspect the facility or the facilities at which the biologic product is manufactured, and will not approve the product unless cGMP compliance is satisfactory. The FDA may also inspect the sites at which the clinical trials were conducted to assess their compliance, and will not approve the biologic unless compliance with GCP requirements is satisfactory.

The testing and approval processes require substantial time, effort and financial resources, and each may take several years to complete. The FDA may not grant approval on a timely basis, or at all. Even if we believe a clinical trial has demonstrated safety and efficacy of one of our product candidates for the treatment of a disease, the results may not be satisfactory to the FDA. Preclinical and clinical data may be interpreted by the FDA in different ways, which could delay, limit or prevent regulatory approval. We may encounter difficulties or unanticipated costs in our efforts to secure necessary governmental approvals which could delay or preclude us from marketing our product candidates. The FDA may limit the indications for use or place other conditions on any approvals that could restrict the commercial application of the products. After approval, certain changes to the approved biologic, such as adding new indications, manufacturing changes or additional labeling claims, are subject to further FDA review and approval. Depending on the nature of the change proposed, a BLA supplement must be filed and approved before the change may be implemented.

We believe that any of our products approved as a biological product under a BLA should qualify for a 12-year period of non-patent exclusivity currently permitted by the Biologics Price Competition and Innovation Act of 2009, or BPCIA. Specifically, the BPCIA established an abbreviated pathway for the approval of biosimilar

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biologics, including the possible designation of a biosimilar as “interchangeable,” based on their similarity to existing brand products. Under the BPCIA, an application for a biosimilar product cannot be submitted to the FDA until four years following the date that the reference product was first licensed by the FDA, and the approval of a biosimilar product may not be made effective by the FDA until 12 years from the date on which the reference product was first licensed. The BPCIA also created certain exclusivity periods for biosimilars approved as interchangeable products. There is a risk that the U.S. Congress could amend the BPCIA to significantly shorten this 12-year exclusivity period or that the FDA will not consider our product candidates to be reference products for competing products, potentially creating the opportunity for competition sooner than anticipated. Moreover, the extent to which a biosimilar, once approved, will be substituted for any one of our reference products in a way that is similar to traditional generic substitution for non-biological products is not yet clear, and will depend on a number of marketplace and regulatory factors that are still developing. The BPCIA is complex and is still being interpreted and implemented by the FDA. As a result, its ultimate impact, implementation and meaning are subject to uncertainty. While it is uncertain when any such processes may be fully adopted by the FDA, any such processes that operate to limit the scope or length of exclusivity afforded by the BPCIA could have a material adverse effect on the future commercial prospects for our biological products. In addition, foreign regulatory authorities may also provide for exclusivity periods for approved biological products. For example, biological products in Europe may be eligible for a 10-year period of exclusivity.

Other Regulatory Requirements

Any biologics manufactured or distributed by us or our collaborators pursuant to FDA approvals would be subject to continuing regulation by the FDA, including recordkeeping requirements and reporting of adverse experiences associated with the product. Manufacturers and their subcontractors are required to register their establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with ongoing regulatory requirements, including cGMPs, which impose certain procedural and documentation requirements upon us and our third-party manufacturers. Failure to comply with the statutory and regulatory requirements can subject a manufacturer to possible legal or regulatory action, such as warning letters, suspension of manufacturing, seizure of product, injunctive action or possible civil penalties. We cannot be certain that we or our present or future third-party manufacturers or suppliers will be able to comply with the cGMP regulations and other ongoing FDA regulatory requirements. If we or our present or future third-party manufacturers or suppliers are not able to comply with these requirements, the FDA may halt our clinical trials, require us to recall a drug from distribution or withdraw approval of the BLA for that product.

The FDA closely regulates the post-approval marketing and promotion of biologics, including standards and regulations for direct-to-consumer advertising, off-label promotion, industry-sponsored scientific and educational activities, and promotional activities involving the Internet. A company can make only those claims relating to safety and efficacy that are approved by the FDA. Failure to comply with these requirements can result in adverse publicity, warning letters, corrective advertising, and potential civil and criminal penalties. Physicians may prescribe legally available biologics for uses that are not described in the product’s labeling and that differ from those tested by us and approved by the FDA. Such off-label uses are common across medical specialties. Physicians may believe that such off-label uses are the best treatment for many patients in varied circumstances. The FDA does not regulate the behavior of physicians in their choice of treatments. The FDA does, however, impose stringent restrictions on manufacturers’ communications regarding off-label use.

Orphan Drug Designation and Exclusivity

Under the Orphan Drug Act, the FDA may grant orphan designation to a drug or biologic intended to treat a rare disease or condition, which is generally a disease or condition that affects fewer than 200,000 individuals in the United States, or more than 200,000 individuals in the United States and for which there is no reasonable expectation that the cost of developing and making available in the United States a drug or biologic for this type of disease or condition will be recovered from sales in the United States for that drug or biologic. Orphan drug designation must be requested before submitting a BLA. After the FDA grants orphan drug designation, the generic identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA. The orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review or approval process.

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If a product that has orphan drug designation subsequently receives the first FDA approval for the disease for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDA may not approve any other applications, including a full BLA, to market the same biologic for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity. Orphan drug exclusivity does not prevent FDA from approving a different drug or biologic for the same disease or condition, or the same drug or biologic for a different disease or condition. Among the other benefits of orphan drug designation are tax credits for certain research and a waiver of the BLA application user fee.

A designated orphan drug may not receive orphan drug exclusivity if it is approved for a use that is broader than the indication for which it received orphan designation. In addition, exclusive marketing rights in the United States may be lost if the FDA later determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition.

Regulation of Diagnostic Tests

In the United States, the FFDCA and its implementing regulations, and other federal and state statutes and regulations govern, among other things, medical device design and development, preclinical and clinical testing, premarket clearance or approval, registration and listing, manufacturing, labeling, storage, advertising and promotion, sales and distribution, export and import, and post-market surveillance. Diagnostic tests are classified as medical devices under the FFDCA. Unless an exemption or FDA exercise of enforcement discretion applies, diagnostic tests generally require marketing clearance or approval from the FDA prior to commercialization. The two primary types of FDA marketing authorization applicable to a medical device are premarket notification, also called 510(k) clearance, and approval of a premarket, or PMA approval.

To obtain 510(k) clearance for a medical device, or for certain modifications to devices that have received 510(k) clearance, a manufacturer must submit a premarket notification demonstrating that the proposed device is substantially equivalent to a previously cleared 510(k) device or to a preamendment device that was in commercial distribution before May 28, 1976, or a predicate device, for which the FDA has not yet called for the submission of a PMA. In making a determination that the device is substantially equivalent to a predicate device, the FDA compares the proposed device to the predicate device or predicate devices and assesses whether the subject device is comparable to the predicate device or predicate devices with respect to intended use, technology, design and other features which could affect safety and effectiveness. If the FDA determines that the subject device is substantially equivalent to the predicate device or predicate devices, the subject device may be cleared for marketing. The 510(k) premarket notification pathway generally takes from three to twelve months from the date the application is completed, but can take significantly longer.

PMA applications must be supported by valid scientific evidence, which typically requires extensive data, including technical, preclinical, clinical and manufacturing data, to demonstrate to the FDA’s satisfaction the safety and effectiveness of the device. For diagnostic tests, a PMA application typically includes data regarding analytical and clinical validation studies. As part of its review of the PMA, the FDA will conduct a pre-approval inspection of the manufacturing facility or facilities to ensure compliance with the Quality System Regulation, or QSR, which requires manufacturers to follow design, testing, control, documentation and other quality assurance procedures. The FDA’s review of an initial PMA application is required by statute to take between six to ten months, although the process typically takes longer, and may require several years to complete. If the FDA evaluations of both the PMA application and the manufacturing facilities are favorable, the FDA will either issue an approval letter or an approvable letter, which usually contains a number of conditions that must be met in order to secure the final approval of the PMA. If the FDA’s evaluation of the PMA or manufacturing facilities is not favorable, the FDA will deny the approval of the PMA or issue a not approvable letter. A not approvable letter will outline the deficiencies in the application and, where practical, will identify what is necessary to make the PMA approvable. Once granted, PMA approval may be withdrawn by the FDA if compliance with post-approval requirements, conditions of approval or other regulatory standards is not maintained or problems are identified following initial marketing.

On July 31, 2014, the FDA issued a final guidance document addressing the development and approval process for “In Vitro Companion Diagnostic Devices.” According to the guidance document, for novel therapeutic products that depend on the use of a diagnostic test and where the diagnostic device could be essential for the safe

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and effective use of the corresponding therapeutic product, the premarket application for the companion diagnostic device should be developed and approved or cleared contemporaneously with the therapeutic, although the FDA recognizes that there may be cases when contemporaneous development may not be possible. However, in cases where a drug cannot be used safely or effectively without the companion diagnostic, the FDA’s guidance indicates it will generally not approve the drug without the approval or clearance of the diagnostic device. The FDA also issued a draft guidance in July 2016 setting forth the principles for co-development of an in vitro companion diagnostic device with a therapeutic product. The draft guidance describes principles to guide the development and contemporaneous marketing authorization for the therapeutic product and its corresponding in vitro companion diagnostic.

Healthcare Reform

In March 2010, the U.S. Congress passed and President Obama signed into law the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, collectively known as the Affordable Care Act. The Affordable Care Act substantially changes the way healthcare is financed by both governmental and private insurers, and significantly impacts the pharmaceutical industry. The Affordable Care Act contains a number of provisions, including those governing enrollment in federal healthcare programs, reimbursement changes and fraud and abuse measures, which have impacted existing government healthcare programs and have resulted in the development of new programs, including Medicare payment for performance initiatives and improvements to the physician quality reporting system and feedback program. Additionally, the Affordable Care Act:

• increases the minimum level of Medicaid rebates payable by manufacturers of brand-name drugs from 15.1% to 23.1%;

• extends the rebate program to individuals enrolled in Medicaid managed care organizations;

• addresses a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected;

• expands the eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to additional individuals and by adding new mandatory eligibility categories for certain individuals with income at or below 133% of the federal poverty level, thereby potentially increasing a manufacturer’s Medicaid rebate liability;

• expands access to commercial health insurance coverage through new state-based health insurance marketplaces, or exchanges;

• requires manufacturers to participate in a coverage gap discount program, under which they must agree to offer 50% point-of-sale discounts, which, through subsequent legislative amendments, were increased to 70%, off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D;

• imposes a non-deductible annual fee on pharmaceutical manufacturers or importers who sell “branded prescription drugs” to specified federal government programs; and

• establishes a Center for Medicare Innovation at the Centers for Medicare & Medicaid Services, or CMS, to test innovative payment and service delivery models to lower Medicare and Medicaid spending.

Since its enactment, there have been judicial and Congressional challenges to certain aspects of the Affordable Care Act. We expect that the current presidential administration and U.S. Congress will likely continue to seek to modify, repeal, or otherwise invalidate all or certain provisions of, the Affordable Care Act. For example, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted, which, among other things, removes penalties for not complying with the Affordable Care Act’s individual mandate to carry health insurance. On December 14, 2018, a U.S. District Court Judge in the Northern District of Texas, ruled that the individual mandate is a critical and inseverable feature of the Affordable Care Act, and therefore, because it was repealed as part of the Tax Act, the remaining provisions of the Affordable Care Act are invalid as well. While the Trump Administration and the Centers for Medicare & Medicaid Services have both stated that the ruling will have no immediate effect, it is unclear how this decision, subsequent appeals, if any, will impact the law. As a result, there is still uncertainty with respect to the impact President Trump’s administration and the U.S. Congress may have, if any, and any changes will likely take time to

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unfold, and could have an impact on coverage and reimbursement for healthcare items and services covered by plans that were authorized by the Affordable Care Act.

In addition,otherlegislativechanges have been proposed and adopted in the United Statessincethe AffordableCare Act was enacted.These changes includeaggregatereductionsto Medicarepaymentsto providersof 2 percentper fiscalyear, which went into effecton April 1, 2013, and, due to subsequent legislative amendments, will remain in effect through 2027 unless additional Congressional action is taken, and the American Taxpayer Relief Act,which, among otherthings,furtherreduced Medicarepaymentsto several types of providers,includinghospitals,imagingcentersand cancertreatmentcenters, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

Moreover, payment methodologies, including payment for companion diagnostics, may be subject to changes in healthcare legislation and regulatory initiatives. For example, the CMS has begun bundling the Medicare payments for certain laboratory tests ordered while a patient received services in a hospital outpatient setting and, in 2018, the CMS began paying for clinical laboratory services based on a weighted average of reported prices that private payors, Medicare Advantage plans, and Medicaid Managed Care plans pay for laboratory services. In addition, recently, there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several Congressional inquiries and proposed and enacted legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drug products. For example, the 21st Century Cures Act changed the reimbursement methodology for infusion drugs and biologics furnished through durable medical equipment in an attempt to remedy over- and underpayment of certain products. Individual states in the United States have also become increasingly active in implementing regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. These newlaws and the regulationsand policiesimplementingthem,as well as otherhealthcarereformmeasuresthat may be adopted in the future,may have a materialadverseeffecton our industrygenerallyand on our abilityto successfullydevelop and commercializeour products.

Third-Party Payor Coverage and Reimbursement

Although none of our drug candidates has been commercialized for any indication, if they are approved for marketing, commercial success of our drug candidates will depend, in part, upon the availability of coverage and reimbursement from third-party payors at the federal, state and private levels. Government payor programs, including Medicare and Medicaid, private health care insurance companies and managed-care plans have attempted to control costs by limiting coverage and the amount of reimbursement for particular procedures or drug treatments. The U.S. Congress and state legislatures from time to time propose and adopt initiatives aimed at cost-containment. Ongoing federal and state government initiatives directed at lowering the total cost of health care will likely continue to focus on health care reform, the cost of prescription pharmaceuticals and on the reform of the Medicare and Medicaid payment systems. Examples of how limits on drug coverage and reimbursement in the United States may cause reduced payments for drugs in the future include:

• changing Medicare reimbursement methodologies;

• fluctuating decisions on which drugs to include in formularies;

• revising drug rebate calculations under the Medicaid program; and

• reforming drug importation laws.

Some third-party payors also require pre-approval of coverage for new or innovative devices or drug therapies before they will reimburse health care providers who use such therapies. While we cannot predict whether any proposed cost-containment measures will be adopted or otherwise implemented in the future, the announcement or adoption of these proposals could have a material adverse effect on our ability to obtain adequate prices for our drug candidates and operate profitably.

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Other Healthcare Laws and Regulations

We are also subject to healthcare regulation and enforcement by the federal government and the states and foreign governments in which we conduct our business. The laws that may affect our ability to operate include:

• the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual for, or the purchase, order or recommendation of, any good or service for which payment may be made under federal healthcare programs such as the Medicare and Medicaid programs. A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation. In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal False Claims Act;

• federal false claims laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party payors that are false or fraudulent;

• federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters. Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation;

• the federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act, which governs the conduct of certain electronic healthcare transactions and protects the security and privacy of protected health information;

• state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers; and

• similar healthcare laws and regulations in the European Union and other jurisdictions, including reporting requirements detailing interactions with and payments to healthcare providers and requirements regarding the collection, distribution, use, security, and storage of personally identifiable information and other data relating to individuals (including the EU General Data Protection Regulation 2016/679, or GDPR.

In addition, there has been a recent trend of increased federal and state regulation of payments made to physicians and other healthcare providers. The Affordable Care Act, among other things, imposes new reporting requirements on certain drug manufacturers for payments and “transfers of value” made by them to physicians and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members. Failure to submit required information may result in civil monetary penalties for all payments, transfers of value or ownership or investment interests that are not timely, accurately and completely reported in an annual submission. Drug manufacturers are required to submit reports to the government by the 90^th day of each calendar year. Certain states also mandate implementation of commercial compliance programs and compliance with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, impose restrictions on drug manufacturer marketing practices and/or require the tracking and reporting of pricing and marketing information as well as gifts, compensation and other remuneration to physicians and other healthcare professionals and entities.

The shifting commercial compliance environment and the need to build and maintain robust and expandable systems to comply with different compliance and/or reporting requirements in multiple jurisdictions increase the possibility that a healthcare company may violate one or more of the requirements. If our operations are found to be in violation of any of the laws described above or any other governmental laws and regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines, a corporate integrity agreement or other agreement to resolve allegations of non-compliance, the curtailment or restructuring of our operations, the exclusion from participation in federal and state healthcare programs and imprisonment, any of which could adversely affect our ability to operate our business and impact our financial results.

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International Regulation

In addition to regulations in the United States, we will be subject to a variety of foreign regulations governing clinical trials and commercial sales and distribution of our future drugs. Whether or not we obtain FDA approval for a drug, we must obtain approval of a drug by the comparable regulatory authorities of foreign countries before we can commence clinical trials or marketing of the drug in those countries. The approval process varies from country to country, and the time may be longer or shorter than that required for FDA approval. The requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary greatly from country to country.

Under European Union regulatory systems, marketing authorizations may be submitted either under a centralized or mutual recognition procedure. The centralized procedure provides for the grant of a single marketing authorization that is valid for all European Union member states. The mutual recognition procedure provides for mutual recognition of national approval decisions. Under this procedure, the holder of a national marketing authorization may submit an application to the remaining member states. Within 90 days of receiving the applications and assessment report, each member state must decide whether to recognize approval.

In addition to regulations in Europe and the United States, we will be subject to a variety of foreign regulations governing clinical trials and commercial distribution of our future drugs.

Employees

As of December 31, 2018, we had 22 employees. We have no collective bargaining agreements with our employees, and we have not experienced any work stoppages. We believe that our relations with our employees are good.

Research and Development

Our research and development costs were $34.4 million, $59.8 million and $109.7 million for the years ended December 31, 2018, 2017, and 2016, respectively. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional detail regarding our research and development activities, which are funded in part through payments received from our prior and current collaborators, GSK, Bayer and Celgene.

Customer Concentration and Geographic Information

All or a significant portion of our revenues for the years ended December 31, 2018, 2017, and 2016 were derived from GSK, Bayer, and Celgene. GSK and Bayer are located outside of the United States, in the United Kingdom and Germany, respectively. See Notes 2 and 10 to our Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information.

All of our revenues for the years ended December 31, 2018, 2017, and 2016 were earned in the United States. All of our long-lived assets are located in the United States.

About OncoMed

We were incorporated in Delaware and commenced operations in 2004. Our principal offices are located at 800 Chesapeake Drive, Redwood City, California 94063, and our telephone number is (650) 995-8200. Our website address is www.oncomed.com. The information contained in, or that can be accessed through, our website is not part of this Annual Report on Form 10-K.

Financial Information about Segments

We operate only in one business segment. See Note 1 to our Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K. For financial information regarding our business, see “Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes.

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Available Information

We file electronically with the Securities and Exchange Commission, or SEC, our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended. We make available on our website at www.oncomed.com, free of charge, copies of these reports, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. The SEC maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that website is www.sec.gov. The information in or accessible through the SEC and our website are not incorporated into, and are not considered part of, this filing. Further, our references to the URLs for these websites are intended to be inactive textual references only.

Item 1A. RISK FACTORS

The following section includes the most significant factors that may adversely affect our business and operations. You should carefully consider the risks and uncertainties described below and all information contained in this Annual Report on Form 10-K before deciding to invest in our common stock. If any of the following risks actually occur, our business, financial condition, results of operations and growth prospects may be materially and adversely affected. In that event, the trading price of our common stock could decline, and you could lose all or part of your investment.

Risk Factors Related to the Merger

The Merger is subject to a number of conditions, some of which are outside of the parties’ control, and, if these conditions are not satisfied, the Merger Agreement may be terminated and the Merger may not be completed.

The Merger Agreement contains a number of conditions that must be fulfilled to complete the Merger. These conditions include, among other customary conditions, (i) the approval and adoption of the Merger Agreement by OncoMed’s stockholders and, if necessary, Mereo’s shareholders, (ii) the absence of any temporary restraining order, preliminary or permanent injunction or any other order preventing the consummation of the Merger and any law that makes illegal the consummation of the Merger, (iii) the SEC having declared effective the Registration Statement and the registration statement on Form F-6 to be filed with the SEC, (iv) Mereo having obtained all required shareholder approvals in connection with the issuance of Mereo ADSs and the allotment and issuance of the Mereo Shares underlying the Mereo ADSs to be issued in the Merger and the grant of the CVRs to the stockholders of OncoMed pursuant to the Merger Agreement, (v) the approval for listing on Nasdaq, subject to official notice of issuance, of the Mereo ADSs to be issued in the Merger and the approval for admission to trading on AIM of the Mereo Shares underlying the Mereo ADSs to be issued in the Merger pursuant to the Merger Agreement, and the satisfaction of any other requirements of London Stock Exchange plc, (vi) subject to certain materiality exceptions, the accuracy of certain representations and warranties of each of OncoMed and Mereo contained in the Merger Agreement and the compliance by each party with the covenants contained in the Merger Agreement, and (vii) the absence of a material adverse effect with respect to each of OncoMed and Mereo.

The required satisfaction of the foregoing conditions could delay the completion of the Merger for a significant period of time or prevent it from occurring. Any delay in completing the Merger could cause Mereo and its subsidiaries following the Merger, including OncoMed (collectively referred to in this Annual Report on Form 10-K as the “Combined Company”) not to realize some or all of the benefits that the parties expect the Combined Company to achieve. Further, there can be no assurance that the conditions to the closing of the Merger will be satisfied or waived or that the Merger will be completed.

In addition, if the Merger is not completed by September 4, 2019 (subject to potential extensions), either Mereo or OncoMed may choose to terminate the Merger Agreement. Mereo or OncoMed may also elect to terminate the Merger Agreement in certain other circumstances, and the parties can mutually decide to terminate the Merger Agreement at any time prior to the closing of the Merger, before or after shareholder approval, as applicable. See “The Merger Agreement—Termination Events” in the Registration Statement for a more detailed description of these circumstances.

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Failure to complete the Merger could negatively affect the share prices and the future business and financial results of either or both of Mereo and OncoMed.

If the Merger is not completed, the ongoing businesses of either or both of Mereo and OncoMed may be adversely affected. Additionally, if the Merger is not completed and the Merger Agreement is terminated, in certain circumstances either party may be required to pay the other a termination fee of $1,721,193 (subject to any adjustments for VAT). Additionally, in certain circumstances, Mereo or OncoMed, as the case may be, must reimburse the other party for reasonable out-of-pocket fees and expenses incurred in connection with the Merger up to $750,000 (subject to any adjustments for VAT). See “The Merger Agreement—Termination Events” and “The Merger Agreement—Termination Fees” in the Registration Statement for a more detailed description of these circumstances. In addition, Mereo and OncoMed have incurred and will continue to incur significant transaction expenses in connection with the Merger regardless of whether the Merger is completed. Furthermore, Mereo or OncoMed may experience negative reactions from the financial markets, including negative impacts on their stock prices, or negative reactions from their suppliers or other business partners, should the Merger not be completed.

The foregoing risks, or other risks arising in connection with the failure to consummate the Merger, including the diversion of management attention from conducting the business of the respective companies and pursuing other opportunities during the pendency of the Merger, may have a material adverse effect on the businesses, operations, financial results and share and stock prices of Mereo and OncoMed. Either or both of Mereo or OncoMed could also be subject to litigation related to any failure to consummate the Merger or any related action that could be brought to enforce a party’s obligations under the Merger Agreement.

Because the portion of the Merger Consideration payable in Mereo ADSs is subject to adjustment for the net cash held by OncoMed at the time of the closing of the Merger, and will be unaffected by any changes in exchange rates or in the market value of Mereo Shares or OncoMed common stock before the completion of the Merger, OncoMed stockholders cannot be sure of the market value of the Mereo ADSs they will receive.

Under the exchange ratio formula set forth in the Merger Agreement, as of immediately following the Effective Time, former OncoMed stockholders are expected to own approximately 25% of the outstanding equity interests in the Combined Company on an undiluted basis, subject to adjustment for the net cash held by OncoMed at the time of the closing of the Merger. The final Exchange Ratio will be determined pursuant to a formula described in more detail in the Merger Agreement and in the Registration Statement. In particular, if OncoMed’s net cash at the time of the closing of the Merger is less than $36.5 million, the Exchange Ratio will be reduced by an amount that is greater than the amount that would otherwise reflect the difference between the target closing net cash and actual closing net cash on a dollar-for-dollar basis. Because the number of Mereo ADSs to be exchanged for each share of OncoMed common stock will be adjusted based on the net cash held by OncoMed at the time of the closing of the Merger and will be unaffected by any increase or decrease in exchange rates or in the share price of Mereo Shares between now and the closing of the Merger, the notional value of the Merger Consideration and the exact number of Mereo ADSs that will be issued to OncoMed stockholders as of the date of the OncoMed Special Meeting and as of the closing date of the Merger cannot be determined with precision in advance of the Effective Time.

The number of Mereo ADSs that will be issued to OncoMed stockholders as a result of the Merger will not be adjusted in the event of any increase or decrease in currency exchange rates or in the share price of either Mereo Shares or OncoMed common stock between the date of execution of the Merger Agreement and the completion of the Merger, and the parties do not have a right to terminate the Merger Agreement based upon changes in currency exchange rates or in the market price of Mereo Shares or OncoMed common stock.

The dollar value of the Mereo ADSs that OncoMed stockholders will receive upon completion of the Merger will depend upon the net cash held by OncoMed and the market value of Mereo Shares at the time of completion of the Merger. In addition, Mereo ADSs will be denominated in U.S. dollars and will each represent five Mereo Shares, which are denominated in pence. Both the market price of Mereo Shares and the U.S. dollar-pound sterling exchange rate fluctuate continuously. Accordingly, each may be different from the closing price and exchange rate on each of the last full trading day preceding public announcement that Mereo and OncoMed entered into the Merger Agreement, the last full trading day prior to the date of the Registration Statement or the dates of the Mereo and OncoMed stockholder meetings. Moreover, completion of the Merger will occur, if at all, sometime after the requisite shareholder approvals have been obtained. The market value of Mereo Shares and the U.S. dollar-pound

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sterling exchange rate have varied since Mereo and OncoMed entered into the Merger Agreement and will continue to vary in the future due to changes in the business, operations and prospects of Mereo and OncoMed, market assessments of the Merger, third-party acquisition proposals and regulatory considerations, in the case of the share price, and market and economic considerations and other factors both within and beyond the control of Mereo and OncoMed, in the case of both the share price and the exchange rate.

Litigation against Mereo and OncoMed, or the members of the OncoMed Board, could prevent or delay the completion of the Merger or result in the payment of damages following completion of the Merger.

It is a condition to the Merger that no temporary restraining order, preliminary or permanent injunction or other order preventing the consummation of the Merger Agreement or the transactions contemplated thereby shall have been issued by any court of competent jurisdiction or other governmental authority of competent jurisdiction and remain in effect. Neither OncoMed nor Mereo is aware of any lawsuit or proceeding specific to the Merger having been filed to date. If such a lawsuit or other proceeding is commenced and if in any such litigation or proceeding a plaintiff is successful in obtaining a restraining order or injunction prohibiting the consummation of the Merger Agreement or the transactions contemplated thereby, then the closing of the Merger may be delayed or may never occur. Even if the Merger is permitted to occur, the parties may be required to pay damages, fees or expenses in respect of claims related to the Merger or the transactions contemplated thereby.

Some of the directors and executive officers of OncoMed have interests in the Merger that may be different from, or in addition to, the interests of OncoMed stockholders generally.

OncoMed’s directors and executive officers may have interests in the Merger that are different from, or in addition to or may be deemed to conflict with, the interests of OncoMed stockholders generally. These interests include, but are not limited to, the continued employment of certain members of OncoMed’s management team, the continued positions of certain OncoMed directors as directors of the Combined Company, potential payments to certain executive officers pursuant to change in control and severance agreements, accelerated vesting of stock options pursuant to the terms of the Merger Agreement, accelerated vesting of restricted stock units pursuant to the terms of the Merger Agreement, a performance bonus of $50,000 that may be earned by Dr. Lewicki in connection with the Merger, and other rights held by these directors and executive officers. In particular, it is anticipated that certain individuals currently associated with OncoMed’s navicixizumab products will, for a period of 18 months following the closing of the Merger, be permitted to solicit third party interest with respect to the navicixizumab products and to recommend, by written notice to the chief executive officer of Mereo, that Mereo enter into discussions with one or more such third parties that have expressed interest with respect to the navicixizumab program.

Uncertainty about the Merger may adversely affect the relationships of Mereo and OncoMed with their respective suppliers and employees, whether or not the Merger is completed.

In response to the announcement of the Merger, existing or prospective suppliers of Mereo or OncoMed may:

• delay, defer or cease providing goods or services to Mereo, OncoMed or the Combined Company;

• delay or defer other decisions concerning Mereo, OncoMed or the Combined Company, or refuse to extend credit to Mereo, OncoMed or the Combined Company; or

• otherwise seek to change the terms on which they do business with Mereo, OncoMed or the Combined Company.

Any such delays or changes to terms could seriously harm the business of each company or, if the Merger is completed, the Combined Company. These disruptions could also have an adverse effect on the ability of Mereo to achieve the milestones specified in the CVR Agreement.

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In addition, as a result of the Merger, current and prospective employees could experience uncertainty about their future with Mereo, OncoMed or the Combined Company. These uncertainties may impair the Combined Company’s ability to retain, recruit or motivate key management, technical and other personnel.

The Merger Agreement contains provisions that limit each party’s ability to pursue alternatives to the Merger, could discourage a potential competing acquiror of either Mereo or OncoMed from making an alternative transaction proposal and, in specified circumstances, could require either party to pay a termination fee to the other party.

The Merger Agreement provides that Mereo and OncoMed shall not, and requires each of Mereo and OncoMed to refrain from authorizing, directing or permitting its representatives to, solicit, participate in negotiations with respect to or approve or recommend any third-party proposal for an alternative transaction, subject to exceptions set forth in the Merger Agreement relating to the receipt of certain unsolicited offers. If the Merger Agreement is terminated by either party after the other party’s board of directors has changed its recommendation regarding the Merger or due to the other party’s material breach of its non-solicitation obligations, then the terminating party may be required to pay a termination fee of $1,721,193.

These provisions could discourage a potential third-party acquiror or merger partner that might have an interest in acquiring all or a significant portion of Mereo or OncoMed or pursuing an alternative transaction from considering or proposing such a transaction, even if it were prepared to pay consideration with a higher per share cash or market value than the consideration in the Merger, or might result in a potential third-party acquiror or merger partner proposing to pay a lower price to Mereo shareholders or OncoMed stockholders than it might otherwise have proposed to pay because of the added expense of the termination fee that may become payable in certain circumstances.

If the Merger Agreement is terminated and either Mereo or OncoMed determines to seek another business combination, Mereo or OncoMed, as applicable, may not be able to negotiate a transaction with another party on terms comparable to, or better than, the terms of the Merger.

Any delay in completing the Merger may significantly reduce the benefits expected to be obtained from the Merger.

The Merger is subject to a number of conditions that are beyond the control of Mereo and OncoMed and that may prevent, delay or otherwise materially adversely affect completion of the Merger. Mereo and OncoMed cannot predict whether and when these conditions will be satisfied.

Any delay in completing the Merger may significantly reduce the benefits that Mereo and OncoMed expect to achieve if they successfully complete the Merger within the expected timeframe. In particular, any delay is likely to reduce the net cash held by OncoMed at the time of the closing of the Merger, which, under the net cash adjustment mechanism in the exchange ratio formula set forth in the Merger Agreement, will reduce the number of Mereo ADSs payable by Mereo to holders of OncoMed common stock as Share Consideration.

Until the completion of the Merger or the termination of the Merger Agreement in accordance with its terms, in consideration of the agreements made by the parties in the Merger Agreement, Mereo and OncoMed are each prohibited from entering into certain transactions and taking certain actions that might otherwise be beneficial to Mereo or OncoMed and their respective shareholders.

Until the Merger is completed, the Merger Agreement restricts Mereo and OncoMed from taking specified actions without the consent of the other party, and requires each of Mereo and OncoMed to operate in the ordinary course of business consistent with past practices. These restrictions may prevent Mereo and OncoMed from making appropriate changes to their respective businesses or pursuing attractive business opportunities that may arise prior to the completion of the Merger.

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After the Merger, OncoMed stockholders will have a significantly lower ownership and voting interest in the Combined Company than they currently have in OncoMed, and will exercise less influence over management.

Under the exchange ratio formula set forth in the Merger Agreement, as of immediately following the Effective Time, former OncoMed stockholders are expected to own approximately 25% of the outstanding equity interests in the Combined Company on an undiluted basis, subject to adjustment for the net cash held by OncoMed at the time of the closing of the Merger. In addition, the number of Mereo Shares to be allotted and issued by Mereo (and the corresponding number of Mereo ADSs to be issued to holders of OncoMed common stock) as Share Consideration or pursuant to the CVR Agreement will not, in the aggregate, exceed 66.67% of the Mereo Shares issued and outstanding immediately prior to the Effective Time (approximately 40% of the share capital of the Combined Company). Consequently, OncoMed stockholders will have less influence over the management and policies of the Combined Company than they currently have over OncoMed. In addition, only two directors serving on the existing OncoMed Board will continue as directors of the Combined Company immediately following the closing of the Merger.

The opinion of OncoMed’s financial advisor does not reflect changes in circumstances that may occur between the original signing of the Merger Agreement and the completion of the Merger.

Consistent with market practices, the OncoMed Board has not obtained an updated opinion from its financial advisor as of the date of this Annual Report on Form 10-K and does not expect to receive an updated, revised or reaffirmed opinion prior to the completion of the Merger. Changes in the operations and prospects of OncoMed, general market and economic conditions and other factors that may be beyond the control of OncoMed, and on which OncoMed’s financial advisor’s opinion was based, may significantly alter the value of OncoMed or the price of shares or OncoMed’s common stock by the time the Merger is completed. The opinion does not speak as of the time the Merger will be completed or as of any date other than the date of such opinion. Because OncoMed’s financial advisor will not be updating its opinion, the opinion will not address the fairness of the Merger Consideration from a financial point of view at the time the Merger is completed.

OncoMed stockholders have appraisal rights under Delaware law.

Under Delaware law, OncoMed stockholders who do not vote in favor of adoption of the Merger Agreement and otherwise properly perfect their rights will be entitled to “appraisal rights” in connection with the Merger, which generally entitle stockholders to receive in lieu of the Merger Consideration a cash payment of an amount determined by the Court of Chancery equal to be the fair value of their OncoMed common stock as of the Effective Time. The appraised value would be determined by the Court of Chancery and could be less than, the same as or more than the Merger Consideration. Under Delaware law, stockholders are generally entitled to statutory interest on an appraisal award at a rate equal to 5% above the Federal Reserve discount rate compounded quarterly from the closing date of the Merger until the award is actually paid. Stockholders who have properly demanded appraisal rights must file a petition for appraisal with the Court of Chancery within 120 days after the effective date of the Merger. Should a material number of OncoMed’s stockholders exercise appraisal rights and should the Court determine that the fair value of such shares of OncoMed common stock is materially greater than the Merger Consideration, it could have a material adverse effect on the financial condition and results of operation of the Combined Company.

The Merger is expected to be a taxable transaction for U.S. federal income tax purposes.

The exchange of OncoMed common stock for Merger Consideration in the Merger is expected to be a taxable transaction for U.S. federal income tax purposes. However, no opinion of counsel or ruling from the IRS with respect to the tax treatment of the Merger has or will be sought, and there can be no assurance that the IRS will not assert a contrary position. Assuming the Merger will be a taxable transaction for U.S. federal income tax purposes, the amount of gain or loss a holder of OncoMed common stock recognizes, and the timing and potentially the character of a portion of such gain or loss, depends in part on the U.S. federal income tax treatment of the CVRs, with respect to which there is substantial uncertainty.

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The U.S. federal income tax treatment of the CVRs is unclear.

There is no legal authority directly addressing the U.S. federal income tax treatment of the CVRs or the treatment of payments (including Mereo ADSs) that may be received pursuant to the CVRs. Accordingly, the amount, timing and character of any gain, income or loss with respect to the CVRs are uncertain. In addition, there is no legal authority directly addressing the U.S. federal income tax treatment of the expiration of any rights to receive a payment of cash or Mereo ADSs with respect to the CVRs. Any change in the value of the CVRs will affect the amount of any gain or loss recognized with respect to the receipt of the CVRs.

Risk Factors Related to the CVRs

You may not receive any payment on the CVRs.

Your right to receive any future payment on the CVRs will be contingent upon the achievement by Mereo and its subsidiaries of certain milestones within agreed time periods, as specified in the CVR Agreement. If the milestones specified in the CVR Agreement are not achieved for any reason within the time periods specified in such agreement, no payment will be made under the CVRs and the CVRs will expire valueless. Additionally, Bristol-Myers Squibb Company (“Bristol-Myers Squibb”) and Celgene announced on January 3, 2019 that they have entered into a definitive merger agreement under which Bristol-Myers Squibb will acquire Celgene in a cash and stock transaction. We believe it is possible that such transaction may limit the likelihood that Celgene will exercise the exclusive option granted by OncoMed to Celgene in relation to OncoMed’s etigilimab product pursuant to the Master Research and Collaboration Agreement by and between Celgene and OncoMed, dated December 2, 2013 due to the uncertainty of Celgene’s business operations pending consummation of its proposed merger with Bristol-Myers Squibb and the uncertainty of the attractiveness of OncoMed’s etigilimab product to Bristol-Myers Squibb. Accordingly, the value, if any, of the CVRs is speculative, and the CVRs may ultimately have no value.

You will not be able to determine the amount of stock or cash to be received under the CVRs until the achievement of certain agreed upon milestones, which makes it difficult to value the CVRs.

If any payment is made on the CVRs, it will not be made until the achievement of certain agreed upon milestones. As such, you will not know the value, if any, of your CVRs until certain sales milestones occur, or until the CVRs expire.

The CVRs are nontransferable.

The CVRs are nontransferable, meaning that they may not be sold, assigned, transferred, pledged, encumbered or in any other manner transferred or disposedof either in whole or in part, other than in certain limited circumstances. The CVRs will not be registered as securities and they will not be listed or traded on any stockexchange in the United States or elsewhere. Therefore, the CVRs are not liquid and you will not be permitted to sell or transfer them, except for in certain limitedcircumstances.

Mereo and its subsidiaries are required to use “diligent efforts” to achieve the CVR milestones, which allows for consideration of a variety of factors to determine the efforts Mereo and its subsidiaries are required to take; accordingly, under certain circumstances, Mereo and its subsidiaries may not be required to take certain actions to achieve the CVR milestones, or may allocate resources to other projects, which would have an adverse effect on the value, if any, of the CVRs.

Mereo has agreed to use “diligent efforts,” as defined in the CVR Agreement, to achieve each of the CVR milestones in the applicable agreed time period. However, under the CVR Agreement, the definition of “diligent efforts” allows for the consideration of a variety of factors in determining the efforts Mereo is required to use to achieve the relevant milestones, including issues of safety and efficacy, market potential, anticipated pricing and reimbursement rates, costs, labeling, pricing reimbursement, the competitiveness of alternative products, the patent and other proprietary position of the relevant product, and the likelihood of regulatory approval for the relevant product given the relevant regulatory structure involved. The CVR Agreement does not require Mereo to take all

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possible actions to achieve each milestone. As a result, factors and events may come to pass that result in Mereo permissibly devoting less effort to the achievement of each milestone than OncoMed would have devoted had OncoMed remained a stand-alone company.

The CVR Agreement expressly states that Mereo will have no obligation or liability to (i) fund or otherwise support or incur any cost or expense relating to the relevant products (except, in each case, in respect of clinical trials commenced prior to the Effective Time) in excess of the commitments provided for the applicable budget for each product set forth as schedules to the CVR Agreement, (ii) enroll any additional subjects in any currently ongoing trial of the relevant products or (iii) commit to any additional development activities of the relevant products not provided for in the applicable budget.

Any payments in respect of the CVRs will rank at parity with Mereo’s other unsecured and unsubordinated indebtedness.

The CVRs will rank equal in right of payment to all existing and future unsecured unsubordinated indebtedness of Mereo. The CVRs, however, will be effectively subordinated in right of payment to all of Mereo’s secured obligations to the extent of the collateral securing such obligations. Additionally, the CVRs will be effectively subordinated to all existing and future indebtedness, claims of holders of capital stock and other liabilities, including trade payables, of Mereo’s subsidiaries.

Risk Factors Related to the Combined Company

The Combined Company may not fully realize the anticipated benefits of the Merger or realize such benefits within the timing anticipated.

Mereo and OncoMed entered into the Merger Agreement because each company believes that the Merger will be beneficial to each of Mereo, the Mereo shareholders, OncoMed and the OncoMed stockholders. The Combined Company may not be able to achieve the anticipated long-term strategic benefits of the Merger within the timing anticipated or at all. For example, the benefits from the Merger will be partially offset by the costs incurred in completing the transaction. In addition, if the net cash held by OncoMed at the closing of the Merger is lower than each party currently anticipates, the cash position of the Combined Company will be weaker than expected. Any delays and challenges that may be encountered in completing the Merger or in the post-Merger process of consolidation could have an adverse effect on the business and results of operations of the Combined Company, and may affect the value of the Mereo ADSs and Mereo Shares after the completion of the Merger.

The Combined Company will incur significant transaction-related costs in connection with the Merger.

Mereo and OncoMed expect to incur significant costs associated with the Merger. The amount of these costs may not be determined as of the Effective Time and may be material to the financial position and results of operations of the Combined Company. Mereo expects that the substantial majority of expenses resulting from the Merger will be comprised of transaction costs related to the Merger and employee-related costs. Mereo and OncoMed will also incur fees and costs related to integration and systems consolidation. The elimination of duplicative costs may not offset incremental transaction-related and other integration costs in the near term.

The Combined Company’s goodwill or other intangible assets may become impaired, which could result in material non-cash charges to its results of operations.

The Combined Company will have a substantial amount of goodwill and other intangible assets resulting from the Merger. At least annually, or whenever events or changes in circumstances indicate a potential impairment in the carrying value as defined by IFRS, the Combined Company will evaluate this goodwill for impairment based on the recoverable value, being the higher of fair value less costs to sell and value in use, of the cash generating units to which goodwill has been allocated. Estimated fair values could change if there are changes in the Combined Company’s capital structure, cost of debt, interest rates, capital expenditure levels, operating cash flows or market

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capitalization. Impairments of goodwill or other intangible assets could require material non-cash charges to the Combined Company’s results of operations.

Future results of the Combined Company may differ materially from the unaudited pro forma financial information included in the Registration Statement.

The Combined Company’s future results may be materially different from those shown in the unaudited pro forma financial information presented in the Registration Statement that show only a combination of Mereo’s and OncoMed’s historical results. Mereo expects to incur significant costs associated with completing the Merger and combining the operations of the two companies, and the exact magnitude of these costs is not yet known. Furthermore, these costs may decrease capital that could be used by Mereo for future income-earning investments.

The financial analyses and forecasts considered by Mereo, OncoMed and their respective financial advisors may not be realized.

While the financial projections utilized by Mereo, OncoMed and their respective advisors in connection with the Merger were prepared in good faith based on information available at the time of preparation, no assurances can be made regarding future events or that the assumptions made in preparing such projections will accurately reflect future conditions. In preparing such projections, the management of Mereo and OncoMed made assumptions regarding, among other things, future economic, competitive, regulatory and financial market conditions and future business decisions that may not be realized and that are inherently subject to significant uncertainties and contingencies, including, among others, risks and uncertainties described or incorporated by reference in this section and the section entitled “Cautionary Statement Regarding Forward-Looking Statements,” all of which are difficult to predict and many of which are beyond the control of Mereo and OncoMed and will be beyond the control of the Combined Company. There can be no assurance that the underlying assumptions or projected results will be realized, and actual results will likely differ, and may differ materially, from such projections, which could result in a material adverse effect on the Combined Company’s business, financial condition, results of operations and prospects.

After the Merger, Mereo will be a “foreign private issuer” under the rules and regulations of the SEC and, as a result, will be exempt from a number of rules under the Exchange Act and will be permitted to file less information with the SEC than a company incorporated in the United States.

Following completion of the Merger, Mereo will continue to be incorporated as a public limited company in England and Wales and will be deemed to be a “foreign private issuer” under the rules and regulations of the SEC. As a foreign private issuer, Mereo will be exempt from certain rules under the Exchange Act that would otherwise apply if Mereo were a company incorporated in the United States, including:

• the requirement to file periodic reports and financial statements with the SEC as frequently or as promptly as United States companies with securities registered under the Exchange Act;  

• the requirement to file financial statements prepared in accordance with U.S. GAAP;  

• the proxy rules, which impose certain disclosure and procedural requirements for proxy solicitations; and  

• the requirement to comply with Regulation FD, which imposes certain restrictions on the selective disclosure of material information.

In addition, Mereo’s officers, directors and principal shareholders will be exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act and the related rules with respect to their purchases and sales of Mereo ADS and Mereo Shares. Accordingly, after the completion of the Merger, if you hold Mereo ADSs, you may receive less information about the Combined Company than you currently receive about

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OncoMed and be afforded less protection under the United States federal securities laws than you are entitled to currently.

As a foreign private issuer, Mereo will not be required to comply with some of the corporate governance standards of Nasdaq applicable to companies incorporated in the United States.

Following completion of the Merger, the Mereo Board will be required to meet certain corporate governance standards under Nasdaq Listing Rules, including the requirement to maintain an audit committee comprised of three or more directors satisfying the independence standards of Nasdaq applicable to audit committee members. While foreign private issuers are not required to comply with most of the other corporate governance rules of Nasdaq, Mereo believes it currently complies with, and intends to continue to comply with, the majority of such requirements, including the requirements to maintain a majority of independent directors and nominating and compensation committees of its board of directors comprised solely of independent directors. Mereo will be required to continue to follow the AIM rules and Corporate Governance Code publishedby theQuotedCompanies Alliance. As a result, holders of Mereo ADSs may not be afforded the benefits of the corporate governance standards of Nasdaq to the same extent applicable to companies incorporated in the United States.

Additional reporting requirements may apply if Mereo loses its status as a foreign private issuer.

If Mereo loses its status as a foreign private issuer at some future time, then it will no longer be exempt from such rules and, among other things, will be required to file periodic reports and financial statements as if it were a company incorporated in the United States. The costs incurred in fulfilling these additional regulatory requirements could be substantial.

Although Mereo’s reporting obligations as a foreign private issuer will be fewer than those of a public company incorporated in the United States, Mereo’s costs of complying with its SEC reporting requirements will be significant, and its management will be required to devote substantial time to complying with SEC regulations.

Mereo is not currently subject to SEC rules. However, following the completion of the Merger, Mereo will be a foreign private issuer and subject to certain SEC reporting requirements. As such, and particularly after Mereo no longer qualifies as an emerging growth company, Mereo expects to incur significant legal, accounting, and other expenses that it did not incur previously, including costs associated with its SEC reporting requirements under the Exchange Act and compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”). Mereo’s senior management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will increase Mereo’s legal and financial compliance costs and will make some activities more time-consuming and costly. For example, Mereo expects that these rules and regulations may make it more expensive for Mereo to obtain director and officer liability insurance, which in turn could make it more difficult for Mereo to attract and retain qualified senior management personnel or members for the Mereo Board. In addition, these rules and regulations are often subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.

Failure to establish and maintain effective internal controls could have a material adverse effect on Mereo’s business and stock price.

Pursuant to Section 404, Mereo will be required to furnish a report by its senior management on its internal control over financial reporting. However, while Mereo remains an emerging growth company, it will not be required to include an attestation report on internal control over financial reporting issued by its independent registered public accounting firm. To prepare for eventual compliance with Section 404, once Mereo no longer qualifies as an emerging growth company, Mereo will be engaged in a process to document and evaluate its internal control over financial reporting, which is both costly and challenging. In this regard, Mereo will need to continue to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess and

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document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented, and implement a continuous reporting and improvement process for internal control over financial reporting. Despite Mereo’s efforts, there is a risk that it will not be able to conclude, within the prescribed timeframe or at all, that its internal control over financial reporting is effective as required by Section 404. If Mereo identifies one or more material weaknesses, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of Mereo’s financial statements.

Future acquisitions may result in unanticipated accounting charges or may otherwise adversely affect the Combined Company’s results of operations and result in difficulties in integrating purchased assets, products or technologies, or be dilutive to existing stockholders.

A key element of the Combined Company’s business strategy will include expansion through the acquisition of assets, products or technologies that complement its existing product candidates in the field of rare and specialty diseases. The Combined Company will continually evaluate and explore strategic opportunities as they arise, including strategic partnerships or co-development agreements and the purchase or sale of assets, including tangible and intangible assets such as intellectual property.

Acquisitions may require significant capital, typically entail many risks and could result in difficulties in assimilating and integrating the purchased assets, products or technologies. The Combined Company may experience unanticipated costs and expenditures, changing relationships with suppliers and strategic partners, difficulties developing product development plans, or contractual, intellectual property or employment issues. These challenges could disrupt the Combined Company’s ongoing business, distract its management and employees, harm its reputation and increase its expenses. These challenges would be even greater if the Combined Company acquired a business or entered into a business combination transaction.

Acquisitions may require large one-time charges and can result in increased debt or contingent liabilities, adverse tax consequences, additional share-based compensation expense and the recording and later amortization of amounts related to certain purchased intangible assets, any of which could adversely affect the Combined Company’s results of operations. Any of these charges could cause the value of Mereo Shares to decline.

Acquisitions or asset purchases made entirely or partially for cash may reduce the Combined Company’s cash reserves. The Combined Company may seek to obtain additional cash to fund an acquisition by selling equity or debt securities. Any issuance of equity or convertible debt securities may be dilutive to holders of Mereo ADSs or Mereo Shares.

The Combined Company may not be able to find suitable acquisition opportunities that are available at attractive valuations, if at all. Even if it does find suitable acquisition opportunities, it may not be able to consummate the acquisitions on commercially acceptable terms, and any decline in the price of Mereo ADSs or Mereo Shares may make it significantly more difficult and expensive to initiate or consummate additional acquisitions.

The Combined Company’s consolidated financial statements will be prepared in accordance with IFRS. OncoMed prepares its consolidated financial statements in accordance with U.S. GAAP. The conversion of OncoMed’s historical consolidated financial statements into IFRS and the preparation of the Combined Company’s future consolidated financial statements in accordance with IFRS could result in material changes in the reported results of operations, financial position and cash flows of the OncoMed business compared with amounts that it had previously reported (or would have reported in the future) as a stand-alone business in accordance with U.S. GAAP.

The Combined Company’s consolidated financial statements will be prepared in accordance with IFRS. OncoMed prepares its consolidated financial statements in accordance with U.S. GAAP. Significant differences exist between IFRS and U.S. GAAP that may be relevant to OncoMed. Furthermore, significant adjustments may be made to the carrying amounts of the assets and liabilities of OncoMed at the date of completion of the Merger in accordance with business combination accounting under IFRS. Such adjustments may include the recognition of

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identifiable intangible assets, the remeasurement of property, plant and equipment, the recognition of certain contingent liabilities, deferred revenues and related income tax effects. Accordingly, the conversion of OncoMed’s historical consolidated financial statements into IFRS and the preparation of the Combined Company’s future consolidated financial statements in accordance with IFRS could result in material changes in the reported results of operations, financial position and cash flows of the OncoMed business compared with amounts that it previously reported (or would have reported in the future) as a stand-alone business in accordance with U.S. GAAP.

Following the Merger, the executive officers, board of directors and certain of Mereo’s existing shareholders will continue to own a majority or a significant portion of the Combined Company and, as a result, will continue to have control or significant influence over the Combined Company and your interests may conflict with the interests of these shareholders.

After giving effect to the Merger, Mereo’s executive officers, board of directors and significant shareholders and their respective affiliates, in the aggregate, will own approximately 11.3% of Mereo’s outstanding ordinary shares (including ordinary shares in the form of Mereo ADSs). Depending on the level of attendance at Mereo’s general meetings of shareholders, these shareholders either alone or voting together as a group may be in a position to control or significantly influence the outcome of decisions taken at any such general meeting. Any shareholder or group of shareholders controlling more than 50% of the share capital present and voting at Mereo’s general meetings of shareholders may control any shareholder resolution requiring a simple majority, including the appointment of board members, certain decisions relating to Mereo’s capital structure and the approval of certain significant corporate transactions. Any shareholder or group of shareholders controlling more than 75% of the share capital present and voting at Mereo’s general meetings of shareholders may control any shareholder resolution amending Mereo’s articles of association. These shareholders may have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests. Among other consequences, this concentration of ownership may have the effect of delaying or preventing a change in control and might therefore negatively affect the market price of the Mereo ADSs and Mereo Shares.

Risk Factors Related to the Mereo ADSs

There will be no public market for Mereo ADSs prior to the Merger, and an active trading market may not develop.

While the existing Mereo Shares have been traded on AIM since 2016, there will be no public market for Mereo ADSs or Mereo Shares in the United States prior to the completion of the Merger. Although Mereo expects that the Mereo ADSs will be approved for listing on Nasdaq, Mereo cannot predict the extent to which investor interest in the Mereo ADSs will lead to the development of an active trading market or how liquid that market might become. An active public market for Mereo ADSs may not develop or be sustained after the completion of the Merger. If an active public market does not develop or is not sustained, it may be difficult for you to sell your Mereo ADSs at a price that is attractive to you, or at all.

The market price for Mereo ADSs and the underlying Mereo Shares may be volatile and may decline regardless of Mereo’s operating performance, and the value of your investment could materially decline.

Investors who hold Mereo ADSs may not be able to resell those Mereo ADSs at or above the value of such Mereo ADSs at the Effective Time. The trading price of Mereo ADSs may fluctuate, and the trading price of Mereo Shares on AIM is likely to continue to fluctuate, substantially.

The market price of Mereo ADSs and Mereo Shares may fluctuate significantly in response to numerous factors, many of which are beyond Mereo’s control, including:

• positive or negative results from, or delays in, testing or clinical trials conducted by Mereo or its competitors;

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• delays in entering into strategic relationships with respect to development or commercialization of Mereo’s product candidates or entry into strategic relationships on terms that are not deemed to be favorable to Mereo;

• technological innovations or commercial product introductions by Mereo or competitors;

• changes in government regulations;

• developments concerning proprietary rights, including patents and litigation matters;

• public concern relating to the commercial value or safety of Mereo’s product candidates;

• financing or other corporate transactions;

• publication of research reports or comments by securities or industry analysts, and variances in Mereo’s periodic results of operations from securities analysts’ estimates;

• general market conditions in the biopharmaceutical and pharmaceutical industries or in the economy as a whole;

• the loss of any of Mereo’s key scientific or senior management personnel;

• sales of the Mereo ADSs or Mereo Shares by Mereo, its senior management and board members, holders of Mereo ADSs or Mereo’s other security holders in the future;

• actions by institutional shareholders;

• speculation in the press or the investment community; or

• other events and factors, many of which are beyond Mereo’s control.

These and other market and industry factors may cause the market price and demand for the Mereo ADSs to fluctuate substantially, regardless of Mereo’s actual operating performance, which may limit or prevent investors from readily selling Mereo ADSs or Mereo Shares and may otherwise negatively affect the liquidity of Mereo ADSs and Mereo Shares.

In addition, the stock market in general, and emerging companies in particular, have experienced significant price and volume fluctuations that often have been unrelated to the operating performance of the companies affected by these fluctuations. These broad market fluctuations may adversely affect the trading price of Mereo ADSs and Mereo Shares, regardless of Mereo’s operating performance. In the past in the United States, when the market price of a security has been volatile, holders of that security have often instituted securities class action litigation against the issuer of such securities. If any of the holders of Mereo ADSs or Mereo Shares were to bring such a lawsuit against Mereo, Mereo could incur substantial costs defending the lawsuit and the attention of Mereo’s senior management would be diverted from the operation of Mereo’s business. Any adverse determination in litigation could also subject Mereo to significant liabilities.

Future sales of Mereo Shares or Mereo ADSs could depress the market price of Mereo ADSs.

If holders of Mereo Shares or Mereo ADSs sell, or indicate an intent to sell, substantial amounts of Mereo Shares or Mereo ADSs in the public markets, the trading price of Mereo ADSs or Mereo Shares could decline significantly. These sales might also make it more difficult for Mereo to sell equity or equity-related securities at a time and price that it otherwise would deem appropriate.

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The dual listing of Mereo Shares and Mereo ADSs is costly to maintain and may adversely affect the liquidity and value of Mereo Shares and Mereo ADSs.

Following the Merger and after Mereo ADSs are listed for trading on Nasdaq, Mereo Shares will continue to trade on AIM. Maintaining a dual listing will generate additional costs, including significant legal, accounting, investor relations, and other expenses that Mereo did not previously incur, in addition to the costs associated with the additional reporting requirements described in the Registration Statement. Mereo cannot predict the effect of this dual listing on the value of the Mereo ADSs and Mereo Shares. However, the dual listing of Mereo ADSs and Mereo Shares may dilute the liquidity of these securities in one or both markets and may adversely affect the development of an active trading market for the Mereo ADSs. The price of the Mereo ADSs could also be adversely affected by trading in Mereo Shares on AIM.

Fluctuations in the exchange rate between the U.S. dollar and the pound sterling may increase the risk of holding Mereo ADSs.

The share price of Mereo Shares is quoted on AIM in pence sterling, while the Mereo ADSs will trade on Nasdaq in U.S. dollars. Fluctuations in the exchange rate between the U.S. dollar and the pound sterling may result in differences between the value of the Mereo ADSs and the value of Mereo Shares, which may result in heavy trading by investors seeking to exploit such differences. In addition, as a result of fluctuations in the exchange rate between the U.S. dollar and the pound sterling, the U.S. dollar equivalent of the proceeds that a holder of the Mereo ADSs would receive upon the sale in the United Kingdom of any Mereo Shares withdrawn from the depositary, and the U.S. dollar equivalent of any cash dividends paid in pound sterling on Mereo Shares represented by the Mereo ADSs, could also decline.

The depositary for Mereo ADSs is entitled to charge holders fees for various services, including annual service fees.

The depositary for Mereo ADSs is entitled to charge holders fees for various services including for the issuance of Mereo ADSs upon deposit of Mereo Shares, cancellation of Mereo ADSs, distributions of cash dividends or other cash distributions, distributions of Mereo ADSs pursuant to share dividends or other free share distributions, distributions of securities other than Mereo ADSs and annual service fees. In the case of Mereo ADSs issued by the depositary into The Depository Trust Company (“DTC”), the fees will be charged by the DTC participant to the account of the applicable beneficial owner in accordance with the procedures and practices of the DTC participant as in effect at the time. The depositary for Mereo ADSs will not generally be responsible for any United Kingdom stamp duty or stamp duty reserve tax arising upon the issuance or transfer of Mereo ADSs.

If securities or industry analysts do not publish research or publish inaccurate research or unfavorable research about Mereo’s business, the price and trading volume of Mereo Shares and Mereo ADSs could decline.

The trading market for Mereo Shares and Mereo ADSs will depend in part on the research and reports that securities or industry analysts publish about Mereo or its business. If one or more of the analysts who covers Mereo downgrades the Mereo Shares or Mereo ADSs or publishes incorrect or unfavorable research about its business, the price of the Mereo Shares and/or Mereo ADSs would likely decline. If one or more of these analysts ceases coverage of Mereo or fails to publish reports on it regularly, or downgrades the Mereo Shares or Mereo ADSs, demand for Mereo ADSs or Mereo Shares could decrease, which could cause the price of Mereo ADSs and/or Mereo Shares and/or trading volume to decline.

You may be subject to limitations on the transfer of Mereo ADSs and the withdrawal of the underlying Mereo Shares.

Mereo ADSs are transferable on the books of the depositary. However, the depositary may close its books at any time or from time to time when the depositary, in good faith, determines such action is necessary or advisable pursuant to the deposit agreement. The depositary may refuse to deliver, transfer or register transfers of Mereo

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ADSs generally when Mereo’s books or the books of the depositary are closed, or at any time if Mereo or the depositary thinks it is necessary or advisable to do so because of any requirement of law, government or governmental body, or under any provision of the deposit agreement, or for any other reason, subject to your right to cancel your Mereo ADSs and withdraw the underlying Mereo Shares. Temporary delays in the cancellation of your Mereo ADSs and withdrawal of the underlying Mereo Shares may arise because the depositary has closed its transfer books or Mereo has closed its transfer books, the transfer of Mereo Shares is blocked to permit voting at a shareholders’ meeting or because Mereo is paying a dividend on the Mereo Shares.

In addition, you may not be able to cancel your Mereo ADSs and withdraw the underlying Mereo Shares when you owe money for fees, taxes and similar charges and when it is necessary to prohibit withdrawals in order to comply with any laws or governmental regulations that apply to the Mereo ADSs or to the withdrawal of the Mereo Shares or other deposited securities.

Mereo ADS holders may not be entitled to a jury trial with respect to claims arising under the deposit agreement, which could result in less favorable results to the plaintiff(s) in any such action.

The deposit agreement governing the Mereo ADSs provides that holders and beneficial owners of ADSs irrevocably waive the right to a trial by jury in any legal proceeding arising out of or relating to the deposit agreement or the ADSs, including claims under U.S. federal securities laws, against Mereo or the depositary to the fullest extent permitted by applicable law. If this jury trial waiver provision is prohibited by applicable law, an action could nevertheless proceed under the terms of the deposit agreement with a jury trial. Although Mereo is not aware of a specific federal decision that addresses the enforceability of a jury trial waiver in the context of U.S. federal securities laws, it is Mereo’s understanding that jury trial waivers are generally enforceable. Moreover, insofar as the deposit agreement is governed by the laws of the State of New York, New York laws similarly recognize the validity of jury trial waivers in appropriate circumstances. In determining whether to enforce a jury trial waiver provision, New York courts and federal courts will consider whether the visibility of the jury trial waiver provision within the agreement is sufficiently prominent such that a party has knowingly waived any right to trial by jury. Mereo believes that this is the case with respect to the deposit agreement and the Mereo ADSs.

In addition, New York courts will not enforce a jury trial waiver provision in order to bar a viable setoff or counterclaim sounding in fraud or one which is based upon a creditor’s negligence in failing to liquidate collateral upon a guarantor’s demand, or in the case of an intentional tort claim (as opposed to a contract dispute). No condition, stipulation or provision of the deposit agreement or Mereo ADSs serves as a waiver by any holder or beneficial owner of Mereo ADSs or by Mereo or the depositary of compliance with any provision of U.S. federal securities laws and the rules and regulations promulgated thereunder.

If any holder or beneficial owner of Mereo ADSs brings a claim against Mereo or the depositary in connection with matters arising under the deposit agreement or the Mereo ADSs, including claims under U.S. federal securities laws, such holder or beneficial owner may not be entitled to a jury trial with respect to such claims, which may have the effect of limiting and discouraging lawsuits against Mereo or the depositary. If a lawsuit is brought against Mereo or the depositary under the deposit agreement, it may be heard only by a judge or justice of the applicable trial court, which would be conducted according to different civil procedures and may result in different results than a trial by jury would have had, including results that could be less favorable to the plaintiff(s) in any such action, depending on, among other things, the nature of the claims, the judge or justice hearing such claims, and the venue of the hearing.

The rights of OncoMed’s stockholders who become holders of Mereo ADSs in the Merger will not be the same as the rights of holders of Mereo Shares or OncoMed common stock.

OncoMed is a corporation organized under the laws of the State of Delaware. The rights of holders of OncoMed common stock are governed by the DGCL, the certificate of incorporation and bylaws of OncoMed and the listing rules of Nasdaq. Mereo is a public limited company organized under the laws of England and Wales. Upon completion of the Merger, the former holders of OncoMed common stock will receive Mereo ADSs, which represent a beneficial ownership interest in Mereo Shares. The rights of holders of Mereo ADSs will be governed by English law, Mereo’s constitutional documents, the AIM rules, United Kingdom and EEA capital markets laws and

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regulations and the deposit agreement pursuant to which the Mereo ADSs will be issued. There are differences between the rights presently enjoyed by holders of OncoMed common stock and the rights to which the holders of Mereo ADSs will be entitled following the Merger. In addition, the corporate governance practices of Mereo differ in various respects from the corporate governance practices with which OncoMed stockholders may be familiar as a result of their ownership of OncoMed common stock. In some cases, the holders of Mereo ADSs to be issued in the Merger may not be entitled to important rights to which they would have been entitled as holders of OncoMed common stock. However, because of aspects of English law, Mereo’s constitutional documents and the terms of the deposit agreement, the rights of holders of Mereo ADSs will not be identical to and, in some respects, may be less favorable than, the rights of holders of Mereo Shares.

You may not receive distributions on Mereo Shares represented by Mereo ADSs or any value for them if it is unlawful or impractical to make them available to holders of Mereo ADSs.

Mereo expects that the depositary for Mereo ADSs will agree to pay to you or distribute the cash dividends or other distributions it or the custodian receives on Mereo Shares or other deposited securities after deducting its fees and expenses. You will receive these distributions in proportion to the number of Mereo Shares your Mereo ADSs represent. However, in accordance with the limitations that Mereo expects will be set forth in the deposit agreement, it may be unlawful or impractical to make a distribution available to holders of Mereo ADSs. Mereo has no obligation to take any other action to permit the distribution of Mereo ADSs, Mereo Shares, rights or anything else to holders of Mereo ADSs. This means that you may not receive the distributions Mereo makes on the Mereo Shares or any value from them if it is unlawful or impractical to make them available to you. These restrictions may have a material adverse effect on the value of Mereo ADSs.

It may be difficult for you to bring any action or enforce any judgment obtained in the United States against Mereo or members of the Mereo Board, which may limit the remedies otherwise available to you.

Mereo is incorporated as a public limited company in England and Wales, and the majority of Mereo’s assets are located outside the United States. In addition, the majority of the members of the Mereo Board are nationals and residents of countries, including the United Kingdom, outside of the United States. Most or all of the assets of these individuals are located outside the United States. As a result, it may be difficult or impossible for you to bring an action against Mereo or against these individuals in the United States if you believe your rights have been infringed under the securities laws or otherwise. In addition, a United Kingdom court may prevent you from enforcing a judgment of a U.S. court against Mereo or these individuals based on the securities laws of the United States or any state thereof. A United Kingdom court may not allow you to bring an action against Mereo or its directors based on the securities laws of the United States or any state thereof.

Shareholders in countries other than the United Kingdom will suffer dilution if they are unable to participate in future preemptive equity offerings.

Under English law, shareholders usually have preemptive rights to subscribe on a pro rata basis in the issuance of new shares for cash. The exercise of preemptive rights by certain shareholders not resident in the United Kingdom may be restricted by applicable law or practice in the United Kingdom and overseas jurisdictions. In particular, the exercise of preemptive rights by U.S. shareholders would be prohibited unless that rights offering is registered under the Securities Act or an exemption from the registration requirements of the Securities Act applies. Furthermore, under the deposit agreement for the Mereo ADSs, the depositary generally will not offer those rights to holders of Mereo ADSs unless both the rights and the underlying securities to be distributed to holders of Mereo ADSs are either registered under the Securities Act, or exempt from registration under the Securities Act with respect to all holders of Mereo ADSs. If no exemption applies and the Combined Company determines not to register the rights offering, shareholders in the United States may not be able or permitted to exercise their preemptive rights. Mereo is also permitted under English law to disapply preemptive rights (subject to the approval of its shareholders by special resolution) and thereby exclude certain shareholders, such as overseas shareholders, from participating in a rights offering (usually to avoid a breach of local securities laws).

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Holders of Mereo ADSs may not have the same voting rights as holders of Mereo Shares and may not receive voting materials in time to be able to exercise their right to vote.

Except as described in the Registration Statement and as provided in the deposit agreement, holders of Mereo ADSs will not be able to exercise voting rights attaching to Mereo Shares underlying the Mereo ADSs issued pursuant to the Merger on an individual basis. Each holder of Mereo ADSs will appoint the depositary or its nominee as the holder’s representative to exercise, pursuant to the instructions of the holder, the voting rights attaching to the Mereo Shares underlying the Mereo ADSs issued pursuant to the Merger. Holders of Mereo ADSs may not receive voting materials in time to instruct the depositary to vote, and it is possible that they, or persons who hold their Mereo ADSs through brokers, dealers or other third parties, will not have the opportunity to exercise a right to vote.

Because Mereo does not anticipate paying any cash dividends on Mereo ADSs or Mereo Shares in the foreseeable future, capital appreciation, if any, will be your sole source of gains and you may never receive a return on your investment.

Under English law, a company’s accumulated realized profits must exceed its accumulated realized losses on a non-consolidated basis before dividends can be paid. Therefore, Mereo must have distributable profits before issuing a dividend. Mereo has not paid dividends in the past on its ordinary shares. Further, Mereo intends to retain future earnings, if any, for use in its business and does not anticipate paying any cash dividends in the foreseeable future. In addition, Mereo’s credit facility prohibits it from paying dividends on its equity securities, and any future debt agreements may likewise preclude Mereo from paying dividends. As a result, capital appreciation, if any, on Mereo ADSs or Mereo Shares will be your sole source of gains for the foreseeable future.

If Mereo is a passive foreign investment company (“PFIC”), you could be subject to adverse U.S. federal income tax consequences if you are a U.S. investor.

In general, a non-U.S. corporation will be a PFIC for any taxable year in which (i) 75% or more of its gross income consists of passive income or (ii) 50% or more of the average quarterly value of its assets consists of assets that produce, or are held for the production of, passive income (the “asset test”). For purposes of the above calculations, a non-U.S. corporation that directly or indirectly owns at least 25% by value of the shares of another corporation is treated as if it held its proportionate share of the assets of the other corporation and received directly its proportionate share of the income of the other corporation. Passive income generally includes interest, dividends, gains from certain property transactions, rents and royalties (other than certain rents or royalties derived in the active conduct of a trade or business). Cash is a passive asset for PFIC purposes. Goodwill is an active asset under the PFIC rules to the extent attributable to activities that produce active income.

The assets shown on Mereo’s consolidated balance sheet (taking into account OncoMed assets acquired as a result of the Merger) are expected to include a significant amount of cash and cash equivalents for the foreseeable future. Therefore, whether Mereo will satisfy the assets test for the current or any future taxable year generally will depend largely on the quarterly value of Mereo’s goodwill, and on how quickly Mereo utilizes the cash in its business. Because (i) the value of Mereo’s goodwill may be determined by reference to the market price of the Mereo Shares or the Mereo ADSs, which may be volatile given the nature and early stage of its business, (ii) Mereo expects to continue to hold a significant amount of cash, and (iii) a company’s PFIC status is an annual determination that can be made only after the end of each taxable year, Mereo cannot express a view as to whether it will be a PFIC for the current or any future taxable year. For the reasons described above, it is possible that Mereo may be a PFIC for its current or any future taxable year.

If Mereo were a PFIC for any taxable year during which a U.S. investor holds Mereo ADSs or Mereo Shares, certain adverse U.S. federal income tax consequences could apply to such U.S. investor.

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Risks Related to Our Business

We anticipate that we will continue to incur significant losses for the foreseeable future, and if we are unable to achieve and sustain profitability, the market value of our common stock will likely decline.

We are a clinical-stage biopharmaceutical company. Biopharmaceutical product development is a highly speculative undertaking and involves a substantial degree of risk. We do not currently have any therapeutic candidates in pivotal clinical trials or approved for sale, and we continue to incur significant research and development and general and administrative expenses related to our operations. We are not profitable and have incurred losses in each year since our founding in 2004. Our net losses for the years ended December 31, 2018, 2017, and 2016 were $8.1 million, $39.1 million and $103.1 million, respectively. As of December 31, 2018, we had an accumulated deficit of $361.8 million.

We expect to continue to incur significant losses for the foreseeable future. We expect these losses and our cash utilization to continue in the near term as we continue to conduct clinical trials for navicixizumab (anti-DLL4/VEGF bispecific, OMP-305B83), etigilimab (anti-TIGIT, OMP-313M32), and GITRL-Fc (OMP-336B11).

We are collaborating with Celgene Corporation, or Celgene, to develop and commercialize etigilimab. Under this agreement, Celgene has an option to obtain an exclusive license for the development and commercialization of etigilimab. Celgene will generally assume responsibility for funding obligations with respect to clinical development and commercialization of etigilimab after option exercise, with the exception of certain costs for certain continuing clinical trials for which we have accepted responsibility prior to option exercise.

If Celgene does not exercise its option, or if our collaboration with Celgene terminates, we will be responsible for funding further development of etigilimab unless we enter into another collaboration for such biologic therapeutic candidates. In addition, we are responsible for all costs associated with the development of any unpartnered therapeutic candidate.  Navicixizumab and GITRL-Fc are not partnered.  Unless and until we enter into a collaboration with respect to our unpartnered therapeutic candidates, which we may never do, any ongoing or future development of these therapeutic candidates, including any activities associated with the completion of ongoing clinical trials, will generally be funded entirely by us.  

Under our collaboration agreement, we are generally responsible for funding all research and development activities that we choose to undertake for our etigilimab program, including the costs associated with conducting the Phase Ia/b clinical trial, prior to Celgene’s exercise of its option for the program. Celgene has not yet exercised its option for our etigilimab program, which it may exercise during certain time periods through the end of certain Phase I clinical trials. Furthermore, there is no guarantee that Celgene will exercise its option for our etigilimab program, and if Celgene does not exercise its option, we may incur additional costs for funding the Phase Ia/b clinical trial and any further development of our etigilimab program.

All of our therapeutic candidates are in development, and none has been approved for sale. To date, we have derived all of our revenues from upfront payments, milestone payments and other payments we received under our prior and current collaborations, and have also supported our research and development efforts by utilizing certain government grants for research and development. We do not anticipate that we will generate revenue from the sale of our therapeutic candidates for the foreseeable future. If any of our therapeutic candidates receive regulatory approval, we may incur significant costs to commercialize our therapeutic candidates. Even after obtaining such regulatory approval, our products may never gain sufficient market acceptance and adequate market share. If our therapeutic candidates fail to demonstrate safety and efficacy in clinical trials, do not gain regulatory approval, or do not achieve market acceptance following regulatory approval and commercialization, we may never become profitable. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. If we are unable to achieve and sustain profitability, the market value of our common stock will likely decline. Because of the numerous risks and uncertainties associated with developing biopharmaceutical products, we are unable to predict the extent of any future losses or whether we will become profitable.

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We are heavily dependent on the success of our most advanced therapeutic candidates, which are in various stages of clinical development. All of our therapeutic candidates are still in clinical development. If we, or our current or future collaborators, are unable to commercialize our therapeutic candidates or if we, or our current or future collaborators, experience significant delays in obtaining regulatory approval for, or commercializing, any or all of our therapeutic candidates, our business will be materially and adversely affected.

We have invested a significant portion of our efforts and financial resources in the development of our most advanced therapeutic candidates that are in clinical development, including navicixizumab (anti-DLL4/VEGF bispecific, OMP-305B83) and etigilimab (anti-TIGIT, OMP-313M32) for the treatment of various types of cancer.

All of our therapeutic candidates are still in clinical development. Our ability to generate product revenues will depend heavily on our ability, and/or the ability of our current or future collaborators, to successfully develop and commercialize these therapeutic candidates. We do not expect that such commercialization of any of our therapeutic candidates will occur for at least the next several years, if ever. Our ability, and/or the ability of our current or future collaborators, to commercialize our therapeutic candidates effectively will depend on several factors, including the following:

• successful completion of preclinical studies and clinical trials, including the ability to demonstrate safety and efficacy of our therapeutic candidates;

• receipt of marketing approvals from the U.S. Food and Drug Administration, or FDA, and similar regulatory authorities outside the United States;

• establishing commercial manufacturing capabilities, for example, by making arrangements with third-party manufacturers;

• successfully launching commercial sales of the product, whether alone or in collaboration with others;

• acceptance of the product by patients, the medical community and third-party payors;

• establishing market share while competing with other therapies;

• a continued acceptable safety and adverse event profile of our products following regulatory approval; and

• qualifying for, identifying, registering, maintaining, enforcing and defending intellectual property rights and claims covering our therapeutic candidates.

If we, or our collaborators, do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to commercialize our therapeutic candidates, which would materially and adversely affect our business, financial condition and results of operations.

We depend on the successful development of our therapeutic candidates. The development of new drugs and biologics is a highly risky undertaking, which involves a lengthy process, and the results of preclinical and early clinical trials are not necessarily predictive of future results. Our development activities, or those of our current or future collaborators, therefore may not be successful on the time schedule we have planned, or at all.

Our therapeutic candidates are in the early stages of clinical trials and are subject to the risks of failure inherent in drug development. As of the date of this Annual Report on Form 10-K, two of our therapeutic candidates are currently in active clinical development: navicixizumab (anti-DLL4/VEGF bispecific, OMP-305B83) and etigilimab (anti-TIGIT, OMP-313M32). We and/or our current or future collaborators will need to conduct significant additional preclinical studies and/or clinical trials before we can demonstrate that any of our therapeutic candidates is safe and effective to the satisfaction of the FDA and other regulatory authorities. Clinical trials are expensive and uncertain processes that may take years to complete.

Success in preclinical studies and early clinical trials does not ensure that later clinical trials will generate adequate data to demonstrate the efficacy and safety of a therapeutic candidate. A number of companies in the biotechnology industry, including those with greater resources and experience than us, have suffered significant setbacks in Phase II and Phase III clinical trials, despite promising results in earlier clinical trials. We do not know

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whether any Phase II, Phase III or other clinical trials we may conduct, or our current or future collaborators may conduct, will demonstrate adequate efficacy and safety to result in regulatory approval to market any of our therapeutic candidates. If later stage clinical trials do not produce favorable results, our ability, or the ability of our current or future collaborators, to achieve regulatory approval for any of our therapeutic candidates may be adversely impacted.

In addition, even if initial or interim data from a clinical trial appear encouraging, subsequent analyses of the mature data from the same trial at a later time point may or may not be favorable.  For example, even if interim median overall survival data from a clinical trial appear positive or encouraging, the final median overall survival data obtained from the trial at a later date may be less favorable.

Delays in the commencement or completion of clinical testing could significantly affect our product development costs or the product development costs of our current or future collaborators. We do not know whether planned clinical trials will begin on time or be completed on schedule, if at all. The commencement and completion of clinical trials can be delayed for a number of reasons, including delays related to:

• obtaining regulatory authorization to commence a clinical trial or complying with conditions imposed by a regulatory authority regarding the scope or design of a clinical trial;

• reaching agreement on acceptable terms with prospective clinical research organizations, or CROs, and trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;

• manufacturing, including manufacturing sufficient quantities of a therapeutic candidate or other materials for use in clinical trials;

• obtaining IRB approval or the approval of other reviewing entities to conduct a clinical trial at a prospective site;

• recruiting and enrolling patients to participate in clinical trials for a variety of reasons, including size of patient population, complexity of clinical trial protocol, the availability of approved effective treatments for the relevant disease, changed standards of care during the conduct of the trial, and competition from other clinical trial programs for similar indications;

• severe or unexpected drug-related adverse effects experienced by patients in a clinical trial; and

• retaining patients who have initiated a clinical trial, but may withdraw due to treatment protocol, adverse effects from the therapy, lack of efficacy from the treatment, personal issues or who are lost to further follow-up.

Clinical trials may also be delayed, suspended or terminated as a result of ambiguous or negative interim results, or results that are inconsistent with earlier results.

In addition, a clinical trial may be suspended or terminated by us, the FDA, the IRB or other reviewing entity overseeing the clinical trial at issue, any of our clinical trial sites with respect to that site, or other regulatory authorities due to a number of factors, including:

• failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols;

• inspection of the clinical trial operations or trial sites by the FDA or other regulatory authorities resulting in the imposition of a clinical hold;

• unforeseen safety issues or any determination that a clinical trial presents unacceptable health risks; and

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• lack of adequate funding to continue the clinical trial, including the incurrence of unforeseen costs due to enrollment delays, requirements to conduct additional clinical trials and increased expenses associated with the services of our CROs and other third parties.

Product development costs to us and our collaborators will increase if we or our collaborators have delays in testing or approval of our therapeutic candidates or if we or they need to perform more or larger clinical trials than planned. Additionally, changes in regulatory requirements and policies may occur in any jurisdiction and we or our collaborators may need to amend clinical trial protocols to address these changes. Amendments may require us to resubmit our clinical trial protocols to IRBs for reexamination, which may impact the costs, timing or successful completion of a clinical trial. If we or our collaborators experience delays in completion of, or if we, the FDA or other regulatory authorities, the IRB or other reviewing entities, or any of our clinical trial sites suspend or terminate any of our clinical trials, the commercial prospects for our therapeutic candidates may be harmed and our ability to generate product revenues will be delayed. In addition, many of the factors that cause, or lead to, termination or suspension of, or a delay in the commencement or completion of, clinical trials may also ultimately lead to the denial of regulatory approval of a therapeutic candidate. Also, if one or more clinical trials are delayed, our competitors may be able to bring products to market before we do, and the commercial viability of our therapeutic candidates could be significantly reduced.

If a clinical trial of a therapeutic candidate that is part of one of our current or future collaborations is delayed, suspended, or terminated for any reason, any potential future opt-in, milestone, and contingent consideration payments to us under that collaboration may be delayed or may not occur at all. Also, a delay, suspension, or termination of a clinical trial for a therapeutic candidate under our collaboration agreement with Celgene prior to option exercise, or the factors that led to such delay, suspension or termination, may negatively impact the decision by Celgene as to whether or not to exercise its option with respect to such therapeutic candidate.

Data from clinical trials of some of our previous therapeutic candidates have not been sufficiently encouraging for us to continue clinical development of those candidates. For example, our demcizumab (anti-DLL4; OMP-21M18) program, which was a part of our strategic collaboration with Celgene, was unsuccessful in the clinic and has been discontinued. In 2017, demcizumab failed to meet its primary efficacy endpoints in two Phase II clinical trials.  Celgene subsequently terminated the collaboration agreement with respect to demcizumab.

We cannot assure you that any of our clinical trials will succeed or that any of our therapeutic candidates will reach the point where they are able to be successfully commercialized.

If we or our current or future collaborators are required to suspend or discontinue clinical trials due to side effects or other safety risks, or if we or they are required to conduct studies on the long-term effects associated with the use of our therapeutic candidates, our ability to commercialize our therapeuticcandidates could be adversely affected or delayed.

Our clinical trials, and any clinical trials with our therapeutic candidates that may be run by our current or future collaborators, may be suspended, delayed, or terminated at any time for a number of safety-related reasons. For example, we may voluntarily suspend, delay, or terminate our clinical trials if at any time we believe that our therapeutic candidates present an unacceptable safety risk to the clinical trial patients, and our current or future collaborators may voluntarily suspend, delay, or terminate clinical trials they may run with our therapeutic candidates, if at any time they believe that our therapeutic candidates present an unacceptable safety risk to the clinical trial patients. In addition, IRBs or regulatory agencies may order the temporary discontinuation or termination of our clinical trials at any time if they believe that the clinical trials are not being conducted in accordance with applicable regulatory requirements, including if they present an unacceptable safety risk to patients. Administering any therapeutic candidate to humans may produce undesirable side effects. The existence of undesirable side effects resulting from our therapeutic candidates could cause us, or our collaborators, or regulatory authorities, such as the FDA, to interrupt, delay or halt clinical trials of our therapeutic candidates and could result in the FDA or other regulatory agencies denying further development or approval of our therapeutic candidates for any or all targeted indications. This, in turn, could affect whether Celgene exercises its development option for etigilimab under our collaboration and could prevent us from commercializing that therapeutic candidate. Further, our programs modulate novel classes of targets and/or modulate targets in novel ways. As a result, we may experience unforeseen adverse side effects with our therapeutic candidates currently in clinical development and any

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future therapeutic candidates, including navicixizumab (anti-DLL4/VEGF bispecific, OMP-305B83), etigilimab (anti-TIGIT, OMP-313M32), and GITRL-Fc (OMP-336B11).

The pharmacokinetic, pharmacodynamic, and safety profile of preclinical studies may not be indicative of results in any clinical trial. As of the date of this Quarterly Report on Form 10-Q, we have observed adverse events in clinical trials for all three of our therapeutic candidates currently in clinical development. We currently believe these adverse events are manageable. Nevertheless, such adverse events may cause challenges in development, approval and/or commercialization.

Patients treated with navicixizumab in our clinical trials have experienced treatment-related adverse events including hypertension, infusion reactions, gastrointestinal/gallbladder perforation, thrombocytopenia, headache, fatigue, proteinuria and pulmonary hypertension.  In our earlier clinical trials with a related anti-DLL4 antibody, demcizumab (anti-DLL4, OMP-21M18), cardiopulmonary events, including reversible pulmonary hypertension and/or heart failure, were observed in certain patients and resulted in demcizumab being placed on partial clinical hold until a risk mitigation strategy that included cardiac monitoring and early intervention with cardioprotective medication, if indicated, was implemented. A similar risk mitigation strategy has been implemented in our navicixizumab clinical trials since the initiation of this clinical program. The presence of anti-drug antibodies impacting navicixizumab pharmacokinetics was observed in a subset of patients receiving navicixizumab in our Phase I clinical trials.  In several instances, the anti-drug antibodies were associated with infusion reactions to the drug resulting in suspension or termination of navicixizumab administration. Treatment-related adverse events that have occurred in more than one patient treated with etigilimab include rash, pruritis, mucositis and fatigue. Treatment-related adverse events that have occurred in more than one patient treated with GITRL-Fc include nausea and infusion reactions. In addition, anti-drug antibodies have been observed in patients being treated with GITRL-Fc.

Further treatment of patients in the ongoing trials or subsequent trials of any of our therapeutic candidates could reveal significant harmful side effects. We have not conducted complete studies on the long-term effects associated with the use of all of our therapeutic candidates. Studies of these long-term effects may be required for regulatory approval and such requirement would delay the introduction of our therapeutic candidates, including etigilimab under our collaboration with Celgene, into the market. These studies could also be required at any time after regulatory approval of any of our therapeutic candidates. Absence of long-term data may also limit the approved uses of our products, if any, to short-term use. Some or all of our therapeutic candidates may prove to be unsafe for human use, which would materially harm our business.

The successful development and commercialization of our independent programs, and etigilimab if Celgene declines to exercise its option, will depend in large part on our ability either to raise capital to advance development of those programs or to secure collaborations with strategic partners that have the capital and expertise to bring products to market. We may be unable to secure such funds and/or secure such future collaborations.

If Celgene declines to exercise its option with respect to etigilimab, terminates the etigilimab program under the collaboration agreement, or terminates the entire agreement, we will need to secure funding to advance development of that program on our own and/or secure relationships with collaborators that have the necessary capital and expertise. Under our collaboration agreement with Celgene, we are not eligible to receive any further research or development milestone payments for etigilimab prior to Celgene’s decision regarding option exercise with respect to etigilimab.

We may also choose to advance our therapeutic candidates and programs that are not part of the Celgene collaboration independently without partnering such therapeutic candidates and programs, which will require substantial funds. We are currently independently advancing navicixizumab (anti-DLL4/VEGF bispecific, OMP-305B83) through clinical development, which is currently being funded entirely by us.  If any of our independent therapeutic candidates receive regulatory approval and are commercialized, substantial expenditures will also be required.

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As of December 31, 2018, we had approximately $57.3 million in cash, cash equivalents and short-term investments. We believe that our available cash, cash equivalents and short-term investments will be sufficient to meet our anticipated cash requirements through at least the first quarter of 2020, even without taking into account potential future milestone payments to us. Our future financing requirements will depend on many factors, some of which are beyond our control, including:

• the rate of progress and cost of our clinical trials, preclinical studies and other discovery and research and development activities;

• the timing of, and costs involved in, seeking and obtaining FDA and other regulatory approvals;

• the continuation and success of our strategic alliance with Celgene and future collaboration partners, including the exercise or non-exercise of the etigilimab development option by Celgene, and the continuation and success of our small molecule program collaboration with Bayer, including the advancement or non-advancement of the small molecule programs into further development and potential commercialization by Bayer;

• the costs of preparing, filing, prosecuting, maintaining, defending and enforcing any patent claims and other intellectual property rights, including litigation costs and the results of such litigation;

• our ability to enter into additional collaboration, licensing, government or other arrangements and the terms and timing of such arrangements;

• the potential need to acquire, by acquisition or in-licensing, other products or technologies; and

• the emergence of competing technologies, changes in standard-of-care treatment, or other adverse market developments.

Future capital requirements will also depend on the extent to which we acquire or invest in additional complementary businesses, products and technologies. We currently have no understandings, commitments or agreements relating to any of these types of transactions.

Until we can generate a sufficient amount of product revenue to finance our cash requirements, which we may never do, we expect to finance future cash needs primarily through public or private equity offerings, debt financings, a credit facility, government grants and contracts and/or strategic collaborations. Additional financing may not be available to us when we need it or it may not be available to us on favorable terms, if at all. Additionally, to the extent that we seek a new strategic partner to develop any of our programs, we may not be able to secure a collaboration on favorable terms, if at all. A collaboration may not provide sufficient funding or value to bring a product to market, and further funding and/or collaborations may be required. The terms of any such collaboration may also significantly limit our share of potential future profits from the associated program, may require us to relinquish potentially valuable rights to our current therapeutic candidates, potential products or proprietary technologies, or may grant licenses on terms that are not favorable to us. If we are unable to obtain adequate financing or form favorable collaborations, when needed, we may have to delay, reduce the scope of, or eliminate one or more of our clinical trials or research and development programs or our commercialization efforts.

If Celgene does not exercise its option for etigilimab, terminates the etigilimab program under its collaboration with us or terminates its entire collaboration agreement with us, or if Bayer terminates the small molecule program under its collaboration agreement with us, whether as a result of our inability to meet milestones or otherwise, any potential revenue from those collaborations will be significantly reduced or non-existent, and our results of operations and financial condition will be materially and adversely affected.

We have invested a significant portion of our time and financial resources in the development of etigilimab (anti-TIGIT, OMP-313M32), which is currently in clinical development and a part of our collaboration with Celgene.  It may not be possible to advance etigilimab further in development if Celgene chooses not to exercise its

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option with respect to this program, terminates the collaboration agreement with respect to this program or terminates the entire agreement.  

Under our agreement with Celgene, Celgene has an option to obtain an exclusive license to develop further and commercialize biologic therapeutics in the etigilimab program, which may be exercised during specified time periods through completion of a certain clinical trial, provided that such completion occurs within a specified time period. We are responsible for funding all research and development activities that we choose to undertake for the etigilimab program under the collaboration prior to Celgene’s exercise of the option for such program.

The collaboration provides milestone payments for achievement of specified development, regulatory and commercial milestones, paid on a per-product and per-program basis. The opt-in payments and payments for achievement of development, regulatory and commercial milestones may total up to $440.0 million for products in the etigilimab program (including payments received as of December 31, 2018), including a $35.0 million opt-in payment.  Celgene is also required to pay us tiered royalties for etigilimab equal to a percentage of net product sales worldwide in the high-single digits to the mid-teens.

Celgene is under no obligation to exercise its option with respect to the etigilimab program and may choose not do so. Celgene has previously declined to exercise its options for other programs of ours that were formerly part of the Celgene collaboration, including our navicixizumab program.  Additionally, Bristol-Myers Squibb Company (“Bristol-Myers Squibb”) and Celgene announced on January 3, 2019 that they have entered into a definitive merger agreement under which Bristol-Myers Squibb will acquire Celgene in a cash and stock transaction. We believe it is possible that such transaction may limit the likelihood that the opt-in payment for etigilimab will be achieved due to the uncertainty of Celgene’s business operations pending consummation of its proposed merger with Bristol-Myers Squibb and the uncertainty of the attractiveness of OncoMed’s etigilimab therapeutic candidate to Bristol-Myers Squibb.

If Celgene does not exercise its option on the etigilimab program, terminates the collaboration agreement with respect to the program or terminates the entire agreement, we will not receive any opt-in payment for the etigilimab program. There is no guarantee that the etigilimab program will successfully advance to achieve the relevant further development, regulatory and commercial milestones and that we will receive the associated milestone payments or any royalty payments on our anticipated timelines or at all.

The agreement with Celgene will terminate upon the expiration of all of Celgene’s payment obligations under a license agreement entered into with respect to the etigilimab program following Celgene’s exercise of an option for the etigilimab program, or if Celgene fails to exercise its option within the relevant option period. The agreement may be terminated by either party for the insolvency of, or an uncured material breach of the agreement by, the other party. In addition, Celgene may terminate the agreement in its entirety or with respect to the etigilimab program, for any reason, with prior written notice to us. We may also terminate the agreement with respect to the etigilimab program in the event that Celgene challenges the licensed patents with respect to such program. Depending on the timing of any such termination we may not be entitled to receive the opt-in payments, or potential milestone payments, as these payments terminate with termination of the agreement.

If Celgene does not exercise its option with respect to etigilimab, or terminates its rights and obligations with respect to the etigilimab program or the entire agreement, then depending on the timing of such event:

• under certain circumstances, we may owe Celgene single-digit percentage royalties on etigilimab if we elect to continue to commercialize etigilimab and etigilimab is successfully commercialized, subject to a cap;

• the development of etigilimab may be terminated or significantly delayed;

• our cash expenditures could increase significantly if it is necessary for us to hire additional employees and allocate scarce resources to the development and commercialization of etigilimab;

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• we would bear all of the risks and costs related to the further development and commercialization of etigilimab, including the reimbursement of third parties; and

• in order to fund further development and commercialization of etigilimab, we may need to seek out and establish an alternative collaboration arrangement with third-party partners; this may not be possible, or we may not be able to do so on terms which are acceptable to us, in which case, since assumption of sole responsibility for further development and commercialization would greatly increase our expenditures, it may be necessary for us to limit the size or scope of the etigilimab program, seek additional funding by other means, and/or choose to stop work altogether on the etigilimab program.

Any of these events could have a material adverse effect on our results of operations and financial condition.

In addition to our collaboration with Celgene, we have a collaboration with Bayer that currently consists of a small molecule program. Under our agreement with Bayer, if Bayer elects to advance the small molecule program into further development and commercialization, we would be entitled to receive up to $112.0 million in the aggregate for research, development, regulatory, and commercial milestones, plus single-digit percentage royalties on net product sales. However, Bayer is under no obligation to advance the small molecule program into further development and commercialization, and there is no guarantee that Bayer will elect to do so or that we will receive any payments related to the small molecule program on our anticipated timelines or at all. Moreover, there is no guarantee that any such small molecule therapeutic candidate will achieve the relevant further development, regulatory, or commercial milestones.

Bayer may terminate, for any or no reason, the collaboration agreement upon prior written notice to us. The agreement may also be terminated by either party for material breach by the other party that is not cured within a specified cure period. Either party may terminate the agreement for insolvency by the other party, and we may terminate the agreement if Bayer challenges the licensed patents. Depending on the timing of any such termination we may not be entitled to receive potential milestone payments, as these payments terminate with termination of the agreement.

The commercial success of etigilimab will depend in large part on Celgene’s development and marketing efforts, if and when Celgene exercises its option on that program. If Celgene is unable to perform in accordance with the terms of our agreement, our potential to generate future revenue from these programs would be significantly reduced and our business would be materially and adversely harmed.

If Celgene opts to exercise its option to license any etigilimab under our agreement, we will have limited influence and/or control over Celgene’s approaches to development and commercialization. While we will have potential milestone and royalty streams payable as Celgene or its sublicensees advance development of etigilimab, we are likely to have limited ability to influence Celgene’s development and commercialization efforts. Moreover, transitioning a therapeutic candidate to a collaboration partner after exercise of the partner’s option can be a complex process and may cause delays in the development program for that therapeutic candidate. If  Celgene or any potential future collaboration partners do not perform in the manner that we expect or fulfill their responsibilities in a timely manner, or at all, or if significant delays arise from the transition of a therapeutic candidate to Celgene or a potential future collaboration partner after option exercise, the clinical development, regulatory approval and commercialization efforts related to therapeutic candidates we have licensed to such collaboration partners could be delayed or terminated.

If we terminate our collaboration with Celgene, or any program thereunder, due to a material breach by Celgene, we have the right to assume the responsibility at our own expense for the development of the applicable biologic therapeutic candidates. Assumption of sole responsibility for further development will greatly increase our expenditures, and may mean we need to limit the size and scope of one or more of our programs, seek additional funding and/or choose to stop work altogether on one or more of the affected therapeutic candidates. This could result in a limited potential to generate future revenue from such therapeutic candidates, and our business could be materially and adversely affected. Further, under certain circumstances, we may owe Celgene a single-digit percentage royalty on a therapeutic candidate successfully commercialized, subject to a cap.

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We rely on third parties to conduct some of our preclinical studies and all of our clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may be unable to obtain regulatory approval for or commercialize any of our therapeuticcandidates.

Although we conduct certain preclinical studies, we currently do not have the ability to independently conduct preclinical studies that comply with good laboratory practices, or GLP. We also do not currently have the ability to independently conduct any clinical trials. We rely on medical institutions, clinical investigators, contract laboratories, collaborative partners and other third parties, such as CROs, to conduct GLP compliant preclinical studies and clinical trials on our therapeutic candidates. The third parties with which we contract for execution of our GLP preclinical studies and our clinical trials play a significant role in the conduct of these studies and trials and the subsequent collection and analysis of data. These third parties are not our employees and, except for restrictions imposed by our contracts with such third parties, we have limited ability to control the amount or timing of resources that they devote to our programs. Although we rely on these third parties to conduct our GLP compliant preclinical studies and clinical trials, we remain responsible for ensuring that each of our GLP preclinical studies and clinical trials is conducted in accordance with its investigational plan and protocol. The FDA and regulatory authorities in other jurisdictions require us to comply with regulations and standards, commonly referred to as good clinical practices, or GCPs, for conducting, monitoring, recording and reporting the results of clinical trials, in order to ensure that the data and results are scientifically credible and accurate and that the trial subjects are adequately informed of the potential risks of participating in clinical trials.

Many of the third parties with whom we contract may also have relationships with other commercial entities, some of which may compete with us. If the third parties conducting our GLP preclinical studies or our clinical trials do not perform their contractual duties or obligations, experience work stoppages, do not meet expected deadlines, terminate their agreements with us or need to be replaced, or if the quality or accuracy of the clinical data they obtain is compromised due to their failure to adhere to our clinical trial protocols or to GCPs, or for any other reason, we may need to enter into new arrangements with alternative third parties. This could be costly, and our preclinical studies or clinical trials may need to be extended, delayed, terminated or repeated, and we may not be able to obtain regulatory approval in a timely fashion, or at all, for the applicable therapeutic candidate, or to commercialize such therapeutic candidate being tested in such studies or trials.

We rely on single source third-party contract manufacturing organizations to manufacture and supply our therapeutic candidates for us. If one of our suppliers or manufacturers fails to perform adequately or fulfill our needs, or if these agreements are terminated by the third parties, we may be required to incur significant costs and devote significant efforts to find new suppliers or manufacturers. We may also face delays in the development and commercialization of our therapeutic candidates.

We currently have limited experience in, and we do not own facilities for, manufacturing our therapeutic candidates. We rely upon single source third-party contract manufacturing organizations to manufacture and supply large quantities of our therapeutic candidates. We currently utilize Lonza Sales AG, or Lonza, for the bulk manufacturing of our therapeutic candidates. We have also used Synco Bio Partners B.V. (recently acquired by Wacker Chemie AG) for fill/finish services (e.g. filling vials with drug substance, sealing and inspecting vials and performance of release assays). In addition, a number of our clinical trials require us to source and supply our clinical trial sites with other medications that are administered in conjunction with our therapeutic candidates, or co-medications. We rely upon third-party suppliers for the manufacture and supply of these co-medications, which are subject to the same risks as the manufacture and supply of our therapeutic candidates.

The manufacture of pharmaceutical products in compliance with current good manufacturing practice, or cGMP, regulations requires significant expertise and capital investment, including the development of advanced manufacturing techniques and process controls. Manufacturers of pharmaceutical products often encounter difficulties in production, including difficulties with production costs and yields, quality control, including stability of the therapeutic candidate and quality assurance testing, or shortages of qualified personnel. We cannot assure you that any stability failures or other issues relating to the manufacture of our therapeutic candidates or the supply of co-medications will not occur in the future. If the manufacturers of our therapeutic candidates or co-medications were to encounter any of these difficulties or otherwise fail to comply with their obligations to us or under applicable regulations, or if we were unable to timely identify third party suppliers of co-medications or enter into agreements with these third party suppliers for the supply of co-medications, our ability to provide study materials in

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our preclinical studies and clinical trials would be jeopardized. Any delay or interruption in the supply of preclinical study or clinical trial materials could delay the initiation of, enrollment in, and/or completion of our preclinical studies and clinical trials, increase the costs associated with maintaining our preclinical study and clinical trial programs and, depending upon the period of delay, require us to commence new trials at significant additional expense or terminate the studies and trials completely.

All manufacturers of our therapeutic candidates must comply with cGMP requirements enforced by the FDA through its facilities inspection program. These requirements include, among other things, quality control, quality assurance and the maintenance of records and documentation. Manufacturers of our component materials may be unable to comply with these cGMP requirements and with other FDA, state and foreign regulatory requirements. The FDA or similar foreign regulatory agencies at any time may also implement new standards, or change their interpretation and enforcement of existing standards for manufacture, packaging or testing of products. We have little control over our manufacturers’ compliance with these regulations and standards. A failure to comply with these requirements may result in fines and civil penalties, suspension of production, suspension or delay in product approval, product seizure or recall, or withdrawal of product approval. If the safety of any product supplied is compromised due to our manufacturers’ failure to adhere to applicable laws or for other reasons, we may not be able to obtain regulatory approval for or successfully commercialize our products, and we may be held liable for any injuries sustained as a result. Any of these factors could cause a delay of clinical trials, regulatory submissions, approvals or commercialization of our therapeutic candidates or entail higher costs or impair our reputation.

Our current agreements with our suppliers do not provide for the entire supply of the bulk drug necessary for additional clinical trials or for full-scale commercialization. In the event that we and our suppliers cannot agree to the terms and conditions for them to provide some or all of our bulk drug clinical and commercial supply needs, or if any single-source supplier terminates the agreement in response to a breach by us, we would not be able to manufacture the bulk drug on a commercial scale until a qualified alternative supplier is identified, which could also delay the development of, and impair our ability to commercialize, our therapeutic candidates.

Although we believe that appropriate alternative sources of supply exist for each of our current therapeutic candidates, the number of third-party suppliers with the necessary manufacturing and regulatory expertise and facilities is limited, and it could be expensive and take a significant amount of time to arrange for alternative suppliers, which could have a material adverse effect on our business. New suppliers of any bulk drug would be required to qualify under applicable regulatory requirements and would need to have sufficient rights under applicable intellectual property laws to the method of manufacturing such ingredients. Obtaining the necessary FDA approvals or other qualifications under applicable regulatory requirements and ensuring non-infringement of third-party intellectual property rights could result in a significant interruption of supply and could require the new manufacturer to bear significant additional costs which may be passed on to us. In addition, we may be required to pay potential fees and royalties to Lonza if we utilize other suppliers for bulk drug, given that we have used their proprietary production cell lines in our programs.

The failure of third-party manufacturers or suppliers to perform adequately or the termination of our arrangements with any of them may adversely affect our business.

Even if our therapeutic candidates do obtain regulatory approval they may never achieve market acceptance or commercial success.

Even if we or our current or future collaborators obtain FDA or other regulatory approvals, and are able to launch our therapeutic candidates commercially, our therapeutic candidates may not achieve market acceptance among physicians, patients and third-party payors and, ultimately, may not be commercially successful. Market acceptance of our therapeutic candidates for which we receive approval depends on a number of factors, including:

• the efficacy and safety of the therapeutic candidates as demonstrated in clinical trials;

• the clinical indications for which the therapeutic candidate is approved;

• acceptance by physicians, operators of treatment facilities and parties responsible for reimbursement of the product as a safe and effective treatment;

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• the potential and demonstrable advantages of our therapeutic candidates, including the cost of treatment and benefits over alternative treatments;

• the safety of therapeutic candidates seen in a broader patient group, including use outside the approved indications;

• the cost of treatment in relation to alternative treatments;

• the availability of adequate reimbursement and pricing by third-party payors and government authorities;

• relative convenience and ease of administration;

• the tolerance of the products by patients, including prevalence and severity of adverse side effects; and

• the effectiveness of our sales and marketing efforts.

Any failure by our therapeutic candidates that obtain regulatory approval to achieve market acceptance or commercial success would adversely affect our financial results.

If any of our therapeuticcandidates receives marketing approval and we or others later identify undesirable side effects caused by the therapeuticcandidate, our ability to market and derive revenue from the therapeuticcandidates, or our current or future collaborators’ ability to do so, could be compromised.

In the event that any of our therapeutic candidates receive regulatory approval and we or others identify undesirable side effects caused by one of our products, any of the following adverse events could occur:

• regulatory authorities may withdraw their approval of the product or seize the product;

• we or our current or future collaborators may be required to recall the product or change the way the product is administered to patients;

• additional restrictions may be imposed on the marketing of the particular product or the manufacturing processes for the product or any component thereof;

• we or our current or future collaborators may be subject to fines, injunctions or the imposition of civil or criminal penalties;

• regulatory authorities may require the addition of labeling statements, such as a “black box” warning or a contraindication;

• we or our current or future collaborators may be required to create a Medication Guide outlining the risks of such side effects for distribution to patients;

• we or our current or future collaborators could be sued and held liable for harm caused to patients;

• the product may become less competitive; and

• our reputation or the reputation of our current or future collaborators may suffer.

Any of the foregoing events could result in the loss of significant revenues to us, which would materially and adversely affect our results of operations and business.

We currently have no sales and marketing staff or distribution organization. If we are unable to develop a sales and marketing and distribution capability on our own or through potential marketing partners, we will not be successful in commercializing our future products.

We currently have no sales or marketing staff or distribution organization. If Celgene elects to exercise its option for our etigilimab program, there is no guarantee that Celgene will elect to market and distribute etigilimab or that Celgene will not elect to terminate our collaboration arrangement, which they have a right to do at any time with prior notice under our agreement. Further, we are likely to have limited control over the marketing and distribution activities of Celgene for etigilimab.

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On the other hand, if Celgene does not exercise its option for etigilimab, and we develop etigilimab ourselves, or if we develop unpartnered product candidates such as navicixizumab to the point of commercialization, we may need to enter into distribution or co-marketing arrangements with other third parties. If we need to rely on third parties for marketing and distributing our independently developed approved products, any revenue we receive will depend upon the efforts of third parties, which may not be successful and are only partially within our control, and our product revenue may be lower than if we directly marketed or sold our products. If we are unable to enter into arrangements with third parties to sell, market and distribute therapeutic candidates for which we have received regulatory approval on acceptable terms or at all, we will need to market these products ourselves. Marketing products ourselves is likely to be expensive and logistically difficult, as it would require us to build our own sales force. We have no experience as a company in this area. If such efforts were necessary, we may not be able to successfully commercialize our future products. If we are not successful in commercializing our future products, either on our own or through our collaboration with one or more third parties, or by co-promoting products with marketing partners, any future product revenue will be materially and adversely affected.

We may experience difficulties in managing our current activities and future growth given our level of managerial, operational, financial and other resources.

On December 4, 2018, our Board of Directors approved a restructuring plan, pursuant to which we reduced our workforce by 38 employees (or 75% of our then-current workforce). The reduction in force is ongoing and the Company expects to complete such reduction in connection with the closing of the Merger. As of December 31, 2018, we had 22 full-time employees.  We will need to manage our operations and clinical trials, continue our development activities and commercialize our therapeutic candidates with our reduced workforce and management team. Our management and personnel, systems and facilities currently in place may not be adequate to support our current activities or future growth. Our need to effectively execute our business strategy requires that we:

• manage our clinical trials effectively, including our Phase Ib trial for navicixizumab (anti-DLL4/VEGF bispecific, OMP-305B83), our Phase Ia/b trial for etigilimab (anti-TIGIT, OMP-313M32), and our Phase Ia trial for GITRL-Fc (OMP-336B11), as well as additional clinical trials we may initiate in the future;

• manage our internal research and development efforts effectively while carrying out our contractual obligations to licensors, contractors, collaborators, government agencies and other third parties;

• continue to improve our operational, financial and management controls, reporting systems and procedures; and

• maintain and motivate our remaining employees and identify, recruit, and integrate additional employees.

If we are unable to maintain or expand our managerial, operational, financial and other resources to the extent required to manage our development and commercialization activities, our business will be materially adversely affected.

We are highly dependent on the services of our President and Chief Executive Officer, John Lewicki, Ph.D., and other key executives, and if we are not able to retain these members of our management or retain or recruit additional management, clinical and scientific personnel, our business will suffer.

We may not be able to retain our management, scientific and clinical personnel, or attract qualified management, scientific and clinical personnel in the future, due to the intense competition for qualified personnel among biotechnology, pharmaceutical and other businesses, particularly in the San Francisco Bay Area. Our industry has experienced a high rate of turnover of management personnel in recent years. We have experienced such turnover ourselves. In addition to the competition for personnel, the San Francisco Bay Area in particular is characterized by a high cost of living. As such, we could have difficulty attracting experienced personnel to our company and may be required to expend significant financial resources in our employee recruitment and retention

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efforts. If we are not able to attract, retain and motivate necessary personnel to accomplish our business objectives, we may experience constraints that will significantly impede the achievement of our development objectives, our ability to raise additional capital and our ability to implement our business strategy.

We are highly dependent on the principal members of our management. The loss of service of any of our management could harm our business. In addition, we are dependent on our continued ability to retain and motivate our existing management, clinical and scientific personnel, and to potentially attract highly qualified additional management, clinical and scientific personnel. The competition for qualified personnel in the pharmaceutical industry is intense. Due to our limited resources, we may not be able to effectively retain our existing personnel or attract and recruit additional qualified personnel. If we are not able to retain our management, particularly our President and Chief Executive Officer, Dr. Lewicki, or to attract, on acceptable terms, additional qualified personnel necessary for the continued development of our business, we may not be able to sustain our operations or grow. Although we have executed employment agreements with each member of our current executive management team, including Dr. Lewicki, these agreements are terminable at will with or without notice and, therefore, we may not be able to retain their services as expected.

In addition, we have scientific and clinical advisors who assist us in formulating our product development and clinical strategies. These advisors are not our employees and may have commitments to, or consulting or advisory contracts with, other entities that may limit their availability to us, or may have arrangements with other companies to assist in the development of products that may compete with ours.

We face substantial competition and our competitors may discover, develop or commercialize products faster or more successfully than us.

The biotechnology and pharmaceutical industries are highly competitive, and we face significant competition from companies in the biotechnology, pharmaceutical and other related markets that are researching and marketing products designed to address solid tumors and hematologic malignancies. Established pharmaceutical and biotechnology companies that are known to be involved in oncology research and currently sell or are developing drugs in our markets of interest include AbbVie, Amgen, Astellas, AstraZeneca, Bayer, BMS, Celgene, Genentech (Roche), GSK, Johnson & Johnson, Lilly, Merck, Merck Serono, Novartis, Pfizer, Regeneron, Sanofi, Teva and others. There are also biotechnology companies of various sizes that are developing therapies against immuno-oncology targets.

It is possible that our competitors will develop and market drugs or other treatments that are less expensive and more effective than our therapeutic candidates, or that will render our therapeutic candidates obsolete. It is also possible that our competitors will commercialize competing drugs or treatments before we or our collaboration partners can launch any products developed from our therapeutic candidates. If approved for marketing by the FDA or other regulatory agencies worldwide, our therapeutic candidates would compete against existing cancer treatments such as Avastin^®, Erbitux^®, Yervoy™, Keytruda^®, Opdivo^®, and chemotherapies, and potentially against other novel drug candidates or treatments that are currently in development. There have been several additional monoclonal antibodies in development for cancer, such as Abbvie’s ABT-165, an anti-DLL4/VEGF dual variable domain immunoglobulin, and ABL Bio’s ABL001, an anti-DLL4/VEGF antibody, both of which are reportedly being studied in clinical trials. In the immuno-oncology field, there are several companies reportedly advancing antibody programs modulating TIGIT in early stage research and development, including Genentech (Roche), Merck, BMS, and Arcus Biosciences, and there are several approved therapeutic agents against other immuno-oncology targets. We also anticipate that we will face increased competition in the future as new companies enter into our target markets and scientific developments surrounding the immuno-oncology field continue to develop.

Many of our competitors have materially greater name recognition and financial, manufacturing, marketing, legal, research and drug development resources than we do. Additional mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources being concentrated in our competitors. Large pharmaceutical companies in particular have extensive expertise in preclinical and clinical testing and in obtaining regulatory approvals for drugs. In addition, academic institutions, government agencies, and other public and private organizations conducting research may seek patent protection with respect to potentially competitive products or technologies. These organizations may also establish exclusive collaborative or licensing relationships with our competitors.

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Failure to successfully validate, develop and obtain regulatory approval for companion diagnostics could harm our product development strategy.

An important element of our clinical development strategy for certain of our therapeutic candidates such as  etigilimab (anti-TIGIT, OMP-313M32)  is that we seek to identify patient subsets within a disease category who may derive selective and meaningful benefit from the therapeutic candidates we are developing. In collaboration with our partners, we plan to develop companion diagnostics for selected therapeutic candidates to help us to more accurately identify patients within a particular subset. Such companion diagnostics would be used during our clinical trials as well as in connection with the commercialization of our therapeutic candidates. Companion diagnostics are subject to regulation by the FDA and comparable foreign regulatory authorities as medical devices and therefore require separate regulatory clearance or approval prior to commercialization. The clinical development of novel therapeutics with a companion diagnostic is complex from an operational and regulatory perspective because of the need for both the drug and the diagnostic to receive regulatory clearance or approval.

We will be dependent on identifying suitable third-party development partners, and on entering into appropriate agreements with such third parties, and on the sustained cooperation and effort of our future collaborators in developing and obtaining approval for these companion diagnostics. It may be necessary to resolve issues such as selectivity/specificity, analytical validation, reproducibility, or clinical validation of companion diagnostics during the development and regulatory approval processes. Moreover, even if data from preclinical studies and early clinical trials appear to support development of a companion diagnostic for a therapeutic candidate, data generated in later clinical trials may fail to support the analytical and clinical validation of the companion diagnostic. We and our future collaborators may encounter difficulties in developing, obtaining regulatory approval for, manufacturing and commercializing companion diagnostics similar to those we face with respect to our therapeutic candidates themselves, including issues with achieving regulatory clearance or approval, production of sufficient quantities at commercial scale and with appropriate quality standards, and in gaining market acceptance. Failure to overcome these hurdles would have an adverse effect on our ability to derive revenues from sales of our diagnostic products. Any delay or failure by us or our future collaborators to develop or obtain regulatory approval of the companion diagnostics where required in connection with obtaining approval of our therapeutic candidates could delay or prevent approval of our therapeutic candidates. In addition, a diagnostic company with whom we contract may decide to discontinue selling or manufacturing the companion diagnostic test that we anticipate using in connection with development and commercialization of our therapeutic candidates or our relationship with such diagnostic company may otherwise terminate. We may not be able to enter into arrangements with another diagnostic company to obtain supplies of an alternative diagnostic test for use in connection with the development and commercialization of our therapeutic candidates or do so on commercially reasonable terms, which could adversely affect and/or delay the development or commercialization of our therapeutic candidates.

We may form additional strategic alliances in the future with respect to our independent programs, as well as for etigilimab if Celgene does not exercise its option, and we may not realize the benefits of such alliances.

We may form strategic alliances, create joint ventures or collaborations or enter into licensing arrangements with third parties with respect to our independent programs that we believe will complement or augment our existing business. For example, we may attempt to find a partner for licensing, development and/or commercialization of our unpartnered research, preclinical and clinical assets, or of etigilimab if Celgene decides to terminate our collaboration agreement or to not exercise its option for etigilimab. Our currently unpartnered programs include navicixizumab (anti-DLL4/VEGF bispecific, OMP-305B83). We routinely engage in partnering discussions with a range of pharmaceutical and biotechnology companies and could enter into new collaborations at any time. We face significant competition in seeking appropriate strategic partners, and the negotiation process to secure appropriate terms is time-consuming and complex. Any delays in identifying suitable development partners and entering into agreements to develop our therapeutic candidates could also delay the commercialization of our therapeutic candidates, which may reduce their competitiveness even if they reach the market. Moreover, we may not be successful in our efforts to establish such a strategic partnership for any of our unpartnered therapeutic candidates and programs on terms that are acceptable to us, or at all. This may be because our therapeutic candidates and programs may be deemed to be at too early of a stage of development for collaborative effort, our research and development pipeline may be viewed as insufficient, and/or third parties may not view our therapeutic candidates and programs as having sufficient potential for commercialization, including the likelihood of an adequate safety and efficacy profile. Even if we are successful in entering into a strategic alliance or license arrangement, there is no

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guarantee that the collaboration will be successful, or that any future partner will commit sufficient resources to the development, regulatory approval, and commercialization effort for such products, or that such alliances will result in us achieving revenues that justify such transactions.

We may engage in strategic transactions that could impact our liquidity, increase our expenses and present significant distractions to our management.

From time to time, we may consider strategic transactions, such as acquisitions of companies, asset purchases, and out-licensing or in-licensing of products, therapeutic candidates or technologies. Additional potential transactions that we may consider include a variety of different business arrangements, including spin-offs, strategic partnerships, joint ventures, restructurings, divestitures, business combinations and investments. Any such transaction may require us to incur non-recurring or other charges, may increase our near- and long-term expenditures and may pose significant integration challenges or disrupt our management or business, which could adversely affect our operations and financial results. For example, these transactions may entail numerous operational and financial risks, including:

• exposure to unknown liabilities;

• disruption of our business and diversion of our management’s time and attention in order to develop acquired products, therapeutic candidates or technologies;

• incurrence of substantial debt or dilutive issuances of equity securities to pay for acquisitions;

• higher-than-expected acquisition and integration costs;

• write-downs of assets or goodwill or impairment charges;

• increased amortization expenses;

• difficulty and cost in combining the operations and personnel of any acquired businesses with our operations and personnel;

• impairment of relationships with key suppliers or customers of any acquired businesses due to changes in management and ownership; and

• inability to retain key employees of any acquired businesses.

Accordingly, although there can be no assurance that we will undertake or successfully complete any transactions of the nature described above, any transactions that we do complete may be subject to the foregoing or other risks, and could have a material adverse effect on our business, results of operations, financial condition and prospects.

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We may be subject to costly product liability claims related to our clinical trials and therapeutic candidates and, if we are unable to obtain, or maintain, adequate insurance or are required to pay for liabilities resulting from a claim excluded from, or beyond the limits of, our insurance coverage, a material liability claim could adversely affect our financial condition.

Because we conduct clinical trials with human patients, we face the risk that the use of our therapeutic candidates may result in adverse side effects to patients in our clinical trials. We face even greater risks upon any commercialization of our therapeutic candidates. Although we have product liability insurance, which covers our clinical trials, for up to $10.0 million, our insurance may be insufficient to reimburse us for any expenses or losses we may suffer, and we may be required to increase our product liability insurance coverage for any advanced clinical trials that we may initiate in the future. We do not know whether we will be able to continue to obtain product liability coverage and obtain expanded coverage if we require it, on acceptable terms, or at all. We may not have sufficient resources to pay for any liabilities resulting from a claim excluded from, or beyond the limits of, our insurance coverage. Where we have provided indemnities in favor of third parties under our agreements with them, there is also a risk that these third parties could incur liability and bring a claim under such indemnities. An individual may bring a product liability claim against us alleging that one of our therapeutic candidates or products causes, or is claimed to have caused, an injury or is found to be unsuitable for consumer use. Any product liability claim brought against us, with or without merit, could result in:

• withdrawal of clinical trial volunteers, investigators, patients or trial sites;

• the inability to commercialize our therapeutic candidates;

• decreased demand for our therapeutic candidates;

• regulatory investigations that could require costly recalls or product modifications;

• loss of revenues;

• substantial costs of litigation;

• liabilities that substantially exceed our product liability insurance, which we would then be required to pay ourselves;

• an increase in our product liability insurance rates or the inability to maintain insurance coverage in the future on acceptable terms, if at all;

• the diversion of management’s attention from our business; and

• damage to our reputation and the reputation of our products.

Product liability claims may subject us to the foregoing and other risks, which could have a material adverse effect on our business, results of operations, financial condition and prospects.

Our business involves the use of hazardous materials and we and our third-party manufacturers must comply with environmental laws and regulations, which may be expensive and restrict how we do business.

Our third-party manufacturers’ activities and our own activities involve the controlled storage, use and disposal of hazardous materials, including the components of our pharmaceutical therapeutic candidates, test samples and reagents, biological materials and other hazardous compounds. We and our manufacturers are subject to federal, state, local and foreign laws and regulations governing the use, generation, manufacture, storage, handling and disposal of these hazardous materials. We currently carry no insurance specifically covering environmental claims relating to the use of hazardous materials. Although we believe that our safety procedures for handling and disposing of these materials and waste products comply with the standards prescribed by these laws and regulations, we cannot eliminate the risk of accidental injury or contamination from the use, storage, handling or disposal of hazardous materials. In the event of an accident, state or federal or other applicable authorities may curtail our use of these materials and/or interrupt our business operations. In addition, if an accident or environmental discharge occurs, or if we discover contamination caused by prior operations, including by prior owners and operators of

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properties we acquire, we could be liable for cleanup obligations, damages and fines. If such unexpected costs are substantial, this could significantly harm our financial condition and results of operations.

Our internal computer systems, or those of our CROs or other contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of our product development programs.

Our business is increasingly dependent on critical, complex and interdependent information technology systems to support business processes as well as internal and external communications. Despite the implementation of security measures, our internal computer systems and those of our CROs and other contractors and consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. While, to our knowledge, we have not experienced any such system failure, accident or security breach to date, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our programs. For example, the loss of clinical trial data from completed or ongoing clinical trials for any of our therapeutic candidates could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. In addition, our systems are potentially vulnerable to data security breaches, whether by employees or others, which may expose sensitive data to unauthorized persons. To the extent that any disruption or security breach results in a loss of or damage to our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability and the further development of our therapeutic candidates could be delayed.

Our employees, independent contractors, principal investigators, CROs, consultants and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.

We are exposed to the risk that our employees, independent contractors, principal investigators, CROs, consultants and vendors may engage in fraudulent or other illegal activity. Misconduct by these parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violates: (i) FDA laws and regulations, including those laws that require the reporting of true, complete and accurate information to the FDA, (ii) manufacturing standards, (iii) federal and state healthcare fraud and abuse laws and regulations, and (iv) laws that require the true, complete and accurate reporting of financial information or data. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Activities subject to these laws also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. It is not always possible to identify and deter misconduct by employees and other third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. Additionally, we are subject to the risk that a person or government could allege such fraud or other misconduct, even if none occurred. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant civil, criminal and administrative penalties, damages, monetary fines, disgorgements, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, individual imprisonment, other sanctions, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of our operations, any of which could adversely affect our ability to operate our business and our results of operations.

Requirements associated with being a public company have increased our costs significantly and have diverted significant company resources and management attention.

Prior to our initial public offering in July 2013, we had not been subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, or the other rules and regulations of the SEC or any securities exchange relating to public companies. We are continuing to work with our legal, independent accounting and financial advisors to identify those areas in which changes should be made to our financial and management control systems to manage our growth and our obligations as a public company. These areas include corporate governance, corporate control, disclosure controls and procedures and financial reporting and accounting systems. We have made, and will continue to make, changes in these and other areas. However, the expenses that

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have been required in order to operate as a public company have been material, and may increase after we cease to be an “emerging growth company.” Compliance with the various reporting and other requirements applicable to public companies has also required considerable time and attention of management. In addition, the changes we have made and may make in the future may not be sufficient to allow us to satisfy our obligations as a public company on a timely basis.

Since we are no longer an “emerging growth company” as defined in the Jumpstart our Business Startups Act, or the JOBS Act, we are no longer able to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies.” Accordingly, we are now required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, increased disclosure obligations regarding executive compensation in our periodic reports and proxy statements and the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As a result we will incur the greater expenses associated with such reporting requirements.

In addition, being a public company made it more difficult or more costly for us to obtain certain types of insurance, including directors’ and officers’ liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage in the future. The impact of these events could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, on our board committees or as executive officers.

If we are not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 in a timely manner or with adequate compliance, we may be subject to sanctions by regulatory authorities.

Section 404 of the Sarbanes-Oxley Act of 2002 requires that we evaluate and determine the effectiveness of our internal controls over financial reporting and have provided a management report on the internal control over financial reporting. If we have a material weakness in our internal control over financial reporting, we may not detect errors on a timely basis and our financial statements may be materially misstated. We evaluate our internal controls systems to allow management to report on, and allow our independent auditors to attest to, our internal controls. We are currently performing and will continue to perform the system and process evaluation and testing (and any necessary remediation) required to comply with the management certification and eventual auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002.

We cannot be certain as to the timing of completion of our evaluation, testing and remediation actions or the impact of the same on our operations. If we are not able to comply with the requirements of Section 404 in a timely manner or with adequate compliance, we may be subject to sanctions or investigation by regulatory authorities, such as the SEC or The Nasdaq Stock Market LLC, or Nasdaq. Any such action could adversely affect our financial results or investors’ confidence in us and could cause our stock price to fall. Moreover, if we are not able to comply with the requirements of Section 404 in a timely manner, or if we or our independent registered public accounting firm identifies deficiencies in our internal controls that are deemed to be material weaknesses, we could be subject to sanctions or investigations by Nasdaq, the SEC or other regulatory authorities, which would entail expenditure of additional financial and management resources and could materially adversely affect our stock price. Inferior internal controls could also cause us to fail to meet our reporting obligations or cause investors to lose confidence in our reported financial information, which could have a negative effect on our stock price.

The recently enacted comprehensive tax reform legislation could adversely affect our business and financial condition.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (“Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal top corporate tax rate from 35% to 21%; (2) requiring companies to pay a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries; (3) generally eliminating U.S. federal income taxes on dividends from foreign subsidiaries; (4) requiring a current inclusion in U.S. federal taxable income of certain earnings of controlled foreign corporations; (5) eliminating the corporate alternative minimum tax (“AMT”) and changing how existing AMT credits can be realized; (6) creating the base erosion anti-abuse tax, a new minimum tax; (7) creating a new limitation on deductible interest expense; and (8)

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changing rules related to the use and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017.Notwithstanding the reduction in the corporate income tax rate, the overall impact of the Tax Act is uncertain and our business and financial condition could be adversely affected. In addition, it is uncertain if and to what extent various states will conform to the newly enacted federal tax law. The determination of the benefit from (or provision for) income taxes requires complex estimations, significant judgments and significant knowledge and experience concerning the applicable tax laws. Given that we are still in the transition period for the accounting for income tax effects of the Tax Act, the current assessment on deferred tax assets (liabilities) is based on the currently available information and guidance. If in the future any element of the Tax Act changes the related accounting guidance for income tax, it could affect our income tax position and we may need to adjust the benefit from (or provision for) income taxes accordingly.

Our ability to utilize our net operating loss carryforwards and certain other tax attributes may be limited.

We have incurred substantial losses during our history and do not expect to become profitable in 2019 and may never achieve profitability. To the extent that we continue to generate taxable losses, unused losses will carry forward to offset future taxable income, if any, until such unused losses expire. We may be unable to use these losses to offset income before such unused losses expire. Under Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), if a corporation undergoes an “ownership change” (generally defined as a greater than 50 percentage point change (by value) in its equity ownership over a rolling three-year period), the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income may be further limited. We have experienced ownership changes in the past, and we may experience additional ownership changes in the future as a result of subsequent shifts in our equity ownership, some of which are outside of our control. As of December 31, 2018, we had federal and California net operating loss carryforwards of $267.7 million and $97.2 million, respectively, that could be limited if we experience an ownership change, which could have an adverse effect on our results of operations.

We may be adversely affected by the current global economic environment.

Our ability to attract and retain collaboration partners or customers, invest in and grow our business and meet our financial obligations depends on our operating and financial performance, which, in turn, is subject to numerous factors, including the prevailing economic conditions and financial, business and other factors beyond our control, such as the rate of unemployment, the number of uninsured persons in the United States and inflationary pressures. Our results of operations could be adversely affected by general conditions in the global economy and in the global financial markets. The recent global financial crisis caused extreme volatility and disruptions in the capital and credit markets. We cannot anticipate all the ways in which the current global economic climate and global financial market conditions could adversely impact our business.

We are exposed to risks associated with reduced profitability and the potential financial instability of our collaboration partners or customers, many of which may be adversely affected by volatile conditions in the financial markets. For example, unemployment and underemployment, and the resultant loss of insurance, may decrease the demand for healthcare services and pharmaceuticals. If fewer patients are seeking medical care because they do not have insurance coverage, our collaboration partners or customers may experience reductions in revenues, profitability and/or cash flow that could lead them to reduce their support of our programs or financing activities. If collaboration partners or customers are not successful in generating sufficient revenue or are precluded from securing financing, they may not be able to pay, or may delay payment of, accounts receivable that are owed to us. In addition, the volatility in the financial markets could cause significant fluctuations in the interest rate and currency markets. We currently do not hedge for these risks. The foregoing events, in turn, could adversely affect our financial condition and liquidity. To the extent economic challenges result in fewer individuals pursuing or being able to afford our therapeutic candidates once commercialized, our business, results of operations, financial condition and cash flows could be adversely affected.

Business disruptions could seriously harm our future revenues and financial condition and increase our costs and expenses.

Our operations could be subject to earthquakes, power shortages, telecommunications failures, floods, hurricanes, typhoons, fires, extreme weather conditions, medical epidemics and other natural or manmade disasters

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or business interruptions. The occurrence of any of these business disruptions could seriously harm our operations and financial condition and increase our costs and expenses. Our corporate headquarters is located in California and certain clinical sites for our therapeutic candidates, operations of our existing and future partners and suppliers are or will be located in California near major earthquake faults and fire zones. The ultimate impact on us, our significant partners, suppliers and our general infrastructure of being located near major earthquake faults and fire zones and being consolidated in certain geographical areas is unknown, but our operations and financial condition could suffer in the event of a major earthquake, fire or other natural or manmade disaster.

Risks Related to Intellectual Property

We or our collaborators may become subject to third parties’ claims alleging infringement of their patents and proprietary rights, which could be costly or delay or prevent the development and commercialization of our therapeutic candidates, or we may need to become involved in legal proceedings to invalidate the patents or proprietary rights of third parties.

Our success will depend, in part, on our ability to operate without infringing upon the proprietary rights of others.  Litigation relating to infringement or misappropriation of patent and other intellectual property rights in the pharmaceutical and biotechnology industries is common. We or our collaborators may be subject to third-party claims in the future that would cause us to incur substantial expenses and which, if successful, could cause us to pay substantial damages, if we or our collaborators are found to be infringing a third party’s patent rights. These damages potentially include increased damages and attorneys’ fees if we are found to have infringed such rights willfully. Further, if a patent infringement suit is brought against us or our collaborators, our research, development, manufacturing or sales activities relating to the product or therapeutic candidate that is the subject of the suit may be delayed or terminated. As a result of patent infringement claims, or in order to avoid potential infringement claims, we or our collaborators may choose to seek, or be required to seek, a license from the third party, which would be likely to include a requirement to pay license fees or royalties or both. These licenses may not be available on acceptable terms, or at all. Even if a license can be obtained on acceptable terms, the rights may be nonexclusive, which would give our competitors access to the same intellectual property rights. If we are unable to enter into a license on acceptable terms, we or our collaborators could be prevented from commercializing one or more of our therapeutic candidates, or forced to modify such therapeutic candidates, or to cease some aspect of our business operations, which could harm our business significantly.

We are aware of U.S. and foreign issued patents and pending patent applications controlled by third parties that may relate to the areas in which we are developing therapeutic candidates. Because all issued patents are entitled to a presumption of validity in many countries, including the United States and many European countries, issued patents held by others that claim our products or technology may limit our freedom to operate unless and until these patents expire or are declared invalid or unenforceable in a court of applicable jurisdiction, if we do not obtain a license or other right to practice the claimed inventions. Pending patent applications controlled by third parties may result in additional issued patents claiming our products and technology. In addition, the publication of patent applications occurs with a certain delay after the date of filing, so we may not be aware of all relevant patent applications of third parties at a given point in time. Further, publication of discoveries in the scientific or patent literature often lags behind actual discoveries, so we may not be able to determine whether inventions claimed in patent applications of third parties have been made before or after the date on which inventions claimed in our patent applications and patents have been made. If U.S. patent applications filed by third parties claim technology or therapeutics that are also claimed by our patent applications or patents, we may, under certain circumstances, have to participate in interference proceedings in the U.S. Patent and Trademark Office, or USPTO, to determine the priority of invention. We may also become involved in inter partes or post-grant review proceedings in the USPTO, opposition proceedings in the European Patent Office, or EPO, or other proceedings before patent offices in the U.S. or foreign countries, regarding the intellectual property rights of third parties. We may also become involved in legal proceedings before courts in the U.S. or foreign countries in which we challenge the intellectual property rights of a third party.  The outcome of these proceedings may be uncertain. An unfavorable outcome in these proceedings regarding the intellectual property rights of a third party could require us to attempt to license rights from the prevailing party, or to cease using the related technology or developing or commercializing the related therapeutic candidate, which would have a material adverse effect on our business.

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We may become subject to third parties’ claims seeking to invalidate our patents or proprietary rights, or we may need to become involved in lawsuits or other legal proceedings to protect or enforce our patents, which could put our patents and other proprietary rights at risk.

Competitors may infringe our patents, or misappropriate or violate our other intellectual property rights. To counter infringement or unauthorized use, we may find it necessary to file infringement or other claims to protect our intellectual property rights. In addition, in any infringement proceeding brought by us against a third party to enforce our rights, a court may decide that a patent of ours is invalid or unenforceable, or may refuse to stop the other party from using the technology at issue on the basis that our patents do not cover the technology in question. In patent litigation in the U.S., defendant counterclaims alleging invalidity or unenforceability are commonplace, and there are numerous grounds upon which a third party can assert invalidity or unenforceability of a patent. An adverse result in any patent litigation proceeding could put one or more of our patents at risk of being invalidated or interpreted narrowly, which could open us up to additional competition and have a material adverse effect on our business.

Third parties may also raise claims alleging the invalidity or unenforceability of our patents in other forms of proceedings, including proceedings before administrative bodies in the U.S. or abroad, even outside the context of patent litigation. The use of administrative proceedings for challenging patents, including interference, derivation, and reexamination proceedings before the USPTO or oppositions and other comparable proceedings in foreign jurisdictions, is common in the biotechnology and pharmaceutical industries. For instance, we may be involved in opposition proceedings in the EPO regarding our intellectual property rights with respect to our therapeutic candidates. Due to recent changes in U.S. patent law, new procedures including inter partes review and post-grant review have been implemented and are now also available for use in patent challenges, and the use of inter partes review to challenge the validity of patents in the biotechnology and pharmaceutical industries has become increasingly common. The outcome of administrative proceedings in which our patents are challenged may be uncertain.  An unfavorable outcome of these proceedings could weaken our intellectual property position, including potentially reducing some of the patent protection on our therapeutic candidates, and potentially open us up to additional competition.  Additional competition may reduce our market share and adversely affect our business.

Any lawsuits or other legal proceedings in which we or our collaborators may become involved regarding our patents or proprietary rights and/or the patents or proprietary rights of third parties could be costly, time-consuming, delay or prevent the development and commercialization of our therapeutic candidates, or adversely affect our stock price.

The cost to us of any patent litigation or other proceedings regarding our patents and/or third party patents, even if resolved in our favor, could be substantial. Such litigation or proceedings could substantially increase our operating losses and reduce our resources available for development activities. We may not have sufficient financial or other resources to adequately conduct such litigation or proceedings. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their substantially greater financial resources. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments, and, if securities analysts or investors perceive these results to be negative, there could be a substantial adverse effect on the price of our common stock. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace. Patent litigation and other proceedings may also require significant time and attention of management and technical staff, which may materially and adversely impact our financial position and results of operations. Furthermore, because of the substantial amount of discovery required in connection with any intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation.

Our proprietary rights may not adequately protect our technologies and therapeutic candidates. If we are unable to protect our therapeutic candidates and our intellectual property rights, it may materially and adversely affect our position in the market.

Our commercial success will depend on our ability to obtain patents and maintain adequate protection for our technologies, intellectual property and therapeutic candidates in the United States and other countries. There is no guarantee that any of our patent applications will result in issued patents, or that any patents, if issued, will include

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claims that are sufficiently broad to cover our therapeutic candidates or products, or to provide meaningful protection from our competitors. We will be able to protect our proprietary rights from unauthorized use by third parties only to the extent that our proprietary technologies and future products are covered by valid and enforceable patents or are effectively maintained as trade secrets within our organization. If third parties disclose or misappropriate our proprietary rights, it may materially and adversely impact our position in the market.

We apply for patents covering both our technologies and therapeutic candidates, as we deem appropriate. However, we may fail to apply for patents on important technologies or therapeutic candidates in a timely fashion, or at all. Our existing patents and any future patents we obtain may not be sufficiently broad to prevent others from using our technologies or from developing competing products and technologies. Moreover, the patent positions of numerous biotechnology and pharmaceutical companies are highly uncertain and involve complex legal and factual questions for which important legal principles remain unresolved. As a result, the validity and enforceability of our patents cannot be predicted with certainty. In addition, we cannot guarantee you that:

• we were the first to make the inventions covered by each of our issued patents and pending patent applications;

• we were the first to file patent applications for these inventions;

• others will not independently develop similar or alternative technologies or duplicate any of our technologies by inventing around our claims;

• a third party will not challenge our proprietary rights, and, if challenged, that a court or patent office, as applicable, will hold that our patents are valid and enforceable;

• any patents issued to us or our collaboration partners will cover our product as ultimately developed, or provide us with any competitive advantages, or will not be challenged by third parties;

• we will develop additional proprietary technologies or therapeutic candidates that are patentable; or

• the patents of others will not have an adverse effect on our business.

Patent applications in the United States and most other countries are confidential for a period of time until they are published, and publication of discoveries in scientific or patent literature typically lags behind actual discoveries by several months or more. As a result, we cannot be certain that the inventors of our issued patents and applications and those of any patents and applications that we may in-license were the first to conceive of the inventions covered by such patents and pending patent applications or that we or a licensor were the first to file patent applications covering such inventions.

Our issued patents covering our therapeutic candidates could be found invalid or unenforceable if challenged in court or before the USPTO or comparable foreign authority. For instance, we may become involved in opposition proceedings before the EPO, proceedings such as interferences, re-examination, inter partes review, or post-grant review before the USPTO, and/or legal proceedings before the courts in the U.S. or foreign countries regarding patents in our portfolio, and the outcome of any such proceeding may be uncertain. The outcome regarding legal assertions of invalidity and unenforceability is unpredictable. If a third party challenging one or more of our patents were to prevail on a legal assertion of invalidity and/or enforceability, we would lose at least part, and perhaps all, of the patent protection on our therapeutic candidates. Such a loss of patent protection could have a material adverse impact on our business.

In addition, there are numerous recent changes to the patent laws and proposed changes to the rules of the USPTO which may have a significant impact on our ability to protect our technology and enforce our intellectual property rights. For example, on September 16, 2011, President Obama signed the Leahy-Smith America Invents Act, which codifies several significant changes to the U.S. patent laws, including, among other things, changing from a “first to invent’ to a “first inventor to file” system, limiting where a patentee may file a patent suit, eventually eliminating interference proceedings while creating derivation actions, and creating a set of procedures to challenge patents in the USPTO after they have issued. The effects of these changes are currently uncertain as the courts have yet to address many of these provisions in the context of a dispute. The U.S. Supreme Court has also recently issued multiple decisions regarding patent law, the full impact of which is not yet known. The rulings have narrowed the scope of patent protection available under certain circumstances and weakened the rights of patent owners in certain

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situations. In addition to increasing uncertainty with regard to the ability to obtain patents in the future, these events have created uncertainty with respect to the value of patents once obtained. For example, on March 20, 2012 in Mayo Collaborative Services, DBA Mayo Medical Laboratories, et al. v. Prometheus Laboratories, Inc., the Court held that several claims drawn to measuring drug metabolite levels from patient samples and correlating them to drug doses were not patent eligible subject matter. The decision appears to impact diagnostics patents that merely apply a law of nature via a series of routine steps and it has created uncertainty around the ability to patent certain biomarker-related method claims. Additionally, on June 13, 2013 in Association for Molecular Pathology v. Myriad Genetics, Inc., the Court held that claims to isolated genomic DNA are not patentable, but claims to complementary DNA (cDNA) molecules were held to be valid. The effect of the decision on patents for other isolated natural products is uncertain. Depending on decisions by the U.S. Congress, the federal courts, the USPTO, and foreign courts and patent offices, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing patents and patents that we might obtain in the future.

Restrictions on our patent rights relating to our therapeutic candidates may limit our ability to prevent third parties from competing against us.

Our success will depend, in part, on our ability to prevent third parties from infringing upon our proprietary rights. Composition-of-matter patents on the biological or chemical active pharmaceutical ingredient are generally considered to be the strongest form of intellectual property protection for pharmaceutical products, as such patents provide protection without regard to any method of use. We have filed composition-of-matter patent applications for all of our therapeutic candidates. However, we cannot be certain that the claims in our patent applications to inventions covering our therapeutic candidates will be considered patentable by the USPTO and courts in the United States or by the patent offices and courts in foreign countries.

In addition to composition-of-matter patents and patent applications, we also have filed method-of-use patent applications. This type of patent protects the use of the product only for the specified method. However, this type of patent does not prevent a competitor from making and marketing a product that is identical to our product for an indication that is outside the scope of the patented method. Moreover, even if these competitors do not actively promote their product for our targeted indication, physicians may prescribe these products “off-label.” Although off-label prescriptions may infringe or contribute to the infringement of method-of-use patents, the practice is common and such infringement is difficult to prevent or prosecute.

Although we have a number of issued patents and numerous patent applications pending before the USPTO and foreign patent offices, the resulting patent protection may lapse before we manage to obtain commercial value from them, which might result in increased competition and materially affect our position in the market. Even if our patents do not lapse before we are able to obtain at least some commercial value from them, the life of any patent, and the protection it affords, is limited. Although the term of a U.S. patent may be increased to compensate for certain delays caused by the USPTO, this increase may also be reduced or offset entirely by delays caused by the patent applicant during patent prosecution. Once the patent life has expired for any of our therapeutic candidates, we may be open to competition from biosimilars, which may potentially reduce our market share, and our business and results of operations will be adversely affected.

We may not be able to protect our intellectual property rights throughout the world.

Filing, prosecuting and defending patents on all of our therapeutic candidates and technologies throughout the world would be prohibitively expensive. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and further, may export otherwise infringing products to territories where we have patent protection, but where enforcement is not as strong as that in the United States. These products may compete with our future products in jurisdictions where we do not have any issued patents and our patent claims or other intellectual property rights may not be effective or sufficient to prevent them from so competing.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly those relating to

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biopharmaceuticals, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial cost and divert our efforts and attention from other aspects of our business. Furthermore, such proceedings could put our patents at risk of being invalidated, held unenforceable, or interpreted narrowly, could put our other patent applications at risk of not issuing and could provoke third parties to assert counter claims of infringement or misappropriation against us. We may not be able to obtain injunctive relief in foreign jurisdictions to prevent ongoing infringement while we enforce our patent rights and we may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from our intellectual property.

If we fail to comply with our obligations in our intellectual property licenses with third parties, we could lose license rights that are important to our business.

We are a party to intellectual property license agreements with third parties, including with respect to navicixizumab (anti-DLL4/VEGF bispecific, OMP-305B83) and the production of all of our biologic therapeutic candidates, and expect to enter into additional license agreements in the future. Our existing license agreements impose, and we expect that our future license agreements will impose, various diligence, milestone payment, royalty, insurance, indemnification and other obligations on us. If we fail to comply with these obligations, our licensors may have the right to terminate these agreements, in which event we, or our collaborators, might not be able to develop and market any therapeutic candidate that is covered by these agreements. Termination of these licenses or reduction or elimination of our licensed rights may result in our having to negotiate new or reinstated licenses with less favorable terms, or in the inability to obtain access to the licensed technology at all. The occurrence of such events could materially harm our business.

Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.

The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other provisions during the patent application process. In addition, periodic maintenance fees on any issued patent are due to be paid to the USPTO and foreign patent agencies in several stages over the lifetime of a patent. There are situations in which noncompliance can result in abandonment or lapse of a patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Noncompliance events that could result in abandonment or lapse of a patent or patent application include failure to respond to official actions within prescribed time limits, non-payment of fees, and failure to properly legalize and submit formal documents. In the event that noncompliance leads to abandonment or lapse of a patent or patent application, competitors might be able to enter the market earlier than would otherwise have been the case, which could have a material adverse effect on our business.

If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected.

Our registered or unregistered trademarks or trade names may be challenged, infringed, circumvented or declared generic or determined to be infringing on other marks. Litigation may be necessary to protect our rights to our trademarks or trade names. Such litigation may be costly and be a distraction to management. Also, an adverse result in any such litigation proceedings could put our trademarks or trade names at risk. We may not be able to protect our rights to these trademarks and trade names, which we need to build name recognition by potential partners or customers in our markets of interest. Over the long term, if we are unable to establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively and our business may be adversely affected.

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We may be subject to claims that we or our employees or consultants have wrongfully used or disclosed alleged trade secrets of our employees’ or consultants’ former employers or their clients. These claims may be costly to defend and if we do not successfully do so, we may be required to pay monetary damages and may lose valuable intellectual property rights or personnel.

Many of our employees were previously employed at universities or biopharmaceutical or pharmaceutical companies, including our competitors or potential competitors. Although no claims against us are currently pending, we may be subject to claims that these employees or we have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers. Litigation may be necessary to defend against these claims. If we fail in defending such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. A loss of key research personnel or their work product could hamper our ability to commercialize, or prevent us from commercializing our therapeutic candidates, which could severely harm our business. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management.

If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.

In addition to seeking patents for some of our technology and therapeutic candidates, we also rely on trade secrets, including unpatented know-how, technology and other proprietary information, to maintain our competitive position. We seek to protect these trade secrets, in part, by entering into non-disclosure and confidentiality agreements with parties who have access to them, such as our employees, corporate collaborators, outside scientific collaborators, contract manufacturers, consultants, advisors and other third parties. We also enter into confidentiality and invention or patent assignment agreements with our employees and consultants that obligate them to assign their inventions to us. Despite these efforts, any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States, including in foreign jurisdictions, are less willing or unwilling to protect trade secrets. If any of our trade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent them from using that technology or information to compete with us. If any of our trade secrets were to be disclosed to or independently developed by a competitor, our competitive position would be harmed.

Risks Related to Government Regulation  

The regulatory approval process is expensive, time-consuming and uncertain and may prevent us or our collaboration partners from obtaining approvals for the commercialization of some or all of our therapeutic candidates.

The development, research, testing, manufacturing, labeling, approval, selling, import, export, marketing and distribution of drug and biologic products are subject to extensive and evolving regulation by federal, state and local governmental authorities in the United States, principally by the FDA, and foreign regulatory authorities, which regulations differ from country to country. Neither we nor our collaboration partners are permitted to market our therapeutic candidates in the United States until we receive regulatory approval from the FDA. Our therapeutic candidates are subject to regulation as biologics, and we will require approval of a BLA from the FDA before we may market our therapeutic candidates. Neither we nor our collaboration partners have submitted an application for or received marketing approval for any of our therapeutic candidates. Obtaining approval of a BLA can be a lengthy, expensive and uncertain process. In addition, failure to comply with FDA and other applicable U.S. and foreign regulatory requirements may subject us to administrative or judicially imposed sanctions, including:

• warning letters;

• civil and criminal penalties;

• injunctions;

• withdrawal of approved products;

• product seizure or detention;

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• product recalls;

• total or partial suspension of production; and

• refusal to approve pending BLAs or supplements to approved BLAs.

Prior to receiving approval to commercialize any of our therapeutic candidates in the United States or abroad, we and our collaboration partners must demonstrate with substantial evidence from well-controlled clinical trials, and to the satisfaction of the FDA and other regulatory authorities abroad, that such therapeutic candidates are safe and effective for their intended uses. Preclinical testing and clinical trials are long, expensive and uncertain processes. We may spend several years completing our testing for any particular therapeutic candidate, and failure can occur at any stage. Negative or inconclusive results or adverse medical events during a clinical trial could also cause the FDA or us to terminate a clinical trial or require that we repeat it or conduct additional clinical trials. Additionally, data obtained from preclinical studies and clinical trials can be interpreted in different ways and the FDA or other regulatory authorities may interpret the results of our studies and trials less favorably than we do. Even if we and our collaboration partners believe the preclinical or clinical data for our therapeutic candidates are promising, such data may not be sufficient to support approval by the FDA and other regulatory authorities. Administering any of our therapeutic candidates to humans may produce undesirable side effects, which could interrupt, delay or halt clinical trials of our therapeutic candidates and result in the FDA or other regulatory authorities denying approval of our therapeutic candidates for any or all targeted indications.

Regulatory approval of our therapeutic candidates is not guaranteed, and the approval process is expensive and may take several years. The FDA and foreign regulatory entities also have substantial discretion in the approval process. Despite the time and expense exerted, failure can occur at any stage, and we could encounter problems that cause us to abandon or repeat clinical trials, or perform additional preclinical studies and clinical trials. The number of preclinical studies and clinical trials that will be required for FDA approval varies depending on the therapeutic candidate, the disease or condition that the therapeutic candidate is designed to address, and the regulations applicable to any particular therapeutic candidate. The FDA can delay, limit or deny approval of a therapeutic candidate for many reasons, including, but not limited to, the following:

• a therapeutic candidate may not be deemed safe or effective;

• FDA officials may not find the data from preclinical studies and clinical trials sufficient;

• the FDA might not approve our or our third-party manufacturer’s processes or facilities; or

• the FDA may change its approval policies or adopt new regulations.

If any of our therapeutic candidates fails to demonstrate safety and efficacy in clinical trials or does not gain regulatory approval, our business and results of operations will be materially and adversely harmed.

Even if we or our collaboration partners receive regulatory approval for a therapeutic candidate, we and our collaboration partners will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense and subject us to penalties if we fail to comply with applicable regulatory requirements.

Once regulatory approval has been granted, the approved product and its manufacturer are subject to continual review by the FDA and/or non-U.S. regulatory authorities. Any regulatory approval that we or our collaboration partners receive for our therapeutic candidates may be subject to limitations on the indicated uses for which the product may be marketed or contain requirements for potentially costly post-marketing follow-up studies to monitor the safety and efficacy of the product. In addition, if the FDA and/or non-U.S. regulatory authorities approve any of our therapeutic candidates, we will be subject to extensive and ongoing regulatory requirements by the FDA and other regulatory authorities with regard to the labeling, packaging, adverse event reporting, storage, advertising, promotion and recordkeeping for our products. Manufacturers of our products are required to comply with cGMP regulations, which include requirements related to quality control and quality assurance as well as the corresponding maintenance of records and documentation. Further, regulatory authorities must approve these manufacturing facilities before they can be used to manufacture our products, and these facilities are subject to continual review and periodic inspections by the FDA and other regulatory authorities for compliance with cGMP regulations. If we, a collaboration partner or a regulatory authority discovers previously unknown problems with a product, such as

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adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, a regulatory authority may impose restrictions on that product, the collaboration partner, the manufacturer or us, including requiring withdrawal of the product from the market or suspension of manufacturing. If we, our therapeutic candidates or the manufacturing facilities for our therapeutic candidates fail to comply with regulatory requirements of the FDA and/or other non-U.S. regulatory authorities, we could be subject to administrative or judicially imposed sanctions, including:

• warning letters;

• civil or criminal penalties;

• injunctions;

• suspension of or withdrawal of regulatory approval;

• suspension of any ongoing clinical trials;

• voluntary or mandatory product recalls and publicity requirements;

• refusal to approve pending applications for marketing approval of new products or supplements to approved applications filed by us;

• restrictions on operations, including costly new manufacturing requirements; or

• seizure or detention of our products or import bans.

The regulatory requirements and policies may change and additional government regulations may be enacted for which we may also be required to comply and that could prevent, limit or delay regulatory approval of our therapeutic candidates. For example, in December 2016, the 21st Century Cures Act, or Cures Act, was signed into law.  The Cures Act, among other things, is intended to modernize the regulation of biologics and spur innovation. Ifwe or our collaboration partnersaresloworunabletoadapttochangesinexistingrequirementsortheadoptionofnewrequirementsorpolicies,orifwearenotabletomaintainregulatorycompliance,we or our collaboration partners, as applicable, mayloseanymarketingapprovalthatwemayhaveobtained and will not be permitted to market our future products, whichwouldadverselyaffectourbusiness,prospectsandabilitytoachieveorsustainprofitability.

We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative or executive action, either in the United States or abroad.  For example, certain policies of the Trump administration may impact our business and industry.  Namely, the Trump administration has taken several executive actions, including the issuance of a number of Executive Orders, that could impose significant burdens on, or otherwise materially delay, FDA’s ability to engage in routine regulatory and oversight activities such as implementing statutes through rulemaking, issuance of guidance, and review and approval of marketing applications. It is difficult to predict how these executive actions, including the Executive Orders, will be implemented, and the extent to which they will impact the FDA’s ability to exercise its regulatory authority.  If these executive actions impose constraints on FDA’s ability to engage in oversight and implementation activities in the normal course, our business may be negatively impacted.

Changes in funding for the FDA and other government agencies could hinder their ability to hire and retain key leadership and other personnel, or otherwise prevent new products and services from being developed or commercialized in a timely manner, which could negatively impact our business.

The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory, and policy changes. Average review times at the agency have fluctuated in recent years as a result. In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.

Disruptions at the FDA and other agencies may also slow the time necessary for new drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our business.  For example, over the last several years, including for 35 days beginning on December 22, 2018, the U.S. government has shut down

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several times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA employees and stop critical activities. If a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business.

The availability of adequate third-party coverage and reimbursement for newly approved products is uncertain, and failure to obtain adequate coverage and reimbursement from third-party payors could impede our ability to market any future products we may develop and could limit our ability to generate revenue.

There is significant uncertainty related to the third-party payor coverage and reimbursement of newly approved medical products. The commercial success of our future products in both domestic and international markets depends on whether such third-party coverage and reimbursement is available for our future products. Governmental payors, including Medicare and Medicaid, health maintenance organizations and other third-party payors are increasingly attempting to manage their healthcare expenditures by limiting both coverage and the level of reimbursement of newly approved drugs and biologics and, as a result, they may not cover or provide adequate reimbursement for our future products. These payors may not view our future products as cost-effective, and coverage and reimbursement may not be available to our customers or may not be sufficient to allow our future products to be marketed on a competitive basis. Third-party payors are exerting increasing influence on decisions regarding the use of, and coverage and reimbursement levels for, particular treatments. Such third-party payors, including Medicare, are challenging the prices charged for medical products and services, and many third-party payors limit or delay coverage and reimbursement for newly approved healthcare products. In particular, third-party payors may limit the covered indications. Cost-control initiatives could cause us to decrease the price we might establish for products, which could result in lower than anticipated product revenues. If we decrease the prices for our therapeutic candidates because of competitive pressures or if governmental and other third-party payors do not provide adequate coverage or reimbursement, our prospects for revenue and profitability will suffer.

Failure to obtain regulatory approvals in foreign jurisdictions will prevent us from marketing our therapeutic candidates internationally.

We may seek a distribution and marketing partner for our unpartnered programs outside North America and may market future products in international markets. In order to market our therapeutic candidates in the European Economic Area, or EEA (which is comprised of the 28 Member States of the EU plus Norway, Iceland and Liechtenstein), and many other foreign jurisdictions, we or our collaboration partners must obtain separate regulatory approvals. More concretely, in the EEA, medicinal products can only be commercialized after obtaining a Marketing Authorization, or MA. There are two types of marketing authorizations:

• The Community MA, which is issued by the European Commission through the Centralized Procedure, based on the opinion of the Committee for Medicinal Products for Human Use of the European Medicines Agency, or EMA, and which is valid throughout the entire territory of the EEA. The Centralized Procedure is mandatory for certain types of products, such as biotechnology medicinal products, orphan medicinal products, and medicinal products indicated for the treatment of AIDS, cancer, neurodegenerative disorders, diabetes, auto-immune and viral diseases. The Centralized Procedure is optional for products containing a new active substance not yet authorized in the EEA, or for products that constitute a significant therapeutic, scientific or technical innovation or which are in the interest of public health in the EU.

• National MAs, which are issued by the competent authorities of the Member States of the EEA and only cover their respective territory, are available for products not falling within the mandatory scope of the Centralized Procedure. Where a product has already been authorized for marketing in a Member State of the EEA, this National MA can be recognized in another Member State through the Mutual Recognition Procedure. If the product has not received a National MA in any Member State at the time of application, it can be approved simultaneously in various Member States through the Decentralized Procedure.

Under the above described procedures, before granting the MA, the EMA or the competent authorities of the Member States of the EEA make an assessment of the risk-benefit balance of the product on the basis of scientific criteria concerning its quality, safety and efficacy.

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We have had limited interactions with foreign regulatory authorities, and the approval procedures vary among countries and can involve additional clinical testing, and the time required to obtain approval may differ from that required to obtain FDA approval. Clinical trials conducted in one country may not be accepted by regulatory authorities in other countries. Approval by the FDA does not ensure approval by regulatory authorities in other countries, and approval by one or more foreign regulatory authorities does not ensure approval by regulatory authorities in other foreign countries or by the FDA. However, a failure or delay in obtaining regulatory approval in one country may have a negative effect on the regulatory process in others. The foreign regulatory approval process may include all of the risks associated with obtaining FDA approval. We or our collaboration partners may not obtain foreign regulatory approvals on a timely basis, if at all. We or our collaboration partners may not be able to file for regulatory approvals and even if we or our collaboration partners file, we may not receive necessary approvals to commercialize our therapeutic candidates in any market.

Healthcare reform measures could hinder or prevent our therapeutic candidates’ commercial success.

In the United States, there have been, and we expect there will continue to be, a number of legislative and regulatory changes and proposed changes to the healthcare system that could affect our future revenues and profitability and the future revenues and profitability of our potential customers. Federal and state lawmakers regularly propose and, at times, enact legislation that results in significant changes to the healthcare system, some of which are intended to contain or reduce the costs of medical products and services. For example, in March 2010, the U.S. Congress passed and President Obama signed into law the Affordable Care Act. It contains a number of provisions, including those governing enrollment in federal healthcare programs, reimbursement changes and fraud and abuse measures, all of which have impacted existing government healthcare programs and have resulted in the development of new programs. The Affordable Care Act, among other things:

• imposed a non-deductible annual fee on pharmaceutical manufacturers or importers who sell “branded prescription drugs”;

• increased the minimum level of Medicaid rebates payable by manufacturers of brand-name drugs from 15.1% to 23.1%;

• extended the rebate program to individuals enrolled in Medicaid managed care organizations;

• addressed a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected;

• expanded the eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to additional individuals and by adding new mandatory eligibility categories for certain individuals with income at or below 133% of the federal poverty level, thereby potentially increasing a manufacturer’s Medicaid rebate liability;

• expanded access to commercial health insurance coverage through new state-based health insurance marketplaces, or exchanges; and

• required manufacturers to participate in a coverage gap discount program, under which they must agree to offer 50% point-of-sale discounts, which, through subsequent legislative amendments, were increased to 70%, off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D.

Since its enactment, there have been judicial and Congressional challenges to certain aspects of the Affordable Care Act. We expect that the current presidential administration and U.S. Congress will likely continue to seek to modify, repeal, or otherwise invalidate all or certain provisions of, the Affordable Care Act. For example, the Tax Act was enacted, which, among other things, removes penalties for not complying with the Affordable Care Act’s individual mandate to carry health insurance. Additionally, on December 14, 2018, a U.S. District Court Judge in the Northern District of Texas, ruled that the individual mandate is a critical and inseverable feature of the Affordable Care Act, and therefore, because it was repealed as part of the Tax Act, the remaining provisions of the Affordable Care Act are invalid as well. While the Trump Administration and the Centers for Medicare & Medicaid Services have both stated that the ruling will have no immediate effect, it is unclear how this decision, subsequent appeals, if any, will impact the law. As a result, there is still uncertainty with respect to the impact President Trump’s administration and the U.S. Congress may have, if any, and any changes will likely take time to unfold, and could

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have an impact on coverage and reimbursement for healthcare items and services covered by plans that were authorized by the Affordable Care Act. However, we cannot predict the ultimate content, timing or effect of any healthcare reform legislation or the impact of potential legislation on us.

In addition, other legislative changes have been proposed and adopted in the United States since the Affordable Care Act was enacted. These changes include aggregate reductions of Medicare payments to providers of 2 percent per fiscal year, which went into effect on April 1, 2013, and, due to subsequent legislative amendments, will remain in effect through 2027 unless additional Congressional action is taken, and the American Taxpayer Relief Act, which, among other things, further reduced Medicare payments to several types of providers, including hospitals, imaging centers and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. These new laws may result in additional reductions in Medicare and other health care funding, which could have a material adverse effect on our customers and accordingly, our financial operations.

Moreover, payment methodologies, including payment for companion diagnostics, may be subject to changes in healthcare legislation and regulatory initiatives. For example, the CMS has begun bundling the Medicare payments for certain laboratory tests ordered while a patient received services in a hospital outpatient setting and, in 2018, the CMS began paying for clinical laboratory services based on a weighted average of reported prices that private payors, Medicare Advantage plans, and Medicaid Managed Care plans pay for laboratory services. In addition, recently, there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several Congressional inquiries and proposed and enacted legislation designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drug products. For example, the 21st Century Cures Act changed the reimbursement methodology for infusion drugs and biologics furnished through durable medical equipment in an attempt to remedy over- and underpayment of certain products. Individual states in the United States have also become increasingly active in implementing regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amount that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our therapeutic candidates or companion diagnostics or additional pricing pressures.

There likely will continue to be legislative and regulatory proposals at the federal and state levels directed at containing or lowering the cost of health care. We cannot predict the initiatives that may be adopted in the future or their full impact. The continuing efforts of the government, insurance companies, managed care organizations and other payors of healthcare services to contain or reduce costs of health care may adversely affect:

• our ability to set a price we believe is fair for our products;

• our ability to generate revenues and achieve or maintain profitability; and

• the availability of capital.

In light of widely publicized events concerning the safety risk of certain drug products, regulatory authorities, members of Congress, the Governmental Accounting Office, medical professionals and the general public have raised concerns about potential drug safety issues. These events have resulted in the withdrawal of drug products, revisions to drug labeling that further limit use of the drug products and establishment of risk management programs that may, for instance, restrict distribution of drug products. The increased attention to drug safety issues may result in a more cautious approach by the FDA to clinical trials and the drug approval process. Data from clinical trials may receive greater scrutiny with respect to safety, which may make the FDA or other regulatory authorities more likely to terminate clinical trials before completion, or require longer or additional clinical trials that may result in substantial additional expense and a delay or failure in obtaining approval or approval for a more limited indication than originally sought. In, addition, because of the serious public health risks of high profile adverse safety events with certain products, the FDA may require, as a condition of approval, costly risk management programs which may include safety surveillance, restricted distribution and use, patient education, enhanced labeling, special

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packaging or labeling, expedited reporting of certain adverse events, preapproval of promotional materials and restrictions on direct-to-consumer advertising.

Our therapeutic candidates for which we intend to seek approval as biologic products may face competition from biosimilars and may face such competition sooner than anticipated.

With the enactment of the Biologics Price Competition and Innovation Act of 2009, or BPCIA, as part of the Affordable Care Act, an abbreviated pathway for the approval of biosimilar and interchangeable biological products was created. The abbreviated regulatory pathway establishes legal authority for the FDA to review and approve biosimilar biologics, including the possible designation of a biosimilar as “interchangeable,” based on their similarity to existing brand product. Under the BPCIA, an application for a biosimilar product cannot be submitted to the FDA until four years following the date that the reference product was first licensed by the FDA, and the approval of a biosimilar product may not be made effective by the FDA until 12 years from the date on which the reference product was first licensed. During this 12-year period of exclusivity, another company may still market a competing version of the reference product if the FDA approves a full BLA for the competing product containing the sponsor’s own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity and potency of their product. The 12 years of data exclusivity afforded to biologics under the BPCIA does not prevent another company from developing a product that is highly similar to the innovative product, generating its own data, and seeking approval. Data exclusivity only assures that another company cannot rely upon data within the innovator’s application to support the biosimilar product’s application. The law is complex and is subject to continuing interpretation and implementation by the FDA. As a result, its ultimate impact, implementation and meaning are subject to continuing uncertainty. The FDA has continued to approve few biosimilar products, however, reflecting that the Agency is continuing to move forward with implementation and application of a regulatory pathway for biosimilars despite some ongoing uncertainty surrounding the specifics of the biosimilar regulatory pathway. The FDA’s processes for biosimilars could have a material adverse effect on the future commercial prospects for our biological products.

We believe that any of our therapeutic candidates approved as a biological product under a BLA should qualify for the 12-year period of exclusivity. However, there is a risk that the U.S. Congress could amend the BPCIA to significantly shorten this exclusivity period or take other measures to reduce or eliminate periods of exclusivity. There is also a risk that the FDA will not consider our therapeutic candidates to be reference products for competing products, potentially creating the opportunity for competition sooner than anticipated. Moreover, the extent to which a biosimilar, once approved, will be substituted for any one of our reference products in a way that is similar to traditional generic substitution for non-biological products is not yet clear, and will depend on a number of marketplace and regulatory factors that are still developing.

In addition, foreign regulatory authorities may also provide for exclusivity periods for approved biological products. For example, biological products in Europe may be eligible for a 10-year period of exclusivity. Biosimilar products have been approved under the centralized procedure since 2006. The pathway allows sponsors of a biosimilar product to seek and obtain regulatory approval based in part on the clinical trial data of an originator product to which the biosimilar product has been demonstrated to be “similar.” In many cases, this allows biosimilar products to be brought to market without conducting the full suite of clinical trials typically required of originators. It is unclear whether we would face competition to our products in European markets sooner than anticipated.

If we fail to comply with healthcare regulations, we could face substantial penalties and our business, operations and financial condition could be adversely affected.

Even though we do not and will not control referrals of healthcare services or bill directly to Medicare, Medicaid or other third-party payors, certain federal and state healthcare laws and regulations pertaining to fraud and abuse and patients’ rights are and will be applicable to our business. We could be subject to healthcare fraud and abuse and patient privacy regulation by both the federal government and the states in which we conduct our business. The regulations that may affect our ability to operate include, without limitation:

• the federal Anti-Kickback Statute, which prohibits, among other things, any person from knowingly and willfully offering, soliciting, receiving or providing remuneration, directly or indirectly, to induce either the referral of an individual, for an item or service or the purchasing or ordering of a good or service, for

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which payment may be made under federal healthcare programs such as the Medicare and Medicaid programs. Apersonorentitydoes notneedtohaveactualknowledgeofthisstatuteorspecificintenttoviolateit in order to have committed a violation.Inaddition,thegovernmentmayassertthataclaimincludingitemsorservicesresultingfromaviolationofthefederalAnti-KickbackStatuteconstitutesafalseorfraudulentclaimforpurposesofthefalseclaimsstatutes;

• the federal False Claims Act, which prohibits, among other things, individuals or entities from knowingly presenting, or causing to be presented, false claims, or knowingly using false statements, to obtain payment from the federal government, and which may apply to entities that provide coding and billing advice to customers;

• federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters. Similar to the federal Anti-Kickback Statute, apersonorentitydoes notneedtohaveactualknowledgeofthesestatutesorspecificintenttoviolatethem in order to have committed a violation;

• the federal Physician Payments Sunshine Act, which requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the government information related to payments or other “transfers of value” made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, and applicable manufacturers and group purchasing organizations to report annually to the government ownership and investment interests held by physicians (as defined above) and their immediate family members and payments or other “transfers of value” to such physician owners. Manufacturers are required to report such data to the government by the 90th calendar day of each year;

• the federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act, which governs the conduct of certain electronic healthcare transactions and protects the security and privacy of protected health information;

• state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers; state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or pricing information and marketing expenditures; and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts; and

• similar healthcare laws and regulations in the European Union and other jurisdictions, including reporting requirements detailing interactions with and payments to healthcare providers and requirements regarding the collection, distribution, use, security, and storage of personally identifiable information and other data relating to individuals (including the GDPR).

If our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from government-funded healthcare programs, such as Medicare and Medicaid or similar programs in other countries or jurisdictions, integrity oversight and reporting obligations to resolve allegations of non-compliance, individual imprisonment,  and the curtailment or restructuring of our operations. Any penalties could adversely affect our ability to operate our business and our financial results. Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business. Moreover, achieving and sustaining compliance with applicable federal and state privacy, security and fraud laws may prove costly.

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Risks Related to the Securities Market and Investment in Our Common Stock

On January 23, 2019 we received written notice from Nasdaq that we were not in compliance with Nasdaq’s continued listing requirements due to our failure to maintain a minimum closing bid price.  Our common stock may be delisted from the Nasdaq Global Select Market if we cannot satisfy Nasdaq’s continued listing requirements.

On January 23, 2019, we received a letter from the listing qualifications department of The Nasdaq Stock Market (“Nasdaq”) indicating that for 30 consecutive business days we did not maintain a minimum closing bid price of $1.00 per share as required by Nasdaq Listing Rule 5450(a)(1) (the “Minimum Bid Price Requirement”).

In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we have 180 calendar days, or until July 22, 2019, to regain compliance with the Minimum Bid Price Requirement. To regain compliance, the closing bid price of our common stock must be at least $1.00 per share for a minimum of ten consecutive business days before July 22, 2019.

If our common stock does not achieve compliance by July 22, 2019, we may be eligible for an additional 180-day period to regain compliance if we transfer to the Nasdaq Capital Market, provided that we meet the continued listing requirement for market value of publicly-held shares and all other initial listing standards of the Nasdaq Capital Market, with the exception of the Minimum Bid Price Requirement, and provide written notice to Nasdaq of our intention to cure the deficiency during the second compliance period, for example, by effecting a reverse stock split, if necessary. However, if it appears to the Nasdaq staff that we will not be able to cure the deficiency, or if we do not meet the other listing standards, Nasdaq could provide notice that our common stock will become subject to delisting. In the event we receive notice that our common stock is being delisted, Nasdaq rules permit us to appeal any delisting determination by the Nasdaq staff to a Hearings Panel.

We believe that the completion of the Merger will address the above-indicated Nasdaq compliance matter. We will also continue to monitor the bid price for its common stock and consider various other options available to it if our common stock does not trade at a level that is likely to regain compliance. However, there can be no assurance that we will be able to regain compliance with the Minimum Bid Price Requirement or maintain compliance with any other Nasdaq requirement in the future.

The price of our common stock may be volatile, and you may not be able to resell your shares at prices that are attractive to you.

There was no public market for our common stock prior to our initial public offering in July 2013, the trading volume of our common stock on The Nasdaq Global Select Market has been limited since then, and there can be no assurance that an active and liquid trading market for our common stock will be sustained. We cannot predict the extent to which investor interest in our company will sustain an active trading market on The Nasdaq Global Select Market or otherwise or how liquid that market might become. If an active and liquid market is not sustained, it may be difficult for stockholders to sell their shares of common stock at prices that are attractive to them, or at all. Further, an inactive market may also impair our ability to raise capital by selling shares of our common stock and may impair our ability to enter into strategic partnerships or acquire companies or products, therapeutic candidates or technologies by using our shares of common stock as consideration. Stockholders may also be unable to sell their shares of common stock at prices that are attractive to them due to fluctuations in the market price of our common stock. Factors that could cause volatility in the market price of our common stock include, but are not limited to:

• ability to commercialize or obtain regulatory approval for our therapeutic candidates, or delays in commercializing or obtaining regulatory approval;

• results from, or any delays in, clinical trial programs relating to our therapeutic candidates, including the ongoing and planned clinical trials for navicixizumab (anti-DLL4/VEGF bispecific, OMP-305B83) and etigilimab (anti-TIGIT, OMP-313M32);

• failure to achieve anticipated research and development milestones and obtain the applicable milestone payments under our agreements with our collaboration partners, on our anticipated timelines or at all;

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• any need to suspend or discontinue clinical trials due to side effects or other safety risks, or any need to conduct studies on the long-term effects associated with the use of our therapeutic candidates;

• announcements relating to future collaborations; our existing collaboration with  Celgene, including decisions regarding the exercise by Celgene of its option for etigilimab or any termination by Celgene the etigilimab development program; or our small molecule program collaboration with Bayer, including the advancement or non-advancement of the small molecule programs into further development and potential commercialization by Bayer;

• manufacturing issues related to our therapeutic candidates for clinical trials or future products for commercialization;

• commercial success and market acceptance of our therapeutic candidates following regulatory approval;

• undesirable side effects caused by therapeutic candidates after they have entered the market;

• ability to discover, develop and commercialize additional therapeutic candidates;

• success of our competitors in discovering, developing or commercializing products;

• strategic transactions undertaken by us;

• additions or departures of key personnel;

• product liability claims related to our clinical trials or therapeutic candidates;

• prevailing economic conditions;

• business disruptions caused by external factors, such as natural disasters and other crises;

• disputes concerning our intellectual property or other proprietary rights;

• FDA or other U.S. or foreign regulatory actions affecting us or our industry;

• healthcare reform measures in the United States;

• sales of our common stock by our officers, directors or significant stockholders;

• future sales or issuances of equity or debt securities by us;

• fluctuations in our quarterly operating results; and

• the issuance of new or changed securities analysts’ reports or recommendations regarding us.

In addition, the stock markets in general, and the markets for pharmaceutical, biopharmaceutical and biotechnology stocks in particular, have experienced extreme volatility that have been often unrelated to the operating performance of the issuer. These broad market fluctuations may adversely affect the trading price or liquidity of our common stock. In the past, when the market price of a stock has been volatile, holders of that stock have sometimes instituted securities class action litigation against the issuer. If any of our stockholders were to bring such a lawsuit against us, we could incur substantial costs defending the lawsuit and the attention of our management would be diverted from the operation of our business.

Together with their affiliates, our directors and management own a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval.

Based on the beneficial ownership of our outstanding common stock as of December 31, 2018, our officers and directors, together with their respective affiliates, beneficially own approximately 14.3% of our outstanding common stock. Accordingly, these stockholders will continue to have significant influence over the outcome of corporate actions requiring stockholder approval, including the election of directors, any merger, consolidation or sale of all or substantially all of our assets or any other significant corporate transaction. The interests of these stockholders may not be the same as or may even conflict with your interests. For example, these stockholders could delay or prevent a change of control of our company, even if such a change of control would benefit our other stockholders, which could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of our company or our assets and might affect the prevailing market price of our common stock. The

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significant concentration of stock ownership may adversely affect the trading price of our common stock due to investors’ perception that conflicts of interest may exist or arise.

Future sales of our common stock or securities convertible or exchangeable for our common stock may depress our stock price.

If our existing stockholders or holders of our options or warrants sell, or indicate an intention to sell, substantial amounts of our common stock in the public market, the trading price of our common stock could decline. The perception in the market that these sales may occur could also cause the trading price of our common stock to decline. As of December 31, 2018, we have a total of 38,660,146 shares of common stock outstanding.

Based on the number of shares subject to outstanding awards under our 2004 Stock Incentive Plan and 2013 Equity Incentive Award Plan, or available for issuance under our 2013 Equity Incentive Award Plan and Employee Stock Purchase Plan as of December 31, 2018, 9,311,367 shares of common stock that are either subject to outstanding options, outstanding but subject to vesting, or reserved for future issuance under our employee benefit plans will be eligible for sale in the public market, subject to, in the case of shares issued to directors, executive officers and other affiliates, the volume limitations under Rule 144 under the Securities Act. If these additional shares of common stock are sold, or if it is perceived that they will be sold, in the public market, the trading price of our common stock could decline.

Approximately 4.4 million shares of our common stock are entitled to rights with respect to the registration of their shares under the Securities Act. Registration of these shares under the Securities Act would result in the shares becoming freely tradable without restriction under the Securities Act, except for shares purchased by affiliates. In addition, our directors, executive officers and other affiliates may establish, and certain executive officers, directors and affiliates have established, programmed selling plans under Rule 10b5-1 of the Exchange Act, for the purpose of effecting sales of our common stock. Any sales of securities by these stockholders, or the perception that those sales may occur, including the entry into such programmed selling plans, could have a material adverse effect on the trading price of our common stock.

Future sales and issuances of equity and debt securities could result in additional dilution to our stockholders and could place restrictions on our operations and assets, and such securities could have rights, preferences and privileges senior to those of our common stock.

We expect that significant additional capital will be needed in the future to continue our planned operations. To raise capital, we may from time to time issue additional shares of common stock at a discount from the then-current trading price of our common stock. As a result, our common stockholders would experience immediate dilution upon the purchase of any shares of our common stock sold at such discount. For example, on August 23, 2016, we closed the sale of an aggregate of 6,325,000 shares of our common stock at a public offering price of $10.00 per share, a discount from the then-current trading price of our common stock. In addition, as opportunities present themselves, we may enter into financing or similar arrangements in the future, including the issuance of debt securities, preferred stock or common stock. Whether or not we issue additional shares of common stock at a discount, any issuance of common stock will, and any issuance of other equity securities or of options, warrants or other rights to purchase common stock may, result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to decline. New investors could also gain rights, preference and privileges senior to those of holders of our common stock, which could cause the price of our common stock to decline. Debt securities may also contain covenants that restrict our operational flexibility or impose liens or other restrictions on our assets, which could also cause the price of our common stock to decline.

Pursuant to our equity incentive plan, we are authorized to grant equity-based incentive awards to our employees, directors and consultants. As of December 31, 2018, there were 3,349,842 shares of our common stock reserved for future issuance under our 2013 Equity Incentive Award Plan, or the 2013 Plan. The number of shares of our common stock reserved for issuance under our 2013 Plan will be increased (i) from time to time by the number of shares of our common stock forfeited upon the expiration, cancellation, forfeiture, cash settlement or other termination of awards under our 2004 Stock Incentive Plan, or the 2004 Plan, and (ii) annually on the first day of the year by the lesser of (x) a number of additional shares of our common stock representing 4% of our then-outstanding shares of common stock on the last day of the immediately preceding fiscal year; (y) 1,500,000 shares of our

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common stock; and (z) such smaller number of shares as determined by our board of directors. As a result of this increase, an additional 1,500,000 shares of our common stock became available for future issuance under our 2013 Plan as of January 1, 2018. Future option grants and issuances of common stock under our 2013 Plan may have an adverse effect on the market price of our common stock.

In addition, pursuant to our 2013 Employee Stock Purchase Plan, or ESPP, as of December 31, 2018, 1,510,518 shares of our common stock were available for issuance to our employees. The number of shares of our common stock reserved for issuance under our ESPP will be increased annually on the first day of the year by the lesser of (x) a number of additional shares of our common stock representing 1% of our then-outstanding shares of common stock on the last day of the immediately preceding fiscal year; (y) 350,000 shares of our common stock; and (z) such number of shares as determined by our board of directors. As a result of this increase, an additional 350,000 shares of our common stock became available for future issuance under our ESPP as of January 1, 2018. Future issuances of common stock under our ESPP may have an adverse effect on the market price of our common stock.

Our quarterly operating results may fluctuate significantly or may fall below the expectations of investors or securities analysts, each of which may cause our stock price to fluctuate or decline.

We expect our operating results to be subject to quarterly fluctuations. Our net loss and other operating results will be affected by numerous factors, including:

• variations in the level of expenses related to our therapeutic candidates or future development programs;

• if any of our therapeutic candidates receives regulatory approval, the level of underlying demand for these therapeutic candidates and wholesalers’ buying patterns;

• addition or termination of clinical trials or funding support;

• our execution of any collaborative, licensing or similar arrangements, and the timing of payments we may make or receive under these arrangements or existing such arrangements, such as our collaboration agreement with  Celgene and our small molecule program collaboration with Bayer;

• any intellectual property infringement lawsuit or opposition, interference, or cancellation proceeding in which we may become involved; and

• regulatory developments affecting our therapeutic candidates or those of our competitors.

If our quarterly operating results fall below the expectations of investors or securities analysts, the price of our common stock could decline substantially. Furthermore, any quarterly fluctuations in our operating results may, in turn, cause the price of our stock to fluctuate substantially. We believe that quarterly comparisons of our financial results are not necessarily meaningful and should not be relied upon as an indication of our future performance.

Provisions of our charter documents or Delaware law could delay or prevent an acquisition of our company, even if the acquisition would be beneficial to our stockholders, and could make it more difficult for you to change management.

Provisions in our amended and restated certificate of incorporation and our amended and restated bylaws may discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. In addition, these provisions may frustrate or prevent any attempt by our stockholders to replace or remove our current management by making it more difficult to replace or remove our board of directors. These provisions include:

• a classified board of directors so that not all directors are elected at one time;

• a prohibition on stockholder action through written consent;

• a requirement that special meetings of stockholders be called only by the board of directors, the chairman of the board of directors, the chief executive officer or, in the absence of a chief executive officer, the president;

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• an advance notice requirement for stockholder proposals and nominations;

• the authority of our board of directors to issue preferred stock with such terms as our board of directors may determine; and

• a requirement of approval of not less than 66 2/3% of all outstanding shares of our capital stock entitled to vote to amend any bylaws by stockholder action, or to amend specific provisions of our certificate of incorporation.

In addition, Delaware law prohibits a publicly held Delaware corporation from engaging in a business combination with an interested stockholder, generally a person who, together with its affiliates, owns or within the last three years has owned 15% or more of our voting stock, for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. Accordingly, Delaware law may discourage, delay or prevent a change in control of our company. Furthermore, our amended and restated certificate of incorporation specifies that the Court of Chancery of the State of Delaware is the sole and exclusive forum for most legal actions involving actions brought against us by stockholders. We believe this provision benefits us by providing increased consistency in the application of Delaware law by chancellors particularly experienced in resolving corporate disputes, efficient administration of cases on a more expedited schedule relative to other forums and protection against the burdens of multi-forum litigation. However, the provision may have the effect of discouraging lawsuits against our directors and officers. The enforceability of similar choice of forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings, and it is possible that, in connection with any applicable action brought against us, a court could find the choice of forum provisions contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in such action.

Provisions in our charter and other provisions of Delaware law could limit the price that investors are willing to pay in the future for shares of our common stock.

Our employment agreements with our officers may require us to pay severance benefits to any of those persons who are terminated in connection with a change of control of us, which could harm our financial condition or results.

Our officers are parties to employment agreements providing for aggregate cash payments of up to approximately $3.5 million for severance and other benefits and acceleration of vesting of stock options with a value of up to approximately $.01 million (as of December 31, 2018) in the event of a termination of employment in connection with a change of control of us. The accelerated vesting of options could result in dilution to our existing stockholders and harm the market price of our common stock. The payment of these severance benefits could harm our financial condition and results. In addition, these potential severance payments may discourage or prevent third parties from seeking a business combination with us.

We do not anticipate paying any cash dividends on our capital stock in the foreseeable future; therefore capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future.

We have never declared or paid cash dividends on our capital stock. We do not anticipate paying any cash dividends on our capital stock in the foreseeable future. We currently intend to retain all available funds and any future earnings to fund the development and growth of our business. In addition, the terms of any future debt financing arrangement may contain terms prohibiting or limiting the amount of dividends that may be declared or paid on our common stock. As a result, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future.

If securities or industry analysts publish inaccurate or unfavorable research about our business, or fail to publish research about our business regularly, our stock price and trading volume could decline.

The trading market for our common stock will depend, in part, on the research and reports that securities or industry analysts publish about us or our business. A limited number of securities and industry analysts currently publish research on our company. If one or more of the analysts who cover us downgrade our stock or publish

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inaccurate or unfavorable research about our business, our stock price would likely decline. In addition, if our operating results fail to meet the forecast of analysts, our stock price would likely decline. If one or more of the analysts covering us or our business cease coverage of our company or fail to publish reports on us regularly, demand for our stock could decrease, which might cause our stock price and trading volume to decline.

Changes in, or interpretations of, accounting rules and regulations could result in unfavorable accounting charges or require us to change our compensation policies.

Accounting methods and policies for biopharmaceutical companies, including policies governing revenue recognition, research and development and related expenses and accounting for stock-based compensation, are subject to further review, interpretation and guidance from relevant accounting authorities, including the SEC. Changes to, or interpretations of, accounting methods or policies may require us to reclassify, restate or otherwise change or revise our financial statements, including those contained in this filing.

Item 1B. UNRESOLVED STAFF COMMENTS

None.

Item 2. PROPERTIES

Our corporate headquarters are located in Redwood City, California, where we lease 45,690 square feet of office and laboratory space. In May 2006, we entered into a lease agreement for office and laboratory facilities in Redwood City, California. The lease term commenced in February 2007 for a period of seven years with options to extend the lease for two additional five-year terms. On December 22, 2010, the lease agreement was amended to extend the lease term for an additional five years, expiring in February 2019, with options to further extend the lease for two additional three-year terms. On November 11, 2016, the lease agreement was further amended to extend the lease term through May 2028, with an option to further extend the lease for an additional three-year term, and an option to expand the premises by an additional approximately 22,750 square feet of office and laboratory space if we choose to so expand the premises prior to September 16, 2017, which we chose not to do.

In October 2018 and January 2019, the Company subleased a specified portion of the Company’s office facility located in Redwood City, California. These subleases have terms of 12 to 24 months and will expire in 2020. The aggregate sublease proceeds are approximately $1.6 million and $0.8 million for the years ended December 31, 2019 and 2020, respectively.

Item 3. LEGAL PROCEEDINGS

From time to time, we may become involved in legal proceedings and claims arising in the ordinary course of our business.  We are not currently a party to any legal proceedings the outcome of which, if determined adversely to us, we believe would individually or in the aggregate have a material adverse effect on our business, operating results, financial condition or cash flows.

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock has been listed on The Nasdaq Global Select Market under the symbol “OMED” since July 18, 2013. Prior to that date, there was no public trading market for our common stock.

Holders of Common Stock

As of December 31, 2018, there were approximately 44 holders of record of our common stock. In addition, a substantially greater number of stockholders may be “street name” or beneficial holders, whose shares are held of record by banks, brokers and other financial institutions.

Dividend Policy

We have never declared or paid cash dividends on our capital stock. We intend to retain all available funds and any future earnings, if any, to fund the development and expansion of our business and we do not anticipate paying any cash dividends in the foreseeable future. Any future determination related to dividend policy will be made at the discretion of our board of directors.

Recent Sales of Unregistered Securities

None.

Issuer Purchases of Equity Securities

Not applicable.

Securities Authorized for Issuance Under Equity Compensation Plans

The information required by this Item regarding equity compensation plans is incorporated by reference to the information set forth in Part III, Item 12 of this Annual Report on Form 10 K.

ITEM 6. SELECTED FINANCIAL DATA

The selected statement of operations data for the years ended December 31, 2018, 2017 and 2016, and the selected balance sheet data as of December 31, 2018 and 2017 are derived from our audited financial statements included elsewhere in this Annual Report on Form 10-K. The selected statement of operations data for the years ended December 31, 2015 and 2014 and the selected balance sheet data as of December 31, 2016, 2015 and 2014 are derived from our audited financial statements which are not included in this Annual Report on Form 10-K.

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Our historical results are not necessarily indicative of the results that may be expected in the future. You should read the selected historical financial data below in conjunction with the section titled “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and related notes included elsewhere in this Annual Report on Form 10-K.

	Year Ended December 31,
(In thousands, except share and    per share data)	2018			2017			2016			2015			2014
Statement of Operations Data:
Revenue:
Collaboration revenue	$	44,421		$	36,016		$	21,277		$	25,216		$	39,559
Other revenue		-			2,138			3,876			683			—
Total revenue		44,421			38,154			25,153			25,899			39,559
Operating expenses:
Research and development (1)		34,443			59,839			109,713			92,873			76,430
General and administrative (1)		18,172			16,761			18,827			18,583			13,753
Restructuring charges (1)		1,851			2,527			—			—			—
Total operating expenses		54,466			79,127			128,540			111,456			90,183
Loss from operations		(10,045	)		(40,973	)		(103,387	)		(85,557	)		(50,624	)
Interest and other income    (expense), net		1,562			828			299			170			105
Loss before income taxes		(8,483	)		(40,145	)		(103,088	)		(85,387	)		(50,519	)
Income tax provision (benefit)		(382	)		(1,083	)		14			20			(509	)
Net loss	$	(8,101	)	$	(39,062	)	$	(103,102	)	$	(85,407	)	$	(50,010	)
Net loss per common share,    basic and diluted (2)	$	(0.21	)	$	(1.04	)	$	(3.14	)	$	(2.84	)	$	(1.69	)
Shares used to compute net loss    per common share, basic and    diluted (2)		38,442,994			37,631,348			32,859,554			30,028,684			29,664,326

⁽¹⁾ Included in the statement of operations data above are the following non-cash stock-based compensation expenses:

	Year Ended December 31,
(In thousands)	2018		2017		2016		2015		2014
Research and development	$	3,380	$	4,886	$	5,892	$	6,113	$	3,600
General and administrative		3,397		4,522		5,239		4,653		2,594
Restructuring charges		65		6		—		—		—
Total stock-based compensation	$	6,842	$	9,414	$	11,131	$	10,766	$	6,194

⁽²⁾ See Notes 2 and 14 to our audited financial statements included in this Annual Report on Form 10-K for an explanation of the calculations of our basic and diluted net loss per common share.

	As of December 31,
(In thousands)	2018			2017			2016			2015			2014
Balance Sheet Data:
Cash and short-term investments	$	57,345		$	103,091		$	184,573		$	157,279		$	231,966
Working capital		51,083			12,073			133,730			178,614			202,264
Total assets		65,078			110,322			195,482			237,887			247,842
Accumulated deficit		(361,786	)		(452,007	)		(412,945	)		(309,843	)		(224,436	)
Total stockholders’ equity (deficit)		48,231			(48,603	)		(23,028	)		3,551			76,367

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion in conjunction with our financial statements and related notes included elsewhere in this Annual Report on Form 10-K. This discussion and other parts of this Annual Report on Form 10-K contains forward-looking statements that involve risks and uncertainties. All statements other than statements of historical facts contained in this report are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “could,” “will,” “would,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “intend,” “predict,” “seek,” “contemplate,” “potential” or “continue” or the negative of these terms or other comparable terminology. These forward-looking statements, include, but are not limited to, the initiation, timing, progress and results of our preclinical studies and clinical trials, and our research and development programs; our ability to advance therapeutic candidates into, and successfully complete, clinical trials; the structure, timing, and completion of the proposed business combination with Mereo BioPharma Group plc, Mereo US Holdings Inc. (“HoldCo”), and Mereo MergerCo One Inc.; our continued listing on The Nasdaq Global Select Market until the closing of the Merger; our continued compliance with the listing requirements of The Nasdaq Stock Market; HoldCo’s anticipated listing of American Depositary Shares on The Nasdaq Stock Market in connection with the closing of the Merger; our receipt of future milestone payments and/or royalties, and the expected timing of such payments; our collaborators’ exercise of their license options; the commercialization of our therapeutic candidates; the implementation of our business model, strategic plans for our business, therapeutic candidates and technology; the scope of protection we are able to establish and maintain for intellectual property rights covering our therapeutic candidates and technology; estimates of our expenses, future revenues, capital requirements and our needs for additional financing; the timing or likelihood of regulatory filings, including Investigational New Drug applications, and approvals; our ability to maintain and establish collaborations or obtain additional government grant funding; our use of proceeds from our initial public offering or IPO; our financial performance; and developments relating to our competitors and our industry. These statements reflect our current views with respect to future events or our future financial performance, are based on assumptions, and involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under “Item 1A. Risk Factors” of this Annual Report on Form 10-K. These forward-looking statements speak only as of the date hereof. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

Overview

OncoMed is a clinical-stage biopharmaceutical company focused on developing novel therapeutics that address the fundamental biology driving cancer’s growth, resistance, recurrence and metastasis. We believe our therapeutic candidates are quite distinct from current generations of chemotherapies and targeted therapies, and have the potential to significantly impact cancer treatment and the clinical outcome of patients with cancer.

We currently have two therapeutic candidates in active clinical development targeting key cancer pathways, including pathways regulating can stem cells (CSCs) and the immune systems response to cancer. The first therapeutic candidate in active clinical development, navicixizumab (anti-DLL4/VEGF bispecific, OMP-305B83), has completed a single-agent Phase Ia trial in patients with advanced solid tumors, and we are conducting a Phase Ib clinical trial of navicixizumab in combination with a standard chemotherapy regimen in patients with platinum-resistant ovarian cancer.   Enrollment of patients in the Phase Ib clinical trial has been completed, and we are determining next steps for the program. Our second therapeutic candidate, etigilimab (anti-TIGIT, OMP-313M32), recently completed the single-agent Phase Ia portion of a Phase Ia/b clinical trial, which enrolled patients with advanced or metastatic solid tumors, and is currently in the Phase Ib portion of the clinical trial, which combines etigilimab with anti-PD1 (nivolumab). Enrollment in the Phase Ia/b clinical trial has been completed. Etigilimab is part of our collaboration with Celgene Corporation, or Celgene.  Clinical trials for these two therapeutic candidates are ongoing, with the intent of gathering additional data required to proceed to later stage clinical trials and potentially product approval. Another therapeutic candidate, GITRL-Fc (OMP-336B11), is currently in a single-

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agent Phase Ia trial in patients with advanced or metastatic solid tumors, although enrollment has ended, and we do not plan to advance GITRL-Fc beyond Phase Ia.

Financial Operations Overview

Revenue

We have not generated any revenue from product sales. Our revenue to date has been primarily derived from upfront payments and development milestones received from our current collaborators Celgene Corporation, or Celgene, and Bayer Pharma AG, or Bayer, and our former collaborator GlaxoSmithKline LLC, or GSK.

The following table summarizes our revenue for the years ended December 31, 2018, 2017 and 2016, which is related to the recognition of upfront payments, milestone payments and reimbursements of research and development costs under our various collaboration arrangements:

	Year Ended December 31,
(In thousands)	2018		2017		2016
Celgene:
Recognition of upfront payment	$	44,421	$	35,588	$	20,053
Other revenue		—		409		1,780
Celgene total		44,421		35,997		21,833
Bayer:
Recognition of upfront payment		—		278		648
Other revenue		—		1,726		1,457
Bayer total		—		2,004		2,105
GSK:
Recognition of upfront payment		—		150		576
Other revenue		—		3		639
GSK total		—		153		1,215
Total revenue	$	44,421	$	38,154	$	25,153

We expect that any revenue we generate will fluctuate from period to period as a result of the timing and amount of milestones and other payments from our current collaboration with Celgene, our small molecule program collaboration with Bayer, or any new collaboration we may enter in the future.

Research and Development

Research and development expenses represent costs incurred to conduct research such as the discovery and development of clinical candidates for our prior and current collaborators GSK, Bayer and Celgene as well as discovery and development of our proprietary unpartnered therapeutic candidates. We expense all research and development costs as they are incurred. Our research and development expenses consist of employee salaries and related benefits, including stock-based compensation, third-party contract costs relating to research, manufacturing, preclinical studies, clinical trial activities, laboratory consumables, and allocated facility costs.

At any point in time, we typically have various early stage research and drug discovery projects. Our internal resources, employees and infrastructure are not directly tied to any one research or drug discovery project and are typically deployed across multiple projects. As such, we do not maintain information regarding these costs incurred for these early stage research and drug discovery programs on a project-specific basis.

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The following table summarizes our research and development expenses for the years ended December 31, 2018, 2017 and 2016. The internal costs include personnel, facility costs, laboratory consumables and discovery and research related activities associated with our pipeline. The external program costs reflect external costs attributable to our clinical development candidates and preclinical candidates selected for further development. Such expenses include third-party contract costs relating to manufacturing, clinical trial activities, translational medicine and toxicology activities.

	Year Ended December 31,
(In thousands)	2018		2017		2016
Internal Costs:
Cancer biology, pathology and toxicology	$	7,145	$	12,027	$	17,404
Molecular and cellular biology		6,256		6,660		7,886
Process development and manufacturing		3,630		3,612		6,018
Product development		5,864		8,817		11,751
Subtotal internal costs		22,895		31,116		43,059
External Program Costs:
Manufacturing		3,121		4,334		16,766
Clinical		6,392		20,456		40,810
Translational medicine		1,590		2,807		4,500
Toxicology		445		1,126		4,578
Subtotal external program costs		11,548		28,723		66,654
Total research and development expense	$	34,443	$	59,839	$	109,713

Our research and development expenses decreased from 2018 to 2017 as we discontinued development of multiple therapeutic product candidates. The process of conducting preclinical studies and clinical trials necessary to obtain regulatory approval is costly and time-consuming. We or our current or future partners may never succeed in achieving marketing approval for any of our therapeutic candidates. The probability of success of each therapeutic candidate may be affected by numerous factors, including preclinical data, clinical data, competition, manufacturing capability and commercial viability.

For the biologic programs covered under our strategic alliance with Celgene, we are responsible for development that we choose to undertake of each therapeutic candidate prior to the exercise of Celgene’s option for the applicable program. Celgene may exercise such option on a program-by-program basis during time periods through the earlier of completion of certain clinical trials or the twelfth anniversary of the date of our collaboration agreement. As of December 31, 2018, the etigilimab program is the only program remaining under the collaboration. During the fourth quarter of 2018, we evaluated the development program status of the product candidates under the collaboration agreement with Celgene and determined that the clinical data we have obtained to date supported a revision in our estimate of the remaining period of performance up to the first quarter of 2019. If Celgene exercises its option for the etigilimab program, we will enter into a license agreement with Celgene for etigilimab whereupon Celgene would be responsible for all further development costs.

Our product development programs are at an early stage; therefore, the successful development of our therapeutic candidates is highly uncertain and may not result in approved products. Completion dates and completion costs can vary significantly for each therapeutic candidate and are difficult to predict. We may need to raise additional capital or may seek additional strategic alliances in the future in order to complete the development and commercialization of our therapeutic candidates.

General and Administrative

Our general and administrative expenses consist primarily of personnel costs, allocated facilities-related expenses, depreciation of capital equipment and other expenses for outside professional services.  Personnel costs consist of salaries, benefits and stock-based compensation. General and administrative personnel include our executive, finance, human resources, information technology and legal organizations.  Our professional fees principally consist of outside legal, human resource, audit, tax and accounting services and other consulting costs.

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Since becoming a public company in 2013, we have incurred and expect to continue to incur additional expenses required of public companies, including costs to comply with the rules and regulations applicable to companies listed on a national securities exchange and costs related to compliance and reporting obligations pursuant to the rules and regulations of the SEC. Other related public company costs include increased expenses for additional insurance, investor relations and other needs for human resources and professional services.

Restructuring Charges

Restructuring charges relate to severance, other one-time benefits and other employee related charges as a result of the restructuring plan that we implemented in December 2018 and April 2017.

Interest and Other Income (Expense), net

Interest and other income (expense), net consists primarily of interest received on our cash, cash equivalents and short-term investments balances.

Provision for Income Taxes

For the year ended December 31, 2018, we recorded an income tax benefit of $0.4 million in the statement of operations as a result of a lapse of statute of limitations on uncertain tax positions. For the year ended December 31, 2017, we recorded an income tax benefit of $1.1 million due to an AMT refundable credit as a result of the Tax Cuts and Jobs Act (“Tax Act”), enacted on December 22, 2017. For the year ended December 31, 2016, we recorded tax expense of $14,000 due to interest on uncertain tax positions.

On December 22, 2017, the Tax Act was signed into law making significant changes to the Internal Revenue Code. Changes included the reduction of the federal corporate income tax rate from 35% to 21% and the repeal of corporate AMT. We recorded $1.1 million as income tax benefit in the fourth quarter of 2017, the period in which the legislation was enacted. We expect a portion of the AMT to be refunded in the following 12 months.  

On December 22, 2017, SEC Staff Accounting Bulletin No. 118 (SAB 118) was issued to address the application of US GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Act. The impact of the Act was finalized during the year ended December 31, 2018, and no change was made from the previously reported provisional amount.

We estimate our income tax provision, including deferred tax assets and liabilities, based on significant management judgment. We evaluate the realization of all or a portion of our deferred tax assets on a quarterly basis. We record a valuation allowance to reduce our deferred tax assets to the amounts that are more likely than not to be realized. We consider future taxable income, ongoing tax planning strategies and our historical financial performance in assessing the need for a valuation allowance. If we expect to realize deferred tax assets for which we have previously recorded a valuation allowance, we will reduce the valuation allowance in the period in which such determination is first made. Our future effective income tax rate may be affected by such factors as changes in tax laws, regulations or rates, changing interpretation of existing laws or regulations, the impact of accounting for stock-based compensation and changes in overall levels of income before tax.

We record liabilities related to uncertain tax positions in accordance with the guidance that clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements by prescribing a minimum recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

At December 31, 2018 and 2017, we had total federal and state unrecognized tax benefits of $17.0 million and $16.7 million, respectively. Of the total unrecognized tax benefits, $16.2 million and $15.9 million at December 31, 2018 and 2017, respectively, if recognized, in the absence of a valuation allowance, would reduce our effective tax rate in the period of recognition. As of December 31, 2018, we do not believe that it is reasonably possible that our unrecognized tax benefits will significantly change in the next 12 months.

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Results of Operations

Comparison of the Years Ended December 31, 2018 and 2017

	Year Ended December 31,						Dollar
(In thousands)	2018			2017			Change
Revenue:
Collaboration revenue	$	44,421		$	36,016		$	8,405
Other revenue		—			2,138			(2,138	)
Total revenue		44,421			38,154			6,267
Operating expenses:
Research and development		34,443			59,839			(25,396	)
General and administrative		18,172			16,761			1,411
Restructuring charges		1,851			2,527			(676	)
Total operating expenses		54,466			79,127			(24,661	)
Loss from operations		(10,045	)		(40,973	)		30,928
Interest and other income, net		1,562			828			734
Loss before income taxes		(8,483	)		(40,145	)		31,662
Income tax provision (benefit)		(382	)		(1,083	)		701
Net loss	$	(8,101	)	$	(39,062	)	$	30,961

Revenue

Total revenue for the year ended December 31, 2018 was $44.4 million, an increase of $6.2 million, or 16%, compared to $38.2 million for the year ended December 31, 2017. Effective January 1, 2018, we adopted Accounting Standards Codification, Topic 606, Revenue from Contracts with Customers, using the modified retrospective method for our collaboration agreement with Celgene. Under this method, the impact of the transition is reflected in the opening balance of the accumulated deficit as of January 1, 2018, while the prior period revenue amounts are not adjusted. For the year ended December 31, 2018, under Topic 606, we recognized collaboration revenue of $44.4 million based on a measure of progress toward the completion of the performance obligation. For the year ended December 31, 2017, we recognized collaboration revenue of $36.0 million on a straight-line basis as permitted by the legacy revenue recognition guidance. For further discussion regarding our revenue recognition policy, see Note 2 to our Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.

Research and Development

Research and development expenses were $34.4 million for the year ended December 31, 2018, a decrease of $25.4 million, or 42%, compared to $59.8 million for the year ended December 31, 2017. The decrease was comprised of a $17.2 million decrease in our external program costs and an $8.2 million decrease in our internal program costs.

The decrease in external costs of $17.2 million for the year ended December 31, 2018 compared to the year ended December 31, 2017 was primarily due to decreases in clinical study costs of $14.1 million as a result of the discontinuation of various clinical programs in 2018. The decrease in internal costs of $8.2 million for the year ended December 31, 2018 compared to the year ended December 31, 2017 was due to overall decrease in activity and spend on our clinical programs. We expect that our research and development expenses will continue to decrease as our clinical development activities decrease.

General and Administrative

General and administrative expenses were $18.2 million for the year ended December 31, 2018, an increase of $1.4 million, or 8%, compared to $16.8 million for the year ended December 31, 2017. The increase is primarily due to increases in consulting costs and outside professional fees of $1.2 million and transaction costs of $1.8 million incurred as a result of the Merger Agreement entered into with Mereo in the fourth quarter of 2018. The increase in

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general and administrative expenses was offset by decreases in legal cost of $0.7 million and payroll-related expense of $1.1 million as a result of the reduction in force implemented in April 2017.

Restructuring Charges

Restructuring charges were $1.9 million and $2.5 million for the year ended December 31, 2018 and 2017, respectively. The restructuring costs are related to severance, other one-time benefits and other employee related charges as a result of the restructuring plan that we implemented in December 2018 and April 2017.

Interest and Other Income (Expense), net

Interest and other income (expense), net was $1.5 million for the year ended December 31, 2018, a change of $0.7 million, compared to $0.8 million for the year ended December 31, 2017. The change was due to interest earned on cash, cash equivalents and short-term investments during the year.

Comparison of the Years Ended December 31, 2017 and 2016

	Year Ended December 31,						Dollar
(In thousands)	2017			2016			Change
Revenue:
Collaboration revenue	$	36,016		$	21,277		$	14,739
Other revenue		2,138			3,876			(1,738	)
Total revenue		38,154			25,153			13,001
Operating expenses:
Research and development		59,839			109,713			(49,874	)
General and administrative		16,761			18,827			(2,066	)
		2,527			—			2,527
Total operating expenses		79,127			128,540			(49,413	)
Loss from operations		(40,973	)		(103,387	)		62,414
Interest and other income (expense), net		828			299			529
Loss before income taxes		(40,145	)		(103,088	)		62,943
Income tax provision (benefit)		(1,083	)		14			(1,097	)
Net loss	$	(39,062	)	$	(103,102	)	$	64,040

Revenue

Total revenue for the year ended December 31, 2017 was $38.2 million, an increase of $13.0 million, or 52%, compared to $25.2 million for the year ended December 31, 2016. Revenue recognized during 2017 from amortization of upfront fees amounted to $36.0 million, an increase of $14.7 million compared to $21.3 million for the year ended December 31, 2016. The increase in collaboration revenue was due to an increase of $15.5 million in amortization of upfront fees from our partnership with Celgene as a result of the revision of the estimated period of performance.  In the fourth quarter of 2017, the Company evaluated the status of its obligations to Celgene and determined that the estimated period to complete the Company’s performance of all remaining obligations was in the third quarter of 2019. Accordingly, the estimated period of performance was revised to two years, up to the third quarter of 2019. The Company will recognize the remaining unamortized portion of deferred revenue over the revised estimated period of performance on a prospective basis.

Other revenue for the year ended December 31, 2017 decreased by $1.7 million compared to $3.9 million for the year ended December 31, 2016 due to lower reimbursement of research and development costs for services performed in 2017.

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Research and Development

Research and development expenses were $59.8 million for the year ended December 31, 2017, a decrease of $49.9 million, or 45%, compared to $109.7 million for the year ended December 31, 2016. The decrease was comprised of a $37.9 million decrease in our external program costs and an $11.9 million decrease in our internal program costs.

The decrease in our external program costs of $37.9 million was primarily due to a decrease of $20.2 million in clinical study costs resulting from discontinuation of dosing of all patients in our demcizumab and tarextumab programs. The decrease in manufacturing costs of $12.4 million and toxicology cost of $3.5 million was mainly related to our GITRL-Fc and anti-TIGIT programs due to the timing of production of materials used in clinical studies of these programs and the discontinuation of our demcizumab program in 2017.

The decrease in our internal costs by $11.9 million was primarily due to a decrease of $5.8 million in personnel costs, including a decrease in stock-based compensation of $1.0 million, as a result of our reduced headcount following our restructuring actions in April 2017, a decrease of $2.1 million in regulatory, clinical consulting costs and outside professional fees, and a decrease of $1.5 million in laboratory supplies as a result of an overall decrease in activity and spend on our clinical programs. We expect that our research and development expenses will continue to decrease as our clinical development activities decrease.

General and Administrative

General and administrative expenses were $16.7 million for the year ended December 31, 2017, a decrease of $2.1 million, or 11%, compared to $18.8 million for the year ended December 31, 2016. The decrease is primarily due to a decrease of $2.0 million in personnel costs, including a decrease in stock-based compensation of $0.7 million, as a result of our reduced headcount following the restructuring plan that we implemented in April 2017.

Restructuring Charges

Restructuring charges were $2.5 million for the year ended December 31, 2017 related to severance, other one-time benefits and other employee related charges as a result of the restructuring plan that we implemented in April 2017.

Interest and Other Income (Expense), net

Interest and other income (expense), net was $0.8 million for the year ended December 31, 2017, a change of $0.5 million, compared to $0.3 million for the year ended December 31, 2016. The change was primarily due to interest earned on cash, cash equivalents and short-term investments during the year.  

Liquidity and Capital Resources

As of December 31, 2018, we had cash, cash equivalents and short term investments totaling $57.3 million.

In June 2015, we filed a shelf registration statement on Form S-3 (File No. 333-204914), which permitted: (a) the offering, issuance and sale by us of up to a maximum aggregate offering price of $250.0 million of our common stock, preferred stock, debt securities, warrants, purchase contracts and/or units; and (b) as part of the $250.0 million, the offering, issuance and sale by us of up to a maximum aggregate offering price of $50.0 million of our common stock could have been issued and sold under a sales agreement with Cantor Fitzgerald & Co. in one or more at-the-market offerings. Through December 31, 2017, we sold 743,987 shares pursuant to our at-the-market program at a weighted average price of $8.93 per share, resulting in aggregate net proceeds to us of $6.5 million, net of offering costs.

On August 23, 2016, we closed the sale of an aggregate of 6,325,000 shares of our common stock at a public offering price of $10.00 per share. The shares were issued pursuant to a prospectus supplement filed with the SEC

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on August 17, 2016, and related prospectus, pursuant to the shelf registration statement. We received net offering proceeds of approximately $59.2 million, net of underwriting discounts and commissions and offering costs.

In May 2018, we filed a new shelf registration statement on Form S-3 (File No. 333-225225) that permits: (a) the offering, issuance and sale by us of up to a maximum aggregate offering price of $150.0 million of our common stock, preferred stock, debt securities, warrants and/or units; and (b) as part of the $150.0 million, the offering, issuance and sale by us of up to a maximum aggregate offering price of $30.0 million of our common stock that may be issued and sold under our sales agreement with Cantor Fitzgerald & Co. in one or more at-the-market offerings. As of December 31, 2018, we have not sold any securities pursuant to this shelf registration statement. Following the effectiveness of this shelf registration statement on Form S-3 in June 2018, no additional securities covered by the prior shelf registration statement on Form S-3 (File No. 333-204914) shall be offered or sold.

Our primary uses of cash are to fund operating expenses. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable and accrued expenses.

We believe that our existing cash, cash equivalents and short-term investments as of December 31, 2018 will be sufficient to meet our anticipated cash requirements through at least the first quarter of 2020, even without taking into account potential future milestone payments to us. However, our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially.

Our future capital requirements are difficult to forecast and will depend on many factors, including:

• the achievement of milestones and/or exercise of the etigilimab option under our agreement with  Celgene or the achievement of milestones and/or advancement of the small molecule programs into further development and potential commercialization under our agreement with Bayer;

• the initiation, progress, timing and completion of clinical trials for our therapeutic candidates;

• the number and characteristics of therapeutic candidates that we pursue;

• the progress, costs and results of our clinical trials;

• the outcome, timing and cost of regulatory approvals;

• delays that may be caused by changing regulatory requirements;

• funding we may receive under any new collaborations we may enter into or new government grants we may be awarded in the future;

• the costs and timing of hiring new employees to support any future growth; and

• the costs and timing of procuring clinical supplies of our therapeutic candidates.

The following table summarizes our cash flows for the periods indicated:

	Year Ended December 31,
(In thousands)	2018			2017			2016
Cash used in operating activities	$	(44,862	)	$	(84,970	)	$	(36,936	)
Cash provided by (used in) investing activities		41,182			57,250			(29,703	)
Cash provided by financing activities		89			4,044			65,148

Cash Flows from Operating Activities

Cash used in operating activities for the year ended December 31, 2018 was $44.9 million. The net loss of $8.1 million was offset by non-cash charges of $1.7 million for depreciation and amortization and $6.8 million for stock-based compensation expense. The change in net operating assets of $45.3 million was due primarily to a decrease in accrued clinical liabilities of $1.7 million due to the decrease in our clinical development activities, and

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a decrease in deferred revenue of $44.4 million due to the amortization of upfront payments from our current collaboration arrangements with Celgene.

Cash used in operating activities for the year ended December 31, 2017 was $85.0 million. The net loss of $39.1 million was offset by non-cash charges of $1.7 million for depreciation and amortization and $9.4 million for stock-based compensation expense. The change in net operating assets of $57.0 million was due primarily to a decrease in accounts payable of $2.3 million and accrued liabilities and income tax payable of $4.6 million due to the timing of vendor payments, a decrease in accrued clinical liabilities of $17.4 million due to the decrease in our clinical development activities, and a decrease in deferred revenue of $36.0 million due to the amortization of upfront payments from our prior and current collaboration arrangements with GSK, Bayer and Celgene.

Cash used in operating activities for the year ended December 31, 2016 was $36.9 million. The net loss of $103.1 million was offset by non-cash charges of $1.8 million for depreciation and amortization and $11.1 million for stock-based compensation expense. The change in net operating assets of $53.3 million was due primarily to a decrease of $68.2 million in accounts receivable as a result of collection in 2016 of payments related to the achievement of the $70.0 million safety milestone during 2015 from Celgene based on an analysis of Phase Ib and blinded interim Phase II clinical trial safety data associated with the demcizumab (anti-DLL4, OMP-21M18) program. The decrease in deferred revenue is due to the amortization of upfront and milestone payments from our prior and current collaboration arrangements with GSK, Bayer and Celgene in the amount of $21.3 million. The remaining net change in operating assets which increased cash was a result of an increase in accrued clinical liabilities of $9.6 million offset by a decrease in accounts payable of $1.8 million and accrued liabilities of $3.1 million due to timing of payments.

Cash Flows from Investing Activities

Cash provided by (used in) investing activities for the years ended December 31, 2018, 2017 and 2016 was comprised of purchases of short-term investments amounting to $82.3 million, $127.4 million and $207.3 million, respectively, offset by maturities of short-term investments amounting to $124.1 million, $185.2 million and $178.7 million, respectively. Acquisition of property and equipment for the years ended December 31, 2018, 2017 and 2016, amounted to $0.7 million, $0.6 million and $1.2 million, respectively.

Cash Flows from Financing Activities

Cash provided by financing activities for the year ended December 31, 2018 was comprised of aggregate net proceeds of $89,000 received from issuance of common stock related to employee stock plan purchases.

Cash provided by financing activities for the year ended December 31, 2017 was comprised of aggregate net proceeds of $1.7 million received from our at-the-market offering program and $2.3 million received from issuance of common stock upon the exercise of stock options and employee stock plan purchases.

Cash provided by financing activities for the year ended December 31, 2016 was comprised of aggregate net proceeds of $59.2 million received from the sale of shares of our common stock through our underwritten public offering that closed on August 23, 2016 and $4.7 million from our at-the-market offering program, and $1.2 million received from the issuance of common stock upon the exercise of stock options and employee stock plan purchases.

Contractual Obligations and Other Commitments

The following table summarizes our contractual obligations as of December 31, 2018:

	Payments Due by Period
(In thousands)	Less than 1 year		2 to 3 Years		4 to 5 Years		More Than 5 Years		Total
Operating leases, net of    sublease income (1)	$	776	$	4,217	$	5,428	$	13,382	$	23,803

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⁽¹⁾Operating leases include total future non-cancelable obligations under our operating lease agreement. The amounts set forth in the table above are net of sublease income of $1.6 million and $0.8 million for the years ended December 31, 2019 and 2020.

The Company leases office and laboratory facilities in Redwood City, California under a lease agreement that was originally set to expire in January 2019 and included a lease extension option for two additional three-year terms. During the fourth quarter of 2016, the Company signed an amendment to the lease agreement to extend the lease term through May 2028, with an option to extend the lease for an additional three-year term.

The amendment to the lease agreement includes a 10-year cancelable lease agreement for additional office and laboratory space that expires in May 2028, subject to the Company’s three-year lease extension option described above. The Company exercised its right to terminate the lease agreement for this additional space in September 2017. The exercise of such cancelation did not result in an economic penalty to the Company.

In October 2018 and January 2019, the Company subleased a specified portion of the Company’s office facility located in Redwood City, California. These subleases are cancellable and have terms of 12 to 24 months up to 2020. The aggregate sublease proceeds are $1.6 million and $0.8 million for the years ending December 31, 2019 and 2020, respectively.

Off-Balance Sheet Arrangements

As of December 31, 2018, we did not have any off-balance sheet arrangements or any holdings in variable interest entities.

Critical Accounting Polices and Estimates

Our financial statements are prepared in accordance with generally accepted accounting principles in the United States, or GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. In many instances, we could have reasonably used different accounting estimates, and in other instances changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly, actual results could differ significantly from the estimates made by our management. To the extent that there are material differences between these estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected. We believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates. See Note 2 to Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for a summary of significant accounting policies and the effect on our financial statements.

Revenue Recognition

We generate substantially all of our revenue from collaborative research and development agreements with pharmaceutical companies. Under collaboration agreements, we may receive non-refundable upfront payments, funding for research and development services, milestones, other contingent payments and royalties.

Effective January 1, 2018, we adopted Topic 606 using the modified retrospective transition method. Under this method, we recorded a cumulative adjustment to the opening balance of accumulated deficit and to deferred revenue. Under Topic 606, we recognize revenue when we transfer control of promised goods or services to our customers in an amount that reflects the consideration which we expect to receive in exchange for those goods or services. To determine revenue recognition for arrangements that we determine are within the scope of Topic 606, we perform the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. We

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only apply the five-step model to contracts when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer to the customer. At contract inception, once a contract is determined to be within the scope of Topic 606, we assess the goods or services promised within the contract and determine those that are performance obligations, and assess whether each promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

We evaluated our existing contracts and only applied Topic 606 to those contracts that were not completed at January 1, 2018. As a result of this evaluation, we determined that only our collaboration with Celgene is within the scope of Topic 606 and concluded that Celgene is a customer. The Company determined that its performance obligation under the arrangement with Celgene is research and development services. As part of the promised research and development services, the Company may provide the resultant data to Celgene to assist Celgene in determining whether or not to exercise its options. Under the arrangement, Celgene has options to further develop and commercialize biologic therapeutics in each program under the collaboration, which may be exercised during time periods specified in the agreement. Upon Celgene’s exercise of its option for certain programs, the Company may, at its discretion, gain co-development and co-commercialization rights and corresponding obligations. The Company determined that the exclusive option(s) provided to Celgene is not a material right under Topic 606 and thus it is not a performance obligation. Based on its assessment, the Company has identified the research and development services as the only performance obligation at the inception of the collaboration agreement.

The terms of our arrangement with Celgene include payments by Celgene of a non-refundable upfront fee; potential development, regulatory and sales milestones; program opt-in payments; and royalties on net product sales. Each of these payments results in collaboration revenue, except for revenues from royalties on net product sales, which would be classified as royalty revenues. Prior to recognizing revenue, we estimate the transaction price, including variable consideration that is subject to a constraint. Amounts of variable consideration are included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Variable consideration includes payments based upon the achievement of specified milestones, and royalty payments based on product sales derived from the collaboration. Under the collaboration agreement, we determined that the non-refundable upfront cash payment of $155.0 million and stock premium of $1.7 million received in December 2013, the $70.0 million demcizumab (anti-DLL4, OMP-21M18) safety milestone that was achieved in December 2015 and the two designation milestone payments of $2.5 million each for the designation of rosmantuzumab and etigilimab as clinical candidates in 2014 and 2015, respectively, constitute consideration to be included in the transaction price. The total consideration received of $231.7 million constitutes the transaction price at the transition date for Topic 606.

We apply the five-step model in determining the appropriate amount of revenue to be recognized as we fulfill our obligations under our collaboration agreement with Celgene. As part of the accounting for this arrangement, we must develop assumptions that require judgment to determine the stand-alone selling price for each performance obligation identified in the contract. We also must develop assumptions that require judgment in determining the measure of progress used to recognize revenue. Under Topic 606, we recognize collaboration revenue by measuring the progress toward complete satisfaction of the performance using an input measure. We concluded the method that best correlates with progress of the services provided to Celgene is the input method, based on actual costs incurred to date compared to the overall total expected costs to satisfy the performance obligation. We evaluate the estimate of expected costs to satisfy the performance obligation each reporting period and make adjustments for any significant changes.

Amounts received prior to satisfying the revenue recognition criteria are recorded as deferred revenue in our balance sheets. Amounts expected to be recognized as revenue within the 12 months following the balance sheet date are classified as current liabilities.

We recognize revenue for reimbursements of research and development costs as the services are performed. The reimbursement of research and development costs has been excluded from the transaction price, as the performance of these research and development services was at our discretion and is not a commitment or performance obligation pursuant to the Celgene collaboration agreement.  

92

Preclinical Studies and Clinical Trial Accruals

We estimate our preclinical studies and clinical trial expenses based on the services performed pursuant to contracts with research institutions and clinical research organizations that conduct these activities on our behalf. In recording service fees, we estimate the time period over which the related services will be performed and compare the level of effort expended through the end of each period to the cumulative expenses recorded and payments made for such services and, as appropriate, accrue additional service fees or defer any non-refundable advance payments until the related services are performed. If the actual timing of the performance of services or the level of effort varies from the estimate, we will adjust our accrual or deferred advance payment accordingly. If we underestimate or overestimate the level of services performed or the costs of these services, our actual expenses could differ from our estimates. To date, we have not experienced significant changes in our estimates of preclinical studies and clinical trial accruals.

Stock-Based Compensation

We recognize compensation costs related to stock options granted to employees based on the estimated fair value of the awards on the date of grant, net of estimated forfeitures. We estimate the grant date fair value, and the resulting stock-based compensation expense, using the Black-Scholes option-pricing model. The grant date fair value of the stock-based awards is generally recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the respective awards. Stock-based compensation expense was $6.8 million, $9.4 million and $11.1 million for the years ended December 31, 2018, 2017 and 2016, respectively.

The Black-Scholes option-pricing model requires the use of highly subjective and complex assumptions which determine the fair value of stock-based awards, including the expected term and the price volatility of the underlying stock. These assumptions include:

• Expected term—The expected term represents the period that the stock-based awards are expected to be outstanding. We used the simplified method to determine the expected terms as provided by the SEC. The simplified method calculates the expected term as the average of the time-to-vesting and the contractual life of the options.

• Volatility—The expected volatility is derived from a blend of the historical volatilities of the Company’s own common stock and of the common stock of comparable publicly listed biopharmaceutical companies over a period approximately equal to the expected term of the stock option grants because we have limited information on the volatility of our common stock due to no significant trading history. The comparable companies were chosen based on their similar size, stage in the life cycle, and financial leverage in comparison to us.

• Risk-free interest rate—The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant for zero coupon U.S. Treasury notes with maturities approximately equal to the expected term of the awards.

• Expected dividend—The expected dividend is assumed to be zero as we have never paid dividends and have no current plans to pay any dividends on our common stock.

In addition to the assumptions used in the Black-Scholes option-pricing model, we must also estimate a forfeiture rate to calculate the stock-based compensation for our awards. We continue to use judgment in evaluating the expected volatility and forfeiture rates used for our stock-based compensation calculations on a prospective basis. As we continue to accumulate additional data related to our common stock, we may have refinements to the estimates of our expected volatility, expected terms, and forfeiture rates, which could materially impact our future stock-based compensation expense.

Provision for Income Taxes

We estimate our income tax provision, including deferred tax assets and liabilities, based on significant management judgment. We evaluate the realization of all or a portion of our deferred tax assets on a quarterly basis. We record a valuation allowance to reduce our deferred tax assets to the amounts that are more likely than not to be realized. We consider future taxable income, ongoing tax planning strategies and our historical financial

93

performance in assessing the need for a valuation allowance. If we expect to realize deferred tax assets for which we have previously recorded a valuation allowance, we will reduce the valuation allowance in the period in which such determination is first made. Our future effective income tax rate may be affected by such factors as changes in tax laws, regulations or rates, changing interpretation of existing laws or regulations, the impact of accounting for stock-based compensation and changes in overall levels of income before tax.

We record liabilities related to uncertain tax positions in accordance with the guidance that clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements by prescribing a minimum recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

Newly Adopted and Recent Accounting Pronouncements

Refer to Newly Adopted and Recent Accounting Pronouncements in Note 2 to our Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risks in the ordinary course of our business. These risks primarily include risk related to interest rate sensitivities and foreign currency exchange rate sensitivity.

Interest Rate Sensitivity

We had cash and short-term investments of $57.3 million and $103.1 million as of December 31, 2018 and 2017, respectively, which consisted of bank deposits and U.S. Treasury Bills. Such interest-earning instruments carry a degree of interest rate risk; however, historical fluctuations in interest income have not been significant. We had no outstanding debt as of December 31, 2018 or 2017.

We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure. We have not been exposed nor do we anticipate being exposed to material risks due to changes in interest rates. A hypothetical 10% change in interest rates during any of the periods presented would not have had a material impact on our financial statements. There have been no material quantitative changes in our market risk exposures between the current fiscal year and preceding fiscal years.

Foreign Currency Exchange Rate Sensitivity

We face foreign exchange risk as a result of entering into transactions denominated in currencies other than U.S. dollars, particularly in Euro and British Sterling. Due to the uncertain timing of expected payments in foreign currencies, we do not utilize any forward foreign exchange contracts, nor did we in the year ended December 31, 2018. In the years ended December 31, 2018 and 2017, all foreign transactions settled on the applicable spot exchange basis at the time such payments were made.

An adverse movement in foreign exchange rates could have a material effect on payments we make to foreign suppliers. The impact of an adverse change in foreign exchange rates may be offset in the event we receive a milestone payment from a foreign partner. A hypothetical 10% change in foreign exchange rates during any of the preceding periods presented would not have a material impact on our financial statements. There have been no material quantitative changes in our market risk exposures between the current fiscal year and preceding fiscal years.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

ONCOMED PHARMACEUTICALS, INC.

Index to Financial Statements

Report of Independent Registered Public Accounting Firm	96
Financial Statements:
Balance Sheets	97
Statements of Operations	98
Statements of Comprehensive Loss	99
Statements of Stockholders’ Equity (Deficit)	100
Statements of Cash Flows	101
Notes to the Financial Statements	102

95

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of OncoMed Pharmaceuticals, Inc.

Opinion on the Financial Statements

We have audited the accompanying balance sheets of OncoMed Pharmaceuticals, Inc. (the Company) as of December 31, 2018 and 2017, the related statements of operations, comprehensive loss, stockholders’ equity (deficit) and cash flows for each of the three years in the period ended December 31, 2018, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 7, 2019 expressed an unqualified opinion thereon.

Adoption of ASU No. 2014-09

As discussed in Note 2 to the financial statements, the Company changed its method for recognizing revenue as a result of the adoption of Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), effective January 1, 2018.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.  

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2005.

Redwood City, California

March 7, 2019

96

OncoMed Pharmaceuticals, Inc.

Balance Sheets

(In thousands, except share and per share data)

	December 31,
	2018			2017
Assets
Current assets:
Cash and cash equivalents	$	9,686		$	13,277
Short-term investments		47,659			89,814
Accounts receivable and other receivables		3,026			405
Prepaid and other current assets		1,913			1,709
Assets held for sale		1,443			—
Total current assets		63,727			105,205
Property and equipment, net		623			3,275
Other assets		728			1,842
Total assets	$	65,078		$	110,322
Liabilities and stockholders' deficit
Current liabilities:
Accounts payable	$	1,787		$	2,565
Accrued liabilities		4,368			3,940
Accrued clinical liabilities		2,736			4,434
Current portion of deferred revenue		3,697			82,193
Current portion of deferred rent		56			—
Total current liabilities		12,644			93,132
Deferred revenue, less current portion		—			61,645
Deferred rent, less current potion		4,103			3,765
Noncurrent income tax payable		—			383
Other liabilities		100			—
Total liabilities		16,847			158,925
Commitments and contingencies (Note 7)
Stockholders’ equity (deficit):
Preferred stock, $0.001 par value; 5,000,000 shares authorized    at December 31, 2018 and 2017; no shares issued    and outstanding at December 31, 2018 and 2017		—			—
Common stock, $0.001 par value; 145,000,000 shares authorized at    December 31, 2018 and 2017; 38,660,146 and 38,212,505 shares    issued and outstanding at December 31, 2018 and 2017, respectively		38			38
Additional paid-in capital		410,008			403,077
Accumulated other comprehensive (loss) income		(29	)		289
Accumulated deficit		(361,786	)		(452,007	)
Total stockholders’ equity (deficit)		48,231			(48,603	)
Total liabilities and stockholders’ equity (deficit)	$	65,078		$	110,322

See accompanying notes to the financial statements.

97

OncoMed Pharmaceuticals, Inc.

Statements of Operations

(In thousands, except share and per share data)

	Year Ended December 31,
	2018			2017			2016
Revenue:
Collaboration revenue	$	44,421		$	36,016		$	21,277
Other revenue		—			2,138			3,876
Total revenue		44,421			38,154			25,153
Operating expenses:
Research and development		34,443			59,839			109,713
General and administrative		18,172			16,761			18,827
Restructuring charges		1,851			2,527			—
Total operating expenses		54,466			79,127			128,540
Loss from operations		(10,045	)		(40,973	)		(103,387	)
Interest and other income, net		1,562			828			299
Loss before income taxes		(8,483	)		(40,145	)		(103,088	)
Income tax provision (benefit)		(382	)		(1,083	)		14
Net loss	$	(8,101	)	$	(39,062	)	$	(103,102	)
Net loss per common share, basic and diluted	$	(0.21	)	$	(1.04	)	$	(3.14	)
Shares used to compute net loss per common    share, basic and diluted		38,442,994			37,631,348			32,859,554

See accompanying notes to the financial statements.

98

OncoMed Pharmaceuticals, Inc.

Statements of Comprehensive Loss

(In thousands)

	Year Ended December 31,
	2018			2017			2016
Net loss	$	(8,101	)	$	(39,062	)	$	(103,102	)
Other comprehensive income (loss):
Unrealized gain (loss) on available-for-sale securities,    net of tax		(318	)		29			240
Total comprehensive loss	$	(8,419	)	$	(39,033	)	$	(102,862	)

See accompanying notes to the financial statements.

99

OncoMed Pharmaceuticals, Inc.

Statements of Stockholders’ Equity (Deficit)

(In thousands, except share data)

							Accumulated						Total
					Additional		Other						Stockholders’
	Common Stock				Paid-In		Comprehensive			Accumulated			Equity
	Shares		Amount		Capital		(Loss) Income			Deficit			(Deficit)
Balances at December 31, 2015		30,116,633	$	30	$	313,344	$	20		$	(309,843	)	$	3,551
Issuance of common stock upon    public offering, net of    offering costs		6,325,000		7		59,163		—			—			59,170
Issuance of common stock    under At-the-Market    Agreement, net of offering    costs		388,166		—		4,739		—			—			4,739
Issuance of common stock    related to stock incentive    plans		284,790		—		1,243		—			—			1,243
Stock-based compensation		—		—		11,131		—			—			11,131
Net unrealized gain on    available-for-sale securities		—		—		—		240			—			240
Net loss		—		—		—		—			(103,102	)		(103,102	)
Balances at December 31, 2016		37,114,589		37		389,620		260			(412,945	)		(23,028	)
Issuance of common stock    under At-the-Market    Agreement, net of offering    costs		355,821		—		1,701		—			—			1,701
Issuance of common stock    related to stock incentive    plans		742,095		1		2,342		—			—			2,343
Stock-based compensation		—		—		9,414		—			—			9,414
Net unrealized gain on    available-for-sale securities		—		—		—		29			—			29
Net loss		—		—		—		—			(39,062	)		(39,062	)
Balances at December 31, 2017		38,212,505	$	38	$	403,077	$	289		$	(452,007	)		(48,603	)
Adoption of ASU 2014-09,    Revenue from Contracts with    Customers (Topic 606)		—		—		—		—			98,322			98,322
Issuance of common stock    related to stock incentive    plans		447,641		—		89		—			—			89
Stock-based compensation		—		—		6,842		—			—			6,842
Net unrealized loss on    available-for-sale securities		—		—		—		(318	)		—			(318	)
Net loss		—		—		—		—			(8,101	)		(8,101	)
Balances at December 31, 2018		38,660,146	$	38	$	410,008	$	(29	)	$	(361,786	)	$	48,231

See accompanying notes to the financial statements.

100

OncoMed Pharmaceuticals, Inc.

Statements of Cash Flows

(In thousands)

	Year Ended December 31,
	2018			2017			2016
Operating activities
Net loss	$	(8,101	)	$	(39,062	)	$	(103,102	)
Adjustments to reconcile net loss to net cash used in    operating activities:
Depreciation and amortization		1,691			1,710			1,764
Stock-based compensation		6,842			9,414			11,131
Changes in operating assets and liabilities:
Accounts receivable and other receivables		(19	)		2,110			68,184
Income tax refund receivable		—			(1,098	)		—
Prepaid and other current assets		(204	)		786			782
Other assets		1,114			684			379
Accounts payable		(778	)		(2,325	)		(1,770	)
Accrued liabilities, income tax payable    and other liabilities		318			(4,572	)		(3,115	)
Accrued clinical liabilities		(1,698	)		(17,420	)		9,633
Deferred revenue		(44,421	)		(36,045	)		(21,272	)
Deferred rent		394			848			450
Net cash used in operating activities		(44,862	)		(84,970	)		(36,936	)
Investing activities
Purchases of property and equipment		(655	)		(585	)		(1,158	)
Purchases of short-term investments		(82,305	)		(127,376	)		(207,283	)
Maturities of short-term investments		124,142			185,211			178,738
Net cash provided by (used in) investing activities		41,182			57,250			(29,703	)
Financing activities
Proceeds from issuance of common stock related to the    exercise of options and employee stock plan    purchases		89			2,343			1,239
Net proceeds from issuance of common stock under    At-the-market Agreement		—			1,701			4,739
Net proceeds from issuance of common stock upon    public offering		—			—			59,170
Net cash provided by financing activities		89			4,044			65,148
Net decrease in cash and cash equivalents		(3,591	)		(23,676	)		(1,491	)
Cash and cash equivalents  at beginning of year		13,277			36,953			38,444
Cash and cash equivalents at end of year	$	9,686		$	13,277		$	36,953
Supplemental cash flow information:
Accrued liabilities for purchase of property and    equipment	$	—		$	173		$	244

See accompanying notes to the financial statements.

101

OncoMed Pharmaceuticals, Inc.

Notes to the Financial Statements

1. Organization

OncoMed Pharmaceuticals, Inc. (“OncoMed”, the “Company”, “us”, “we”, or “our”) is a clinical-stage biopharmaceutical company focused on developing novel therapeutics that address the fundamental biology driving cancer’s growth, resistance, recurrence and metastasis. The Company currently has two therapeutic candidates in active clinical development targeting pathways regulating cancer, including cancer stem cell, or CSC, pathways or immuno-oncology. The Company’s operations are based in Redwood City, California and it operates in one segment.  

2. Summary of Significant Accounting Policies

Basis of Presentation

The Company’s financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, preclinical study and clinical trial accruals, fair value of assets and liabilities, stock-based compensation, restructuring charges and income taxes. Management bases its estimates on historical experience and on various other market-specific and relevant assumptions that management believes to be reasonable under the circumstances. Actual results may differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of 90 days or less at the date of purchase to be cash and cash equivalents.

Short-Term Investments

Short-term investments consist of debt securities classified as available-for-sale and have maturities greater than 90 days, but less than 365 days from the date of acquisition. Short-term investments are carried at fair value based upon quoted market prices. Unrealized gains and losses on available-for-sale securities are excluded from earnings and were reported as a component of accumulated other comprehensive income. The cost of available-for-sale securities sold is based on the specific-identification method.

Other Comprehensive (Loss) Income

Other comprehensive (loss) income includes certain changes in equity from non-owner sources that are excluded from net loss, specifically, unrealized gains and losses on available-for-sale investments and the related tax impact.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and short-term investments. Cash and short-term investments are invested through banks and other financial institutions in the United States. Such deposits may be in excess of insured limits. The Company maintains cash and investments with various high credit quality and capitalized financial institutions.

102

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization is calculated using the straight-line method over the estimated useful lives of the assets, which range from three to five years. Leasehold improvements are amortized over the shorter of their estimated useful lives or the remaining life of the lease at the time the asset is placed into service. In December 2018, the Company changed the estimated useful life of its leasehold improvements to better reflect the period during which these assets are expected to remain in service. The change in estimated useful life has been accounted for as a change in accounting estimate. The remaining carrying amounts of the leasehold improvements as of December 31, 2018 will be amortized prospectively over one year up to December 31, 2019. The change in estimated useful life increased loss from operations and net loss by approximately $26,000, or less than $0.01 per share, as reported in the Statement of Operations for the year ended December 31, 2018.

For assets held for sale, the property and equipment (the “disposal group”) are measured at the lower of their carrying amount or fair value less cost to sell. Losses are recognized for any initial or subsequent write-down to fair value less cost to sell, while gains are recognized for any subsequent increase in fair value less cost to sell, but not in excess of the cumulative loss previously recognized. Any gains or losses not previously recognized that result from the sale of the disposal group shall be recognized at the date of sale. Property and equipment are not depreciated while classified as held for sale. During the fourth quarter of 2018, certain property and equipment qualified as held for sale treatment. See Note 5 Property and Equipment, net to the Notes to Financial Statements.

Impairment of Long-Lived Assets

The carrying value of long-lived assets, including property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the asset may not be recoverable. An impairment loss is recognized when the total of estimated future undiscounted cash flows, expected to result from the use of the asset and its eventual disposition, are less than its carrying amount. Impairment, if any, would be assessed using discounted cash flows or other appropriate measures of fair value. Through December 31, 2018, there have been no such impairment losses.

Revenue Recognition

Effective January 1, 2018, the Company adopted Accounting Standards Codification, or ASC, Topic 606, Revenue from Contracts with Customers, using the modified retrospective transition method. Under this method, the Company recorded a cumulative adjustment to the opening balance of accumulated deficit and to deferred revenue. Under Topic 606, the Company recognizes revenue when it transfers control of promised goods or services to its customers in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of Topic 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once a contract is determined to be within the scope of Topic 606, the Company assesses the goods or services promised within the contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

The Company evaluated its existing contracts and only applied Topic 606 to those contracts that were not completed at January 1, 2018.  As a result of this evaluation, the Company determined that only its collaboration with Celgene Corporation (“Celgene”) is within the scope of Topic 606. The terms of this arrangement include payment to the Company of a non-refundable, upfront fee; potential development, regulatory and sales milestones; program opt-in payments; and royalties on net product sales. Each of these payments results in collaboration revenue, except for revenues from royalties on net product sales, which would be classified as royalty revenues. In determining the appropriate amount of revenue to be recognized as it fulfills its obligations under its collaboration agreement with Celgene, the Company applies the five-step model. As part of the accounting for this arrangement,

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the Company must develop assumptions that require judgment to determine the stand-alone selling price for each performance obligation identified in the contract. The Company also must develop assumptions that require judgment in determining the measure of progress used to recognize revenue.

Milestone Payments

At the inception of each arrangement that includes development, regulatory or commercial milestone payments, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant reversal of cumulative revenue would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the control of the Company or partner, such as regulatory approvals, are not considered probable of being achieved until those approvalsare received or the underlying activity has been completed. The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied. At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of such development milestones and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect collaboration revenues and earnings in the period of adjustment. 

Customer Concentration

Customers whose collaboration revenue accounted for 10% or more of total revenues were as follows:

	Year Ended December 31,
	2018	2017	2016
GlaxoSmithKline LLC (“GSK”)	—	*	*
Bayer Pharma AG (“Bayer”)	—	*	*
Celgene Corporation (“Celgene”)	100%	94%	87%

* less than 10%

Research and Development Expenses

Research and development costs are expensed as incurred. Research and development costs consist of salaries and other personnel-related expenses, including associated stock-based compensation, consulting fees, lab supplies, and facility costs, as well as fees paid to other entities that conduct certain research, development and manufacturing activities on behalf of the Company.

Clinical Trial Accruals

Clinical trial costs are a component of research and development expenses. The Company accrues and expenses clinical trial activities performed by third parties based upon actual work completed in accordance with agreements established with clinical research organizations and clinical sites. The Company determines the actual costs through discussions with internal personnel and external service providers as to the progress or stage of completion of trials or services and the agreed-upon fee to be paid for such services.

Nonrefundable advance payments for goods and services that will be used or rendered in future research and development activities, are deferred and recognized as expense in the period that the related goods are delivered or services are performed.

Stock-Based Compensation

The Company recognizes compensation expense for all share-based payment awards made to employees and directors based on estimated fair values. For employee stock options, the Company determines the grant date fair value of the awards using the Black-Scholes option-pricing model and generally recognizes the fair value as stock-based compensation expense on a straight-line basis over the vesting period of the respective awards. Stock-based

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compensation expense is based on the value of the portion of stock-based payment awards that is ultimately expected to vest. As such, the Company’s stock-based compensation is reduced for the estimated forfeitures at the date of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. For restricted stock, the compensation cost for these awards is based on the closing price of the Company’s common stock on the date of grant and recognized as compensation expense on a straight-line basis over the requisite service period.

In the second quarter of 2018, the Company early adopted ASU 2018-07, Stock Compensation. ASU 2018-07 clarifies the accounting for share-based payment transactions for acquiring goods and services from non-employees. Specifically, the standard aligns the accounting for payments to non-employees to match the accounting for payments to employees, and no longer accounting for these transactions differently. The adoption of the standard did not have material impact on the Company’s financial statements.

Leases

The Company rents its office space and facilities under cancelable and non-cancelable operating lease agreements and recognizes related rent expense on a straight-line basis over the term of the lease. The Company’s lease agreements contain rent holidays, scheduled rent increases, lease incentives and renewal options. Rent holidays and scheduled rent increases are included in the determination of rent expense to be recorded over the lease term. Lease incentives are recognized as a reduction of rent expense on a straight-line basis over the term of the lease. The Company does not assume renewals in its determination of the lease term unless they are deemed to be reasonably assured at the inception of the lease. The Company begins recognizing rent expense on the date that the Company obtains the legal right to use and control the leased space.

The Company entered into a sublease agreement during the fourth quarter of 2018. The Company records sublease income as a reduction of rent expense.

Restructuring Charges

Restructuring charges consist of severance, other one-time benefits and other employee related charges. Liabilities for costs associated with a restructuring activity are measured at fair value and are recognized when the liability is incurred. One-time termination benefits are expensed at the date the Company notifies the employee, unless the employee will continue to provide future services, in which case the benefits are expensed ratably over the future service period.

The Company continually evaluates the adequacy of the remaining liabilities under its restructuring initiatives. Although the Company believes that these estimates accurately reflect the costs of the Company’s restructuring plan, actual results may differ and thereby require the Company to record an additional provision or reverse a portion of such a provision.

Income Taxes

The Company accounts for income taxes using the liability method under which deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount which is more likely than not to be realizable.

The recognition, derecognition and measurement of a tax position is based on management’s best judgment given the facts, circumstances and information available at each reporting date. The Company’s policy is to recognize interest and penalties related to the underpayment of income taxes as a component of income tax expense. To date, there have been no interest or penalties charged in relation to the unrecognized tax benefits.

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Net Loss per Common Share

Basic net loss per common share is calculated by dividing the net loss by the weighted-average number of common shares outstanding during the period, without consideration for common stock equivalents. Diluted net loss per common share is computed by dividing the net loss by the weighted-average number of common shares and common share equivalents outstanding for the period determined using the treasury-stock method. For purposes of this calculation, potentially dilutive securities consisting of stock options and restricted stock units are considered to be common stock equivalents and were excluded in the calculation of diluted net loss per common share because their effect would be anti-dilutive for all periods presented.

Newly Adopted and Recent Accounting Pronouncements

Accounting Standard Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition.

In May 2014, the Financial Accounting Standards Board (“FASB”) issued a comprehensive new standard on revenue from contracts with customers, ASU No. 2014-09, Revenue from Contracts with Customers, or Topic 606.  The standard’s core principle is that a reporting entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Entities have the option of using either a full retrospective or a modified retrospective approach to adopt this new guidance. In 2016, the FASB updated the guidance for reporting revenue gross versus net to improve the implementation guidance on principal versus agent considerations, and for identifying performance obligations and the accounting of intellectual property licenses. In addition, the FASB introduced practical expedients and made narrow scope improvements to the new accounting guidance.

Collaboration with Celgene

The Company adopted the accounting standard update on January 1, 2018 using the modified retrospective approach, for its collaboration agreement with Celgene. Therefore, comparative historical information will not be adjusted and will continue to be reported under ASC 605 with the impact of the transition reflected in the opening balance of accumulated deficit as of January 1, 2018. The consideration the Company is eligible to receive under this agreement includes upfront payments, milestone payments and program opt-in payments. The new revenue recognition standard differs from ASC 605 in many respects, such as in the accounting for variable consideration and the measurement of progress toward completion of performance obligations. The most significant impact of the standard relates to the Company’s method of revenue recognition for performance obligations that are delivered over time. Under the new standard, milestone payments are included in the transaction price as variable consideration, subject to a constraint, and are allocated to the performance obligations in the contract when recognized. Through December 31, 2017, the Company also received payments from Celgene to reimburse the costs of research and development services performed by the Company; these payments were historically recorded as other revenue. As the performance of these research and development services was at the Company’s discretion and are not reflective of a commitment or performance obligation pursuant to the Celgene agreement, the reimbursement paid to the Company has been excluded from the transaction price.

The Company’s deferred revenue associated with its Celgene collaboration agreement as of December 31, 2017 under Topic 605 was $143.8 million. As a result of adopting Topic 606, the Company recorded a $98.3 million reduction to its deferred revenue and opening accumulated deficit on January 1, 2018 as a result of the cumulative impact of the change in the recognition of the upfront and milestone payments using the input method (described further in Note 5, “Collaborations”) under Topic 606, rather than on a ratable basis which was applied in prior periods. Under Topic 606, collaboration revenue under the Company’s collaboration agreement with Celgene from inception of the agreement through January 1, 2018 was $186.2 million and deferred revenue was $45.5 million as of January 1, 2018. At adoption date, the remaining performance obligation under the contract was estimated to be substantially complete by the third quarter of 2019. At December 31, 2018, the Company evaluated the development program status of the remaining product candidate under the collaboration agreement with Celgene, etigilimab, and estimated that the remaining performance obligation under the contract will be completed by the first quarter of 2019.

Collaborations with Bayer and GSK

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As the GSK collaboration was terminated in its entirety on October 28, 2017, this arrangement was outside the scope of Topic 606 as of the adoption date. For the Bayer collaboration, Bayer terminated all biologic therapeutic programs under the collaboration effective June 16, 2017, while the small molecule therapeutics program remained active. Refer to Note 5, “Collaborations,” for further details. The Company has determined that the small molecule therapeutic program remaining as of December 31, 2017 is immaterial in the context of the collaboration agreement relative to the biologics therapeutic programs that was terminated during 2017. The Company’s performance obligations under the small molecule therapeutic program with respect to Bayer were substantially complete at December 31, 2017, and any future receipts in the form of milestones or royalties are contingent upon the achievement of specified development, commercial and/or sales targets. The Company has concluded that there was no transition adjustment to be recognized on January 1, 2018 for these two agreements.

Impact of Adoption

The following table summarizes the impact of adopting Topic 606 on select balance sheets and statement of operations line items:

(In thousands)	Balance at December 31, 2017			Adjustment			Balance at January 1, 2018
Balance Sheets:
Deferred revenue, current portion	$	82,193		$	(51,299	)	$	30,894
Deferred revenue, non-current portion		61,645			(47,023	)		14,622
Accumulated deficit		(452,007	)		98,322			(353,685	)

	For the year ended December 31, 2018
(In thousands, except per share data)	As reported under Topic 606			Adjustment		Balances without the adoption of Topic 606
Statements of Operations:
Collaboration revenue	$	44,421		$	58,321	$	102,742
Income (loss) from operations		(10,045	)		58,321		48,276
Net income (loss)		(8,101	)		58,321		50,220
Net income (loss) per common shares, basic		(0.21	)		1.52		1.31
Net income (loss) per common shares, diluted		(0.21	)		1.51		1.30

Contract Balances

Upfront payments and fees may be required to be recorded as deferred revenue upon receipt or when due, and recognized in a future period when or as the Company performs its obligations under these arrangements. Amounts payable to the Company are recorded as accounts receivable when the Company’s right to consideration is unconditional.

As of December 31, 2018, theCompany’s contract liabilities, which consisted of deferred revenue, decreased by a total of $142.7 million from December 31, 2017, of which $98.3 million was related to the cumulative adjustment to the opening balance of accumulated deficit upon the adoption of Topic 606 on January 1, 2018 and $44.4 million related to revenue recognized for the year ended December 31, 2018. Upon adoption of the standard as of January 1, 2018, the Company had a $45.5 million contract liability. As of December 31, 2018, the Company had a $1.1 million contract liability. The remaining performance obligation under the contract is expected to be substantially complete by the first quarter of 2019.

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ASU No. 2016-02, Leases (Topic 842)

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which amends the existing accounting standards for leases. The new standard requires lessees to record a right-of-use asset and a corresponding lease liability on the balance sheet (with the exception of short-term leases). For lessees, leases will continue to be classified as either operating or financing in the income statement. This ASU becomes effective in the first quarter of fiscal year 2019 and early adoption is permitted. This ASU is required to be applied with a modified retrospective approach and requires application of the new standard at the beginning of the earliest comparative period presented. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements. In issuing ASU No. 2018-11, the FASB decided to provide another transition method in addition to the existing transition method by allowing entities to initially apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company is currently evaluating our population of leases and are continuing to assess all potential impacts of ASU 2016-02 and ASU 2018-11, but currently believe that the most significant impact relates to the Company’s accounting for office building operating leases. The Company anticipates recognition of additional assets and corresponding liabilities related to leases upon adoption, but have not yet quantified these at this time. The Company will adopt the standard effective January 1, 2019 and plan to utilize the transition method stated in ASU 2018-11.

ASU No. 2018-07, Improvement to Nonemployees Share-based Payment Accounting (Topic 718)

In June 2018, the FASB issued ASU No. 2018-07, Stock Compensation. ASU No. 2018-07 simplifies the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. The guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, but not earlier than the Company’s adoption of Topic 606. The Company chose to adopt the guidance early, in the second quarter of 2018. The adoption of the standard did not have material impact on the Company’s financial statements.

3. Cash and Investments

The fair value of securities, not including cash at December 31, 2018 and 2017 were as follows:

	December 31, 2018
	Amortized		Gross Unrealized					Fair
(In thousands)	Cost		Gains		Losses			Value
Money market funds	$	275	$	—	$	—		$	275
U.S. treasury bills		47,688		—		(29	)		47,659
Total	$	47,963	$	—	$	(29	)	$	47,934
Classified as:
Cash equivalents								$	275
Short-term investments									47,659
Total								$	47,934

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As of December 31, 2018, the Company had a total of $57.3 million in cash, cash equivalents and short-term investments, which includes $9.7 million in cash and cash equivalents and $47.6 million in short-term investments.

	December 31, 2017
	Amortized		Gross Unrealized				Fair
(In thousands)	Cost		Gains		Losses		Value
Money market funds	$	99	$	—	$	—	$	99
U.S. treasury bills		89,525		289		—		89,814
Total	$	89,624	$	289	$	—	$	89,913
Classified as:
Cash equivalents							$	99
Short-term investments								89,814
Total							$	89,913

As of December 31, 2017, the Company had a total of $103.1 million in cash, cash equivalents and short-term investments, which includes $13.3 million in cash and cash equivalents and $89.8 million in and short-term investments.

All available-for-sale securities held as of December 31, 2018 had contractual maturities of less than one year. There have been no significant realized gains or losses on available-for-sale securities for the periods presented.

4. Fair Value Measurements

The Company records its financial assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as follows:

• Level 1: Inputs which include quoted prices in active markets for identical assets and liabilities.

• Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company’s financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used in such measurements were as follows:

	December 31, 2018
(In thousands)	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	275	$	—	$	—	$	275
U.S. treasury bills		—		47,659		—		47,659
Total	$	275	$	47,659	$	—	$	47,934

	December 31, 2017
(In thousands)	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	99	$	—	$	—	$	99
U.S. treasury bills		—		89,814		—		89,814
Total	$	99	$	89,814	$	—	$	89,913

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Where quoted prices are available in an active market, securities are classified as Level 1. When quoted market prices are not available for the specific security, then the Company estimates fair value by using benchmark yields, reported trades, broker/dealer quotes, and issuer spreads. The Company classifies U.S. Treasury securities as Level 2. There were no transfers between Level 1 and Level 2 during the periods presented.

5. Property and Equipment, net

Property and equipment, net consist of the following:

	December 31,
(In thousands)	2018			2017
Computer equipment and software	$	1,440		$	1,935
Furniture and fixtures		415			547
Laboratory equipment		—			11,720
Leasehold improvements		9,598			9,250
		11,453			23,452
Less accumulated depreciation and amortization		(10,830	)		(20,177	)
Property and equipment, net	$	623		$	3,275

Depreciation expense for the years ended December 31, 2018, 2017 and 2016 was $1.7 million, $1.7 million and $1.8 million, respectively

The Company reviews the estimated useful lives of its property and equipment on an ongoing basis. Effective December 1, 2018, the Company changed its estimated useful life of leasehold improvements and this change has been accounted for as a change in accounting estimate. The remaining carrying amounts of the leasehold improvements as of December 31, 2018 will be amortized prospectively over one year up to December 31, 2019. The change in estimated useful life increased net loss by approximately $26,000, or less than $0.01 per share, as reported in the Statement of Operations for the year ended December 31, 2018.

In the fourth quarter of 2018, property and equipment with net book value of $1.4 million qualified as held for sale treatment. Assets held for sale are measured at the lower of their carrying amount or fair value less cost to sell. The property and equipment are not depreciated while classified as held for sale. As of December 31, 2018, assets held for sale were composed mainly of laboratory equipment and were recorded at $1.4 million. Subsequently, in January 2019, the Company sold the property and equipment classified as held for sale for net sale proceeds of approximately $1.4 million. No impairment loss was recorded for such assets held for sale as of December 31, 2018.

6. Accrued Liabilities

Accrued liabilities consist of the following:

	December 31,
(In thousands)	2018		2017
Research and development related	$	988	$	670
Compensation related		1,809		2,733
Other		1,571		537
Total accrued liabilities	$	4,368	$	3,940

7. Commitments and Contingencies

Operating Leases

The Company leases an office and laboratory facility in Redwood City, California under a lease agreement that was originally set to expire in January 2019 and included a lease extension option for two additional three-year

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terms. During the fourth quarter of 2016, the Company signed an amendment to the lease agreement to extend the lease term through May 2028 with an option to extend the lease for an additional three-year term.  

The amendment to the lease agreement includes a 10-year cancelable lease agreement for additional office and laboratory space that expires in May 2028, subject to the Company’s three-year lease extension option described above.  The Company exercised its right to terminate the lease agreement for this additional space prior to September 2017. The exercise of such cancelation did not result in an economic penalty to the Company.

As of December 31, 2018, future minimum annual rental payments under the Company’s non-cancelable operating lease agreement are as follows (in thousands):

Year ending December 31,	Operating Leases, net of Sublease Income
2019	$	776
2020		1,640
2021		2,577
2022		2,667
2023		2,761
2024 and thereafter		13,382
Total minimum payments	$	23,803

Through December 31, 2018, the landlord provided the Company a tenant improvement allowance for a total of $8.0 million for its office and laboratory expansion in prior years and office improvements. The Company recorded the tenant improvement allowance received as leasehold improvements under the property and equipment account and deferred rent liability on the accompanying balance sheets.

In October 2018 and January 2019, the Company subleased a specified portion of the Company’s office facility located in Redwood City, California. These subleases have terms of 12 to 24 months and will expire in 2020. The aggregate sublease proceeds of $1.6 million and $0.8 million for the years ending December 31, 2019 and 2020, respectively, are included in the table above.

The operating lease agreement contains rent escalation provisions and tenant improvement allowances. The total rent obligation is being expensed ratably over the term of the agreement. Rent expense for year ended December 31, 2018 was $2.3 million, net of sublease income of $0.1 million. Rent expense for years ended December 31 2017 and 2016 was $2.4 million and $1.6 million, respectively.

Guarantees and Indemnifications

The Company, as permitted under Delaware law and in accordance with its certificate of incorporation and bylaws, and pursuant to indemnification agreements with certain of its officers and directors, indemnifies its officers and directors for certain events or occurrences, subject to certain limits, while the officer or director is or was serving at the Company’s request in such capacity. The term of the indemnification period lasts as long as an officer or director may be subject to any proceeding arising out of acts or omissions of such officer or director in such capacity.

The maximum amount of potential future indemnification is unlimited; however, the Company currently holds director and officer liability insurance. This insurance limits the Company’s exposure and may enable it to recover a portion of any future amounts paid. The Company believes that the fair value of these indemnification obligations is minimal. Accordingly, the Company has not recognized any liabilities relating to these obligations for any period presented.

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8. License Agreement

In 2004, the Company assumed an exclusive, worldwide license agreement with the University of Michigan relating to the use of certain patents and technology relating to its cancer stem cell (“CSC”) technology for which an up-front fee of $10,000 had been paid and the Company issued 7,796 shares of its common stock. Pursuant to the agreement, the Company is obligated to make low single-digit royalty payments to the University of Michigan on net sales of its or its licensees’ products and processes covered under the agreement, pay an annual license maintenance fee, and reimburse the University of Michigan for costs of prosecution and maintenance of the licensed patents which reduces future royalty obligations. With respect to one family of licensed patent applications that does not relate to any of the Company’s lead therapeutic programs, the Company is also required to pay a tiered, single-digit percentage of any sublicense revenues, including any upfront or milestone payments, received from any sublicensees under such family of patents. Once the University of Michigan has received $10.0 million in royalties, the Company may at its option convert the license to a fully paid-up license provided the Company transfers additional shares of nonvoting common stock equal to 0.25% of the fully diluted shares then outstanding to the University of Michigan. The amounts incurred for patent legal costs amounted to $27,000, $32,000 and $69,000 for the years ended December 31, 2018, 2017 and 2016, respectively, all of which has been recorded as general and administrative expense in the statements of operations.

9. Collaborations

The Company has entered into three collaboration arrangements, each having multiple deliverables under which the Company received non-refundable upfront payments. For collaborations where the Company has determined that there is a single unit of accounting the Company recognizes revenue related to the upfront payments ratably over its estimated period of performance for each collaboration. Two of these collaboration agreements have since been entirely or substantially terminated.

The Company’s prior and current collaboration arrangements include contractual milestones, which relate to the achievement of pre-specified research, development, regulatory and commercialization events. The milestone events contained in the Company’s alliances coincide with the progression of the Company’s product candidates from research and development, to regulatory approval and through to commercialization. The process of successfully discovering a new product candidate, having it selected by the alliance partner for development, having it approved and ultimately sold for a profit is highly uncertain. As such, the milestone payments that the Company may earn from its collaborators involve a significant degree of risk to achieve.

Research and development milestones in the Company’s strategic alliances may include the following types of events:

• Completion of pre-clinical research and development work leading to selection of product clinical candidates.

• Advancement of candidates into clinical development, which may include filing of investigational new drug (“IND”) applications.

• Initiation of Phase I, Phase II or Phase III clinical trials.

• Achievement of certain scientific or development events.

Regulatory milestones may include the following types of events:

• Filing of regulatory applications for marketing approval such as a New Drug Application in the United States, or a Marketing Authorization Application in Europe.

• Marketing approval in a major market, such as the United States, Europe or Japan.

Commercialization milestones may include the following types of events:

• Product sales in excess of pre-specified thresholds.

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Summary of Collaboration Related Revenue

The Company has recognized the following revenues from its prior and current collaboration agreements during the years ended December 31, 2018, 2017 and 2016:

	Year Ended December 31,
(In thousands)	2018		2017		2016
Celgene:
Recognition of upfront payment	$	44,421	$	35,588	$	20,053
Other revenue		—		409		1,780
Celgene total		44,421		35,997		21,833
Bayer:
Recognition of upfront payments		—		278		648
Other revenue		—		1,726		1,457
Bayer total		—		2,004		2,105
GSK:
Recognition of upfront payment		—		150		576
Other revenue		—		3		639
GSK total		—		153		1,215
Total collaboration related revenue	$	44,421	$	38,154	$	25,153

Adoption of ASU No. 2014-09

On January 1, 2018, the Company adopted ASU No. 2014-09 using the modified retrospective method. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with Topic 605.

Celgene Strategic Alliance

In December 2013, the Company entered into a Master Research and Collaboration Agreement (the “Agreement”) with Celgene pursuant to which the Company and Celgene were to collaborate on research and development programs directed to the discovery and development of novel biologic therapeutic programs, and, if Celgene exercised its option to do so, the discovery, development and commercialization of novel small molecule therapeutics.

The etigilimab program is the last remaining biologic therapeutic program that is currently active under the collaboration agreement with Celgene. Celgene has an option to obtain an exclusive license to develop further and commercialize biologic therapeutics in the etigilimab program, which may be exercised during time periods specified in the collaboration agreement through the earlier of completion of a certain clinical trial or the twelfth anniversary of the date of the collaboration agreement. Pursuant to the agreement, the Company will lead the development of etigilimab prior to Celgene’s exercise of its option for the etigilimab program. The Company is responsible for funding all research and development activities that we choose to undertake for therapeutics in the etigilimab program prior to Celgene’s exercise of the option for the program. Upon option exercise by Celgene, the Company will be required to enter into an agreed form of a license agreement with Celgene, pursuant to which Celgene retains all rights to develop further and commercialize biologic therapeutic products in the etigilimab program on a worldwide basis, with certain support for development from the Company.  

The Company is eligible to receive a $35.0 million opt-in payment upon Celgene’s exercise of the option for the etigilimab program. The collaboration also includes milestone payments for achievement of specified development, regulatory and commercial milestones, paid on a per-product and per-program basis. The option exercise payments and payments for achievement of development, regulatory and commercial milestones under the agreement may total up to $440.0 million, for products in the etigilimab program, including the $35.0 million opt-in payment. The Company previously received a $2.5 million milestone payment for the etigilimab program. Accordingly, the future potential milestone payments for products in the etigilimab program under the collaboration total up to $437.5 million, including the $35.0 million opt-in payment. For the etigilimab program, if the option is

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exercised and the program is successfully commercialized by Celgene, the Company is eligible to receive tiered royalties equal to a percentage of net product sales worldwide in the high-single digits to the mid-teens. The Company is not eligible to receive any further research or development milestone payments for etigilimab prior to Celgene’s decision regarding option exercise with respect to etigilimab.

The collaboration agreement with Celgene will terminate upon the expiration of all of Celgene’s payment obligations under the license agreement entered into with respect to the etigilimab program following Celgene’s exercise of an option for such program, or if Celgene’s option on the etigilimab program expires without Celgene exercising its option. The collaboration agreement may be terminated by either party for the insolvency of, or an uncured material breach of the collaboration agreement by the other party. In addition, Celgene may terminate the collaboration agreement in its entirety or with respect to the etigilimab program, for any reason, upon 120 days’ prior written notice to us and upon 60 days’ prior written notice in the event that Celgene reasonably believes that such termination is necessary in order to comply with any antitrust laws. The Company may also terminate the collaboration agreement with respect to the etigilimab program in the event that Celgene challenges the licensed patents with respect to such program.

If Celgene does not exercise its option with respect to the etigilimab program before the option for that program expires, the Company will retain worldwide rights to such program. In addition, under certain termination circumstances, the Company would also have worldwide rights to the etigilimab program.

The collaboration agreement with Celgene previously included the demcizumab, navicixizumab, and rosmantuzumab biologic therapeutic programs. Celgene, however, terminated the collaboration agreement with respect to both demcizumab and navicixizumab, effective January 23, 2019, and terminated the collaboration agreement with respect to rosmantuzumab, effective February 12, 2019. Prior to such terminations, Celgene had options to obtain an exclusive license to develop further and commercialize biologic therapeutics in these programs under the agreement. As a result of these terminations, the Company now has worldwide rights to each of these programs, including navicixizumab. Under certain circumstances, the Company may owe Celgene single-digit percentage royalties on therapeutic products in these programs if we elect to continue to commercialize them and they are successfully commercialized, subject to a cap.

Celgene previously had the right to designate up to two additional biologic therapeutic programs targeting the RSPO-LGR signaling pathway or an undisclosed pathway for inclusion in the collaboration, but this right expired on the fourth anniversary of the date of the collaboration agreement. Celgene also had an additional option, which expired unexercised on the fourth anniversary of the date of the collaboration agreement, that would have permitted Celgene to discover, develop and commercialize small molecule therapeutics directed to targets in an undisclosed pathway under the collaboration.

Under the terms of the collaboration agreement with Celgene, the Company received an upfront cash payment of $155.0 million in December 2013. In addition, Celgene purchased 1,470,588 shares of the Company’s common stock at a price of $15.13 per share, resulting in gross proceeds of $22.2 million. The price paid by Celgene for the common stock represented a premium over the closing price of the Company’s common stock on the date of the collaboration. The Company accounted for the $1.7 million premium as additional consideration under the Agreement and the common stock was recorded at its fair market value of $20.5 million. As of December 31, 2018, the Company is not eligible to receive any milestone payments under its collaboration with Celgene prior to the point that Celgene exercises its remaining option. The Company is eligible to receive up to approximately $35.0 million of contingent consideration if Celgene exercises its options for the etigilimab program. Following Celgene’s exercise of its option for the etigilimab program, Celgene will have exclusive development and commercialization rights worldwide, with the Company eligible to receive milestones and tiered royalties equal to a percentage of net product sales worldwide in the high-single digits to the mid-teens. If Celgene successfully develops and commercializes product candidates in the etigilimab program, the Company could receive additional contingent consideration of up to $402.5 million for the achievement of post-option exercise development, regulatory events and sales milestones.

The Company assessed its collaboration agreement with Celgene in accordance with Topic 606 and concluded that Celgene is a customer. The Company determined that its performance obligation under the arrangement with Celgene is research and development services. As part of the promised research and development services, the

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Company may provide the resultant data to Celgene to assist Celgene in determining whether or not to exercise its options. Under the arrangement, Celgene has options to further develop and commercialize biologic therapeutics in each program under the collaboration, which may be exercised during time periods specified in the agreement. Upon Celgene’s exercise of its option for certain programs, the Company may, at its discretion, gain co-development and co-commercialization rights and corresponding obligations. The Company determined that the exclusive option(s) provided to Celgene is not a material right under Topic 606 and thus it is not a performance obligation. Based on its assessment, the Company has identified the research and development services as the only performance obligation at the inception of the collaboration agreement.

Prior to recognizing revenue, the Company estimates the transaction price, including variable consideration that is subject to a constraint. Amounts of variable consideration are included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Variable consideration includes payments based upon the achievement of specified milestones, and royalty payments based on product sales derived from the collaboration. Under the collaboration agreement, the Company determined that the non-refundable upfront cash payment of $155.0 million and stock premium of $1.7 million received in December 2013 constitute consideration to be included in the transaction price. The Company also included in the transaction price the $70.0 million demcizumab (anti-DLL4, OMP-21M18) safety milestone that was achieved in December 2015 and the two designation milestone payments of $2.5 million each for the designation of rosmantuzumab and etigilimab as clinical candidates in 2014 and 2015, respectively. The total consideration received of $231.7 million constitutes the transaction price at the transition date for Topic 606. Through December 31, 2017, the Company also received a total of $2.5 million in the aggregate from Celgene to reimburse the costs of research and development services performed by the Company; these reimbursements have historically been recorded as other revenue. As the performance of these research and development services was at the Company’s discretion and is not a commitment or performance obligation pursuant to the Celgene collaboration agreement, the reimbursement paid to the Company has been excluded from the transaction price. None of the remaining development and regulatory milestone amounts have been included in the transaction price, as all milestone amounts were fully constrained as of January 1, 2018 and December 31, 2018. As part of the Company’s evaluation of the constraint, the Company considered numerous factors, including that receipt of the milestone amounts is outside the control of the Company and contingent upon success in future clinical trials. Any consideration related to sales milestones and royalties on net product sales will be recognized at the later of when the related sales occur or the performance obligation to which some or all of the sales milestone or royalty has been allocated is satisfied (in whole or in part) and therefore have also been excluded from the transaction price. The Company will re-evaluate the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur.

The impact of adopting Topic 606 on the accounting treatment of the Company’s collaboration agreement with Celgene primarily relates to the change in the timing of revenue recognition of the transaction price. The Company’s deferred revenue associated with its Celgene collaboration agreement as of December 31, 2017 under Topic 605 was $143.8 million. Upon adoption of Topic 606 as of January 1, 2018, the Company recognized a cumulative catch up adjustment of $98.3 million, which was recorded as a decrease to the opening balance of accumulated deficit, and a corresponding decrease in the deferred revenue balance from the Company’s collaboration with Celgene.

Following the adoption of Topic 606, the Company recognizes collaboration revenue by measuring the progress toward complete satisfaction of the performance obligation using an input measure. The Company concluded the method that best correlates with progress of the services provided to Celgene is the input method, based on actual costs incurred to date compared to the overall total expected costs to satisfy the performance obligation. The Company will evaluate the estimate of expected costs to satisfy the performance obligation each reporting period and make adjustments for any significant changes. Under Topic 606, collaboration revenue under the Company’s collaboration agreement with Celgene was $44.4 million for the year ended December 31, 2018 and deferred revenue balance was $1.1 million as of December 31, 2018. Upon adoption of Topic 606, the Company initially estimated that the performance obligation under the contract would be substantially completed by the third quarter of 2019. At December 31, 2018, the Company evaluated the development program status of the etigilimab program, the only program remaining under the collaboration agreement with Celgene, and determined that the performance obligation will be completed by the first quarter of 2019. The change in the timing of revenue

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recognition resulted in an increase in revenue and corresponding decreases in net loss of $7.7 million and net loss per common share, basic and diluted, of $0.20 per share for the year ended December 31, 2018.

As of December 31, 2018, the Company was eligible to receive in its collaboration with Celgene up to approximately $35.0 million of contingent consideration if Celgene exercises its options on the etigilimab program. If Celgene successfully develops and commercializes the etigilimab program, the Company could receive additional contingent consideration of up to approximately $402.5 million for the achievement of post-option exercise development, regulatory events and sales milestones. As all contingent consideration is based solely on the performance of Celgene, the Company would recognize the contingent payments upon receipt immediately as collaboration revenue if the Company had no further performance obligations under the agreement with Celgene.

In the fourth quarter of 2018, the Company recorded a receivable and a deferred revenue of $2.6 million for the sale of a tumor bank to Celgene. The Company recognized the receivable as of December 31, 2018 because the right to the consideration is considered unconditional. Subsequently, in January 2019, the Company recognized the revenue upon delivery of the tumor bank to Celgene. The sale is not considered a commitment or performance obligation pursuant to the Celgene collaboration agreement, hence is excluded from the collaboration transaction price.

Bayer Strategic Alliance

On June 15, 2010, the Company entered into a Collaboration and Option Agreement with Bayer. The agreement sets forth an alliance to discover, develop and market novel biologic and small molecule therapeutics affecting targets within the Wnt signaling pathway. The Company received an upfront payment of $40.0 million upon execution of the collaboration agreement in 2010 and a $5.0 million milestone payment in 2012. The Company initially recognized the payments as deferred revenue and amortized to revenue on a ratable basis through the second quarter of 2017, as permitted by the legacy revenue recognition guidance.

Effective June 16, 2017, Bayer terminated all biologic therapeutic programs under the collaboration. The Company is no longer eligible to receive any payments under its collaboration with Bayer with respect to biologic therapeutic candidates.

With respect to the Wnt pathway small molecule program, the Company and Bayer under the collaboration agreement agreed to jointly conduct research to discover potential new small molecule therapeutics targeting the Wnt pathway.  Bayer may, within a specified time period, elect to advance such small molecule therapeutics into further development, and obtain an exclusive license to commercialize such therapeutics.  Bayer leads discovery, development, and commercialization of such small molecule therapeutics. As of December 31, 2018, the Company remains eligible to receive up to $27.0 million in development milestone payments for each small molecule candidates. If Bayer successfully develops and commercializes small molecule candidates for more than one indication, the Company could receive contingent consideration payments for each small molecule candidate of up to $15.0 million for the achievement of certain regulatory events and up to $70.0 million upon the achievement of specified future product sales. As all such contingent consideration is based solely on the performance of Bayer, the Company would recognize the contingent payments upon receipt immediately as collaboration revenue.

The Company evaluated the agreement under Topic 606, and determined that the small molecule therapeutic program remaining as of December 31, 2017 is immaterial in the context of the collaboration agreement relative to the biologics therapeutic programs that was terminated during 2017. Further, the Company’s performance obligations under the small molecule therapeutic program were substantially complete at December 31, 2017, and any future receipts in the form of milestones or royalties are contingent upon the achievement of specified development, commercial and/or sales targets by Bayer.

GSK Strategic Alliance

On December 7, 2007, the Company entered into a Collaboration and Option Agreement with GSK. The agreement was formed to discover, develop and market novel antibody therapeutics to target CSCs. The agreement gave GSK the option to obtain an exclusive license for certain product candidates targeting the Notch signaling pathway.

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In 2007, the Company received an initial payment of $35.0 million, with half in the form of an equity investment by GSK in the Company’s Series B-2 convertible preferred stock and the other half as an up-front cash payment which was initially recorded as deferred revenue. The 1,441,396 shares of Series B-2 convertible preferred stock sold by the Company to GSK were issued at a premium of $4.3 million above the estimated fair value of convertible preferred stock at the time of issuance. This premium was considered an additional up-front payment and was added to the $17.5 million deferred revenue and was amortized to revenue on a ratable basis through the first quarter of 2017, as permitted by the legacy revenue recognition guidance.

Effective October 28, 2017, GSK terminated the agreement in its entirety. As a result of such termination, the Company is no longer eligible to receive any payments under the collaboration agreement with GSK and the Company has no remaining performance obligations. As the GSK collaboration was terminated in its entirety on October 28, 2017, this arrangement is outside the scope of Topic 606 as of the adoption date.

10. Lonza Sales AG Agreement

In August 2012, the Company entered into a multi-product license agreement with Lonza Sales AG (“Lonza”). This agreement relates to the process development and manufacturing of the Company’s biologics portfolio with Lonza. Under the multi-product license agreement, the Company receives licenses to utilize Lonza’s glutamine synthetase gene expression system and related technologies for commercial production of the Company’s product candidates. Under this license agreement, the Company paid an upfront payment of $488,000 which was recorded to research and development expense during 2012 and is obligated to pay Lonza certain payments up to £200,000 (approximately $254,000) per licensed product on achievement of specified milestones, and royalties up to the very low single digits on sales of its licensed products. There has been no further payment made by the Company to Lonza pursuant to the license agreement for the years ended December 31, 2018, 2017 and 2016.

The multi-product license agreement shall remain in force on a product by product and country by country basis until expiration of the Company’s obligation to make payments to Lonza with respect to such product in such country. The agreement can otherwise be terminated by the Company for any reason or no reason upon advance written notice to Lonza, or by either the Company or Lonza upon the other party’s material breach of the agreement, or if the other party ceases to carry on business. Lonza may also terminate the licenses granted under the agreement if the Company challenges any of the Lonza patent rights.  

11. Stockholder’s Equity

Stock Incentive Plans

2004 Plan

The Company granted options under its 2004 Stock Incentive Plan (the “2004 Plan”) until July 2013 when it was terminated as to future awards, although it continues to govern the terms of options that remain outstanding under the 2004 Plan. The 2004 Plan provided for the award of restricted shares, grants of incentive and nonstatutory stock options, and sales of shares of the Company’s common stock. Awards can be made to employees, outside directors, and consultants of the Company. Stock options granted generally vest over a period of five years from the date of grant, with 20% of the total grant vesting on the first anniversary of the option vesting commencement date and 1/48 of the remaining grant vesting each month thereafter. Restricted stock issuances and early exercise of stock options were subject to the Company’s right of repurchase at the original issuance price, which right lapses over the vesting period of the stock. In connection with the Board of Directors’ and stockholders’ approval of the 2013 Plan, all remaining shares available for future award under the 2004 Plan were transferred to 2013 Plan, and the 2004 Plan was terminated as to future awards.

2013 Plan

In July 2013, the Company’s Board of Directors and stockholders approved the 2013 Equity Incentive Award Plan (the “2013 Plan”). Under the 2013 Plan, the Company initially reserved 500,000 shares of common stock for issuance as of its effective date of July 17, 2013, plus 90,125 shares which were then available for issuance under the Company’s 2004 Plan. The number of shares reserved for issuance under the 2013 Plan will increase by the

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number of shares represented by awards outstanding under the 2004 Plan that are forfeited or lapse unexercised and which following July 17, 2013 are not issued under the 2004 Plan. Additionally, on the first day of each calendar year, beginning in 2014 and ending in 2023, the number of shares in the reserve will increase by the least of 1,500,000 shares, 4% of the shares of the Company’s common stock outstanding (on an as-converted basis) on the last day of the immediately preceding fiscal year or such smaller number of shares of stock as determined by the Company’s Board of Directors. The 2013 Plan authorizes discretionary grants of incentive stock options, nonqualified stock options, restricted stock, restricted stock units, performance awards, dividend equivalents, stock payments, deferred stock, deferred stock units, and stock appreciation rights to employees and consultants of the Company, or any of its qualifying affiliates, and to members of the Board of Directors. The exercise price per share subject to each option shall not be less than 100% of the fair value of the common stock on the date of grant. In addition, in the case of incentive stock options granted to a greater than 10% stockholder, such price shall not be less than 110% of the fair value on the date the option is granted. The term of the options shall not be more than 10 years from the grant date, or 5 years from the date an incentive stock option is granted to a greater than 10% stockholder. Stock options granted generally vest over a period of four years from the date of grant, with 25% of the total grant vesting on the first anniversary of the option vesting commencement date and 1/48th of the original grant vesting each month thereafter for stock options granted upon hiring, and with 1/48th of the total grant vesting each month after the option vesting commencement date for any stock options granted after the hiring date.

As of December 31, 2018, a total of 8,217,239 shares of common stock have been authorized under the 2013 Plan. As of December 31, 2018, a total of 4,140,554 shares are subject to options and restricted stock units (“RSUs”) outstanding under the 2013 Plan. There are 310,453 shares subject to options outstanding under the 2004 Plan as of December 31, 2018, which will become available for issuance under the 2013 Plan to the extent the options are forfeited or lapse unexercised without issuance of such shares under the 2004 Plan. On January 1, 2018, an additional 1,500,000 shares of the Company’s common stock became available for future issuance as a result of the annual increase provision in the 2013 Plan.

Shares Reserved for Future Issuances

The following table summarizes the Company’s common stock reserved for future issuance:

(In thousands)	December 31, 2018
Outstanding stock options and RSUs		4,451
Reserved for future equity award grants		3,350
Reserved for future ESPP issuances		1,510
Total common stock reserved for future issuances		9,311

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Stock Options

The following table summarizes the stock option activity for the year ended December 31, 2018:

	Stock Option Outstanding
(In thousands, except exercise price and    contractual life)	Number of shares			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Balances at December 31, 2017		5,217			10.70		5.6	$	913
Granted		1,744			3.34
Exercised		—			—
Forfeited		(2,816	)		8.69
Balances at December 31, 2018		4,145			8.96		6.4		—
Options vested and expected to vest—    December 31, 2018		3,945		$	8.88		7.0		—
Options exercisable—    December 31, 2018		2,542		$	11.44		5.2		—

The total fair value of options vested were $5.5 million, $7.1 million and $9.2 million for the years ended December 31, 2018, 2017 and 2016, respectively. There were no options exercised during the year ended December 31, 2018. The aggregate intrinsic value of options exercised were $1.4 million and $0.8 million for the years ended December 31, 2017, and 2016, respectively. The stock options outstanding have no intrinsic value as of December 31, 2018.

The weighted-average grant date estimated fair value of options granted during the years ended December 31, 2018, 2017 and 2016 were $2.32, $3.66 and $8.23 per share, respectively.

Restricted Stock Units

The following table summarizes the RSU activity for the year ended December 31, 2018:

	Restricted Stock Units Outstanding
(In thousands, except grant date fair value    and contractual life)	Number of shares			Weighted Average Grant Date Fair Value per Share		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Balances at December 31, 2017		880			5.33		1.3	$	3,606
Awarded		70			2.29
Released		(402	)		4.57
Forfeited		(242	)		5.60
Balances at December 31, 2018		306			5.41		1.0	$	229

The total fair value of RSUs vested was $1.8 million, $6.4 million and $2.2 million for the years ended December 31, 2018, 2017 and 2016, respectively. The aggregate intrinsic value of the non-vested RSUs was $0.2 million as of December 31, 2018.

Employee Stock Purchase Plan

The Company’s Employee Stock Purchase Plan (the “ESPP”) allows eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions of up to 15% of their eligible compensation,

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subject to any plan limitations. The ESPP provides for six-month offering periods, and at the end of each offering period, employees are able to purchase shares at 85% of the lower of the fair market value of the Company’s common stock on the first trading day of the offering period or on the last day of the offering period.

On January 1, 2018, as a result of the annual increase provision in the ESPP plan, an additional 350,000 shares of the Company’s common stock became available for future issuance. As of December 31, 2018, a total of 1,893,620 shares of common stock have been authorized and 1,510,518 shares of common stock are available for future issuance under the Company’s ESPP.

In accordance with the terms of the Merger Agreement (see Note 16 Potential Business Combination with Mereo BioPharma), on February 23, 2019, the Board of Directors determined that the offering period ending on February 28, 2019 would be the final offering period under the ESPP and that, contingent upon the consummation of the Merger, the ESPP would terminate immediately prior to the effective time of the Merger.

During the years ended December 31, 2018, 2017 and 2016, employees purchased an aggregate of 45,352 shares, 88,982 shares and 111,633 shares under the Company’s ESPP, respectively, at a weighted-average price per share of $1.97, $7.16 and $8.21, respectively.  During the years ended December 31, 2018, 2017 and 2016, the weighted-average fair value per share granted under the Company’s ESPP were $1.54, $3.39 and $5.06, respectively.

Stock-Based Compensation

Employee stock-based compensation expense was calculated based on awards expected to vest and has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Stock-based compensation expense recognized was as follows:

	Year Ended December 31,
(In thousands)	2018		2017		2016
Research and development	$	3,380	$	4,886	$	5,892
General and administrative		3,397		4,522		5,239
Restructuring charges		65		6		—
Total	$	6,842	$	9,414	$	11,131

As of December 31, 2018, the Company had $4.3 million, $0.8 million and $2,000 of unrecognized compensation expense related to unvested stock options, RSUs and ESPP, respectively, which are expected to be recognized over an estimated weighted-average period of 2.5 years, 1.0 years and 0.2 years, respectively.

Fair Value Disclosures

The fair value of stock options granted and purchases under the Company’s ESPP is estimated using the Black-Scholes option pricing model.

The fair value of stock options granted was estimated as of the grant date using the following assumptions:

	Year Ended December 31,
	2018		2017		2016
Weighted-average volatility	78.1%		75.8%		71.9%
Weighted-average expected term (years)		6.2		6.2		5.8
Risk-free interest rate	2.6%		2.2%		1.5%
Expected dividend yield		—		—		—

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The fair value of stock purchase rights granted under the Company’s ESPP was estimated using the following assumptions:

	Year Ended December 31,
	2018		2017		2016
Weighted-average volatility	66.5%–93.7%		54.0%–93.7%		45.4%–104.5%
Weighted-average expected term (years)		0.5		0.5		0.5
Risk-free interest rate	1.10%–2.28%		0.47%–1.10%		0.26%–0.50%
Expected dividend yield		—		—		—

Volatility

Since the Company has limited information on the volatility of its common stock due to no significant trading history, the expected stock price volatility was calculated based on a blend of the historical volatilities of the Company’s own stock and of the common stock of comparable publicly traded biopharmaceutical companies over a period equal to the expected term of the stock option grants. The comparable companies were chosen based on their similar size, stage in the life cycle, and financial leverage to the Company.

Expected Term

The Company has very limited historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior for its stock-option grants. As such, the expected term was estimated using the simplified method.

Risk-Free Rate

The risk-free interest rate assumption is based on the zero-coupon U.S. Treasury instruments on the date of grant with a maturity date consistent with the expected term of the Company’s stock option grants.

Expected Dividend Yield

To date, the Company has not declared or paid any cash dividends and does not have any plans to do so in the future. Therefore, the Company used an expected dividend yield of zero.

Common Stock Issuance under At-the-Market Agreement

Pursuant to a sales agreement (the “ATM Agreement”) with Cantor Fitzgerald & Co. (“Cantor Fitzgerald”), the Company sold 355,821 and 388,166 shares for the years ended December 31, 2017 and 2016, respectively, at a weighted average price per share of $4.93 and $12.59, respectively. The Company received net proceeds of $1.7 million and $4.7 million, net of offering costs, for the years ended December 31, 2017 and 2016, respectively. The shares were issued under the Company’s shelf registration statement on Form S-3 (File No. 333-204914) filed with the SEC in June 2015.

In May 2018, the Company filed a new shelf registration statement on Form S-3 (File No. 333-225225) which permits the issuance and sale of up to a maximum aggregate offering price of $30.0 million of the Company’s common stock that may be issued and sold under the ATM Agreement with Cantor Fitzgerald in one or more at-the-market offerings. Following the effectiveness of the new shelf registration statement on Form S-3 (File No. 333-225225) in June 2018, no additional securities covered by the prior shelf registration statement on Form S-3 (File No. 333-204914) shall be offered or sold. For the year ended December 31, 2018, the Company has not sold any securities under the new shelf registration statement.

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Public Offering of Common Stock

On August 23, 2016, the Company closed the sale of an aggregate of 6,325,000 shares of its common stock, at a public offering price of $10.00 per share. The shares were issued pursuant to a prospectus supplement filed with the SEC on August 17, 2016, and related prospectus, pursuant to the Company’s shelf registration statement on Form S-3 filed on June 12, 2015. The Company received net offering proceeds of approximately $59.2 million, net of underwriting discounts and commissions and offering costs.

12. Restructuring Charges

2018 Restructuring

In connection with the proposed Merger, on December 1, 2018, the Company’s Board of Directors approved a restructuring plan to reduce the Company’s workforce by 75%. Under the 2018 restructuring plan, the Company recorded $1.9 million of restructuring charges consisting of one-time severance payments and other employee related costs, and other charges during the fourth quarter of 2018. Restructuring charges are included in operating expenses in the statement of operations. The restructuring plan is ongoing and the Company expects to complete the actions associated with the restructuring in the first quarter of 2019.

The following table provides a summary of restructuring activity during the fourth quarter of 2018 and the related liabilities recorded in the accrued liabilities in the balance sheet. The Company expects to pay out its restructuring liability by the first quarter of 2019.

(In thousands)	Employee Severance and Other Costs
Balance as of December 31, 2017	$	6
Costs incurred		1,851
Less cash payments		(572	)
Less non-cash settlements		(65	)
Balance as of December 31, 2018	$	1,220

2017 Restructuring

On April 24, 2017, the Company’s Board of Directors approved a restructuring plan to reduce operating costs and better align its workforce with the needs of its business following the Company’s announcements that its Phase II “YOSEMITE” clinical trial of demcizumab did not meet its primary endpoint and would be discontinued, its Phase II “PINNACLE” clinical trial of tarextumab did not meet its endpoints, its partner Bayer had decided not to exercise its option to license vantictumab and ipafricept, and enrollment would be discontinued in the Phase Ib clinical trial of brontictuzumab. The restructuring plan provided for a 48% reduction in the Company’s workforce. Under the 2017 restructuring plan, the Company recorded $2.5 million in restructuring charges consisting of one-time severance payments and other employee related costs, and other charges during the year ended December 31, 2017. Restructuring charges are included in operating expenses in the statement of operations. The Company has substantially completed this plan and paid the restructuring cost at the end of the fourth quarter of 2017. No charges were recorded in the periods after December 31, 2017.

13. Income Taxes

For the year ended December 31, 2018, the Company recorded an income tax benefit of $0.4 million in the statement of operations as a result of a lapse of statute of limitations on uncertain tax positions. For the year ended December 31, 2017, the Company recorded an income tax benefit of $1.1 million due to an Alternative Minimum Tax (“AMT”) refundable credit as a result of the Tax Cuts and Jobs Act (“Tax Act”), enacted on December 22, 2017. For the year ended December 31, 2016, the Company recorded an income tax provision of $14,000 due to interest on uncertain tax positions.

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Loss before income taxes for the years ended December 31, 2018, 2017 and 2016 was from the United States.

The components of the income tax provision (benefit) are as follows:

	Year Ended December 31,
(In thousands)	2018			2017			2016
Current:
Federal	$	(383	)	$	(1,084	)	$	13
State		1			1			1
Total		(382	)		(1,083	)		14
Deferred:
Federal		—			—			—
State		—			—			—
Total		—			—			—
Income tax provision (benefit)	$	(382	)	$	(1,083	)	$	14

The reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows:

	Year Ended December 31,
	2018			2017			2016
Tax at statutory federal rate		21	%		35	%		35	%
State tax—net of federal benefit		9	%		1	%		1	%
Tax credits		18	%		12	%		8	%
Stock compensation		(25	)%		(7	)%		(2	)%
Change in valuation allowance		(13	)%		90	%		(42	%)
Transaction costs		(4	)%		—			—
Impact of corporate rate change on deferred taxes		—			(129	)%		—
Other		(1	)%		1	%		—
Income tax (provision) benefit		5	%		3	%		—	%

Net deferred tax assets as of December 31, 2018 and 2017 consist of the following:

	Year Ended December 31,
(In thousands)	2018			2017
Deferred tax assets:
Net operating loss carryforwards	$	63,011		$	54,931
Accruals		733			643
Tax credit carryovers		65,719			63,406
Deferred revenue		778			30,259
Other		3,049			3,643
Gross deferred tax assets		133,290			152,882
Deferred tax liability		—			—
Valuation allowance		(133,290	)		(152,882	)
Net deferred tax assets	$	—		$	—

The valuation allowance decreased by $19.6 million and $32.1 million for the years ended December 31, 2018 and 2017, respectively. The tax benefit of deductible temporary differences or carryforwards is recorded as a deferred tax asset to the extent that management assesses the realization is “more likely than not.” Future realization of the tax benefit ultimately depends on the existence of sufficient taxable income within the period available under the tax law. At December 31, 2018 and 2017, the Company has set up valuation allowances against all federal and state deferred tax assets because based on all available evidence, these deferred tax assets are not more likely than not to be realizable.

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On December 22, 2017, the Tax Act was signed into law making significant changes to the Internal Revenue Code. Changes included the reduction of the federal corporate income tax rate from 35% to 21% and the repeal of corporate AMT. The Company recorded $1.1 million as income tax benefit in the fourth quarter of 2017, the period in which the legislation was enacted. The company expects a portion of the AMT to be refunded in the following 12 months.  

On December 22, 2017, SEC Staff Accounting Bulletin No. 118 (SAB 118) was issued to address the application of US GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Act. The impact of the Act was finalized during the year ended December 31, 2018, and no change was made from the previously reported provisional amount.

At December 31, 2018, the Company had federal net operating loss carryforwards related to the 2018 tax year, amounting to $39.1 million which carryforward indefinitely and $228.6 million which begin to expire in 2023. At December 31, 2018, the Company had state net operating loss carryforwards of $97.2 million, which begin to expire in 2028, if not utilized. At December 31, 2018, the Company also had federal and California research and development credit carryforwards aggregating approximately $25.4 million and $19.8 million, respectively. The federal credits will expire in 2025, if not utilized. California research and development credits have no expiration date. At December 31, 2018, the Company also had federal orphan drug credit and AMT carryforwards of approximately $39.3 million and $1.5 million, respectively. The federal orphan drug credits will begin to expire in 2034, if not utilized.  

Under Sections 382 and 383 of Internal Revenue Code of 1986, as amended (Code), if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes, such as research tax credits, to offset its post-change income and taxes may be limited. In general, an “ownership change” occurs if there is a cumulative change in our ownership by “5% shareholders” that exceeds 50 percentage points over a rolling three-year period. Similar rules may apply under state tax laws. The Company in the past experienced an ownership change which has impacted its ability to fully realize the benefit of these net operating loss carryforwards. If the Company experiences additional ownership changes as a result of future transactions in its stock, then the Company may be further limited in its ability to use its net operating loss carryforwards and other tax assets to reduce taxes owed on the net taxable income that the Company earns. Any such limitations on the ability to use its net operating loss carryforwards and other tax assets could adversely impact our business, financial condition and operating results. 

The Company recognizes the financial statements effects of a tax position when it is more likely than not, based on technical merits, that the position will be sustained upon examination.

A reconciliation of the Company’s unrecognized tax benefits is as follows:

	December 31,
(In thousands)	2018			2017		2016
Balance at beginning of year	$	16,658		$	14,260	$	10,022
Increase related to current year tax provision		628			2,398		4,238
Increase related to prior year tax provision		—			—		—
Decrease related to prior year tax provision		(297	)		—		—
Balance at end of year	$	16,989		$	16,658	$	14,260

The unrecognized tax benefits, if recognized and in absence of full valuation allowance, would impact the income tax provision by $16.2 million and $15.9 million as of December 31, 2018 and 2017, respectively. As of December 31, 2018, the Company does not believe that it is reasonably possible that its unrecognized tax benefits would significantly change in the following 12 months.

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The Company has elected to include interest and penalties as a component of tax expense. The Company recorded $15,000 and $14,000 of interest and penalties for the years ended December 31, 2017 and 2016, respectively. The Company recorded an income tax benefit of $86,000 as a result of lapse of statute of limitations for the year ended December 31, 2018. The Company recorded a liability for interest and penalties of $86,000 as of December 31, 2017. There is no liability recorded for interest and penalties as of December 31, 2018.

The Company files federal and state income tax returns in the U.S. and California. Tax years from 2004 forward remain open to examination due to the carryover of net operating losses and other tax attributes.

14. Net Loss per Common Share

The following outstanding common stock equivalents were excluded from the computation of diluted net loss per common share for the periods presented because including them would have been antidilutive:

	Year Ended December 31,
(In thousands)	2018		2017		2016
Options to purchase common stock		4,145		5,217		4,325
RSUs		306		880		576
		4,451		6,097		4,901

15. Selected Quarterly Financial Data (Unaudited)

Selected quarterly results from operations for the years ended December 31, 2018 and 2017 are as follows:

	2018 Quarter Ended
(In thousands, except per share amounts)	March 31			June 30			September 30		December 31
Total revenue	$	7,849		$	6,870		$	19,518	$	10,184
Operating expenses		13,781			11,758			13,727		15,200
Net income (loss)		(5,574	)		(3,976	)		6,115		(4,666	)
Basic and diluted net income (loss) per    common share	$	(0.15	)	$	(0.10	)	$	0.16	$	(0.12	)

	2017 Quarter Ended
(In thousands, except per share amounts)	March 31			June 30			September 30			December 31
Total revenue	$	6,213		$	6,195		$	5,106		$	20,640
Operating expenses		28,971			21,630			16,131			12,395
Net loss		(22,608	)		(15,225	)		(10,692	)		9,463
Basic and diluted net income (loss) per    common share	$	(0.61	)	$	(0.40	)	$	(0.28	)	$	0.25

16. Potential Business Combination with Mereo BioPharma

On December 5, 2018, the Company entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) with Mereo BioPharma Group plc, a public limited company incorporated under the laws of England and Wales (“Mereo”), Mereo US Holdings Inc., a Delaware corporation and a wholly-owned subsidiary of Mereo (“HoldCo”), and Mereo MergerCo One Inc., a Delaware corporation and an indirect wholly-owned subsidiary of Mereo (“Merger Sub”), pursuant to which, among other matters, and subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, Merger Sub will merge with and into OncoMed, with OncoMed surviving the merger as a wholly owned subsidiary of HoldCo, and an indirect wholly-owned subsidiary of Mereo (the “Merger”). The respective boards of directors of OncoMed and Mereo have each unanimously approved the Merger Agreement. The parties expect the Merger will be completed in the second quarter of 2019.

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17. Subsequent Events

In January 2019, the Company signed an agreement to sublease a specified portion of the Company’s office facility located in Redwood City, California. The sublease has a term of 12 months through the end of 2019. The aggregate sublease proceeds for the term of the lease are approximately $0.8 million.

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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Management, with the participation of our principal executive and financial officers, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”) as of the end of the period covered by this Annual Report on Form 10-K. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Based on that evaluation, our principal executive and financial officers concluded that our disclosure controls and procedures were effective as of December 31, 2018 to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our principal executive and financial officers, as appropriate, to allow timely decisions regarding required disclosure.

Management’s Annual Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) of the Exchange Act. Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework (2013) set forth by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2018. Management reviewed the results of its assessment with our Audit Committee. The effectiveness of our internal control over financial reporting as of December 31, 2018 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in its report, which appears in this Item under the heading “Report of Independent Registered Public Accounting Firm.”

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of OncoMed Pharmaceuticals, Inc.

Opinion on Internal Control over Financial Reporting

We have audited OncoMed Pharmaceuticals, Inc.’s internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework)(the COSO criteria). In our opinion, OncoMed Pharmaceuticals, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the balance sheets of OncoMed Pharmaceuticals, Inc. as of December 31, 2018 and 2017, the related statements of operations, comprehensive loss, stockholders’ equity (deficit) and cash flows for each of the three years in the period ended December 31, 2018, and the related notes and our report dated March 7, 2019 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.  

/s/ Ernst & Young LLP

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Redwood City, California

March 7, 2019

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Item 9B. Other Information

None.  

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PART III

Item 10. Directors, Executive Officers and Corporate Governance

Board of Directors

Our Board is divided into three classes. Each class consists, as nearly as possible, of one-third of the total number of directors, and each class has a three-year term. Unless the Board determines that vacancies (including vacancies created by increases in the number of directors) shall be filled by the stockholders, and except as otherwise provided by law, vacancies on the Board may be filled only by the affirmative vote of a majority of the remaining directors. A director elected by the Board to fill a vacancy (including a vacancy created by an increase in the number of directors) shall serve for the remainder of the term of the class of directors in which the vacancy occurred and until such director’s successor is elected and qualified.

The Board currently consists of seven seated directors, divided into the following three classes:

• Class I directors: Michael S. Wyzga, Rick E Winningham and Perry A. Karsen, whose current terms will expire at the annual meeting of stockholders to be held in 2020;

• Class II directors: John Lewicki, Ph.D., whose current term will expire at the annual meeting of stockholders to be held in 2021; and

• Class III directors: Jack W. Lasersohn, J.D., Deepa R. Pakianathan, Ph.D. and Jonathan D. Root, M.D., whose current terms will expire at the Annual Meeting.

The following table sets forth information for our board or directors with respect to their position/office held with the Company and their ages as of December 31, 2018.

Name	Age	Position/Office Held With the Company	Director Since
Class I Directors whose terms expire at the 2020 Annual Meeting of Stockholders
Perry A. Karsen(1)(3)(4)	63	Executive Chairman	2016
Rick E Winningham(2)(4)	59	Director	2015
Michael S. Wyzga(1)	63	Director	2013
Class II Directors whose terms expire at the 2021 Annual Meeting of Stockholders
John A. Lewicki, Ph.D.	67	Director, President and Chief Executive Officer	2018
Class III Directors whose terms expire at the Annual Meeting of Stockholders
Jack W. Lasersohn, J.D.(3)(4)	66	Director	2005
Deepa R. Pakianathan, Ph.D.(1)(2)(4)	54	Director	2008
Jonathan D. Root, M.D.(2)	59	Director	2004

(1)	Member of the audit committee.
(2)	Member of the compensation committee.
(3)	Member of the nominating and corporate governance committee.
(4)	Member of the business development and strategy committee.

Perry A. Karsen has served as a director on our board of directors since January 2016 and as Executive Chairman of the board of directors since January 2018. Mr. Karsen was the Chief Executive Officer of Celgene Cellular Therapeutics from May 2013 until his retirement from Celgene Corporation at the end of 2015. Mr. Karsen held the position of Executive Vice President and Chief Operations Officer at Celgene Corporation from July 2010 to May 2013 and he served as Senior Vice President and Head of Worldwide Business Development at Celgene and

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President of Asia/Pacific Region, from May 2004 until February 2009. Mr. Karsen was the President and Chief Executive Officer of Pearl Therapeutics, a privately held biotechnology company subsequently acquired by AstraZeneca, from February 2009 until July 2010. In addition, Mr. Karsen held executive positions at Human Genome Sciences, Bristol-Myers Squibb, Genentech and Abbott Laboratories earlier in his career. He also was a General Partner at Pequot Ventures from 2000 to 2003, focusing on investments in biotechnology and medical devices. Mr. Karsen currently serves on the Board of Directors of the following publicly listed companies:  Jounce Therapeutics since January 2016 where he is a member of the audit, compensation and nominating and governance committees, Voyager Therapeutics since July 2015 where he is a member of the compensation, audit and nominating and governance committees, and Intellia Therapeutics since 2016 where he is a member of the compensation and nominating and governance committees.  He also currently serves on the Board of Directors of The Gladstone Foundation, a private company. He is a past member of the Board of Directors of the following publicly listed companies: Agios Pharmaceuticals from 2011 to 2015, Alliqua Biomedical from 2014 to 2015 and Navidea Therapeutics from 2014 to 2015, where he was a member of the audit committee.  Mr. Karsen is also a past member of the Board of Directors and the Executive Committee of the Biotechnology Industry Organization (BIO) and the Board of Directors of the Alliance for Regenerative Medicine (ARM), each a private company. Mr. Karsen received a B.S. in Biological Sciences from the University of Illinois, Urbana, a Master of Arts in Teaching Biology from Duke University, and an MBA from the Kellogg School of Management at Northwestern University.

Mr. Karsen has been chosen to serve on our board of directors due to his senior management experience at biopharmaceutical and biotechnology companies and his current and past experience on boards of directors of multiple public and private biotechnology, pharmaceutical and medical device companies.

Rick E Winningham has served as a director on our board of directors since June 2015. Mr. Winningham has served as Chief Executive Officer and Chairman of the board of directors of Theravance Biopharma since August 2014 and as a member of the Theravance Biopharma board of directors since July 2013.  He is also a member of Theravance BioPharma’s science and technology committee. From 2001 to 2014 he served as Chief Executive Officer of Theravance, Inc., during which time the company formed a transformational alliance with GlaxoSmithKline, completed a successful initial public offering, and advanced a number of products to commercialization before separating into two independent publicly traded companies, Theravance, Inc. (now called Innoviva, Inc.) and Theravance Biopharma. Prior to joining Theravance, Inc., Mr. Winningham served as President, Bristol-Myers Squibb (BMS) Oncology/Immunology/Oncology Therapeutics Network (OTN) from 1997 to 2001, and also as President of Global Marketing from 2000 to 2001.  In addition to operating responsibility for U.S. Oncology/Immunology/OTN, Mr. Winningham had full responsibility for Global Marketing in the Cardiovascular, Infectious Disease, Immunology, Oncology/Metabolics and GU/GI/Neuroscience therapeutic areas.  Over a fifteen-year period with BMS and its predecessor, Bristol-Myers, Mr. Winningham held various U.S. and global management positions. During his tenure with BMS, he was associated with the development and commercialization of several major pharmaceutical products, such as Taxol®, Paraplatin®, Zerit®, Videx®, Reyataz®, and Abilify®. Mr. Winningham has been a member of the Board of Directors of Jazz Pharmaceuticals PLC, a publicly listed company, since May 2010. He is also a past member of the nominating and governance and compensation committees of Jazz Pharmaceuticals. He is also a member of the Board of Directors of the following private companies: California Life Sciences Association since March 2015 and the Biotechnology Innovation Organization (BIO) since February 2014. He holds an M.B.A. from Texas Christian University and a B.S. from Southern Illinois University.

Mr. Winningham has been chosen to serve on our board of directors due to his senior management experience at biopharmaceutical and biotechnology companies and his experience as a member of the boards of directors of multiple public biopharmaceutical companies.

Michael S. Wyzga has served as a director on our board of directors since October 2013. Mr. Wyzga is currently the President of MSW Consulting, Inc., a private company focused on strategic counseling in the life sciences area. From December 2011 until November 2013, Mr. Wyzga served as President and Chief Executive Officer and a member of the board of directors of Radius Health, Inc., a publicly traded biopharmaceutical company. Prior to that, Mr. Wyzga served in various senior management positions at Genzyme Corporation, a publicly traded global biotechnology company. Mr. Wyzga joined Genzyme in February 1998 and most recently served as Executive Vice President, Finance from May 2003 until November 2011 and as chief financial officer from July 1999 until November 2011. Since October 2018, Mr. Wyzga has served as a member of the board of directors of LogicBio, a publicly traded company, where he is also the chair of the audit committee. Since February 2015, Mr. Wyzga has also served as a member of the board of directors of Exact Sciences Corporation, a publicly traded

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medical technology company, where he is also chair of the audit committee. Since February 2016, Mr. Wyzga has also served as Chairman of the board of directors of GenSight Biologics S.A., a publicly traded biopharmaceutical company. Since October 2018, Mr. Wyzga has also served as Chairman of the board of directors of X4 Pharmaceuticals, a privately-held company. Mr. Wyzga also previously served as a member of the board of directors of Idenix Pharmaceuticals, Inc., a publicly traded biotechnology company that was acquired by Merck in August 2014, where he also served as the chair of the audit committee and a member of the compensation committee,  Altus Pharmaceuticals, Inc., a publicly traded biopharmaceutical company that ceased operations in November 2009, as a member of the Supervisory Board of Prosensa Holding B.V., a publicly traded biopharmaceutical company, from June 2014 until the Prosensa acquisition by BioMarin Falcon B.V. in December 2014, and Akebia Therapeutics, Inc., a publicly traded biopharmaceutical company, where he was also a member of the compensation committee and chair of the audit committee, from February 2014 until December 2018. He received an M.B.A. from Providence College and a B.S. from Suffolk University.

Mr. Wyzga has been chosen to serve on our board of directors due to his senior management experience at biopharmaceutical and biotechnology companies, his current and past experience on boards of directors of public companies, including his experience as chair of the audit committee at Idenix Pharmaceuticals and Akebia Therapeutics, and his financial expertise.

John A. Lewicki, Ph.D. has served as our Chief Executive Officer and as a director on our board of directors since March 2018 and as our President since January 2018. Dr. Lewicki previously served as a member of the Office of the President from September 2017 until January 2018, as our Executive Vice President, Research and Development from January 2016 until January 2018, as our Executive Vice President and Chief Scientific Officer from December 2009 until January 2016, and as our Senior Vice President, Research and Development from 2004 until December 2009. From 1983 to 2000, Dr. Lewicki served in various capacities at Scios, Inc., a publicly traded biopharmaceutical company that developed drugs for the treatment of cardiovascular, inflammatory and other diseases, including 12 years as its Vice President of Research, in which capacity he managed the company’s research organization across diverse therapeutic areas. Dr. Lewicki has authored or coauthored over 80 published papers and book chapters and is listed as an inventor on over 30 issued U.S. patents. Dr. Lewicki received a Ph.D. in Physiology/Pharmacology from the University of California, San Diego.

Dr. Lewicki has been chosen to serve on our board of directors due to his role as our President and Chief Executive Officer, his many years of experience in management positions at the Company and Scios, Inc., and his significant scientific expertise in biotechnology.

Jack W. Lasersohn, J.D. has served as a director on our board of directors since July 2005 and served as Lead Director from August 2013 until January 2018. Since 1989, Mr. Lasersohn has been a General Partner or Manager of The Vertical Group, a private venture capital firm that is focused on the fields of medical technology and biotechnology. Prior to that time, Mr. Lasersohn was a Vice President and then Director of the venture capital division of F. Eberstadt & Co., Inc., an investment bank and The Vertical Group’s predecessor. Mr. Lasersohn has served on the board of directors of over 25 publicly traded and privately held medical or biotechnology companies and served on the Executive Committee of the Board of the National Venture Capital Association until April 2012. From 1995 until May 2016, Mr. Lasersohn served on the board of directors of the Masimo Corporation, a publicly traded medical technology company that develops noninvasive patient monitoring products, where he also served as a member of its compensation committee and as chairman of its nominating and corporate governance committee. Mr. Lasersohn served on the strategic team of the Entrepreneur In Residence program at the U.S. Food and Drug Administration pursuant to an appointment by the Office of the President, and has served as a panel member of the MEDCAC Panel pursuant to appointment by CMS. Mr. Lasersohn received a B.S. in Physics from Tufts University, an M.A. from The Fletcher School of Law and Diplomacy, and a J.D. from the Yale Law School.  

Mr. Lasersohn has been chosen to serve on our board of directors due to his long experience as a venture capital investor and as a member of the boards of directors of multiple public and private medical device and biotechnology companies.

Deepa R. Pakianathan, Ph.D. has served as a director on our board of directors since December 2008. Since 2001, Dr. Pakianathan has been a Managing Member at Delphi Ventures, a venture capital firm focused on biotechnology and medical device investments, and leads the firm’s biotechnology investment activities. From 1998 to 2001, Dr. Pakianathan was a senior biotechnology banker at JPMorgan, a global investment bank, from 1997 to 1998, she was a research analyst covering biotech at Genesis Merchant Group and from 1993 to 1997 she was a post-doctoral research scientist at Genentech. Dr. Pakianathan serves on the boards of directors of Alder

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Biopharmaceuticals, Inc., a publicly traded biopharmaceutical company, where she serves as a member of its compensation committee, Karyopharm Therapeutics, Inc., a publicly traded biopharmaceutical company, where she serves as a member of its audit committee and chair of its compensation committee, and Calithera Biosciences, Inc., a publicly traded biopharmaceutical company, where she serves as a member of its audit committee and chair of its nominating and governance committee. From 2004 to 2016, Dr. Pakianathan served on the board of directors of Alexza Pharmaceuticals, Inc., a publicly traded biopharmaceutical company, where she also served as a member of its governance, nomination and compensation committee. Dr. Pakianathan received a B.Sc. from the University of Bombay, India, a M.Sc. from The Cancer Research Institute at the University of Bombay, India, and an M.S. and Ph.D. from Wake Forest University.

Dr. Pakianathan has been chosen to serve on our board of directors due to her experience as a venture capital investor in, and director of, multiple biotechnology companies, as well as her experience as a biotechnology investment banker, research analyst and research scientist.

Jonathan D. Root, M.D. has served as a director on our board of directors since August 2004. Since 1998, Dr. Root has been a Managing Member at U.S. Venture Partners, a venture capital firm. Prior to joining U.S. Venture Partners, Dr. Root was on the faculty and clinical staff at The New York Hospital-Cornell Medical Center in New York City, where he served as Assistant Professor of Neurology and Director of the Neurology-Neurosurgery Special Care Unit. Dr. Root currently serves on the boards of directors of several privately held healthcare technology companies. Dr. Root received an A.B. in Economics from Dartmouth College, an M.D. from the University of Florida College of Medicine and an M.B.A. from Columbia University.

Dr. Root has been chosen to serve on our board of directors due to his medical expertise and his clinical experience, and his experience as a venture capital investor in, and director of, multiple biotechnology companies.

Executive Officers

The following table sets forth information for our executive officers with respect to their position/office held with the Company and their ages as of December 31, 2018.

Name	Age	Position/Office Held With the Company
John A. Lewicki, Ph.D.	67	President and Chief Executive Officer
Alicia J. Hager, J.D., Ph.D.	49	Senior Vice President and General Counsel
Robert Stagg, Pharm.D.	60	Senior Vice President, Clinical Research and Development
Yvonne Li	59	Vice President, Finance, Controller and Administration

John A. Lewicki, Ph.D. has served as our President since January 2018 and as Chief Executive Officer and director on our board of directors since March 2018. Please see Dr. Lewicki’s biography set forth above in the section entitled “Directors.”

Alicia J. Hager, J.D., Ph.D. has served as our Senior Vice President and General Counsel since January 2017, and previously served as our Vice President and General Counsel from December 2012, our Vice President, Legal Affairs from July 2010 and our Chief Patent Counsel from November 2008. From June 2008 to October 2008, Dr. Hager served as our Senior Patent Counsel. From October 2002 to May 2008, Dr. Hager was an associate at the law firm of Morrison & Foerster LLP, where she served as intellectual property counsel for biotech and pharmaceutical clients. Prior to Morrison & Foerster LLP, Dr. Hager was a patent agent at the law firm of Heller Ehrman White & McAuliffe LLP. Dr. Hager received an A.B. in Chemistry from Occidental College, an A.M. and Ph.D. in Chemistry from Harvard University and a J.D. from Stanford Law School.

Robert Stagg, Pharm.D. has served as our Senior Vice President, Clinical Research and Development since December 2016. In addition, he previously served as our Vice President of Clinical Research from January 2009 to December 2016, and prior to that as our Vice President of Clinical Research and Regulatory from September 2007 to January 2009. Prior to joining OncoMed, Dr. Stagg served as Vice President of Regulatory and Drug Safety at PDL BioPharma, and he previously served in a variety of clinical research capacities at various pharmaceutical and biotechnology companies. Dr. Stagg received his Pharm.D. from the University of the Pacific, and he subsequently did his residency and Oncology fellowship at the University of California, San Francisco (UCSF). Subsequently, he

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joined the faculty at UCSF where he was an Assistant Clinical Professor from July 1983 to January 1991. While at UCSF his primary focus was oncology clinical research.

Yvonne Li has served as our Vice President, Finance, Controller and Administration since March 2014, and previously served as our Vice President, Controller from December 2012, our Senior Director, Controller from January 2010, and our Director, Controller from April 2007. Prior to joining OncoMed, Ms. Li served as Director of Accounting at Anita Borg Institute and held various positions at Actel Corporation. Ms. Li received a Master of Business Administration with a concentration in Finance from San Francisco State University. Ms. Li is a member of the American Institute of Certified Public Accountants.

Changes in Directors and Executive Officers

There following are changes in our directors and executive officers for the year ended December 31, 2018.

• On January 1, 2018, Paul Hastings informed our Board of his decision to resign, effective immediately, as a member and Chairman of the Board and as the Company’s President and Chief Executive Officer due to personal reasons. Following Mr. Hastings’ resignation, on January 3, 2018, the Board decreased the authorized number of directors on the Board from nine to eight directors, thereby eliminating the vacancy left as a result of Mr. Hastings’ resignation. In addition, the Board appointed Perry Karsen as Chairman of the Board, effective immediately. As a result of Mr. Karsen’s appointment as Chairman of the Board, the Board also determined that Jack W. Lasersohn would no longer serve as Lead Director of the Board, effective immediately. Mr. Lasersohn will continue to serve as a member of the Board.

• On January 31, 2018, Dr. Lewicki, at that time the Company’s Executive Vice President, Research and Development, and a member of the Office of the President, was appointed by our Board as the Company’s President. On March 16, 2018, our Board appointed Dr. Lewicki as the Company’s President and Chief Executive Officer.

• On January 28, 2018, Sunil Patel, the Company’s Executive Vice President and Chief Financial Officer, Principal Accounting Officer, and a member of the Office of the President at the time, notified the Company of his intention to resign from the Company, effective on or about March 9, 2018.

• On March 16, 2018, our Board appointed Ms. Li, the Company’s Vice President, Finance, Controller and Administration, as the Company’s principal accounting officer and principal financial officer, effective immediately.

• Dr. Lewicki and Denise Scots-Knight, Ph.D., were nominated and elected at the annual meeting of stockholders on June 22, 2018 to serve as Class II directors. Each elected director will hold office from the date of his or her election by the stockholders until the third subsequent annual meeting of stockholders or until his or her successor is elected and has been qualified, or until such director’s earlier death, resignation or removal.

• Laurence Lasky did not stand for reelection as a member of our Board of Directors at the 2018 annual meeting of stockholders. As a result, he ceased serving as a non-employee director in June 2018.

• On September 28, 2018, Dr. Scots-Knight informed our Board of her decision to resign, effective immediately, as a member of our Board due to other professional commitments.

• The Company terminated the employment of Austin Gurney, Ph.D., the Company’s Chief Scientific Officer and Senior Vice President, Research, effective as of December 21, 2018 in connection with the reduction in force approved by our Board on December 1, 2018.

Committees of the Board

Audit Committee

Our audit committee oversees our corporate accounting and financial reporting process. Among other matters, the audit committee:

• appoints our independent registered public accounting firm;

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• evaluates the independent registered public accounting firm’s qualifications, independence and performance;

• determines the engagement of the independent registered public accounting firm;

• reviews and approves the scope of the annual audit and the audit fee;

• discusses with management and the independent registered public accounting firm the results of the annual audit and the review of our quarterly financial statements;

• approves the retention of the independent registered public accounting firm to perform any proposed permissible audit and non-audit services;

• monitors the rotation of partners of the independent registered public accounting firm on our engagement team as required by law;

• is responsible for reviewing our financial statements and our management’s discussion and analysis of financial condition and results of operations to be included in our annual and quarterly reports to be filed with the SEC;

• reviews our critical accounting policies and estimates;

• reviews related party transactions; and

• annually reviews the audit committee charter and the committee’s performance.

During 2018, the members of our audit committee were Messrs. Wyzga and Karsen and Dr. Pakianathan, with Mr. Wyzga serving as the chairperson. Each member of our audit committee meets the requirements for financial literacy under the applicable rules and regulations of the SEC and Nasdaq. Our Board has determined that Mr. Wyzga is an audit committee financial expert as defined under the applicable rules of the SEC and has the requisite financial sophistication as defined under the applicable rules and regulations of Nasdaq. Our Board has determined that each of Messrs. Wyzga and Karsen and Dr. Pakianathan are independent under the applicable rules of Nasdaq and under the applicable rules of the SEC. The audit committee operates under a written charter that satisfies the applicable standards of the SEC and Nasdaq. A copy of the audit committee charter is available to security holders at http://www.oncomed.com/invest/governance.cfm.

Compensation Committee

Our compensation committee reviews and recommends policies relating to compensation and benefits of our officers and employees. The compensation committee reviews and approves corporate goals and objectives relevant to compensation of our Chief Executive Officer and other executive officers, evaluates the performance of these officers in light of those goals and objectives, and sets the compensation of these officers, other than the Chief Executive Officer, based on such evaluations. The Board retains the authority to determine and approve, upon the recommendation of the compensation committee, the compensation of the Chief Executive Officer, unless such authority has been delegated to the compensation committee. Our executive officers submit proposals to the Board regarding our executive and director compensation. The compensation committee also approves grants of stock options and other awards under our stock plans. The compensation committee will review and evaluate, at least annually, the performance of the compensation committee and its members, including compliance of the compensation committee with its charter. During 2018, the members of our compensation committee were Mr. Winningham and Drs. Pakianathan, Scots-Knight and Root, with Mr. Winningham serving as the chairperson. Dr. Scots-Knight left the compensation committee in September 2018 when she resigned from the Board. No current member of our compensation committee has at any time been one of our officers or employees. Each current member of our compensation committee is an independent, outside and non-employee director under the applicable rules and regulations of the SEC, Nasdaq and the Internal Revenue Code of 1986, as amended, relating to compensation committee independence. The compensation committee operates under a written charter that satisfies the applicable standards of the SEC and Nasdaq. A copy of the compensation committee charter is available to security holders at http://www.oncomed.com/invest/governance.cfm.

In 2018, the compensation committee retained Radford, a national executive compensation consulting firm, to conduct market research and analysis on our various executive positions, to assist the committee in developing appropriate incentive plans for our executives on an annual basis, to provide the committee with advice and ongoing

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recommendations regarding material executive compensation decisions, and to review compensation proposals of management. In compliance with the disclosure requirements of the SEC regarding the independence of compensation consultants, Radford addressed each of the six independence factors established by the SEC with the compensation committee. Its responses affirmed the independence of Radford on executive compensation matters. Based on this assessment, the compensation committee determined that the engagement of Radford does not raise any conflicts of interest or similar concerns. The compensation committee also evaluated the independence of other outside advisors to the compensation committee, including outside legal counsel, considering the same independence factors and concluded their work for the compensation committee does not raise any conflicts of interest.

Nominating and Corporate Governance Committee

The nominating and corporate governance committee is responsible for making recommendations to our Board regarding candidates for directorships and the size and composition of our Board. In addition, the nominating and corporate governance committee is responsible for overseeing our corporate governance policies and reporting and making recommendations to our Board concerning governance matters. During 2018, the members of our nominating and corporate governance committee were Drs. Lasky and Scots-Knight and Messrs. Lasersohn and Karsen, with Mr. Lasersohn serving as the chairperson of the committee. Dr. Lasky ceased serving as a member of the nominating and corporate governance committee in June 2018 when he ceased serving as a director. Dr. Scots-Knight left the nominating and corporate governance committee in September 2018 when she resigned from the Board. Each current member of our nominating and corporate governance committee is an independent director under the applicable rules and regulations of Nasdaq relating to nominating and corporate governance committee independence. The nominating and corporate governance committee operates under a written charter. A copy of the nominating and corporate governance committee charter is available to security holders at http://www.oncomed.com/invest/governance.cfm.

In recommending candidates for election to the Board, the independent members of the nominating and corporate governance committee may consider the following criteria, among others: diversity of personal and professional background, perspective and experience; personal and professional integrity, ethics and values; experience in corporate management, operations or finance, such as serving as an officer or former officer of a publicly held company, and a general understanding of marketing, finance and other elements relevant to the success of a publicly traded company in today’s business environment; experience relevant to the Company’s industry and with relevant social policy concerns; experience as a board member of another publicly held company; relevant academic expertise or other proficiency in an area of the Company’s operations; practical and mature business judgment, including ability to make independent analytical inquiries; promotion of a diversity of business or career experience relevant to the success of the Company. The Board evaluates each individual in the context of the Board as a whole, with the objective of assembling a group that can best maximize the success of the business and represent stockholder interests through the exercise of sound judgment using its diversity of experience in these various areas.

The nominating and corporate governance committee will consider director candidates recommended by stockholders. For a stockholder to make any recommendation or nomination for election to the Board at an annual meeting, the stockholder must provide notice to the Company, which notice must be delivered to, or mailed and received at, the Company’s principal executive offices not less than 90 days and not more than 120 days prior to the one-year anniversary of the preceding year’s annual meeting; provided, that if the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, the stockholder’s notice must be delivered, or mailed and received, not later than 90 days prior to the date of the annual meeting or, if later, the 10th day following the date on which public disclosure of the date of such annual meeting is made. Further updates and supplements to such notice may be required at the times, and in the forms, required under our bylaws. As set forth in our bylaws, submissions must include the name and address of the proposed nominee, information regarding the proposed nominee that is required to be disclosed in a proxy statement or other filings in a contested election pursuant to Section 14(a) under the Exchange Act of 1934, as amended (the “Exchange Act”), information regarding the proposed nominee’s indirect and direct interests in shares of the Company’s common stock, and a completed and signed questionnaire, representation and agreement of the proposed nominee. Our bylaws also specify further requirements as to the form and content of a stockholder’s notice. We recommend that any stockholder wishing to make a nomination for director review a copy of our bylaws, as amended and restated to date, which is available, without charge, from our General Counsel, at 800 Chesapeake Drive, Redwood City, California 94063.

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Business Development and Strategy Committee

On March 1, 2018, the Board designated a special business development and strategy committee of the Board. The business development and strategy committee is responsible for identifying, reviewing, evaluating, and negotiating strategic transactions and other business development opportunities consistent with the Company’s corporate strategy. The business development and strategy committee will recommend appropriate strategic transactions and other business development opportunities to the Board. Entry into any such strategic transaction or other business development opportunity will require the review and approval of the Board. During 2018, the members of our business development and strategy committee were Drs. Pakianathan and Scots-Knight and Messrs. Karsen, Lasersohn, and Winningham, with Dr. Pakianathan serving as the chairperson of the committee. Dr. Scots-Knight left the Business Development and Strategy Committee when she resigned from the Board in September 2018.

Code of Ethics and Related Policies

We have adopted a Code of Business Conduct and Ethics that applies to our officers, directors and employees which is available on our website at www.oncomed.com. The Code of Business Conduct and Ethics is intended to qualify as a “code of ethics” within the meaning of Section 406 of the Sarbanes-Oxley Act of 2002 and Item 406 of Regulation S-K. In addition, we intend to promptly disclose (1) the nature of any amendment to our Code of Business Conduct and Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions and (2) the nature of any waiver, including an implicit waiver, from a provision of our code of ethics that is granted to one of these specified officers, the name of such person who is granted the waiver and the date of the waiver on our website in the future.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Company’s directors and executive officers, and persons who own more than 10% of a registered class of the Company’s equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. Officers, directors and greater than 10% beneficial owners are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file.

To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required, during the fiscal year ended December 31, 2018, none of our directors, officers or greater than 10% beneficial owners failed to file on a timely basis any reports required by Section 16(a) of the Exchange Act, except with respect to the transactions reported on the Form 5 filed by Dr. Lewicki on February 13, 2019 and Form 5 filed by Ms. Li on February 13, 2019.

Item 11. Executive Compensation

Director Compensation

We have adopted a non-employee director compensation policy, which was last amended on March 1, 2018. We do not provide directors who are our employees with additional compensation for their service as directors.

Under our non-employee director compensation policy, each non-employee director receives an annual retainer of $40,000. Non-employee directors receive additional annual retainers of $10,000 for serving on the audit committee (or $15,000 for serving as the chair of the audit committee), $7,000 for serving on the compensation committee (or $10,000 for serving as the chair of the compensation committee), $5,000 for serving on the nominating and corporate governance committee (or $8,000 for serving as the chair of the nominating and corporate governance committee), and $10,000 for serving on the business development and strategy committee (or $15,000 for serving as the chair of the business development and strategy committee). In addition, for fiscal year 2018, Dr. Lasky received an annual retainer of $7,000 for assuming certain additional responsibilities relating to our scientific strategy (which was pro-rated to $4,000 for his partial service in 2018) and Mr. Karsen received an annual retainer of $7,000 for assuming certain additional responsibilities relating to our business development strategy (which was pro-rated to $583 for his partial service in 2018), in each case as requested by the Board. Retainers are

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paid to our non-employee directors quarterly in arrears and are pro-rated for any partial quarter of service. Each non-employee director is granted an annual option under our 2013 Equity Incentive Award Plan (or the “2013 Plan”) to purchase 15,000 shares of our common stock on the date of each annual meeting of stockholders, and such option will vest as to 100% of the shares subject thereto upon the earlier of one year following the grant date or the date of the subsequent year’s annual meeting of stockholders, subject to the director’s continued service to OncoMed through the vesting date. In addition, upon a director’s initial appointment or election to our Board, he or she is granted an option under our 2013 Plan to purchase that number of shares equal to 0.1% of our then-outstanding capital stock, and the option vests in three equal annual installments, subject to the director’s continued service to OncoMed through the applicable vesting date. The policy also provides that upon a “Change in Control” of OncoMed (as defined in our 2013 Plan), all outstanding equity awards granted under the 2013 Plan or any other equity incentive plan maintained by OncoMed that are held by a non-employee director will become fully vested and/or exercisable. Members of our board of directors are also reimbursed for reasonable travel and other out-of-pocket expenses.

In addition, in February 2018 the Board approved compensation to Mr. Karsen in connection with his appointment as Executive Chairman, effective January 3, 2018, in addition to his existing compensation under our non-employee director compensation policy, consisting of a monthly retainer of $25,000 (or $30,000 for any month in which Mr. Karsen provides more than 85 hours of service). In connection with this appointment, Mr. Karsen was also granted an option to purchase 120,000 shares of our common stock at an exercise price of $2.29 per share and 48,000 restricted stock units (“RSUs”), in each case vesting monthly over six months from January 3, 2018, subject to Mr. Karsen’s continued service as Executive Chairman through each vesting date, as well as 22,500 RSUs, which were fully vested at grant.

The following table sets forth information concerning the compensation earned by our non-employee directors during the year ended December 31, 2018.

Name	Fees Earned or Paid in Cash ($)		Option Awards(1)(2) ($)		Stock Awards(1) ($)		Total ($)
Perry A. Karsen(3)		364,750		218,142		161,445		744,337
Jack W. Lasersohn, J.D.		57,167		26,682		—		83,849
Laurence Lasky, Ph.D.(4)		24,857		29,621		—		54,478
Deepa R. Pakianathan, Ph.D.		70,750		26,682		—		97,432
Jonathan D. Root, M.D.		47,000		26,682		—		73,682
Denise Scots-Knight, Ph.D.(5)		45,667		26,682		—		72,349
Rick E Winningham		59,167		26,682		—		85,849
Michael S. Wyzga		55,000		26,682		—		81,682

(1)

Amount reflects the aggregate grant date fair value of restricted stock units and stock options granted during 2018 computed in accordance with ASC Topic 718. The assumptions used in the valuation of these awards are set forth in Note 11 to our Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K. The grant date fair value of these awards is determined for financial statement reporting purposes and does not correspond to the actual value that the directors will receive from the awards.

(2)

The following options held by our non-employee directors were outstanding as of December 31, 2018, no other equity awards held by our non-employee directors were outstanding as of December 31, 2018:

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Name	Shares Subject to Outstanding Options
Perry A. Karsen		195,189
Jack W. Lasersohn, J.D.		75,000
Laurence Lasky, Ph.D.		—
Deepa R. Pakianathan, Ph.D.		75,000
Jonathan D. Root, M.D.		75,000
Denise Scots-Knight, Ph.D.		—
Rick E Winningham		75,000
Michael S. Wyzga		102,853

(3)	On February 26, 2018, our board of directors approved the appointment of Perry Karsen, at that time the chairman of our board of directors, as Executive Chairman, effective January 3, 2018. In addition to his existing compensation under our non-employee director compensation policy, as Executive Chairman Mr. Karsen will receive a monthly retainer of $25,000 (or $30,000 for any month in which Mr. Karsen provides more than 85 hours of service). In connection with this appointment, Mr. Karsen was granted an option to purchase 120,000 shares of our common stock at an exercise price of $2.29 per share and 48,000 restricted stock units (RSUs), in each case vesting monthly over six months from January 3, 2018, subject to Mr. Karsen’s continued service as Executive Chairman through each vesting date, as well as 22,000 RSUs, which were fully vested at grant.
(4)	Mr. Lasky did not stand for reelection as a member of our Board of Directors at the 2018 annual meeting of stockholders. As a result, he ceased serving as a non-employee director in June 2018.
(5)	On September 28, 2018, Dr. Scots-Knight informed the Board of her decision to resign, effective immediately, as a member of the OncoMed Board due to other professional commitments.

Executive Compensation

The following is a discussion and analysis of compensation arrangements of our named executive officers (“NEOs”).

We seek to ensure that the total compensation paid to our executive officers is reasonable and competitive. Compensation of our executives is structured around the achievement of individual performance and near-term corporate targets as well as long-term business objectives.

Our NEOs for fiscal year 2018 were as follows:

• John A. Lewicki, Ph.D., President and Chief Executive Officer;

• Robert Stagg, Pharm.D., Senior Vice President, Clinical Research and Development;

• Alicia Hager, J.D., Ph.D., Senior Vice President and General Counsel;

• Paul Hastings, former Chairman, Chief Executive Officer and President;

• Sunil Patel, former Executive Vice President and Chief Financial Officer; and

• Austin Gurney, Ph.D., former Chief Scientific Officer, Senior Vice President, Research.

2018 Summary Compensation Table

The following table sets forth total compensation paid to our NEOs, who are comprised of (1) the three individuals who served as our principal executive officer in fiscal year 2018, (2) our next two highest compensated executive officers who were serving as executive officers as of December 31, 2018, other than the principal executive officers, and (3) an additional individual for whom disclosure would have been provided but for the fact that the individual was not serving as an executive officer as of December 31, 2018.

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Name and Principal Position	Year	Salary ($)		Bonus(1) ($)		Option Awards(2) ($)		Stock Awards(2) ($)		Non-Equity Incentive Plan Compensation(3) ($)		Other(4) ($)		Total ($)
John A. Lewicki, Ph.D.,	2018		459,986		158,000		729,900		—		115,593		—		1,463,479
President and Chief Executive    Officer	2017		419,777		—		967,675		192,925		167,911		—		1,748,288
Robert Stagg	2018		407,227		79,000		193,095		—		130,313		—		809,635
Senior Vice President , Clinical    Research and Development	2017
Alicia Hager	2018		359,091		79,000		193,095		—		143,636		—		774,822
Senior Vice President and    General Counsel	2017		347,619		—		804,964		154,536		125,143		—		1,432,262
Paul Hastings,	2018		21,053		—		—		—		—		856,652		877,706
Former Chairman,  President    and Chief Executive Officer(5)	2017		551,127		—		1,857,110		169,650		60,624		—		2,638,511
Sunil Patel,	2018		108,561		—		275,850		—		—		—		384,411
Former Executive Vice President    and Chief Financial Officer(6)	2017		406,117		—		939,700		183,600		167,780		—		1,697,197
Austin Gurney, Ph.D.,	2018		383,033		—		193,095		—		—		693,402		1,269,530
Former Chief Scientific Officer,    and  Senior Vice President,    Research(7)	2017		365,612		—		804,964		154,536		116,996		—		1,442,108

(1)	Represents amounts paid pursuant to certain retention bonuses in order to encourage continued service to the company, which where payable to the NEOs if they were employed by the company through December 31, 2018.
(2)	Amounts reflect the aggregate grant date fair value of restricted stock units and stock options computed in accordance with ASC Topic 718. The assumptions used in the valuation of these awards are set forth in Note 11 to our Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K. The grant date fair value of these awards is determined for financial statement reporting purposes and does not correspond to the actual value that the NEOs will receive from the awards.
(3)	Represents amount paid under our cash incentive programs which are earned by our NEOs pursuant to the achievement of certain performance objectives. For fiscal year 2018, these amounts were paid to our NEOs in December 2018. Please see the descriptions of the annual bonuses paid to our NEOs in “Narrative to 2018 Summary Compensation Table and Outstanding Equity Awards at 2018 Fiscal Year End—Terms and Conditions of Performance-Based Annual Bonus Program” below.
(4)	Represents for Mr. Hastings (i) $549,007 for continued payment of Mr. Hastings’ base salary through December 31, 2018, (ii) $4,525 for continued health care coverage, and (ii) $303,120, which represents Mr. Hastings’ target bonus for fiscal year 2018; and for Dr. Gurney (i) $79,000 which represents the amount of his retention bonus had he remained employed through December 31, 2018, (ii) $527,212 which represents 12 months of Dr. Gurney’s base, which has been accrued, and 12 months of Dr. Gurney’s target bonus for fiscal year 2018, which was paid in December 2018, (iii) $75,316, which represents a pro-rated portion of his annual performance bonus earned for the year of termination and (iv) $11,874 which has been accrued for continued health care coverage. For more details regarding the severance received by Mr. Hastings and Dr. Gurney, please see “Narrative to 2018 Summary Compensation Table and Outstanding Equity Awards at 2018 Fiscal Year End—Terms and Conditions of Offer Letter and Severance Agreement for Paul Hastings” and “Narrative to 2018 Summary Compensation Table and Outstanding Equity Awards at 2018 Fiscal Year End—Terms and Conditions of Separation Agreement for Austin Gurney” below.
(5)	Mr. Hastings resigned from OncoMed on January 1, 2018.

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(6)	Mr. Patel resigned from OncoMed on March 9, 2018. He did not receive any severance payments in connection with his resignation.
(7)	Dr. Gurney’s employment with the Company terminated effective as of December 21, 2018 in connection with the reduction in force approved by our board of directors on December 1, 2018.

Outstanding Equity Awards at 2018 Fiscal Year End

The following table lists all outstanding equity awards held by our NEOs as of December 31, 2018.

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		OPTION AWARDS									STOCK AWARDS
NAME	VESTING COMMENCEMENT DATE		NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) EXERCISABLE		NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) UNEXERCISABLE		OPTION EXERCISE PRICE ($)		OPTION EXPIRATION DATE		NUMBER OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED (#)		MARKET VALUE OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED ($)(5)
John A. Lewicki, Ph.D.	12/18/2009			59,409		—		4.11	12/18/2019			—		—
	7/17/2013			14,000		—		17.00	7/17/2023			—		—
	12/18/2014(1)			50,000		—		21.18	12/17/2024			—		—
	12/27/2015(1)			52,500		17,500		21.43	12/26/2025			—		—
	10/9/2016(2)			—		—		—		—		6,250		4,688
	1/3/2017(1)			31,144		33,856		7.66	1/2/2027			—		—
	4/23/2017(1)			28,125		39,375		3.73	4/22/2027			—		—
	4/23/2017(3)			—		—		—		—		11,250		8,438
	10/7/2017(1)			14,583		35,417		4.36	10/6/2027			—		—
	10/7/2017(2)			—		—		—		—		18,750		14,063
	1/4/2018(1)			22,916		77,084		3.98	1/3/2028			—		—
	2/21/2018(1)			28,645		96,355		2.23	2/20/2028			—		—
	3/16/2018(1)			23,437		101,563		2.98	3/15/2028			—		—
Robert Stagg, Pharm.D.	7/17/2013			5,000		—		17.00	7/17/2023			—		—
	12/18/2014(1)			35,000		—		21.18	12/17/2024			—		—
	12/27/2015(1)			22,500		7,500		21.43	12/26/2025			—		—
	10/9/2016(2)			—		—		—		—		5,000		3,750
	1/3/2017(1)			26,353		28,647		7.66	1/2/2027			—		—
	4/23/2017(1)			25,000		35,000		3.73	4/22/2027			—		—
	4/23/2017(3)			—		—		—		—		10,000		7,500
	10/7/2017(1)			10,694		25,972		4.36	10/6/2027			—		—
	10/7/2017(2)			—		—		—		—		13,751		10,313
	1/4/2018(1)			16,041		53,959		3.98	1/3/2028			—		—
Alicia J. Hager, J.D., Ph.D.	3/15/2013(4)			107,667		—		8.55	3/15/2023			—		—
	7/17/2013			10,000		—		17.00	7/17/2023			—		—
	12/18/2014(1)			35,000		—		21.18	12/17/2024			—		—
	12/27/2015(1)			30,000		10,000		21.43	12/26/2025			—		—
	10/9/2016(2)			—		—		—		—		6,250		4,688
	1/3/2017(1)			26,353		28,647		7.66	1/2/2027			—		—
	4/23/2017(1)			25,000		35,000		3.73	4/22/2027			—		—
	4/23/2017(3)			—		—		—		—		10,000		7,500
	10/7/2017(1)			—		—		—		—		13,751		10,313
	10/7/2017(2)			10,694		25,972		4.36	10/6/2027			—		—
	1/4/2018(1)			16,041		53,959		3.98	1/3/2028			—		—
Paul Hastings(6)	12/18/2009			84,929		—		4.11	12/17/2019			—		—
	7/17/2013			160,000		—		17.00	7/16/2023			—		—
	12/18/2014(1)			140,000		—		21.18	12/17/2024			—		—
	12/28/2015(1)			127,500		—		22.10	12/27/2025			—		—
	1/3/2017(1)			84,332		—		7.66	1/2/2027			—		—
	4/24/2017(1)			56,250		—		3.77	4/23/2027			—		—
Austin Gurney, Ph.D.(7)	12/18/2009			59,409		—		4.11	12/17/2019			—		—
	7/17/2013			14,000		—		17.00	7/16/2023			—		—
	12/18/2014(1)			50,000		—		21.18	12/17/2024			—		—
	12/27/2015(1)			40,000		—		21.43	12/26/2025			—		—
	1/3/2017(1)			55,000		—		7.66	1/2/2027			—		—
	4/23/2017(1)			60,000		—		3.73	4/22/2027			—		—
	10/7/2017(1)			36,666		—		4.36	10/6/2027			—		—
	1/4/2018(1)			70,000		—		3.98	1/3/2028			—		—

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(1)	These options vest and become exercisable as to 1/48th of the shares on each monthly anniversary of the vesting commencement date, such that all shares subject to an option will be vested and exercisable on the fourth anniversary of the vesting commencement date, subject to the holder continuing to provide services to us through the applicable vesting date.
(2)	25% of the restricted stock units (“RSUs”) vest on each of the first and second anniversaries of the vesting commencement date, and 50% of the RSUs vest on the third anniversary of the vesting commencement date, subject to the holder continuing to provide services to us through the applicable vesting date.
(3)	50% of the RSUs vest on the first anniversary of the vesting commencement date and 50% of the RSUs vest on the second anniversary of the vesting commencement date, subject to the holder continuing to provide services to us through the applicable vesting date.
(4)	The option vests and becomes exercisable as to 1/60th of the shares on each monthly anniversary of the vesting commencement date, such that all shares subject to the option will be vested and exercisable on the fifth anniversary of the vesting commencement date, subject to the holder continuing to provide services to us through the applicable vesting date.
(5)	Amount shown is based on market value per share of our common stock of $0.75, which represents the closing price of our common stock on the Nasdaq Global Select Market on December 31, 2018.
(6)	Mr. Hastings resigned from OncoMed on January 1, 2018. In connection with such resignation, we entered into a letter agreement with Mr. Hastings which provided, among other things, for (a) accelerated vesting of the portion of Mr. Hastings’ outstanding stock options and restricted stock units that would have otherwise vested through December 31, 2018 had Mr. Hastings’ employment continued, and (b) each vested stock option held by Mr. Hastings, after giving effect to such accelerated vesting, to remain exercisable until the earlier of the original expiration date of such stock option or December 31, 2018. The terms of this letter agreement are described below in “Narrative to 2018 Summary Compensation Table and Outstanding Equity Awards at 2018 Fiscal Year End—Terms and Conditions of Offer Letter and Severance Agreement for Paul Hastings.”
(7)	Dr. Gurney’s employment was terminated effective December 21, 2018. In connection with such termination, we entered into a separation agreement with Mr. Gurney which provided, among other things, for accelerated vesting of all of Mr. Gurney’s outstanding stock options and restricted stock units as of December 21, 2018. The terms of this separation agreement are described below in “Narrative to 2018 Summary Compensation Table and Outstanding Equity Awards at 2018 Fiscal Year End— Terms and Condition of Separation Agreement for Austin Gurney.”

Mr. Patel resigned from OncoMed on March 9, 2018 and, in connection with such resignation, he forfeited all unvested shares subject to his equity awards. Mr. Patel had until June 9, 2018 to exercise the vested shares subject to his options. No shares were exercised by Mr. Patel hence all vested shares subject to his options were cancelled on June 9, 2018.

Narrative to 2018 Summary Compensation Table and Outstanding Equity Awards at 2018 Fiscal Year End

Terms and Conditions of Offer Letter and Severance Agreement for Paul Hastings

On November 12, 2005, we entered into an offer letter agreement with Mr. Hastings (the “Hastings Offer Letter”), as last amended in October 2015, to serve as our Chief Executive Officer and President, providing for an annual base salary, an annual target bonus of up to a certain percentage of such base salary, upon achievement of specific corporate and individual goals and objectives to be established by our board of directors and certain severance payments. The Hastings Offer Letter terminated effective January 1, 2018 following Mr. Hastings’ entry into the Hastings Severance Agreement (as defined below).

In connection with Mr. Hastings’ resignation on January 1, 2018, we entered into a letter agreement with Mr. Hastings (the “Hastings Severance Agreement”). The Hastings Severance Agreement provides for, among other things, (a) continued payment of Mr. Hastings’ base salary through December 31, 2018, (b) up to 12 months of continued health care coverage, (c) $303,120, which represents Mr. Hastings’ target bonus for fiscal year 2018, less required withholding taxes, and (d) accelerated vesting of the portion of Mr. Hastings’ outstanding stock options and

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restricted stock units that would have otherwise vested through December 31, 2018 had Mr. Hastings’ employment continued. In addition, each vested stock option held by Mr. Hastings (after giving effect to vesting acceleration pursuant to the Hastings Severance Agreement) will remain exercisable until the earlier of the original expiration date of such stock option or December 31, 2018. Pursuant to the terms of the Hastings Severance Agreement, Mr. Hastings has provided us with a general release of claims against us.

Terms and Conditions of Offer Letters for John A. Lewicki, Ph.D., Robert Stagg, Pharm.D., Alicia J. Hager, J.D., Ph.D., Austin Gurney, Ph.D., and Sunil Patel

We have entered into standard offer letters with each of Mr. Patel and Drs. Lewicki, Stagg, Gurney, and Hager that provided for annual base salary, annual target bonus and certain benefits, which may be changed in the discretion of the Company. All other obligations under the offer letters have been satisfied. Mr. Patel’s and Dr, Gurney’s offer letters terminated upon his resignation from OncoMed on March 9, 2018 and December 21, 2018, respectively.

Terms and Conditions of Change in Control and Severance Agreements for John A. Lewicki, Ph.D., Robert Stagg, Pharm.D., Alicia J. Hager, J.D., Ph.D., Austin Gurney, Ph.D., and Sunil Patel

We entered into a Change in Control and Severance Agreement with Dr. Lewicki, as last amended in October 2018 (the “Lewicki Change in Control and Severance Agreement”), which provides that in the event of (a) a termination of his employment with us other than for “cause” (as defined in the Lewicki Change in Control and Severance Agreement), or (b) his resignation for “good reason” (as defined in the Lewicki Change in Control and Severance Agreement), if he signs and does not revoke a standard form of release of claims, then Dr. Lewicki shall be entitled to receive (i) a severance amount equal to the sum of 12 months of base salary and 12 months target bonus, and (ii) up to 12 months of continued healthcare coverage. If such qualifying termination or resignation occurs within 18 months following a “change in control” (as defined in the Lewicki Change in Control and Severance Agreement) of the Company, and he signs and does not revoke a standard form of release of claims, Dr. Lewicki will instead receive (i) a severance amount equal to the sum of 24 months of base salary and 24 months target bonus, (ii) up to 24 months of continued healthcare coverage, and (iii) 100% vesting acceleration of outstanding equity awards, including, without limitation, his stock options and restricted stock units. In the event of a change in control, the vesting of any equity awards will automatically accelerate as to 25% of the total number of shares subject thereto.

We also entered into Change in Control and Severance Agreements with Mr. Patel and Drs.  Stagg, Gurney, and Hager, as last amended in October 2015 (collectively, the “Change in Control and Severance Agreements”), each of which provides that in the event of (a) a termination of his/her employment with us other than for “cause” (as defined in the applicable Change in Control and Severance Agreement), or (b) his/her resignation for “good reason” (as defined in the applicable Change in Control and Severance Agreement), if he/she signs and does not revoke a standard form of release of claims, then Mr. Patel or Drs.  Stagg, Gurney, and Hager shall be entitled to receive (i) a severance amount equal to the sum of nine months of base salary and nine months target bonus, and (ii) up to nine months of continued healthcare coverage. If such qualifying termination or resignation occurs within 12 months following a “change in control” (as defined in the applicable Change in Control and Severance Agreement) of the Company, and he/she signs and does not revoke a standard form of release of claims, Mr. Patel or Drs.  Stagg, Gurney, and Hager will instead receive (i) a severance amount equal to the sum of 12 months of base salary and 12 months target bonus, (ii) up to 12 months of continued healthcare coverage, and (iii) 100% vesting acceleration of outstanding equity awards, including, without limitation, his/her stock options and restricted stock units. In the event of a change in control, the vesting of any equity awards will automatically accelerate as to 25% of the total number of shares subject thereto.

Mr. Patel’s Change in Control and Severance Agreement terminated upon his resignation from OncoMed on March 9, 2018. Mr. Patel was not entitled to any severance payments in connection with his resignation of employment.  

Upon termination of Dr. Gurney’s employment in December 2018 in connection with the company’s reduction in force, Dr. Gurney became eligible to receive severance under his Change in Control and Severance Agreement and the Company approved certain enhanced severance benefits in addition to those provided under this Change in Control and Severance Agreement, in exchange for providing a general release of claims against the

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company and its affiliates. The total severance payments and benefits actually provided to Dr. Gurney in connection with his termination are described in the section below entitled “Terms and Conditions of Separation Agreement for Austin Gurney, Ph.D.”.

In addition, in connection with the company’s reduction in force, the employment of Drs. Lewicki, Stagg and Hager will terminate effective as of immediately prior to the closing of the Merger, which is anticipated to occur later this year. Upon Drs. Lewicki’s, Stagg’s and Hager’s termination of employment, in exchange for providing a general release of claims against the company and its affiliates, he or she will be entitled to receive (i) a severance amount equal to the sum of 12 months of base salary and 12 months target bonus (24 months for each in the case of Dr. Lewicki), (ii) up to 12 months of continued healthcare coverage (24 months in the case of Dr. Lewicki), and (iii) 100% vesting acceleration of outstanding equity awards, including, without limitation, his or her stock options and restricted stock units.

Terms and Conditions of Separation Agreement for Austin Gurney, Ph.D.

In connection with the company’s reduction in force, the Company terminated Dr. Gurney’s employment effective as of December 21, 2018.  We entered into a separation agreement with Dr. Gurney (the “Gurney Separation Agreement”), which provides for, among other things, (i) a severance amount equal to $527,212, which represents the sum of 12 months of Dr. Gurney’s base salary and 12 months of Dr. Gurney’s target bonus, (ii) up to 12 months of continued health care coverage, (iii) $79,000, which represents Dr. Gurney’s retention bonus he would have received if he remained employed through December 31, 2018, (iv) a prorated performance-based annual bonus equal to $75,316 for 2018, and (v) accelerated vesting of all of Dr. Gurney’s outstanding stock options and restricted stock units. Pursuant to the terms of the Gurney Separation Agreement, Dr. Gurney has provided us with a general release of claims against us.

Terms and Conditions of Retention Bonuses

On January 26, 2018, the Company entered into retention bonus agreements with each of its NEOs, besides Messrs. Hastings and Patel, in order to encourage continued service to the company. Pursuant to the agreements, each NEO would receive a cash retention bonus should he or she remain employed by the company through December 31, 2018. The retention bonuses would not be earned and will not be paid if the NEO voluntarily terminates employment or is terminated by the company for “cause” prior to December 31, 2018. If the NEO is terminated by the company without “cause” prior to December 31, 2018, he or she will be eligible to receive the full retention bonus payment as a severance amount. Dr. Lewicki’s retention bonus amount of $158,000 and Drs. Stagg’s and Hager’s retention bonus amount was $79,000, which were paid in early January 2019. Dr. Gurney was terminated prior to December 31, 2018, but pursuant to his retention bonus agreement and the Gurney Separation Agreement, he received the full payment of his retention amount of $79,000.

Terms and Conditions of Merger Performance Bonus for John Lewicki, Ph.D.

The Company has agreed to pay a performance bonus of $50,000 to Dr. Lewicki upon achievement of the closing of the Merger to the extent the final net cash held by the company at the time of closing exceeds $37 million.

Terms and Conditions of Performance-Based Annual Bonus Program

For fiscal year 2018, all of our NEOs were eligible for performance-based cash incentives pursuant to the achievement of certain performance objectives. The performance goals for these annual performance cash incentives are reviewed and approved annually by our compensation committee. The determination of the amount of bonuses paid to our NEOs generally reflects a number of considerations, including revenue and operational goals.

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Target Bonus Opportunity

Each NEO’s target bonus opportunity is expressed as a percentage of base salary which can be achieved by meeting corporate and divisional goals and may be increased or decreased based on individual performance. For each of our NEOs, their target bonus opportunity is originally set in their offer letters with us as described above. Our compensation committee reviews these target percentages to ensure they are adequate. While reviewing these target percentages the compensation committee does not follow a formula but rather uses multiple factors as general background information prior to determining the target bonus opportunity rates for our participating NEOs. The compensation committee sets these rates based on each participating executive’s experience in her or his role with the company and the level of responsibility held by each executive, which the compensation committee believes directly correlates to her or his ability to influence corporate results. For fiscal year 2018, the compensation committee initially used a guideline target bonus opportunity of 45% for Dr. Lewicki and Mr. Patel and 40% for Drs. Gurney, Stagg and Hager. In connection with his appointment as our President in February 2018, Dr. Lewicki’s target bonus opportunity was increased to 50% by the compensation committee. Since Mr. Hastings’s resignation was effective as of January 1, 2018, he was not eligible for an annual performance bonus in 2018.  Following the resignation of Mr. Patel on March 9, 2018, he was also no longer eligible to receive any annual performance bonus.

Performance Goals and Weighting

When determining the performance bonus amounts for our NEOs, the compensation committee sets certain performance goals, using a mixture of financial and operational performance objectives after receiving input from our Chief Executive Officer. These performance goals are not expected to be attained based on average or below average performance. Corporate goals and performance targets are reviewed and approved by the compensation committee prior to any allocation of the bonus. After determining performance targets, each performance target is given a different weight when determining the overall bonus amount based on the importance to the success of the Company for each performance target. For fiscal year 2018, the financial performance targets were weighted at 10% and the operational targets were weighted at 90%.

Achievement Level

For each of these performance goals under the annual cash incentive program, the compensation committee sets a target achievement level. There is no minimum or maximum achievement for each performance target, instead the compensation committee weighs the achievement, partial achievement or non-achievement for each performance target when deciding the overall achievement level.

In early fiscal year 2018, the compensation committee established a corporate performance target for financial and operational goals. Our operational performance goals include business development, research and development, achievement of certain milestones in discovery and drug development, and clinical and intellectual property performance goals during the fiscal year. These operational performance goals are internal goals and are not publicly disclosed in any form. We keep the target levels for these operational goals confidential for both operational and competitive reasons, but generally the compensation committee intended for the operational goals to require significant effort on the part of our NEOs and, therefore, set these targets at levels they believed would be difficult to achieve, such that average or below average performance would not satisfy these targets. In December 2018, the Board reviewed our fiscal year 2018 company-wide performance with respect to determining bonuses for executive officers. Based on the achievement of the financial goal and the achievement of most of the operational goals, the Board determined the corporate performance achievement of 80%. In December 2018, following its review and determinations, the Board awarded 2018 cash bonuses to the NEOs of 25% (for Dr. Lewicki), 26% (for Dr. Gurney), 32% (for Dr. Stagg), and 40% (for Dr. Hager) of the executives’ respective base salaries, which was equal to 50%, 65%, 80%, and 100% of Drs. Lewicki’s, Gurney’s, Stagg’s and Hager’s target bonus amounts, respectively.  Dr. Gurney’s performance bonus was also prorated due to his termination on December 21, 2018 and paid pursuant to the Gurney Separation Agreement described above. Each of Messrs. Hastings and Patel did not receive any annual bonus because each was no longer employed for the entire 2018 fiscal year. The NEOs’ 2018 bonuses are set forth in the “2018 Summary Compensation Table” above.

Terms and Conditions of Equity Award Grants

All of our NEOs, except Mr. Hastings, were granted stock options in fiscal year 2018.

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In January 2018, our compensation committee approved the grant of an option to purchase 100,000 shares of our common stock to each of Mr. Patel and Dr. Lewicki and an option to purchase 70,000 shares of our common stock to each of Drs. Gurney, Stagg and Hager. The stock options were granted to Mr. Patel and Drs. Lewicki, Gurney, Stagg and Hager on January 4, 2018, with an exercise price of $3.98 per share, which represents the closing trading price of our common stock on the date of grant. Each option vests in equal monthly installments over four years measured from the grant date, subject to the NEO’s continued service to us through the applicable vesting date.

On March 16, 2018, our board of directors approved the grant of an option to purchase 125,000 shares of our common stock to Dr. Lewicki in connection with his appoint as Chief Executive Officer.  The shares were granted at  an exercise price of $2.98 per share, the closing price of our common stock on March 16, 2018. The stock option vests with respect to 1/48 of the shares subject thereto on each monthly anniversary of March 16, 2018, subject to Dr. Lewicki’s continued employment with the Company on each such vesting date.

In accordance with the Hastings Severance Agreement, described in “Terms and Conditions of Offer Letter and Severance Agreement for Paul Hastings” above, the portion of Mr. Hastings’ outstanding stock options and restricted stock units that would otherwise have vested through December 31, 2018, had Mr. Hastings’ employment continued though such date, vested as of January 1, 2018. Mr. Hastings otherwise forfeited his unvested stock options and restricted stock units upon his resignation of employment from OncoMed on January 1, 2018. Mr. Patel forfeited his unvested stock options and restricted stock units upon his resignation of employment from OncoMed on March 9, 2018. In accordance with the Gurney Separation Agreement, described in “Terms and Conditions of Separation Agreement for Austin Gurney, Ph.D.” above, all of Dr. Gurney’s outstanding stock options and restricted stock units vested as of December 21, 2018.

The table above entitled “Outstanding Equity Awards at 2018 Fiscal Year End” describes the material terms of restricted stock units and other option awards made in past fiscal years to our NEOs.

Compensation Committee Interlocks and Insider Participation

During 2018, our compensation committee consisted of Mr. Winningham and Drs. Pakianathan, Root and Scots-Knight, until Dr. Scots-Knight’s resignation on September 28, 2018. No such member of our compensation committee has at any time been one of our officers or employees. None of our executive officers currently serves, or in the past fiscal year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers on our Board or compensation committee.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners and Management

The following table presents information as to the beneficial ownership of our common stock as of December 31, 2018 for:

• each person, or group of affiliated persons, known by us to beneficially own more than five percent of our common stock;

• each named executive officer as set forth in the summary compensation table included in Part III, Item 11 of this Annual Report on Form 10-K;

• each of our directors; and

• all current executive officers and directors as a group.

Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Unless otherwise indicated below, to our knowledge, the persons and entities named in the table have sole voting and sole investment power with respect to all shares beneficially owned, subject to community property laws where applicable. Shares of our common stock subject to options that are currently exercisable or exercisable within 60 days of December 31, 2018, and restricted stock units that vest within 60 days of December 31, 2018, are deemed to be outstanding and to be beneficially owned by the person holding the

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options or restricted stock units for the purpose of computing the percentage ownership of that person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.

Percentage ownership of our common stock in the table is based on 38,660,146 shares of our common stock issued and outstanding on December 31, 2018. Unless otherwise indicated, the address of each of the individuals and entities named below is c/o OncoMed Pharmaceuticals, Inc., 800 Chesapeake Drive, Redwood City, California 94063.

	Shares of Common Stock Beneficially Owned(1)
Name of Beneficial Owner	Common Stock		Securities Exercisable Within 60 Days		Number of Shares Beneficially Owned		Percent
5% Stockholders:
PRIMECAP Management Company(2)		5,506,300		—		5,506,300		14.24	%
Biotechnology Value Fund, L.P.(3)		4,042,989		—		4,042,989		10.46	%
Celgene Corporation(4)		2,970,588		—		2,970,588		7.68	%
Perceptive Advisors LLC(5)		1,719,111		—		1,719,111		4.45	%
GlaxoSmithKline LLC(6)		2,607,546		—		2,607,546		6.74	%
Entities Affiliated with Delphi Ventures(7)		2,010,542		—		2,010,542		5.20	%
Entities Affiliated with HarbourVest(8)		1,901,106		—		1,901,106		4.92	%
Named Executive Officers and Directors:
John A. Lewicki, Ph.D.(9)		119,104		349,864		468,968		1.21	%
Robert Stagg, Pharm.D.(10)		11,919		151,074		162,993	*
Alicia J. Hager, J.D., Ph.D.(11)		21,753		271,658		293,411	*
Paul Hastings		345,528		—		345,528	*
Sunil Patel		—		—		—	*
Austin Gurney, Ph.D.		66,807		385,075		451,882		1.17	%
Perry A. Karsen(12)		80,500		180,189		260,689	*
Jack W. Lasersohn, J.D.(13)		1,685,913		60,000		1,745,913		4.52	%
Deepika R. Pakianathan, Ph.D.(14)		2,010,542		60,000		2,070,542		5.36	%
Jonathan D. Root, M.D.(15)		121,020		60,000		181,020	*
Rick E Winningham(16)		—		60,000		60,000	*
Michael S. Wyzga(17)		—		87,853		87,853	*
All directors and current executive officers    as a group  (9 persons)(18)		4,100,387		1,447,281		5,547,668		14.35	%

* Represents beneficial ownership of less than one percent of the issued and outstanding shares of common stock of OncoMed.

(1) Represents shares of OncoMed common stock held and restricted stock units held by such individuals that may vest within 60 days of December 31, 2018, and options held by such individuals that are exercisable within 60 days of December 31, 2018. Includes shares held in the beneficial owner’s name or jointly with others, or in the name of a bank, nominee or trustee for the beneficial owner’s account. Reported numbers do not include restricted stock units or options that vest more than 60 days after December 31, 2018.

(2) As reported on Schedule 13G/A filed with the SEC on February 8, 2019 by PRIMECAP Management Company. The address of PRIMECAP Management Company is 177 E. Colorado Blvd., 11th Floor, Pasadena, CA 91105.

(3) As reported on Schedule 13G/A filed with the SEC on February 14, 2019 by Biotechnology Value Fund, L.P. (“BVF”), Biotechnology Value Fund II, L.P. (“BVF2”), Biotechnology Value Trading Fund OS LP (“Trading Fund OS”), BVF Partners OS Ltd. (“Partners OS”), BVF Partners L.P. (“Partners”), BVF Inc., and Mark N. Lampert (“Mr. Lampert”). Partners OS as the general partner of Trading Fund OS may be deemed to beneficially own the 322,447 shares of OncoMed common stock beneficially owned by Trading Fund OS. Partners, as the general partner of BVF, BVF2, the investment manager of Trading Fund OS, and the sole

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member of Partners OS, may be deemed to beneficially own the 4,042,989 shares of OncoMed common stock beneficially owned in the aggregate by BVF, BVF2, Trading Fund OS, and certain Partners managed accounts (the “Partners Managed Accounts”), including 415,397 shares of OncoMed common stock held in the Partners Managed Accounts. BVF Inc., as the general partner of Partners, may be deemed to beneficially own the 4,042,989 shares of OncoMed common stock beneficially owned by Partners. Mr. Lampert, as a director and officer of BVF Inc., may be deemed to beneficially own the 4,042,989 shares of OncoMed common stock beneficially owned by BVF Inc. Partners OS disclaims beneficial ownership of the OncoMed common stock beneficially owned by Trading Fund OS. Each of Partners, BVF Inc. and Mr. Lampert disclaims beneficial ownership of the OncoMed common stock beneficially owned by BVF, BVF2, Trading Fund OS, and the Partners Managed Accounts. The address for BVF, BVF2, Partners, BVF Inc., and Mr. Lampert is 1 Sansome Street, 30th Floor, San Francisco, California 94104. The address for Trading Fund OS and Partners OS is PO Box 309 Ugland House, Grand Cayman, KY1-1104, Cayman Islands.

(4) As reported on Schedule 13G filed with the SEC on August 24, 2016 by Celgene Corporation. The address of Celgene Corporation is 86 Morris Avenue, Summit, New Jersey 07901.

(5) As reported on Schedule 13G/A filed with the SEC on February 14, 2019 by Perceptive Advisors LLC (“Perceptive Advisors”), Joseph Edelman (“Mr. Edelman”), and Perceptive Life Sciences Master Fund, Ltd. (the “Master Fund”). Perceptive Advisors serves as the investment manager to the Master Fund and may be deemed to beneficially own the securities directly held by the Master Fund. Mr. Edelman is the managing member of Perceptive Advisors and may be deemed to beneficially own the securities directly held by the Master Fund. The address for such entities and persons is 51 Astor Place, 10th Floor, New York, NY 10003.

(6) As reported on Schedule 13G filed with the SEC on February 14, 2014 by GlaxoSmithKline plc, with respect to shares held by GlaxoSmithKline LLC. GlaxoSmithKline plc has sole voting and dispositive power over the shares held by GlaxoSmithKline LLC. The address of GlaxoSmithKline plc is 980 Great West Road, Brentford, Middlesex, TW8 9GS, England.

(7) As reported on Schedule 13G/A filed with the SEC on February 12, 2019 by Delphi Ventures VIII, L.P., a Delaware limited partnership (“DV VIII”), Delphi BioInvestments VIII, L.P., a Delaware limited partnership (“DBI VIII”), Delphi Management Partners VIII, L.L.C., a Delaware limited liability company (“DMP VIII”) and the general partner of DV VIII and DBI VIII, and James J. Bochnowski (“Bochnowski”), David L. Douglass (“Douglass”), Douglas A. Roeder (“Roeder”) and Deepika R. Pakianathan, Ph.D. (“Pakianathan”), the managing members of DMP VIII. DMP VIII is the general partner of DV VIII and DBI VIII and may be deemed to have sole power to vote and sole power to dispose of shares of the issuer directly owned by DV VIII and DBI VIII. DMP VIII owns 2,010,542 shares, of which 1,991,602 are directly owned by DV VIII and 18,940 are directly owned by DBI VIII. Bochnowski, Douglass, Roeder and Pakianathan are the managing members of DMP VIII and may be deemed to have shared power to vote and shared power to dispose of the shares of the issuer directly owned by DV VIII and DBI VIII. Bochnowski, Douglass, Roeder and Pakianathan disclaim beneficial ownership of the reported securities directly owned by DV VIII and DBI VIII, except to the extent of any pecuniary interest therein. The address for such entities and persons is Delphi Ventures, 160 Bovet Rd., #408, San Mateo, CA 94402.

(8) As reported on Schedule 13G filed with the SEC on February 14, 2019 by HarbourVest Partners, LLC (“HarbourVest”), Dover VII Associates LLC (“Dover LLC”), Dover VII Associates L.P. (“Dover LP”) and Dover Street VII L.P. (“Dover Street”). HarbourVest is the managing member of Dover LLC, which is the general partner of Dover LP, which is the general partner of Dover Street. Each of HarbourVest, Dover LLC and Dover LP may be deemed to have a beneficial interest in the shares of OncoMed common stock held by Dover Street. Each of HarbourVest, Dover LLC, Dover LP and the members of the HarbourVest Investment Committee disclaim beneficial ownership of the shares held directly by Dover Street. The address for HarbourVest, Dover LLC, Dover LP and Dover Street is One Financial Center, Boston, MA 02111.

(9) Consists of: (i) 111,181 shares held by John Allan Lewicki and Jenniffer Joan Lewicki, Trustees of the Lewicki Family Trust dated December 6, 2000 (“The Lewicki Trust”), (ii) 7,923 shares directly owned by Dr. Lewicki, and (iii) 349,864 shares that may be acquired pursuant to the exercise of stock options within 60 days of December 31, 2018 by Dr. Lewicki. Dr. Lewicki has shared voting and dispositive power over the shares held by The Lewicki Trust.

(10) Consists of (i) 11,919 shares directly owned by Dr. Stagg, and (ii) 151,074 shares that may be acquired pursuant to the exercise of stock options within 60 days of December 31, 2018 by Dr. Stagg.

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(11) Consists of (i) 21,753 shares directly owned by Dr. Hager, and (ii) 271,658 shares that may be acquired pursuant to the exercise of stock options within 60 days of December 31, 2018 by Dr. Hager.

(12) Consists of: (i) 80,500 shares directly owned by Mr. Karsen, and (ii) 180,189 shares that may be acquired pursuant to the exercise of a stock option within 60 days of December 31, 2018 by Mr. Karsen.

(13) Consists of (i) 185,709 shares held directly by Mr. Lasersohn, (ii) 60,000 shares that may be acquired pursuant to the exercise of a stock option within 60 days of December 31, 2018 by Mr. Lasersohn, and (iii) 1,500,204 shares reported on Schedule 13G/A filed with the SEC on January 13, 2017 by Vertical Fund I, L.P. (“VFI”) and Vertical Fund II, L.P. (“VFII”). The Vertical Group, L.P., a Delaware limited partnership, is the sole general partner of each of VFI and VFII, and The Vertical Group GP, LLC, a Delaware limited liability company, controls The Vertical Group, L.P. Mr. Lasersohn is a member and manager of The Vertical Group GP, LLC. Mr. Lasersohn disclaims beneficial ownership of such shares except to the extent of his pecuniary interest therein. The address for such entities and persons is 106 Allen Road, Suite 207, Basking Ridge, New Jersey 07920.

(14) Consists of (i) the shares described in Note (7) above, and (ii) 60,000 shares that may be acquired pursuant to the exercise of a stock option within 60 days of December 31, 2018 by Dr. Pakianathan.

(15) Consists of (i) 121,020 shares held directly by Dr. Root, and (ii) 60,000 shares that may be acquired pursuant to the exercise of a stock option within 60 days of December 31, 2018 by Dr. Root.

(16) Consists of 60,000 shares that may be acquired pursuant to the exercise of stock options within 60 days of December 31, 2018 by Mr. Winningham.

(17) Consists of 87,853 shares that may be acquired pursuant to the exercise of a stock option within 60 days of December 31, 2018 by Mr. Wyzga.

(18) Includes: (i) 3,897,975 shares held by OncoMed’s non-employee directors and entities affiliated with certain of OncoMed’s directors, (ii) 202,412 shares held by OncoMed’s current executive officers, and (iii) 1,447,281 shares that may be acquired by OncoMed’s current executive officers and directors pursuant to the exercise of stock options within 60 days of December 31, 2018.

Equity Compensation Plan Information

The following table provides certain information as of December 31, 2018, with respect to all of our equity compensation plans in effect on that date.

Plan Category	Number of Secruties to be Issued upon Exercise of Outstanding Options, Warrants and Rights (a)			Weighted-Average Exercise price of Outstanding Options, Warrants and Rights (b)			Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c)
Equity compensation plan    approved by Stockholders(1)(2)		4,451,007	(3)	$	11.44	(4)		4,860,360	(5)
Equity Compensation		—			—			—
Total		4,451,007		$	11.44			4,860,360

(1) Includes the OncoMed Pharmaceuticals, Inc. 2013 Equity Incentive Award Plan, 2013 Employee Stock Purchase Plan and 2004 Stock Incentive Plan, as amended.

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(2)	The 2013 Equity Incentive Award Plan contains an “evergreen” provision, pursuant to which the number of shares of common stock reserved for issuance pursuant to awards under such plan shall be increased on the first day of each year beginning in 2014 and ending in 2023, equal to the least of (A) 1,500,000 shares, (B) four percent (4.0%) of the shares of stock outstanding (on an as converted basis) on the last day of the immediately preceding fiscal year and (C) such smaller number of shares of stock as determined by our board of directors; provided, however, that no more than 19,634,255 shares of stock may be issued upon the exercise of incentive stock options. The 2013 Employee Stock Purchase Plan contains an “evergreen” provision, pursuant to which the number of shares of common stock reserved for issuance under such plan shall be increased on the first day of each year beginning in 2014 and ending in 2023, equal to the least of (A) 350,000 shares, (B) one percent (1.0%) of the shares of stock outstanding (on an as converted basis) on the last day of the immediately preceding fiscal year and (C) such smaller number of shares of stock as determined by our board of directors.
(3)	Represents 4,144,597 shares subject to outstanding options and 306,410 shares that may be issued upon vesting of outstanding RSUs, in each case pursuant to equity awards issued under the OncoMed Pharmaceuticals, Inc. 2013 Equity Incentive Award Plan, 2013 Employee Stock Purchase Plan and 2004 Stock Incentive Plan, as amended.
(4)	Shares issuable upon vesting of RSUs have been excluded from the calculation of the weighted average exercise price because they have no exercise price associated with them.
(5)	Includes 1,510,518 shares that were available for future issuance as of December 31, 2018 under the 2013 Employee Stock Purchase Plan, which allows eligible employees to purchase shares of common stock with accumulated payroll deductions.

Item 13. Certain Relationships, Related Transactions and Director Independence

We describe below transactions and series of similar transactions, since January 1, 2017, to which we were a party or will be a party, in which:

• the amounts involved exceeded or will exceed $120,000; and

• any of our directors, executive officers or holders of more than 5% of our common stock, or an affiliate or immediate family member thereof, had or will have a direct or indirect material interest.

Relationship with Celgene

In December 2013, we entered into a collaboration agreement with Celgene Corporation (“Celgene”). Celgene acquired its equity interest in the Company in part concurrent with its entry into the collaboration agreement and in part in connection with an underwritten public offering of shares of our common stock in 2016. As of December 31, 2018, Celgene beneficially owns 7.73% of our issued and outstanding common stock. See “Business—Key Collaboration and License Agreements—Strategic Alliance with Celgene” in this Annual Report on Form 10K for additional information about this collaboration, including potential future milestone payments, contingent consideration and royalties we may receive from Celgene, and potential profit-sharing arrangements with Celgene that may arise, under the collaboration

Director and Officer Indemnification Agreements

We have entered into indemnification agreements with each of our directors and executive officers. These agreements, among other things, require us to indemnify each director (and in certain cases their related venture capital funds) and executive officer to the fullest extent permitted by Delaware law, including indemnification of expenses such as attorneys’ fees, judgments, fines and settlement amounts incurred by the director or executive officer in any action or proceeding, including any action or proceeding by or in right of us, arising out of the person’s services as a director or executive officer.

Policies and Procedures for Related Party Transactions

Our Board has adopted a written related party transaction policy setting forth the policies and procedures for the review and approval or ratification of related party transactions. This policy covers, with certain exceptions set forth in Item 404 of Regulation S-K under the Securities Act, any transaction, arrangement or relationship, or any

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series of similar transactions, arrangements or relationships in which we were or are to be a participant, where the amount involved exceeds $120,000 and a related party had, has or will have a direct or indirect material interest, including, without limitation, purchases of goods or services by or from the related party or entities in which the related party has a material interest, indebtedness, guarantees of indebtedness and employment by us of a related party. In reviewing and approving any such transactions, our audit committee is tasked to consider all relevant facts and circumstances, including, but not limited to, whether the transaction is on terms comparable to those that could be obtained in an arm’s length transaction and the extent of the related party’s interest in the transaction.

Independence of the Board of Directors

As required under Nasdaq rules and regulations, a majority of the members of a listed company’s board of directors must qualify as “independent,” as affirmatively determined by the Board. The Board consults with the Company’s counsel to ensure that the Board’s determinations are consistent with all relevant securities and other laws and regulations regarding the definition of “independent,” including those set forth in pertinent Nasdaq listing standards, as in effect from time to time.

Consistent with these considerations, our Board has determined that all of our current directors, other than Dr. Lewicki, qualify as “independent” directors in accordance with the Nasdaq listing requirements. Dr. Lewicki is not considered independent because he is an employee of OncoMed. The Nasdaq independence definition includes a series of objective tests, such as that the director is not, and has not been for at least three years, one of our employees and that neither the director nor any of his family members has engaged in various types of business dealings with us. In addition, as required by Nasdaq rules, our Board has made a subjective determination as to each independent director that no relationships exist, which, in the opinion of our Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In making these determinations, our Board considered information provided by the directors and us with regard to each director’s business and personal activities and relationships as they may relate to us and our management. There are no family relationships among any of our directors or executive officers.

As required under Nasdaq rules and regulations, our independent directors meet in regularly scheduled executive sessions at which only independent directors are present. All of the committees of our Board are comprised entirely of directors determined by the Board to be independent within the meaning of Nasdaq and SEC rules and regulations applicable to the members of such committees.

Item 14. Principal Accounting Fees and Services

The following table provides information regarding the fees incurred to Ernst & Young LLP for services rendered during the years ended December 31, 2018 and 2017, based on aggregate fees billed and estimated to be billed. All fees described below were approved by the audit committee.

	Year Ended December 31,
	2018		2017
Audit Fees(1)	$	1,143,188	$	752,328
Audit-Related Fees		—		—
Tax Fees(2)		—		12,500
All Other Fees		1,980		1,995
Total Fees	$	1,145,168	$	766,823

(1) Audit Fees of Ernst & Young LLP for 2018 and 2017 were for professional services rendered for the audits of our financial statements, reviews of our quarterly financial statements, and accounting consultation fees in connection with sales of our common stock in in at-the-market offerings pursuant to our shelf registration statement on Form S-3 (File No. 333-225225) filed in May 2018.

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(2) Tax Fees of Ernst & Young LLP for 2017 were for professional services rendered for tax compliance, tax advice and tax planning.

Pre-Approval Policies and Procedures

Before an independent registered public accounting firm is engaged by the Company to render audit or non-audit services, our audit committee must review the terms of the proposed engagement and pre-approve the engagement. The audit committee may delegate authority to one or more of the members of the audit committee to provide such pre-approvals for audit or non-audit services, provided that such person or persons report such pre-approvals to the full audit committee at its next scheduled meeting. Audit committee pre-approval of non-audit services (other than review and attest services) are not required if such services fall within available exceptions established by the SEC.

The audit committee pre-approved all audit, audit-related, tax and other services provided by Ernst & Young LLP for 2018 and 2017 and the estimated costs of those services. Actual amounts billed, to the extent in excess of the estimated amounts, were periodically reviewed and approved by the audit committee.

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PART IV

Item 15. Exhibits and Financial Statement Schedules

The following documents are filed as part of this report:

1. Financial Statements

See Index to Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.

2. Financial Statement Schedules

All schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.

3. Exhibits

The following list of exhibits includes exhibits submitted with this Form 10-K as filed with the Securities and Exchange Commission (SEC) and those incorporated by reference to other filings.

Exhibit		Incorporated by Reference				Filed
Number	Exhibit Description	Form	Date	Number		Herewith
2.1*	Agreement and Plan of Merger and Reorganization, dated December 5, 2018, by and among Mereo BioPharma Group plc, Mereo US Holdings Inc., Mereo MergerCo One Inc. and OncoMed Pharmaceuticals, Inc.	8-K	12/06/2018	2.1
3.1	Amended and Restated Certificate of Incorporation	8-K	07/23/2013	3.1
3.2	Amended and Restated Bylaws	8-K	07/23/2013	3.2
4.1	Form of Common Stock Certificate	S-1/A	07/03/2013	4.1
4.2(A)	Amended and Restated Investor Rights Agreement, dated October 7, 2008, by and among the registrant and certain stockholders	S-1	05/11/2012	4.4	(A)
4.2(B)	Amendment and Consent, dated September 16, 2010, by and among the registrant and certain stockholders	S-1	05/11/2012	4.4	(B)
4.3	Registration Rights Agreement, dated as of December 2, 2013, by and between the registrant and Celgene Corporation	8-K	12/03/2013	4.1
10.1(A)†	Collaboration and Option Agreement, dated June 15, 2010, by and between the registrant and Bayer Schering Pharma AG	S-1/A	07/05/2012	10.2
10.1(B)†	Amendment 1 to the Collaboration and Option Agreement, dated August 1, 2012, by and between the registrant and Bayer Schering Pharma AG	S-1/A	10/25/2012	10.2	(B)
10.1(C)†	Amendment 2 to the Collaboration and Option Agreement, dated August 27, 2013, by and between the registrant and Bayer Schering Pharma AG	10-Q	11/13/2013	10.9
10.1(D)	Amendment 3 to the Collaboration and Option Agreement, dated November 4, 2015, by and between the registrant and Bayer Pharma AG	10-K	03/10/2016	10.2	(D)

155

Exhibit		Incorporated by Reference				Filed
Number	Exhibit Description	Form	Date	Number		Herewith
10.1(E)†	Amendment 4 to the Collaboration and Option Agreement, dated July 21, 2016, by and between the registrant and Bayer Pharma AG	10-Q	11/01/2016	10.1
10.1(F)*	Amendment 5 to the Collaboration and Option Agreement, dated December 15, 2016, by and between the registrant and Bayer Pharma AG	10-K	03/09/2017	10.2	(F)
10.1(G)*	Amendment 6 to the Collaboration and Option Agreement, dated June 13, 2018, by and between the registrant and Bayer Pharma AG	10-Q	08/02/2018	10.1
10.2(A)†	License Agreement, dated January 5, 2001, by and between the registrant (as successor in interest to Cancer Stem Cell Genomics, Inc.) and the Regents of the University of Michigan	S-1	05/11/2012	10.4	(A)
10.2(B)†	Amendment Number 1 to License Agreement, dated July 21, 2004, by and between the registrant (as successor in interest to Cancer Stem Cell Genomics, Inc.) and the Regents of the University of Michigan	S-1	05/11/2012	10.4	(B)
10.2(C)†	Amendment Number 2 to License Agreement, dated August 13, 2004, by and between the registrant and the Regents of the University of Michigan	S-1	05/11/2012	10.4	(C)
10.2(D)	Amendment No. 3 to License Agreement, dated March 31, 2005, by and between the registrant and the Regents of the University of Michigan	S-1	05/11/2012	10.4	(D)
10.2(E)	Amendment No. 4 to License Agreement, dated December 12, 2005, by and between the registrant and the Regents of the University of Michigan	S-1	05/11/2012	10.4	(E)
10.2(F)†	Amendment No. 5 to License Agreement, dated March 12, 2007, by and between the registrant and the Regents of the University of Michigan	S-1	05/11/2012	10.4	(F)
10.2(G)	Amendment No. 6 to License Agreement, dated October 6, 2008, by and between the registrant and the Regents of the University of Michigan	S-1	05/11/2012	10.4	(G)
10.2(H)	Letter, dated September 4, 2008, from the University of Michigan to the registrant regarding the License Agreement	S-1	05/11/2012	10.4	(H)
10.2(I)†	Memorandum of Understanding, dated May 8, 2009, by and between the registrant and the Regents of the University of Michigan	S-1	05/11/2012	10.4	(I)
10.3(A)	Lease, dated May 30, 2006, by and between the registrant and Slough Redwood City, LLC	S-1	05/11/2012	10.5	(A)
10.3(B)	First Amendment to Lease, dated November     , 2006, by and between the registrant and Slough Redwood City, LLC	S-1	05/11/2012	10.5	(B)

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Exhibit		Incorporated by Reference					Filed
Number	Exhibit Description	Form	Date	Number			Herewith
10.3(C)	Second Amendment to Office Lease, dated December 22, 2010, by and between the registrant and HCP LS Redwood City, LLC	S-1	05/11/2012	10.5		(C)
10.3(D)	Third Amendment to Lease, dated November 11, 2016, by and between the registrant and HCP LS Redwood City, LLC	10-K	03/09/2017	10.5	(D)
10.4	Sublease, dated October 26, 2018, by and between the registrant and Venn Biosciences Corporation						X
10.5	Sublease, dated January 16, 2019, by and between the registrant and Revolution Medicines, Inc.						X
10.6(A)#	2004 Stock Incentive Plan, as amended	S-1	05/11/2012	10.6		(A)
10.6(B)#	Form of Stock Option Agreement under 2004 Stock Incentive Plan	S-1	05/11/2012	10.6		(B)
10.7(A)#	2013 Equity Incentive Award Plan	S-1/A	07/08/2013	10.7
10.7(B)#	Form of Stock Option Agreement under 2013 Equity Incentive Award Plan	S-1/A	07/03/2013	10.7		(B)
10.7(C)#	Form of Restricted Stock Unit Award Agreement under the OncoMed Pharmaceuticals, Inc. 2013 Equity Incentive Award Plan	S-8	03/28/2014	10.3
10.8#	Employee Stock Purchase Plan	S-1/A	07/03/2013	10.8
10.9#	Offer Letter, dated November 12, 2005, by and between the registrant and Paul Hastings	S-1	05/11/2012	10.9
10.9(B)#	Amendment to Employment Agreement, dated July 2, 2013, by and between the registrant and Paul Hastings	S-1/A	07/03/2013	10.9		(B)
10.9(C)#	Letter Agreement re: Change in Control and Severance Agreement, dated October 12, 2015, by and between the registrant and Paul Hastings	10-K	03/10/2016	10.9		(C)
10.9(D)#	Letter Agreement re: Your Resignation of Employment and Board Positions, dated January 1, 2018, by and between the registrant and Paul Hastings	10-K	03/09/2018	10.7		(D)
10.9(E)#	Separation Agreement, dated December 5, 2018, by and between the registrant and Austin Gurney						X
10.10#	Offer Letter, dated May 27, 2004, by and between the registrant (as successor in interest to Cancer Stem Cell Genomics, Inc.) and John A. Lewicki	S-1	05/11/2012	10.10
10.11#	Offer Letter, dated June 18, 2009, by and between the registrant and Sunil Patel	S-1	05/11/2012	10.12
10.12#	Offer Letter, dated September 27, 2004, by and between the registrant and Austin Gurney	S-1	05/11/2012	10.14
10.13#	Form of Indemnity Agreement for directors and officers	S-1/A	07/03/2012	10.16

157

Exhibit		Incorporated by Reference				Filed
Number	Exhibit Description	Form	Date	Number		Herewith
10.14#	Amended and Restated Form of Change in Control and Severance Agreement for officers	10-K	03/10/2016	10.16
10.15#	Form of Retention Bonus Agreement for officers	10-K	03/09/2018	10.13
10.16#	Offer Letter, dated April 24, 2008, by and between the registrant and Alicia J. Hager	S-1/A	06/15/2012	10.19
10.17#	Letter Agreement re: Amended and Restated Change in Control and Severance Agreement, dated October 17, 2018, by and between the registrant and John Lewicki					X
10.18(A)†	Multi-Product License Agreement, dated August 22, 2012, by and between the registrant and Lonza Sales AG	S-1/A	10/25/2012	10.21
10.18(B)†	Amendment No. 1 to the Multi-Product License Agreement, dated January 22, 2014, by and between the registrant and Lonza Sales AG	10-K	03/12/2015	10.20	(B)
10.18(C)†	Amendment No. 2 to the Multi-Product License Agreement, dated July 23, 2015, by and between the Registrant and Lonza Sales AG	10-Q	11/05/2015	10.1
10.18(D)†	Amendment No. 3 to the Multi-Product License Agreement, dated August 26, 2016, by and between the registrant and Lonza Sales AG	10-Q	11/02/2017	10.1
10.19	Non-Employee Director Compensation Policy, adopted August 28, 2013, as amended October 14, 2013, February 28, 2014, June 24, 2015 and March 1, 2018	10-Q	05/08/2018	10.1
10.20†	Master Research and Collaboration Agreement, by and between the registrant and Celgene Corporation	10-K	03/18/2014	10.23
10.21	Securities Purchase Agreement, dated as of December 2, 2013, by and between the registrant and Celgene Corporation	8-K	12/03/2013	10.1
10.22(A)	Form of Stockholder Support Agreement, by and between Mereo BioPharma Group plc and certain stockholders of OncoMed Pharmaceuticals, Inc.	8-K	12/06/2018	10.1
10.22(B)	Form of Shareholder Support Agreement, by and between OncoMed Pharmaceuticals, Inc. and certain officers and directors of Mereo BioPharma Group plc.	8-K	12/06/2018	10.2
10.22(C)	Shareholder Support Agreement, by and between OncoMed Pharmaceuticals, Inc. and Novartis Pharma AG.	8-K	12/06/2018	10.3
10.22(D)	Shareholder Support Agreement, by and between OncoMed Pharmaceuticals, Inc. and Invesco Asset Management Limited, as agent for and on behalf of its discretionary managed client, Invesco High Income Fund.	8-K	12/06/2018	10.4

158

Exhibit		Incorporated by Reference			Filed
Number	Exhibit Description	Form	Date	Number	Herewith
10.22(E)	Shareholder Support Agreement, by and between OncoMed Pharmaceuticals, Inc. and Invesco Asset Management Limited, as agent for and on behalf of its discretionary managed client, Invesco Income Fund.	8-K	12/06/2018	10.5
10.22(F)	Shareholder Support Agreement, by and between OncoMed Pharmaceuticals, Inc. and Invesco Asset Management Limited, as agent for and on behalf of its discretionary managed client, Invesco UK Strategic Income Fund.	8-K	12/06/2018	10.6
10.22(G)	Form of CVR Agreement.	8-K	12/06/2018	10.7
23.1	Consent of Independent Registered Public Accounting Firm				X
24.1	Power of Attorney (included on signature page to this Annual Report on Form 10-K)				X
31.1	Certification of Principal Executive Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended				X
31.2	Certification of Principal Financial Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended				X
32.1**	Certification of Principal Executive Officer and Principal Financial Officer Required Under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. §1350				X
101.INS	XBRL Instance Document				X
101.SCH	XBRL Taxonomy Extension Schema Document				X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document				X
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document				X
101.LAB	XBRL Taxonomy Extension Labels Linkbase Document				X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase				X

† Confidential treatment has been granted for certain information contained in this exhibit. Such information has been omitted and filed separately with the Securities and Exchange Commission.

# Indicates management contract or compensatory plan.

* Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment and this exhibit has been filed separately with the Securities and Exchange Commission.

** The certifications attached as Exhibit 32.1 that accompany this Annual Report on Form 10-K are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of OncoMed Pharmaceuticals, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Form 10-K, irrespective of any general incorporation language contained in such filing.

159

ITEM16. FORM 10-K SUMMARY

None.

160

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

ONCOMED PHARMACEUTICALS, INC.
By:	/s/ John Lewicki
	John Lewicki, Ph.D.
	President (principal executive officer)
Date: March 7, 2019

POWER OF ATTORNEY

Each person whose individual signature appears below hereby authorizes and appoints John Lewicki and Yvonne Li, and each of them, with full power of substitution and resubstitution and full power to act without the other, as his or her true and lawful attorney-in-fact and agent to act in his or her name, place and stead and to execute in the name and on behalf of each person, individually and in each capacity stated below, and to file any and all amendments to this Annual Report on Form 10-K and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing, ratifying and confirming all that said attorneys-in-fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ John Lewicki	President (principal executive officer)	March 7, 2019
John Lewicki, Ph.D.
/s/ Yvonne Li	Vice President of Finance, Controller and Administration (principal financial and accounting officer)	March 7, 2019
Yvonne Li
/s/Perry Karsen	Executive Chairman	March 7, 2019
Perry Karsen
/s/ Jack W. Lasersohn	Director	March 7, 2019
Jack W. Lasersohn, J.D.
/s/ Deepa R. Pakianathan	Director	March 7, 2019
Deepa R. Pakianathan, Ph.D.
/s/ Jonathan D. Root	Director	March 7, 2019
Jonathan D. Root, M.D.
/s/ Rick E Winningham	Director	March 7, 2019
Rick E Winningham
/s/ Michael S. Wyzga	Director	March 7, 2019
Michael S. Wyzga

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EX-10.4

Exhibit 10.4

SUBLEASE

THIS SUBLEASE (this“Sublease”)is datedfor reference purposes as ofOctober26, 2018,andis

made byand betweenONCOMEDPHARMACEUTICALS,INC., a Delawarecorporation(“Sublandlord”), andVENN BIOSCIENCES CORPORATION, a Delawarecorporation(“Subtenant”).  Sublandlord and Subtenantherebyagree as follows:

1.Recitals:This Subleaseismade with reference to thefactthatHCP LS RedwoodCity, LLC, as “Landlord,” (“Master Landlord”)and Sublandlord, as“Tenant,”arepartiesto thatcertain Lease dated May 30, 2006,as amended bythatcertain FirstAmendmentto Lease dated November, 2006, thatcertain Acknowledgementof RentCommencementDate datedas ofMarch9, 2007,thatcertain Second Amendment to Office Lease dated December22, 2010, and thatcertainThird Amendmentto LeasedatedNovember11, 2016 (the “Third Amendment”, whichcollectivelywiththe other amendments anddocuments referenced above arereferredto hereinas the“Master Lease”), with respecttothose certain premises consistingof approximately45,690rentable square feetdescribedtherein (the “MasterPremises”) locatedat800 Chesapeake Drive, inthe Britannia SeaportCentre inRedwood City, California.Acopyof theMasterLease is attached hereto asExhibit A.Capitalizedterms usedand notdefined herein shallhave the meaning ascribed tothemintheMasterLease.

2.SubleasedPremises: Subjecttotheterms andconditions ofthis Sublease, Sublandlord hereby subleases to Subtenant, andSubtenantherebysubleases fromSublandlord,a portion oftheMaster Premises consistingof approximately11,100rentable square feetlocatedon portionsofthe firstand secondfloors as more particularlyshown onExhibit B attached hereto (the“Subleased Premises”).The Subleased Premises shallbedeliveredin phasesidentified onExhibit Bas“PhaseI” and “Phase II”. Phase Iconsistsof approximately9,300rentable square feetand shallbe delivered to Subtenantonthe date by whichthis Subleaseis executedbySublandlord and Subtenantand Master Landlord’s written consenttothis Sublease is obtained.Phase IIshallconsistof the areaidentified as “Phase II” on ExhibitB whichcontains  approximately1,800rentable square feetandshallbe deliveredbySublandlordtoSubtenanton oraboutthe date whichistwelve (12) monthsafter the CommencementDate.  In connectionwithitsuseofthe Subleased Premises,and subjectto Sublandlord’sreasonable rules andregulations, Subtenantshallhave the non- exclusive rightto usethe common space outlined onExhibit B,includingthefoyer, kitchen, restrooms, electricalroom, “Clarke” conference room, stairways, certain hallways, and the common loadingdockarea (the“Shared Areas”),ineach case to the extentpermitted byand on the terms setforth in the MasterLease and subjectto Sublandlord’s reasonablerulesandregulations.  Subtenantshallhave no righttoenter,and  shallpreventits employees,agents, contractors and inviteesfromenteringanyportions oftheMaster  Premises other thanthe Subleased Premisesandthe Shared Areas.Sublandlord’sentryintothe Subleased Premises shallbesubjecttothe terms ofSection12.1 of the MasterLeaseincorporate herein,exceptthatno notice shallbe requiredin connectionwith anentryforrecurringservices to the Subleased Premises(e.g., janitorial).The SubleasedPremises(and Phase IandPhase IIthereof)arestipulatedto containtheamountof rentable square feetas set forthherein,and Rentunderthe Subleaseshallnotbe revised intheeventthe actual rentable square feetoftheSubleased Premisesis moreor less.

3. Term:

A.Term.The term(the“Term”) of this Sublease shallbe forthe periodcommencingonthe

datebywhich this Subleaseis executedbySublandlordand Subtenant,Master Landlord’s written consentto this Sublease is obtainedand Sublandlord delivers Phase Iof the Subleased PremisestoSubtenant(the

“CommencementDate”)and endingtwenty-four (24)months afterthe CommencementDateunlessthis

Subleaseis sooner terminated pursuantto itsterms or the MasterLeaseissooner terminatedpursuantto its

terms (the “Expiration Date”);provided, however,thatifthe CommencementDateof this Sublease does not occur withinthirty(30) days after the date by whichboth Sublandlord and Subtenanthave executedthis Sublease,through no faultof Subtenant,thenatanytime thereafter untilthe CommencementDate has occurred,Subtenantshallbe entitledtoterminatethisSublease bywritten notice to Sublandlord,in which eventSublandlordshallpromptlyrefund and delivertoSubtenantthe prepaid BaseRentpaid bySubtenant and the SecurityDeposit,and SubtenantandSublandlord shallthereuponbe released of allfurther obligations underthis Sublease.The termshallcommence withrespecttoPhase IIon the later ofthedate which is twelve (12) monthsafterthe CommencementDateor the date bywhich Sublandlord delivers Phase IIof the Subleased Premisesto Subtenant (the “Phase IICommencementDate”).  If the Phase IICommencementDate does notoccuron or beforethe date which isthirteen (13) months afterthe CommencementDate,thenatany time thereafteruntilthePhase IICommencementDatehas occurred, Subtenantshallbe entitled to terminate this Subleasewith respect to Phase II(butnotasto Phase I),bywritten noticetoSublandlord.

B.No Optionsto Extend orExpand. Notwithstandinganythingtothecontraryinthe Sublease or the MasterLease, Subtenantshallnothave anyoptions to extendorrenew thetermof the Sublease or anyoptions toexpandthe Subleased Premises.

C.Right ofFirst Offer. In the eventthatSublandlord,as ofNovember1, 2019 and until January1, 2020, determines inits sole discretion thatSublandlord does notneedor desire to(i)occupythe Subleased Premisesafter the ExpirationDate, (ii)subleaseto athird partya largerspaceintheMaster Premises whichincludes allor a portionofthe Subleased Premises, or(iii) negotiate atermination ofthe MasterLease, and solongasSubtenantis notandhas notbeen indefaultof anytermor provision of this Subleasebeyond anyapplicablenoticeandcureperiodand has notassigned thisSubleaseor subletanyspace coveredtherebyoragreed to do sointhefuture,then Sublandlord shallnotifySubtenantof the terms and conditions on whichSublandlordwouldbe willingtoextendtheTermof the Sublease(the “Offer Notice”).

If Subtenant,withinten(10)businessdays afterreceiptof Sublandlord’s written notice indicatesin writingits agreementextendtheTerm on theterms statedinthe Offer Notice,then theTerm shallbeextendedon the

terms ofthe Offer Notice.IfSubtenantdoesnottimelyindicatein writingits agreementtoextend the

SubleaseTermon theterms contained inthe OfferNotice withinsaidten (10)business dayperiod, then Subtenant’srightsunder this Paragraph 3.C shallbenulland void and ofno forceor effect,and Sublandlord thereafter shallhave the righttosubleasethe Subleased Premisestoathirdpartyon anyterms Sublandlord desires.

D.TerminationOption. Notwithstandinganythingtothe contraryin the Sublease,in the eventthatSublandlord enters intoan agreementwithMasterLandlordtoterminate the MasterLease or otherwise vacatestheMasterPremisesduringtheTermof this Sublease,either partyshallhave the rightto terminate thisSublease uponone hundred twenty(120)days’prior written notice to Subtenantdelivered on or afterthe date which is ten (10) months afterthe CommencementDate, in which eventthis Sublease shall terminate withoutany liabilityto eitherparty.

4. Rent:

A.Base Rent.Commencingon the CommencementDate and continuingeach month throughouttheTermof thisSublease, Subtenantshallpayto Sublandlordas baserent(“Base Rent”) forthe Subleased Premises monthlyinstallmentsas follows:

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For Phase Iof the Subleased Premises:

Months	Rentable SquareFeet	BaseRent per Month
Commencement Date–Month12	9,300	$68,000
Month13 –ExpirationDate	9,300	$71,216

For Phase IIof the Subleased Premises:

Months	Rentable SquareFeet	BaseRent per Month
PhaseII Commencement Date–ExpirationDate	1,800	$13,784

Base Rentand AdditionalRent, as defined in Paragraph 4.B below, (collectively,hereinafter“Rent”)shallbe paidin advance on or before thefirst(1st) dayofeachmonth.  Rentfor anyperiodduringtheTermhereof whichis forless than one (1) month oftheTermshallbe a pro rataportion ofthemonthlyinstallmentbased on a thirty(30) daymonth.  Rentshallbepayable withoutnotice or demand and withoutanydeduction, offset,or abatement(exceptas otherwiseexpresslysetforth in this Sublease),in lawfulmoneyof the United States of America.  Rentshallbe paid directlyto Sublandlord at800 Chesapeake Drive, Redwood City, CA 94063, Attention:Accounting, or such other addressasmay be designated in writingbySublandlord.

B.Additional Rent.  Allmonies other than Base Rentrequired to be paidbySubtenant underthis Subleaseshallbedeemed additionalrent(“AdditionalRent”).  Base Rentshallinclude, and Subtenantshallhave no obligationto payor reimburseSublandlord for,anyand all“OperatingExpenses” undertheMaster Lease,thecostto performSublandlord’smaintenanceobligations under Paragraph 8 (subjectto Subtenant’s obligationthereunderto payforincreasesin such costtothe extentrequiredtherein), electricity,naturalgas(if applicable), sewer charges, waterand heating, ventilation and airconditioning (“HVAC”)and officejanitorialservices(collectively, “Included Services”). Subtenantshallpayforall environmentalhealth and safetyservicesandhazardous waste managementwith respectto Subtenant’s operationsatthe SubleasedPremises,internet, phone and information technologyservices andsupport, administrative support, businessservices, officesupplies, foodand beverage, and othersimilaritems and serviceswith respecttotheSubleased Premises.In the eventSublandlordreasonablydetermines that Subtenantisusinga disproportionateamountofIncluded Services, Sublandlordmayeither (1) charge a reasonable proportionto bereasonablydetermined bySublandlord of allIncludedServicesjointlymeteredor invoicedtotheMaster Premises or(2) separatelymeterand/or invoicethe Included Servicestothe Subleased Premises atSubtenant’ssole costandexpense.

C.PrepaymentofRent.  Upon execution hereof bySubtenant, Subtenantshallpay to Sublandlord the sumofSixty-Eight ThousandDollars($68,000.00),which shallbe applied asa creditagainst Base Rentforthefirst(1st) month(s)of theTerm.

5. Security Deposit:

A.Withinfive(5) business days afterexecutionofthis Sublease, Subtenantshalldeposit with SublandlordOne HundredThousand Dollars ($100,000.00)in cash andSix HundredThousand Dollars

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($600,000.00) intheformof anirrevocable andunconditionalletter ofcredit(the “Letterof Credit”)as securityforthe performance bySubtenantof itsobligations underthis Sublease, and notas aprepaymentof rent(collectively, the “SecurityDeposit”).If Subtenantdefaults(beyond anyapplicable notice andcure period)under this Sublease,Sublandlord may, upon written noticeto Subtenant,applyalloranypartofthe SecurityDepositfor the paymentof anyrentor other sumin default,therepair ofanydamage to the Subleased PremisescausedbySubtenantorthe paymentofanyother amountwhich Sublandlord mayspend or become obligated tospend byreason of Subtenant’sdefaultorto compensateSublandlord for anyother lossor damage which Sublandlord maysuffer byreason of Subtenant’sdefaulttothefullextentpermitted by law.Subtenanthereby waives anyrestriction ontheuse orapplication of the SecurityDepositbySublandlord as setforth in California CivilCode Section1950.7 (withtheexception of subsection (b)).Tothe extentany portion ofthe SecurityDepositisused, Subtenantshall within five (5)businessdays after demand from Sublandlord restore the SecurityDepositto itsfullamount.  Sublandlord may keep the SecurityDepositinits generalfunds andshallnotbe requiredto payinterestto Subtenantonthe depositamount.  Sublandlordshall returnalloftheremainingSecurityDepositto Subtenantwithin thirty(30) days after thelaterof the end of  theTermorSubtenant’ssurrenderof possessionoftheSubleased Premisesto Sublandlord,lessanyamounts thathave been applied bySublandlordpursuanttothisParagraph.The SecurityDepositshallnotserve asan advance paymentof rentora measure of Sublandlord’s damages for anydefaultunderthis Sublease. Subtenantcovenants and agreesthatitshallnotassign or encumberor attemptto assign orencumberthe SecurityDepositand neither Sublandlordnorits successorsor assigns shallbe bound byanysuch agreement, encumbrance,attempted assignmentor attemptedencumbrance.

B.TheLetter ofCreditshallbegoverned bythe InternationalChamberof Commerce Publication No. 590,and shallbein anamountequaltoSix HundredThousandDollars($600,000.00),issued to Sublandlord, asbeneficiary, in formand substancereasonablysatisfactorytoSublandlord, by Silicon ValleyBank, or anotherbankreasonablyapproved bySublandlord and qualified to transactbankingbusiness in California withan officein theGreaterSan Francisco Bay Areaatwhich draftsdrawn onthe Letter of Creditmaybe presentedforpayment.Thefullamountof the Letter of Creditshallbe available to Sublandlord upon presentation of Sublandlord’ssightdraftaccompaniedonlybythe Letterof Creditand Sublandlord’s signed statementthatSublandlordisentitled todraw on the Letterof Creditpursuantto this Sublease.Subtenantshallmaintainthe Letter of Creditfor the entireTermand anyextensionthereof.The Letterof Creditshallexpresslystatethatthe LetterofCreditand the righttodrawthereundermaybe transferred or assigned bySublandlord to anysuccessor-in-interestto orassignee of Sublandlordunder this Sublease. Subtenantshallpayanyfees relatedtotheissuance oramendmentof the Letter of Credit,including, withoutlimitation, anytransfer fees.The Letterof Creditshallpermitpartialdraws.The Letterof Credit shallprovidethatitwillbeautomaticallyrenewedforperiods of one (1) yearuntilthirty(30)days after the Expiration Date unlessthe issuer provides Sublandlordwith writtennotice ofnon-renewalatthenotice addressherein atleastsixty(60)days priortotheexpiration thereof.  IfSublandlord receives such anotice of non-renewal, and notlater than thirty(30)days priortothe expiration ofthe Letterof Credit, Subtenantfails to furnish Sublandlord witha replacementLetter of Creditpursuantto the terms and conditionsofthis  section,then Sublandlord shallhave the righttodrawthe fullamountofthe Letterof Credit, bysightdraft, and shallhold the proceedsof the Letter of Creditasacash SecurityDepositpursuanttotheterms and conditions ofParagraph 5.Aabove.

C.So longas Subtenantisnotthenin defaultunder thisSublease,and nodefaulthasatany time occurred under thisSublease beyond anyapplicable notice and cure period, upon Subtenant’s payment of atleastThree HundredThousand Dollars ($300,000.00) in BaseRentintheaggregate pursuanttothe schedulesetforthin Paragraph 4.A above,thentheamountof theLetterof Creditmaybe reduced by Subtenant,bydeliverybySubtenantto Sublandlord ofa replacementLetter ofCreditor byan amendmentto the existingLetterof Credit, toThree HundredThousand Dollars ($300,000.00).So longas Subtenantisnot thenin defaultunder thisSublease,and nodefaulthasatany time occurred underthis Sublease beyond any

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applicablenoticeandcureperiod, upon Subtenant’s paymentof atleastSix HundredThousandDollars ($600,000.00) in Base Rentin the aggregatepursuant to theschedule setforth in Paragraph4.Aabove, then within thirty(30) days ofSubtenant’s written requestdelivered fromand after such payment, Sublandlord shallreturnto Subtenantthe Letter of Credit.

6.Holdover: Subtenantacknowledges that itiscritical thatSubtenantsurrendertheSubleased Premises onor beforethe expiration or earlier termination of the Sublease in accordance withtheterms ofthis Sublease.Accordingly, Subtenantshallindemnify, defendand hold harmless Sublandlordfromand against  alllosses, costs,claims, liabilitiesand damages resultingfromSubtenant’sfailureto surrender the Subleased Premises onor beforethe expiration or earlier termination of the Sublease in the conditionrequired underthe terms ofthis Sublease (including, withoutlimitation, anyliabilityor damages sustainedbySublandlord as a resultof aholdoveroftheMasterPremisesbySublandlordoccasionedbythe holdoverofthe Subleased Premises bySubtenant).Inaddition, SubtenantshallpaySublandlordholdoverrentequaltoone hundred  fiftypercent(150%) of Base Rent plus anyAdditionalRentpayable hereunder foranyperiod fromthe Expiration Datethrough the date Subtenantsurrendersthe SubleasedPremisesdecommissionedand/orclosed pursuantto Paragraph 20 below.The provisions ofthis Paragraph6 shallsurvive the expirationorearlier terminationofthis Sublease.

7. “AS IS”  Condition:

A.Exceptasexpresslysetforth herein,the parties acknowledge and agree thatSubtenantis subleasingthe SubleasedPremises on an“AS IS” basis, and thatSublandlordhasmade no representations or warranties,expressorimplied, whatsoever, withrespecttothe Subleased Premises, including, without limitation, anyrepresentation or warrantyasto the suitabilityof the Subleased Premises for Subtenant’s intendeduse or any representationor warrantymade byMaster Landlord underthe Master Lease. Notwithstandingthe foregoing, Sublandlord shalldeliverPhase Iand Phase IIin broomcleanconditionand free ofanypersonalproperty(with the exception oftheFurniture).Priorto delivery, Sublandlordshall performanyclosure or decommissioningofthelabportions ofthe Subleased Premisesrequiredunder applicablelawsinconnection withthe use,storage, releaseor disposalof Hazardous Substances by Sublandlord or its agents, employees, contractors orinvitees. Exceptas setforth in Paragraph 8 below, Sublandlord shallhave noobligation whatsoeverto make orpaythecostofany alterations,improvements or repairs totheSubleased Premises, including, withoutlimitation, anyimprovementor repairrequired to complywith anylaw, regulation, buildingcodeor ordinance(includingthe Americans with Disabilities Act of 1990,as maybe amended).Subtenantexpresslywaives allrights underlawtomake repairsattheexpense of Sublandlord.  Subtenantherebyexpresslywaivesthe provisionsofsubsection1 of Section 1932 and Sections1941 and 1942 ofthe CivilCodeof California and all rights to make repairs atthe expenseof Sublandlord as provided inSection 1942 ofsaid CivilCode.

B.Sublandlord herebydiscloses toSubtenantthatSublandlordhasconstructedin the Subleased Premisescertainimprovements withoutobtainingpermits therefor including, withoutlimitation, interior walls to createtheofficeslabeled 106, 107and 108 on Exhibit B(collectively, the “Prior Improvements”).The Prior Improvements shallremain inthe Subleased Premises;provided, however, if the same are requiredto be removed byMaster Landlord, the Cityof Redwood Cityorother governmentalentity, agencyor department,then(i)Sublandlordshallremove thesame atSublandlord’ssolecostand expense,and

(ii) Sublandlord shallreasonablycooperate with Subtenantin minimizinganyinterference with or adverse effects on Subtenant’soperationsin theSubleased Premises as aresultofsuchremoval.

8.Repair andMaintenance.Subtenantshallrepair andmaintainthe Subleased Premises in good and sanitaryorder,condition andrepairas setforthinSection 8.2(a) ofthe Master Lease incorporated herein. Notwithstandingthe foregoing, Sublandlord shallcontinue torepair andmaintain the Buildingelectrical,

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plumbing, fire protection, HVAC and other main buildingsystems(excludingtelephoneand communications systems), alltothe extentrequiredto bemaintained by“Tenant” pursuantto Section 8.2(a)of the Master Lease.In the eventSublandlord’scosttomaintain andrepairsuch Buildingsystems increasesmateriallyasa resultof Subtenant’suse ofthe SubleasedPremises, Subtenantshallpayto Sublandlord such increase incost. In addition, Subtenantshallpaythe entirecostofany repair, maintenance orreplacementrequired as aresult of the misuse or excess useof such systems,orthenegligence, willfulmisconductor violation of this Sublease, bySubtenantor its agents, employees, contractors or invitees.

9.Master LandlordObligations.Sublandlord shallhave no obligationto performanyrepairsor anyotherobligation ofMasterLandlordrequiredto beperformed byMasterLandlord undertheterms ofthe MasterLease (including, withoutlimitation, MasterLandlord’sobligations underSections6, 8, 9,10, 13,15, and 17.20oftheMaster Lease and MasterLandlord’sobligationto complywith laws andcarrybuilding insurance).  Sublandlordshall,however,requestperformance ofthe same in writingfromMaster Landlord promptlyafterbeingrequestedto doso bySubtenant, and shalluse Sublandlord’sreasonable efforts (not includingthe paymentof monies unless Subtenantagrees toreimburse Sublandlord foranyreasonable out-of- pocketcostsincurred bySublandlord, the incurringofanyliabilities, ortheinstitutionoflegalproceedings, which maybe instituted onlyatSublandlord’s sole discretion) toobtainMaster Landlord’sperformance.

10.Rightto Cure Defaults: If Subtenantfailsto payanysumof moneyto Sublandlord, or fails to performanyotheracton itsparttobe performed hereunder,andin eithercasefails to curethe same within five (5) days after writtennotice fromSublandlord of such failure,then Sublandlord may, butshallnotbe obligated to, make such paymentor performsuch act.Allsuch sums paid, and allreasonablecosts and expenses of performingany such act,shallbe deemed AdditionalRentpayable bySubtenantto Sublandlord upon demand, togetherwith interestthereon atthe lesserof (i)ten percent(10%)perannumor (ii)the maximumrate allowable underlaw (the “InterestRate”) fromthe date of the expenditureuntilrepaid.

11.Assignment andSubletting: Subtenantmaynotassign anyinterestinthis Sublease (by operation of law or otherwise),subletanyof the Subleased Premises,transferanyinterestof Subtenant  thereinor permitanyuse ofthe SubleasedPremises byanotherparty(collectively,“Transfer”), withoutthe prior writtenconsentof Sublandlord andMaster Landlord.Sublandlord’s consentmaybe withheld by Sublandlord in its soleandabsolutediscretion.  Aconsentto oneTransfershallnotbe deemed to bea consent to anysubsequentTransfer.AnyTransfer withoutsuch consentshallbe void and,atthe option of Sublandlord, shallbea materialdefaultunderthis Sublease.Sublandlord’s waiveror consentto any assignmentorsublettingshallbeineffective unlesssetforth in writing, and Subtenantshallnotberelieved fromanyof its obligationsunderthis Sublease. Notwithstandingtheforegoing,Sublandlord’sconsentshall notberequiredfora“PermittedTransfer” of Subtenantas describedin Section 11.1 oftheMaster Lease, as incorporated herein, solongas MasterLandlord’sconsentisreceived (totheextentMasterLandlord’s consentis required underthe Master Lease) andtheconditions thereinaresatisfied;provided, however, inthe eventofanysuch PermittedTransferof Subtenant(otherthan aventure equityfinancing, initialpublic offering, or otherissuanceof capitalstockfor bonafide financingpurposes;or aninternalcorporate reorganization of Subtenant oritsaffiliates notinconnection withanymerger, consolidation, oracquisition involvingSubtenantor its affiliates, unlessthe entitymerging, consolidating, or acquiringSubtenantis not engaged in a substantiallysimilaroracompetingline of businessas Sublandlord, as reasonablydetermined  bySublandlord), Sublandlord shallhave the righttoterminate this Subleaseuponwrittennoticeto Subtenant, in which eventthis Sublease shallterminateninety(90) daysafter such notice of termination.

12. Use:

A.Subjectto the terms oftheMasterLease,Subtenantmayuse theSubleased Premisesfor office,research and development, engineering, laboratory,ClinicalLaboratoryImprovementAmendments

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(CLIA)-certifiedlaboratory,and/or warehousingfacility, and foradministrative and other lawfulpurposes reasonablyrelated toorincidentalto such specified uses (subjectin eachcasetoreceiptof allnecessary approvals fromthe CityofRedwood Cityand allothergovernmentalagencies havingjurisdictionoverthe Subleased Premises), and for no other purpose whatsoever.

B. Hazardous Substances.

(i)Subtenantshallnotuse,store, transportor dispose of anyHazardous Substances (as definedin the Master Lease) inorabouttheSubleasedPremisesortheMaster Premises, exceptthatSubtenantmay keep, store and use inthe Subleased Premises (a)those Hazardous Substances, and theirrespective quantities,specificallylisted onthe EnvironmentalQuestionnaireattached tothis Subleaseas ExhibitDto the extentpermitted pursuanttotheterms and conditions of Section9.6 oftheMaster Lease incorporated herein, and (b)anyotherquantities and types of Hazardous Substances approved in writingby MasterLandlord(to the extentrequired undertheMasterLease) andSublandlord,which approvalby Sublandlord shallnotbeunreasonablywithheld,conditionedor delayedas longassuch quantities andtypes of Hazardous Substancesare permitted pursuanttotheterms and conditions of Section9.6 of the Master Leaseincorporated herein.Subtenantshallatalltimes complywith Sublandlord’sreasonableenvironmental, health and safety(“EH&S”) standards,rulesandregulations, and Sublandlord shallhave therightatanytime to auditSubtenant’s compliance withthesame.

(ii)As ofthe dateofthis Sublease,Sublandlord representsto Subtenantthat,to Sublandlord's knowledge, (a) nolitigation has been broughtorthreatenedagainstSublandlord, nor any settlements reached bySublandlordwith anygovernmentalor private party, concerningthe actualor alleged handling, transportation,storage, treatment, disposal,release or use bySublandlord or anyofits agents, employees, invitees(excludingSubtenantoritsagents,employees, contractors or invitees), orcontractors (collectively, “SublandlordParties”)of Hazardous Substanceson oraboutthe Subleased Premises or Building, orthe soil, groundwater orsurface waterthereof,norhas Sublandlordreceived anynotice of any violation or alleged violation bySublandlordParties ofany Hazardous Substanceslaws, pendingclaims or pendinginvestigations withrespecttothepresence of Hazardous Substances on or aboutthe Subleased Premises or Building, or the soil, groundwater or surface waterthereof, and(b) there areno Hazardous Substances releasedbySublandlordonthe SubleasedPremisesthatrequireremoval, remediation,or encasementof materials orreportingto anygovernmentalauthority, orthatviolateany Hazardous Substance laws.  Asusedinthis Paragraph 12(B)(ii),thephrase“to Sublandlord’s knowledge” shallbe deemed to refer to facts within the actualknowledge ofEric Mendonca,Sublandlord’sFacilityManager, as ofthe dateofthis Sublease, withoutdutyof inquiry.

(iii)Sublandlord'sIndemnityObligations.In additionto Sublandlord’s other indemnityobligations under this Sublease, Sublandlord shallprotect, indemnify, defend (withcounsel reasonablyacceptableto Subtenant), andhold harmlessSubtenantandits officers,directors,employees, agents, successors and assigns fromand againstany and allliabilities, losses, claims, damages, interest, penalties,fines, monetarysanctions, attorneys'fees, experts'fees, courtcosts,remediation costs, investigation costs, andotherexpensestothe extentcaused bythereleaseofHazardous Substancesonor aboutthe Subleased Premises,the Master Premises or the Building bySublandlord oranyof its agents, employees or contractorsin violation of applicable Hazardous Substance laws.Theprovisions ofthis Paragraph shall survive theexpiration orearliertermination of this Sublease.

(iv)Subtenant's Indemnity. Inaddition to Subtenant’s otherindemnity obligations underthis Sublease, Subtenantshallprotect, indemnify, defend(withcounselreasonably acceptableto Sublandlord),and hold harmless Sublandlordandits officers, directors, employees, agents, successors and assignsfromand againstanyandallliabilities, losses, claims, damages, interest, penalties,

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fines, monetarysanctions, attorneys'fees, experts'fees,courtcosts, remediation costs,investigation costs, and other expenses to the extentcaused bythe releaseof Hazardous Substances onorabouttheSubleased Premises,theMaster Premises or the Building bySubtenantor Subtenant's agents, employees, contractorsor invitees in violation of thisSublease,theMaster Leaseor anyapplicable Hazardous Substance laws.The provisions of this Paragraph shallsurvive theexpiration or earlierterminationof thisSublease.

C.Subtenantshallcomplywith allreasonable rules andregulations promulgated fromtime to time byMaster Landlordor Sublandlord.Without limitingthe generalityoftheforegoing, Subtenantshall complywith Sublandlord’sreasonableemergencypoliciesand procedures.

13.Effect of Conveyance: Asusedin thisSublease, the term“Sublandlord” means the holderofthe Tenant’sinterestunder theMasterLease.In the eventof anyassignmentor transferoftheTenant’sinterest undertheMaster Lease, which assignmentor transfer mayoccur atanytime duringthe Termhereofin Sublandlord’s sole discretion, Sublandlordshallbe and herebyis entirelyrelievedof allcovenants and obligationsfirstaccruingandthereafterto be performed bySublandlord hereunder, and itshallbe deemed and construed, withoutfurther agreementbetween the parties hereto, thatanytransferee hasassumed andshall carryoutallcovenants andobligationsfirstaccruingandthereafterto be performed bySublandlord  hereunder.  Sublandlord shalltransfer and deliveranysecurityof Subtenantto thetransferee oftheTenant’s interestunder the MasterLease,andthereupon Sublandlordshallbe dischargedfromanyfurtherliabilitywith respectthereto.

14.Delivery andAcceptance:Subjectto Subtenant’sterminationrightsin Paragraph 3.Aofthis Sublease,thisSublease shallnotbe void or voidable, nor shallSublandlordbeliable to Subtenantforanyloss or damage, byreason of delays in the CommencementDateor the Phase IICommencementDateor delays in Sublandlord deliveringtheSubleased Premisesto Subtenantfor anyreason whatsoever;provided, however, thatRentshallabatewithrespectto the applicable portionofthe Subleased PremisesuntilSublandlord delivers possession ofthe such portion of theSubleased Premisesto Subtenant.

15.Improvements: Subtenantshallnotmake anyalterations orimprovements to theSubleased Premises(i) withoutthe prior written consentof bothMasterLandlordand Sublandlord and(ii)exceptin accordance withtheMasterLease.  Sublandlord’sconsentshallnotbeunreasonablywithheld, conditioned or delayed, provided,however, Sublandlord’s withholdingof consentshallin allevents be deemed reasonable if for anyreason MasterLandlord’sconsentis notobtained. Notwithstandinganythingto thecontrary,unless otherwise agreeduponin writingbySublandlord, Subtenant, atSubtenant’s expense,shallremove prior to the expirationor earliertermination oftheSublease allalterations or improvements constructed by orfor Subtenantandrestore theaffected areasto theircondition priorto such alteration or improvement.

16.Release and Waiver of Subrogation:Notwithstandinganythingto thecontraryin this Sublease, the parties hereto releaseeach otherandtheirrespective agents,employees, successorsand assigns fromall liabilityfor damage to anypropertythatis actuallycoveredbypropertyinsurancein force orwhich would normallybe covered byfullreplacementvalue“SpecialForm” propertyinsurance, withoutregardto the negligence or willfulmisconductoftheentitysoreleased.  Each partyshallcauseeachinsurance policyit obtainstoincludea waiverof subrogation regardingthe liabilitiesreleased hereby.Sublandlord shallnotbe liableto Subtenant, nor shallSubtenantbe entitledtoterminatethis Sublease or toabate Rent(exceptif and to the extentSublandlordis allowed and receives a proportionate abatementof RentundertheMaster Lease with respecttothe Subleased Premises) forany(i)failureor interruption ofanyutilitysystemor service or(ii) failure of MasterLandlordto maintainthe Subleased Premisesorthe Buildingas maybe required underthe MasterLease. Notwithstandinganythingtothecontraryin theSublease,in noeventshallSublandlord be liableto Subtenantfor any lostprofit, damage to orloss ofbusinessoranyformof special,indirector consequentialdamages;itbeingunderstood, however,thatin noeventshallsuch waiverbeconstruedto

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release Sublandlordfromanyof Sublandlord’s indemnityobligationsto Subtenantunderthis Sublease regardingclaims assertedbythird parties againstSubtenant.

17.Insurance: Subtenantshallobtainand keepinfullforce andeffect, atSubtenant’s sole costand expense, duringtheTermthe insurancerequiredto becarried bythe“Tenant” underthe MasterLease. Subtenantshallinclude SublandlordandMaster Landlord asan additionalinsured in anyliabilitypolicyof insurance carriedbySubtenantin connection with thisSubleaseand shallprovideSublandlord with certificates of insurancepromptlyupon Sublandlord’s request.

18.Default: Subtenantshallbe in materialdefaultofits obligationsunder this Sublease if anyofthe followingeventsoccur:

A.Subtenantfails topayanyRentwithin three (3)businessdays afterdeliveryby Sublandlord to Subtenantofwritten notice of nonpayment;or

B.Subtenantfails toperformanyterm, covenantorcondition of this Sublease(exceptthose requiringpaymentof Rent)and fails to cure such breach within twenty(20) days after deliveryby Sublandlord to Subtenantof a writtennoticespecifyingthe natureofthe breach,providedthatif such failure is curablein nature butcannotreasonablybe cured within suchtwenty(20)dayperiod,amaterialdefault shallnotbedeemed to have occurred ifSubtenantpromptlycommences suchcure(and inallevents within suchtwenty(20) dayperiod)anddiligentlypursues such cure to completion and an eventofdefault(asset forth in the MasterLease)hasnotoccurred undertheMasterLease;provided that, notwithstandingthe foregoing, Subtenantshallin anyeventbein materialdefaultofitsobligations underthisSublease if Subtenantfails tocure anysuch breach within sixty(60) days after deliverybySublandlord toSubtenantof writtennoticeofsuch breach(the “Outside Breach Date”),such Outside Breach Dateto beextended for delays in such curethatarebeyond thereasonablecontrolof Subtenant;or

C.the bankruptcyor insolvencyof Subtenant,transfer bySubtenantinfraud of creditors, an assignmentbySubtenantfor the benefitof creditors,orthe commencementof anyproceedings ofanykind by or againstSubtenantunderanyprovisionofthe FederalBankruptcy Actorunderanyotherinsolvency, bankruptcyorreorganization actunless,intheeventanysuch proceedings are involuntary, Subtenantis discharged fromthe same within thirty(30) days thereafter;

D.the appointmentof a receiverfor asubstantialpartof the assets ofSubtenant, which receiveris notdischarged within thirty(30) days;

E.thelevyupon this Subleaseor anyestate of Subtenanthereunder byanyattachmentor execution andthefailure withinthirty(30) days thereafterto have suchattachmentor execution vacated or such other action taken with respecttheretoso as toputSublandlordatno riskofhavingan unconsented transferof this Sublease;

F. Abreach bySubtenantoccurs under the NDA(as defined below);

occurred;or

G. an “Abandonment” (asdefined intheMasterLease) of the SubleasedPremiseshas

H.Subtenantcommits anyotheractor omission which constitutesan eventofdefaultunder theMaster Lease.

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19.Remedies: In the eventofanydefaultbySubtenant, Sublandlord shallhave allremedies providedtothe“Landlord”underSection14.2 of theMasterLease as if an“eventof default” had occurred thereunderand allotherrights and remedies otherwiseavailableatlaw and inequity.Sublandlord mayresort to itsremediescumulativelyor in the alternative.

20. Surrender:

A.On or before the ExpirationDate or anysoonerterminationofthis Sublease, Subtenant shallremove allofits tradefixtures, personalpropertyand allalterationsconstructed bySubtenantinthe Subleased Premises whicharerequired to beremoved undertheterms ofthis SubleaseortheMaster Lease and shallsurrender the SubleasedPremisesto Sublandlord inthe same conditionreceived(reasonablewear and tear,damage bycasualtyor condemnation, andrepairs thatarethe obligationof Sublandlord underthis Sublease or MasterLandlord under the MasterLeaseexcepted), after performanceof anyclosure or decommissioningofthe Subleased Premisesrequiredunderapplicable laws inconnection withthe use, storage, release or disposalof Hazardous SubstancesbySubtenantorits agents, employees, contractors or invitees.Subtenantshallrepairanydamage to the Subleased Premises caused bySubtenant’sremovalof its personalproperty, furnishings and equipment.  If the Subleased Premisesare notso surrendered, then Subtenantshallbe liabletoSublandlord for allcostsincurred bySublandlordinreturningthe Subleased Premisesto the required condition,plus interestthereon atthe InterestRate.

21.Broker:SublandlordandSubtenanteach representtothe other thattheyhave dealtwithno real estatebrokers, finders,agents or salesmen in connection withthistransaction otherthanKidder Mathews representingSubtenant( “SubtenantBroker”)and CBRErepresentingSublandlord( “Sublandlord Broker”). Sublandlord shallberesponsible for paymentofa brokercommission to Sublandlord Brokerpursuanttoa separate agreement,and Sublandlord Brokershallbe responsiblefor paymentof anybrokercommissionto SubtenantBrokerpursuantto a separate agreement. Underno circumstances willSublandlord beresponsible for anypayments to SubtenantBroker.  Sublandlord andSubtenanteach agrees toindemnifyand holdthe otherharmless fromand againstallclaims forbrokerage commissions, finder’s fees orothercompensation made byanyotheragent, broker, salesman orfinderasa consequence ofthe indemnifyingparty’sactions or dealingswith such otheragent, broker, salesman, orfinder.

22.Notices:Unlessatleastfive (5)days’prior writtennoticeis given inthe manner setforth inthis paragraph, the addressof each partyfor allpurposes connected withthis Subleaseshallbethataddressset forth belowtheir signaturesatthe end ofthis Sublease.Allnotices, demandsandcommunicationsin connection withthis Sublease shallbe properlyaddressed and deliveredas follows: (a) personallydelivered; or (b) submittedto an overnightcourierservice, charges prepaid;or(c)depositedin the mail(certified,return- receiptrequested, andpostage prepaid).  Noticesshallbe deemed delivered uponreceipt,ifpersonally delivered, one (1) businessdayafter beingso submitted to anovernightcourier service and two(2)business days afterdepositinthe United States mail, if mailed as setforthabove.  Allnotices given to MasterLandlord undertheMaster Leaseshallbe considered received onlywhen deliveredinaccordance withtheMaster  Lease.

23. Other Sublease Terms:

A.IncorporationBy Reference.Exceptas setforth belowand exceptas otherwise providedinthis Sublease, the terms and conditions ofthis Subleaseshallinclude allof the terms oftheMaster Leaseand suchterms are incorporatedinto this Sublease asiffullysetforth herein,exceptthat:(i) each referencein suchincorporated sections to“Lease”shallbe deemed a reference to this“Sublease”;(ii)each referencetothe“Premises”shallbedeemed a reference tothe “Subleased Premises”;(iii) eachreferenceto “Landlord” shallbe deemed a reference to“Sublandlord” and each referenceto“Tenant”shallbedeemed a

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referenceto “Subtenant”, exceptas otherwise expresslysetforthherein;(iv)eachreferenceto “Rent CommencementDate” shallbe deemed a reference to the “CommencementDate”;(v)withrespectto work, services, utilities, electricity, repairs (or damage caused byMasterLandlord), restoration,insurance, indemnities,reimbursements, representations, warranties ortheperformance ofanyotherobligation of “Landlord” undertheMasterLease, whetheror notincorporated herein, the soleobligation of Sublandlord shallbetorequestthe same in writingfromMasterLandlord asand when requested to do so bySubtenant, and touse Sublandlord’sreasonableefforts(notincludingthe paymentof moneyunless Subtenantagreesto reimburseSublandlordforanyreasonable out-of-pocketcosts incurred bySublandlord, the incurringof any liabilities, or the institutionof legalproceedings, which maybe instituted onlyatSublandlord’s sole discretion)to obtain MasterLandlord’s performance; (vi) withrespectto anyobligation of Subtenantto be performed under this Sublease, wherevertheMaster Lease grantsto“Tenant”a specified numberof days to performits obligations underthe MasterLease (including, withoutlimitation, curinganydefaults),exceptas otherwise provided herein,Subtenantshallhave three (3) fewerdays to performthe obligation orone-halfthe time period permitted under the MasterLease, which everallows Subtenantthe greater amountof time;(vii) withrespecttoanyapprovalrequiredto be obtained fromthe“Landlord” underthe Master Lease,such approvalmustbe obtained fromboth Master Landlordand Sublandlord, and Sublandlord’s withholdingof approvalshallin alleventsbe deemed reasonable if foranyreason MasterLandlord’s approvalis not obtained;(viii) inanycasewherethe“Landlord” reserves or isgranted the rightto manage, supervise, control,repair, alter,regulate the use of, enteror usethe Premisesor anyareas beneath,above oradjacent thereto, such reservationorgrantofrightof entryshallbe deemed tobe forthe benefitof both Master Landlord and Sublandlord;(ix) inanycasewhere “Tenant”istoindemnify, release orwaive claims against “Landlord”, such indemnity, release or waivershallbedeemed to run fromSubtenantto bothMaster Landlord and Sublandlord,butsuchindemnityobligations shallonlyapplywithrespecttotheuseand occupancyof the SubleasedPremises or the Center bySubtenantandits agents, employees, contractors or invitees;(x) inanycase where“Tenant”isto execute and delivercertain documents or noticesto“Landlord”, such obligationshallbe deemedto run fromSubtenantto both MasterLandlordand Sublandlord;and(xi)the followingmodificationsshallbe made totheMaster Leaseasincorporated herein:

(i)thefollowingprovisions oftheMaster Lease are notincorporated herein: Sections1.1(a)(exceptlastsentence), 2,3.1,4.2,5, 6.1, 7.1(firstsentence),7.2(a)(exceptclause (i)), 7.2(b),

7.5, 8.1(b), 9.6(b)(xi)9.6(c), 10.6(b), 14.1, 15.2,16, 17.1, 17.15, 17.16, 17.21, ExhibitB, ExhibitC, Exhibit

D, FirstAmendmentto Lease,AcknowledgmentofRentCommencementDate, Second Amendmentto Lease, and Third Amendmentto Lease;

(ii)referencesto“one-half(1/2)” in Sections 11.2(b) and11.2(c)oftheMaster Leaseshallbe changed to“one hundredpercent(100%)”;and

(iii)the proportion of Subtenant’s rentabated pursuantto anyrightto abate rent providedto Subtenantthrough incorporation ofthe provisionsoftheMaster Lease shallnotexceed the proportion of Sublandlord’srentactuallyabated undertheMaster Lease withrespecttothe Subleased Premises.Asan example only, if Sublandlordis entitled toreceive anabatementof 50% oftherentpayable undertheMaster Lease with respecttothe SubleasedPremisesfora periodoftheTerm, then Subtenantshall be entitled toreceive anabatementof 50% ofthe BaseRentpayable underthis Subleaseforsuch period. However, as afurther example,if Sublandlordis entitled to receive an abatementof 50% oftherentpayable undertheMaster Leasesolely withrespecttoportionsof the Buildingthatdo notincludethe Subleased Premisesfora periodoftheTerm, then Subtenantshallnotbeentitled toanyabatementof Base Rentforsuch period.

B.Performanceof Obligations.This Sublease is andatall times shallbesubjectand subordinatetotheMaster LeaseandtherightsofMasterLandlord thereunder.  Subtenantherebyexpressly

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agrees:(i)to complywith allprovisions of theMasterLeasewithrespectto theTermwhich are incorporated hereunder;and (ii) to performallthe obligations onthepartofthe“Tenant” tobeperformed under the terms of the MasterLeasewhichareincorporated hereunder withrespecttothe Subleased Premises duringtheterm of this Subleaseexceptasexpresslyprovided otherwise inthis Sublease,includingParagraphs 4.B, 8, 16, and

23.Aabove.So longas Subtenantperforms its obligations under the Sublease,Sublandlord shallcontinueto performthe obligationsof “Tenant” undertheMaster LeasethatSubtenanthas notagreed to performunder this Sublease.  Subjectto Sublandlord’s rights underParagraph3.Dabove, Sublandlordshallnotagreeto amend ormodifythe Master Lease in any wayso astomateriallyand adverselyaffectSubtenant’s rightsor obligations underthe Subleasewithouttheprior writtenapprovalof Subtenant, whichshallnotbe unreasonablywithheld, conditioned ordelayed.  Exceptinconnection withanyterminationrightthat Sublandlord mayhave under Article13 ofthe MasterLease, Sublandlordshallnototherwise voluntarily terminate theMasterLeaseduringthe firstfourteen (14) monthsoftheTermwithoutSubtenant’s prior  writtenapprovalunless Master Landlord agrees tocontinue Subtenant’soccupancyof the Subleased Premises fortheremainder ofsuchfirstfourteen(14) monthsoftheTermon the same terms andconditions of this Sublease.  In the eventtheMasterLeaseis terminatedfor anyreason whatsoever,this Sublease shall  terminate simultaneouslywithsuchtermination withoutanyliabilityof Sublandlord to Subtenant,unlesssuch terminationisoccasioned by(a) an “eventof default”bySublandlordasthe “Tenant”under the MasterLease notarisingoutof anyactoromission of Subtenantor its employees, agents,contractors or invitees, or(b)a breach ofSublandlord’s obligations underthe precedingsentence ofthis Paragraph, whichtermination in eithercase shallconstitutea defaultbySublandlord hereunderunlessMasterLandlordagreesto continue Subtenant’s occupancyof the Subleased Premises for the remainderof the firstfourteen(14) monthsofthe Termon the same terms and conditionsofthis Sublease.  In the eventof a conflictbetween the provisions of this Sublease andthe Master Lease, as between Sublandlordand Subtenant, the provisionsofthis Sublease shallcontrol.

24.Rightto Contest: If Sublandlord does nothave the rightto contestanymatterintheMaster Leasedueto expiration of anytime limitthatmaybe setforththerein or for anyotherreason, then notwithstandinganyincorporationof anysuch provision fromthe Master Lease inthis Sublease, Subtenant shallalsonothave therightto contestanysuch matter.

25.Network Room: Subtenantshallberesponsible for obtaininginternetand networkservicesfor the Subleased PremisesatSubtenant’ssole costand expense. Sublandlord shall reasonablycooperate with Subtenantinsubmittingrequests for anynecessaryapprovals or consentsrequiredfromMasterLandlord undertheMaster Leaseto obtain such services.  Subtenantshallhavetherightto use the existingcablingand wiringexclusivelyservingtheSubleased Premises andmayconnectthesame to Subtenant’s ownswitch and firewall, which switch andfirewallmaybe installedbySubtenantinthenetworkroomfor theMaster Premises(the “NetworkRoom”).Subtenantshallnotenteroraccessthe NetworkRoomexceptupon reasonable advance notice to Sublandlord,and onlywith thesupervision byan authorizedemployee of Sublandlord and onlyfor the purpose of accessingSubtenant’sswitch and firewalltherein.If Subtenant electstoinstallits switch and firewallinthe NetworkRoom,Subtenantshallinstall,maintain andoperate such switch andfirewallequipmentinthe NetworkRoomwithoutdamagingor otherwise affectingthe equipmentof Sublandlord in the NetworkRoom(or the equipmentofanyother subtenantsoftheMaster Premises)oranycablingservingthe MasterPremises and shallotherwise perform suchinstallation ina good and workmanlike manner, in compliance with alllaws,codes,ordinances, rulesand regulations, and ina mannerreasonablyprescribed bySublandlord.The NetworkRoomand allcablingand wiringinthe Subleased Premisesare provided bySublandlord intheir “ASIS” condition, and Subtenantshallusesuch cablingand wiringatSubtenant’s solerisk.No representations orwarranties astosuch cablingand wiring’s condition or fitnessfora particularpurpose,expressorimplied, are made bySublandlord.

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26.Furniture,Fixturesand Equipment:Subtenantshallhave therightto use duringthe Termthe furnishings withinthe SubleasedPremisesshown onExhibit C attached hereto (the “Furniture”)atno additionalcostto Subtenant.  The Furniture is providedin its“ASIS, WHEREIS”condition, without representation or warrantywhatsoever. Subtenantshallinsure the Furniture underthe propertyinsurance policyrequired under theMasterLease, as incorporated herein, andpayalltaxes withrespecttothe Furniture. Subtenantshallmaintain the Furniturein good condition andrepair,reasonable wearand tear excepted, and shallberesponsibleforanylossor damage to the same occurringduringtheTerm. Subtenantshallsurrender the Furnitureto Sublandlordupontheterminationof this Subleaseinthe same conditionas existsas of the CommencementDate,reasonable wear andtearexcepted. Subtenantshallnotremove anyof the Furniture fromthe Subleased Premises.

27.Signage: Subjectto MasterLandlord’s(to the extentrequired underthe MasterLease)and Sublandlord’sconsent(with Sublandlord’sconsentnottobe unreasonablywithheld, conditioned or delayed), and provided the same do notreduce ordiminishSublandlord’sabilitytoinstallitsown signs,Subtenantshall have therightto installsuite identification signage attheseparateentranceto theSubleased Premises.All costs for installation, maintenance, andremovalor restorationof such signage shallbe atSubtenant’ssole

costand expense.

28.Generator: Subtenantshallhave access toits pro-ratashare ofthe generatorservicingthe MasterPremisesthroughouttheTerm.

29.Contingent Allowance: If approved, permitted and paid byMaster Landlord, Subtenantshallbe entitledto receive fromMaster Landlord the benefitofa portion ofremainingavailable “TenantImprovement Allowance” under the MasterLease up tomaximumamountof $200,000(the“ContingentAllowance”), subjecttotheconditions,restrictions and deadlinessetforthin the MasterLease(exceptas otherwise waived or modified byMaster Landlord).  Receiptof suchTenantImprovementAllowance shallnotbe aconditionto this Sublease, Sublandlordshallnotberesponsible forpayingsuchTenantImprovementAllowance, and Sublandlord shallnotbeliableforanyfailure byMaster Landlord topaythesame to Subtenant. Sublandlord shall, however,upon Subtenant’srequestuse Sublandlord’s reasonable efforts (notincludingthepaymentof moniesunlessSubtenantagreestoreimburseSublandlord for anyreasonable out-of-pocketcostsincurred by Sublandlord,theincurringof anyliabilities,ortheinstitution oflegalproceedings, which maybe instituted onlyatSublandlord’s solediscretion)to obtain MasterLandlord’s performance ofthe same. Subtenantshall forfeitand shallnolongerbe entitledtoreceive anyportionofthe ContingentAllowancethatisnotdisbursed or requestedfor disbursementbefore the six (6) monthanniversaryofthe CommencementDate.

30.ReviewCosts: SubtenantshallreimburseMasterLandlordpromptlyfor anyandallreasonable costs andexpensesthatarepayable undertheMaster Lease,includingwithoutlimitation reasonable attorneys’fees,incurred byMasterLandlord inconnection withanyconsentrequestedfromtheMaster Landlordin connection with the Sublease, includingwithoutlimitation,MasterLandlord consenttoany furthersubleasingoftheSubleased PremisesbySubtenantor approvalof alterations orimprovementstobe installedbySubtenant.

31.Employee Non-Solicitation: Sublandlordand Subtenanteachagree notto disruptorinterfere withtherespective business ofthe other bydirectlyorindirectlysoliciting, recruiting, attemptingto recruit, or raidingemployees thatareemployed by the otheratanytime between(a)thedateon whichtheSublease is fullyexecutedbythe parties heretoand approvedin writingbyMaster Landlordand (b) theexpiration or earlierterminationofthe Sublease.  If a partybreachesthis provision,such breaching partyagrees topaythe other party, asa liquidateddamage and notasa penalty, the amountof $500,000for each employee recruited bysuch breachingpartyinbreach ofthis provision.

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32.Inspectionby a CASpinAccordancewith Civil Code Section 1938:To Sublandlord’sactual knowledge, the propertybeingleased or rented pursuanttothisSubleasehas notundergoneinspectionbya Certified Access Specialist(CASp). In addition,thefollowingnoticeis herebyprovided pursuantto

Section 1938(e)of the California CivilCode:“A Certified AccessSpecialist(CASp) can inspectthe subject premisesand determine whether the subjectpremises complywith allofthe applicableconstruction-related

accessibilitystandards under state law.Although statelaw does notrequirea CASp inspectionofthesubject

premises,thecommercialpropertyownerorlessormaynotprohibitthelessee or tenant fromobtaininga CASp inspection of the subjectpremises forthe occupancyor potentialoccupancyof thelessee or tenant,if

requested bythelesseeor tenant.The parties shallmutuallyagree onthearrangements forthetime and

manner of the CASp inspection,the paymentof the feeforthe CASpinspection, and thecostof makingany repairs necessarytocorrectviolationsofconstruction-relatedaccessibilitystandards withinthepremises.” SublandlordandSubtenantagreethat if Subtenant requestsaCASpinspection of the Subleased Premises,then Subtenant shall pay(a) thefeefor suchinspection,and(b) thecost of makinganyrepairsnecessarytocorrect violationsof construction-relatedaccessibilitystandardswithinthe SubleasedPremises.

33.ConditionsPrecedent: Notwithstandinganythingtothe contraryin this Sublease, this Sublease and Sublandlord’sobligations hereunderareconditioned upon Sublandlord’s receiptofthe written consentof MasterLandlordtothisSublease. Unless waivedin writingbySublandlord, suchconsentshallprovidethat MasterLandlordwaivesitsrights under Sections 11.2(b)-(c)oftheMaster Lease withrespecttothe Rent payable underthis Sublease, and MasterLandlordapproves of Subtenant’s use of the Subleased Premises as a ClinicalLaboratoryImprovementAmendments  (CLIA)-certifiedlaboratory. In addition, unless waived in writingbySubtenant,suchconsentshallprovidethatthe terms ofSection10.4oftheMaster Lease (Mutual Waiverof Subrogation)shallalsoapplyas betweenMasterLandlord andSubtenant,.If Sublandlord does not receive suchconsentwithinthirty(30) days afterexecutionofthis Sublease bySublandlord, theneitherparty mayterminatethis Sublease bygivingthe otherparty ten (10) days’prior writtennotice,in which casethis Subleaseshallterminate onthe dayfollowingthelastdayof theten(10)-daynotice period(unless Master Landlord’s consentis obtained duringsuchten (10)-dayperiod,in which casethisSubleaseshallremain in fullforce andeffect),and upon such termination, Sublandlord shallreturnto Subtenantallprepaidrentand  the SecurityDeposit.  Subtenantshallpayallconsentand review fees setforthintheMaster LeaseforMaster Landlord’s consentto the sublettinghereunder.This Subleaseisfurther conditioned upon Sublandlordand Subtenantenteringinto a MutualConfidentialityAgreementin the formattached hereto as ExhibitE(the “NDA”).

34.Termination; Recapture:Notwithstandinganythingto the contraryherein,Subtenant acknowledges that,under the MasterLease,both MasterLandlord and Sublandlord have certaintermination and recapture rights,including, withoutlimitation, in Sections11 and13 of the Master Lease.  Nothingherein shallprohibitMasterLandlord or Sublandlordfromexercisinganysuch rights andneither MasterLandlord nor Sublandlord shallhaveanyliabilityto Subtenantas a resultthereof.In the eventMaster Landlord or Sublandlord exercise anysuch termination or recapture rights, this Subleaseshallterminate withoutany liabilityto MasterLandlordor Sublandlord.

hereof.

35. No Recording: Subtenantagreesthatitwillnotrecord this Sublease, or ashortmemorandum

hereto.

36. Amendment:This Sublease maynotbe amended exceptbythe written agreementofallparties

37.No DraftingPresumption:The parties acknowledge thatthis Subleasehas beenagreedto by boththe parties,thatboth Sublandlord and Subtenanthave consulted with attorneys withrespectto the terms

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of this Subleaseandthatnopresumption shallbecreated againstSublandlord because Sublandlord drafted this Sublease.

38.Entire Agreement:This Subleaseconstitutestheentire agreementbetweentheparties with respecttothesubjectmatter herein, andthereareno bindingagreements orrepresentations between the parties exceptasexpressedherein.  Nosubsequentchange oradditionto this Lease shallbe bindingunless in writingand signed bythe partieshereto.

39. Sublandlord’s  AdditionalRepresentations: Sublandlordrepresents and warrants to Subtenant that, asofthe date firstwritten above:(i)thecopyofthe Master Leaseattached heretois atrue, correctand complete copythereof, (ii)to Sublandlord’s knowledge, thereexists no defaultoreventof defaultbyMaster Landlord undertheMasterLease,(iii) Sublandlord hasnotreceived writtennoticefromMasterLandlordof anydefaultbySublandlordundertheMaster Lease, (iv) to Sublandlord’s knowledge, thereare no pendingor threatenedactions, suits orproceedings before anycourtor administrative agencyagainstSublandlordthat could,intheaggregate, materiallyadverselyaffecttheSubleased PremisesortheMasterPremises,and(v) at least$200,000ofthe ExistingPremises ImprovementAllowanceis unusedand shallremain unusedby Sublandlord duringthe six(6)-month periodsetforthin Paragraph 29 above.  Asusedin this Paragraph39, the phrase “to Sublandlord’s knowledge” shallbe deemed to referto facts withinthe actualknowledge onlyof Yvonne Li, Sublandlord’sVice Presidentof Finance,Controllerand Administration, as of thedateofthis Sublease, withoutdutyof inquiry.

40.QuietEnjoyment: Subtenantshallpeacefullyhave, hold and enjoythe Subleased Premises, subjecttotheterms and conditions ofthis Sublease, provided thatSubtenantpaysallRentand performs allof Subtenant’scovenants andagreements containedtherein.

41. Parking: Subtenantshallhave the non-exclusive andnon-reserved useof approximatelythree

(3) automobile parkingstalls inthe Center per 1,000 rentable square feetofspace in the Subleased Premises pursuantto Section 17.20 of the MasterLeaseincorporatedherein.

42.Counterparts:This Sublease maybe executedin one(1) or more counterparts each ofwhich shallbedeemed an originalbutallof whichtogether shallconstitute one (1) and the same instrument. Signature copies maybe detached fromthe counterparts and attached to a single copyof this Sublease physicallytoformone (1)document. Thesignatures of allof the partiesneednotappear onthesame counterpart, anddeliveryofan executed counterpartsignature page in PDF is as effective as executingand deliveringthis Subleaseinthe presence of the otherparties tothis Sublease.

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IN WITNESS WHEREOF, the parties have executed this Sublease as of the day and year first above written.

SUBLANDLORD:SUBTENANT:

ONCOMED PHARMACEUTICALS, INC.,VENN BIOSCIENCES CORPORATION,

a Delaware corporationa Delaware corporation

By:  /s/ John LewickiBy: /s/ Aldo Carrascoso

Print Name: John Lewicki, Ph.D.Print Name: Aldo Carrascoso

Title:President & CEOTitle: CEO

Address:Address:

800 Chesapeake Drive[800 Chesapeake Drive]

Redwood City, CA 94063Redwood City, CA 94063

Attn: LegalAttn:

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EXHIBIT A

MASTER LEASE

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LEASE

Landlord:	Slough Redwood City, LLC
Tenant:	OncoMed Pharmaceuticals, Inc.
Date:	May 30, 2006

TABLE OF CONTENTS

1.	PROPERTY			1
	1.1	Lease of Premises		1
	1.2	Landlord’s Reserved Rights		2
2.	TERM			2
	2.1	Term		2
	2.2	Early Possession		4
	2.3	Condition of Premises		5
	2.4	Acknowledgment of Rent Commencement Date		8
	2.5	Holding Over		9
	2.6	Options to Extend Term		9
3.	RENTAL			10
	3.1	Minimum Rental		10
		(a)	Rental Amounts	10
		(b)	Rental Amounts During Extended Term(s)	10
		(c)	Square Footage of Premises	10
	3.2	Late Charge		11
4.	TAXES			12
	4.1	Personal Property		12
	4.2	Real Property		12
5.	OPERATING EXPENSES			13
	5.1	Payment of Operating Expenses		13
	5.2	Definition of Operating Expenses		13
	5.3	Determination of Operating Expenses		15
	5.4	Final Accounting for Expense Year		16
	5.5	Proration		16
6.	UTILITIES			17
	6.1	Payment		17
	6.2	Interruption		17
7.	ALTERATIONS; SIGNS			18
	7.1	Right to Make Alterations		18
	7.2	Title to Alterations		18
	7.3	Tenant Trade Fixtures		20
	7.4	No Liens		20
	7.5	Signs		20
8.	MAINTENANCE AND REPAIRS			20
	8.1	Landlord’s Obligation for Maintenance		20

		(a)	Repairs and Maintenance	20
		(b)	Tenant’s Remedy	21
	8.2	Tenant’s Obligation for Maintenance		21
		(a)	Good Order, Condition and Repair	21
		(b)	Landlord’s Remedy	22
		(c)	Condition Upon Surrender	22
9.	USE OF PROPERTY			22
	9.1	Permitted Use		22
	9.2	[Intentionally Deleted.]		23
	9.3	No Nuisance		23
	9.4	Compliance with Laws		23
	9.5	Liquidation Sales		24
	9.6	Environmental Matters		24
10.	INSURANCE AND INDEMNITY			30
	10.1	Insurance		30
	10.2	Quality of Policies and Certificates		32
	10.3	Workers’ Compensation; Employees		33
	10.4	Waiver of Subrogation		33
	10.5	Increase in Premiums		33
	10.6	Indemnification		33
	10.7	Blanket Policy		34
11.	SUBLEASE AND ASSIGNMENT			34
	11.1	Assignment and Sublease of Building		34
	11.2	Rights of Landlord		35
12.	RIGHT OF ENTRY AND QUIET ENJOYMENT			36
	12.1	Right of Entry		36
	12.2	Quiet Enjoyment		37
13.	CASUALTY AND TAKING			37
	13.1	Damage or Destruction		37
	13.2	Condemnation		39
	13.3	Reservation of Compensation		40
	13.4	Restoration of Improvements		41
14.	DEFAULT			41
	14.1	Events of Default		41
		(a)	Abandonment	41
		(b)	Nonpayment	41
		(c)	Other Obligations	41
		(d)	General Assignment	41
		(e)	Bankruptcy	42
		(f)	Receivership	42
		(g)	Attachment	42
		(h)	Insolvency	42
	14.2	Remedies Upon Tenant’s Default		42
	14.3	Remedies Cumulative		43
15.	SUBORDINATION, ATTORNMENT AND SALE			43
	15.1	Subordination to Mortgage		43

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	15.2	Sale of Landlord’s Interest		44
	15.3	Estoppel Certificates		44
	15.4	Subordination to CC&R’s		45
	15.5	Mortgagee Protection		45
16.	SECURITY			46
	16.1	Deposit		46
17.	MISCELLANEOUS			46
	17.1	Notices		46
	17.2	Successors and Assigns		48
	17.3	No Waiver		48
	17.4	Severability		48
	17.5	Litigation Between Parties		48
	17.6	Surrender		48
	17.7	Interpretation		48
	17.8	Entire Agreement		48
	17.9	Governing Law		49
	17.10	No Partnership		49
	17.11	Financial Information		49
	17.12	Costs		50
	17.13	Time		50
	17.14	Rules and Regulations		50
	17.15	Brokers		50
	17.16	Memorandum of Lease		50
	17.17	Organizational Authority		50
	17.18	Execution and Delivery		50
	17.19	Survival		51
	17.20	Parking		51
	17.21	Warrant		51
	17.22	Approvals		51
EXHIBITS
	EXHIBIT A-1		Site Plan (The Center)
	EXHIBIT A-2		Building Plan/Service Annex
	EXHIBIT B		Workletter
	EXHIBIT C		Form of Acknowledgment of Rent Commencement Date
	EXHIBIT D		Form of Warrant

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LEASE

THIS LEASE (“Lease”) is made and entered into as of May 30, 2006 (the “Lease Commencement Date”), by and between SLOUGH REDWOOD CITY, LLC, a Delaware limited liability company (“Landlord”), and ONCOMED PHARMACEUTICALS, INC., a Delaware corporation (“Tenant”).

THE PARTIES AGREE AS FOLLOWS:

1. PROPERTY

1.1 Lease of Premises.

(a) Landlord leases to Tenant and Tenant hires and leases from Landlord, on the terms, covenants and conditions hereinafter set forth, the premises (the “Premises”) of approximately 45,678 square feet of space (subject to the measurement provisions in Section 3.1(c) below) consisting of (i) the building commonly known as 800 Chesapeake Drive (the “Building”) located in the Britannia Seaport Centre (referred to interchangeably herein as the “Center” or the “Property”) in the City of Redwood City, County of San Mateo, State of California; and (ii) those portions of the Service Annex (as defined in Section 2.3 below) designated as being either for the exclusive use of the occupant of the Building, or for shared, nonexclusive use by the occupant of the Building and the occupant of the Adjacent Building (as defined in Section 2.3 below), including (but not limited to) the Chemical Storage Area and Emergency Generator Area (as described in Section 2.3 below) immediately adjacent to the Building, which Chemical Storage Area and Emergency Generator Area, respectively, are for the exclusive use of the occupant of the Building but are not fully enclosed and therefore are not included in the square footage calculation for the Premises. The location of the Building within the Center is depicted on the site plan attached hereto as Exhibit A-1 and incorporated herein by this reference (the “Site Plan”); the footprint of the Building is depicted on the drawing attached hereto as Exhibit A-2 and incorporated herein by this reference (the “Building Plan”). The parking areas, driveways, sidewalks, landscaped areas and other portions of the Center that lie outside the exterior walls of the buildings now or hereafter existing from time to time in the Center, as depicted in the Site Plan and as hereafter modified by Landlord from time to time in accordance with the provisions of this Lease, are sometimes referred to herein as the “Common Areas.”

(b) As an appurtenance to Tenant’s leasing of the Premises pursuant to Section 1.1(a), Landlord hereby grants to Tenant, for the benefit of Tenant and its employees, suppliers, shippers, customers and invitees, during the term of this Lease, the non-exclusive right to use, in common with others entitled to such use, (i) those portions of the Common Areas improved from time to time for use as parking areas, driveways, sidewalks, landscaped areas, or for other common purposes, and (ii) all access easements and similar rights and privileges relating to or appurtenant to the Center and created or existing from time to time under any access easement agreements, declarations of covenants, conditions and restrictions, or other written agreements now or hereafter of record with respect to the Center, subject however to any

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limitations applicable to such rights and privileges under applicable law, under this Lease and/or under the written agreements creating such rights and privileges.

1.2 Landlord’s Reserved Rights. To the extent reasonably necessary to permit Landlord to exercise any rights of Landlord and discharge any obligations of Landlord under this Lease, Landlord shall have, in addition to the right of entry set forth in Section 12.1 hereof; the following rights: (i) to make changes to the Common Areas, including, without limitation, changes in the location, size or shape of any portion of the Common Areas, and to construct and/or relocate parking structures and/or parking spaces in the Center; (ii) to close temporarily any of the Common Areas for maintenance or other reasonable purposes; (iii) to construct, alter or add to other buildings and Common Area improvements in the Center; (iv) to use the Common Areas while engaged in making additional improvements, repairs or alterations to the Center or any portion thereof; and (v) to do and perform such other acts with respect to the Common Areas and the Center as may be necessary or appropriate. Landlord shall not exercise rights reserved to it pursuant to this Section 1.2 in such a manner as to cause any material diminution of Tenant’s rights, or any material increase of Tenant’s obligations, under this Lease, or in such a manner as to leave Tenant without reasonable parking or reasonable access to the Premises or otherwise to materially impair Tenant’s ability to conduct its activities in the normal manner; provided, however, that the foregoing shall not limit or restrict Landlord’s right to undertake reasonable construction activity and Tenant’s use of the Premises shall be subject to reasonable temporary disruption incidental to such activity diligently prosecuted.

2. TERM

2.1 Term.

(a) The term of this Lease shall commence on the Lease Commencement Date as defined above. Subject to any applicable adjustments pursuant to Paragraph 3(d) of the Workletter attached hereto as Exhibit B and incorporated herein by this reference (the “Workletter”), Tenant’s obligation to pay minimum rental and Operating Expenses under this Lease shall commence on the date (the “Rent Commencement Date”) that is the earlier to occur of (i) the date on which Tenant commences actual business operations in at least a material portion of the Premises or (ii) the first date by which all of the following conditions are satisfied: (A) Landlord has delivered to Tenant both a TI Substantial Completion Certificate with respect to Landlord’s TI Work (as those terms are defined in the Workletter) and a Section 2.3 Substantial Completion Certificate with respect to Landlord’s Section 2.3 Work (as those terms are defined below); (B) Landlord has delivered possession of the Premises to Tenant with Landlord’s Work substantially completed, for which purpose “substantially completed” shall mean completed subject only to the performance of Punch List Work (as defined in the Workletter); and (C) Landlord has obtained from the appropriate governmental authorities all approvals and permits required for the legal occupancy and use of the Premises; provided that (I) for purposes of the foregoing clause (C), Landlord shall not be responsible for (and the occurrence of the Rent Commencement Date shall not be delayed by any delay in the receipt of) any such approvals or permits that are required by reason of improvements (if any) installed by Tenant pursuant to Article 7 hereof or the Workletter, or by reason of the particular nature of

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Tenant’s business operations to be conducted in the Premises (as distinguished from approvals or permits required for the general use and occupancy of the Premises and of the improvements constructed therein by Landlord); and (II) for purposes of the foregoing clauses (A), (B) and (C), (x) the issuability of the TI Substantial Completion Certificate and the Section 2.3 Substantial Completion Certificate shall be determined without reference to completion of any elements of Landlord’s Work that relate to the construction of the Larc facility and related systems and improvements (the “Larc”) to be constructed as part of Landlord’s TI Work under the Workletter (collectively, “Landlord’s Larc Work”); (y) the substantial completion of Landlord’s Work (subject only to Punch List Work) shall be determined without reference to completion of any elements of Landlord’s Larc Work; and (z) the concept of receipt of all governmental approvals and permits shall not be construed to include operational readiness of, or receipt of governmental approvals and permits for the operation of, the Larc, since the parties recognize that the time frame for permitting, construction and commissioning of the Larc may be materially longer than the time frame for the rest of Landlord’s TI Work. As used in this Lease, the term “Landlord’s Work” shall mean, collectively, Landlord’s Section 2.3 Work (as defined below) and Landlord’s TI Work (as defined in the Workletter). Subject to development and/or modification of construction schedules for Landlord’s Work as contemplated in the Workletter, the parties presently contemplate that the Rent Commencement Date will occur on or about February 7, 2007.

(b) If the Rent Commencement Date has not occurred for any reason whatsoever on or before August 7, 2007, then, in addition to any other rights or remedies available to Tenant under this Lease or under applicable law, Tenant shall have the right to terminate this Lease by written notice to Landlord at any time prior to the satisfaction of all conditions for the occurrence of the Rent Commencement Date; provided, however, that the foregoing deadline of August 7, 2007 shall be extended, day for day, by a period equal to the length of any actual delay in the completion of Landlord’s Work that is caused by Tenant Delay or Unavoidable Delay (as such terms are defined in the Workletter). Notwithstanding the foregoing proviso, however, to the extent there are any periods of such actual delay that are attributable solely to Unavoidable Delay and not to Tenant Delay, the maximum amount of such actual delay attributable solely to Unavoidable Delay that may be taken into account for purposes of extending such deadline of August 7, 2007 shall be sixty (60) days in the aggregate. Upon any valid exercise of Tenant’s termination right under this paragraph (b), (i) if the periods of actual delay that gave rise to Tenant’s termination right consisted primarily of periods attributable solely to Landlord Delay and not to any concurrent Tenant Delay or Unavoidable Delay, then Landlord shall refund to Tenant, within ten (10) business days after Tenant’s exercise of its termination right, any monies previously paid by Tenant to Landlord pursuant to this Lease and the Workletter (including, without limitation, any such amounts paid by Tenant to Landlord for Tenant’s pro rata share, if any, of the cost of Landlord’s TI Work), and (ii) if the periods of actual delay that gave rise to Tenant’s termination right consisted primarily of periods attributable solely to Tenant Delay and/or Unavoidable Delay and not to any concurrent Landlord Delay, then Tenant shall not be entitled to any such refund and Landlord shall instead be entitled to retain any such monies previously paid by Tenant pursuant to this Lease and the Workletter.

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(c) If Landlord has not completed construction of Landlord’s Larc Work (subject only to performance of Punch List Work) and delivered a Larc Substantial Completion Certificate (as defined in the Workletter) to Tenant within ninety (90) days after the Rent Commencement Date, then, in addition to any other rights or remedies available to Tenant under this Lease or under applicable law, beginning on the ninety-first (91^st) day after the Rent Commencement Date and continuing until completion of construction of Landlord’s Larc Work (subject only to performance of Punch List Work) and delivery of such Larc Substantial Completion Certificate, the square footage on which Tenant’s minimum rental obligation under Section 3.1(a) and Tenant’s Operating Cost Share under Article 5 are calculated shall be reduced by an amount equal to the square footage of the Larc, measured in a manner consistent with the manner in which other measurements of square footage are made under this Lease, and Tenant’s payment obligations with respect to minimum rental and Operating Expenses shall be reduced proportionately. If Landlord has not completed construction of Landlord’s Larc Work (subject only to performance of Punch List Work) and delivered a Larc Substantial Completion Certificate to Tenant within nine (9) months after the Rent Commencement Date, then, in addition to any other rights or remedies available to Tenant under this Lease or under applicable law, Tenant shall have the right to terminate this Lease by written notice to Landlord at any time prior to the completion of construction of Landlord’s Larc Work (subject only to performance of Punch List Work) and delivery of such Larc Substantial Completion Certificate; provided, however, that each of the foregoing deadlines shall be extended, day for day, by a period equal to the length of any actual delay in the completion of Landlord’s Larc Work that is caused by Tenant Delay (as defined in the Workletter). Upon any valid exercise of Tenant’s termination right under this paragraph (c), (i) if the periods of actual delay that gave rise to Tenant’s termination right consisted primarily of periods attributable solely to Landlord Delay and not to any concurrent Tenant Delay or Unavoidable Delay, then Landlord shall refund to Tenant, within ten (10) business days after Tenant’s exercise of its termination right, any monies previously paid by Tenant to Landlord pursuant to this Lease and the Workletter (including, without limitation, any such amounts paid by Tenant to Landlord for Tenant’s pro rata share, if any, of the cost of Landlord’s TI Work), and (ii) if the periods of actual delay that gave rise to Tenant’s termination right consisted primarily of periods attributable solely to Tenant Delay and/or Unavoidable Delay and not to any concurrent Landlord Delay, then Tenant shall not be entitled to any such refund and Landlord shall instead be entitled to retain any such monies previously paid by Tenant pursuant to this Lease and the Workletter.

(d) The term of this Lease shall end on the seventh (7^th) anniversary of the Rent Commencement Date (the “Termination Date”), estimated to be February 7, 2014 (if the Rent Commencement Date occurs on the target date indicated in Section 2.1(a) above), unless sooner terminated or extended as hereinafter provided.

2.2 Early Possession. Tenant shall have the nonexclusive right to enter and use the Premises for the purpose of constructing improvements in the Premises (subject to all the terms and conditions of Article 7 below and of the Workletter as defined below), installing fixtures and furniture, laboratory equipment, computer equipment, telephone equipment, low-voltage data wiring and personal property and performing other similar work preparatory to the commencement of Tenant’s business in the Premises, beginning on the Lease Commencement

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Date (which date is also sometimes interchangeably referred to herein, for purposes of such early access, as the “Early Access Date”). Such occupancy and possession shall be subject to and upon all of the terms and conditions of this Lease (including, but not limited to, conditions relating to maintenance of required insurance by Tenant), except that (i) Tenant shall have no obligation to pay minimum rental or Operating Expenses for any period prior to the Rent Commencement Date, (ii) subject to any applicable provisions to the contrary in Section 6.1 hereof and/or in the Workletter, Tenant shall have no obligation to pay the cost of utilities supplied to the Premises for any period prior to the Rent Commencement Date, and (iii) such early possession shall not advance or otherwise affect the Rent Commencement Date or Termination Date determined under Section 2.1. To the extent Landlord and/or its contractors or consultants are also performing work in the Premises prior to the Rent Commencement Date, Tenant shall not unreasonably interfere with or delay Landlord’s contractors or consultants by any early access, occupancy or possession under this Section 2.2, shall coordinate and cooperate with Landlord and its contractors and consultants (who shall similarly coordinate and cooperate with Tenant and its contractors) to minimize any interference or delay by either party with respect to the other party’s work following the Early Access Date, and shall indemnify Landlord and its agents and employees to the extent provided in Section 10.6(a) below and in Paragraph 5(c) of the Workletter in connection with Tenant’s early entry upon the Premises hereunder.

2.3 Condition of Premises. Tenant has had an opportunity to inspect the condition of the Premises and agrees to accept the Premises “as is” in their condition existing as of the date of this Lease, without any obligation on the part of Landlord to improve, alter, repair or clean the Premises in any way for Tenant’s occupancy hereunder, except as otherwise expressly provided herein. Notwithstanding the foregoing:

(a) Landlord shall, at Landlord’s sole expense, perform all work necessary to cause the following conditions to be satisfied (“Landlord’s Section 2.3 Work”): (i) all existing Building systems and improvements (including, but not limited to, the existing HVAC, electrical and plumbing systems and all utilities serving the Premises) shall be in good working order and repair, including selective retrofit and upgrade work to certain of such Building systems as reasonably determined by Landlord to be appropriate to accommodate a standard level of laboratory improvements; (ii) the Premises and Service Annex, as defined below (excluding any improvements constructed in either of them by Tenant) and the Common Areas of the Center shall comply with all laws, rules, regulations, codes, ordinances, requirements, covenants, conditions and restrictions applicable thereto at the Rent Commencement Date, and shall comply with the terms of Landlord’s warranty set forth in Section 2.3(c) below; (iii) the roof membrane of the Building shall be replaced; (iv) any additional shell or structural work which Landlord in its sole discretion deems necessary or appropriate to prepare the Building for occupancy by Tenant (which additional work may include, but will not necessarily include or be limited to, structural reinforcement and/or voluntary seismic upgrades) shall be substantially completed; and (v) Landlord shall have substantially completed construction of those portions of the Service Annex designated for exclusive or shared use by the occupant of the Building, including all systems and improvements reasonably required for the contemplated use thereof, in accordance with Section 2.3(d) below. As described in the Workletter, a detailed (but not necessarily

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exhaustive) description of the elements of the “Base Building” which it is Landlord’s responsibility to deliver to Tenant in accordance with this Section 2.3 and the Workletter (including, but not necessarily limited to, the elements of Landlord’s Section 2.3 Work as described above) is set forth in Schedule B-1 attached to the Workletter and incorporated by reference therein. Landlord shall use reasonable efforts to coordinate the design and construction of Landlord’s Section 2.3 Work with Tenant’s final interior layout and with the final plans and specifications for the Tenant Improvements. Landlord shall use reasonable efforts to endeavor to complete Landlord’s Section 2.3 Work and cause the conditions set forth in the first sentence of this paragraph to be satisfied by February 7, 2007, but to the extent it is not reasonably practicable to do so by February 7, 2007, Landlord shall thereafter continue to proceed diligently and with reasonable efforts to complete the required work and achieve the required conditions as promptly as practicable thereafter, and Landlord and Tenant shall continue to cooperate reasonably and in good faith with one another (and cause their respective consultants and contractors to cooperate reasonably and in good faith with one another) in the manner described in Section 2.2 above in connection with the concurrent performance of their respective work in the Building. When Landlord receives written certification from Landlord’s Architect that construction of Landlord’s Section 2.3 Work has been substantially completed (subject only to performance of Punch List Work), Landlord shall prepare and deliver to Tenant a certificate signed by both Landlord and Landlord’s Architect (the “Section 2.3 Substantial Completion Certificate”) certifying that the construction of Landlord’s Section 2.3 Work has been substantially completed in accordance with this Section 2.3 and specifying the date of that completion. Thereafter, beginning on the Rent Commencement Date and continuing during the rest of the term of this Lease, Tenant shall be responsible (subject, however, to any corrective obligations of Landlord as expressly set forth in this Lease) for maintenance, repair and/or replacement of all such systems and improvements to the extent required under the provisions of Article 8 hereof. If Landlord’s obligations under this paragraph are violated in any respect, then it shall be the obligation of Landlord, after receipt of written notice from Tenant setting forth with specificity the nature of the violation, to correct promptly and diligently, at Landlord’s sole cost, the condition(s) constituting such violation. However, in the case of the requirements set forth in clause (i) of the first sentence of this paragraph, Tenant’s failure to give such written notice to Landlord within six (6) months after the Rent Commencement Date shall give rise to a conclusive and irrebuttable presumption that Landlord has complied with all Landlord’s obligations under such clause (i), and in the case of the requirements set forth in clauses (ii) through (v) of the first sentence of this paragraph (except with respect to latent defects in the case of the requirements set forth in clauses (iii) and (v) of the first sentence of this paragraph), Tenant’ failure to give such written notice to Landlord regarding any alleged violation within one (1) year after the Rent Commencement Date shall give rise to a conclusive and irrebuttable presumption that Landlord has complied with all Landlord’s obligations under such clauses (ii) through (v). TENANT ACKNOWLEDGES THAT THE WARRANTIES AND/OR OBLIGATIONS CONTAINED IN THIS SECTION 2.3 AND IN THE WORKLETTER (IF APPLICABLE) ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE PHYSICAL CONDITION OF THE PREMISES, BUILDING SYSTEMS AND EXISTING IMPROVEMENTS (OTHER THAN TENANT IMPROVEMENTS) IN THE PREMISES, AND THAT LANDLORD MAKES NO OTHER WARRANTIES EXCEPT AS EXPRESSLY SET FORTH IN THIS SECTION 2.3 AND, IN

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THE CASE OF TENANT IMPROVEMENTS CONSTRUCTED BY LANDLORD UNDER THE WORKLETTER, AS EXPRESSLY SET FORTH IN THE WORKLETTER.

(b) As set forth in the Workletter, Landlord shall provide Tenant with a tenant improvement allowance in the maximum amount of One Hundred Twenty-Five Dollars ($125) per square foot, or approximately Five Million Seven Hundred Nine Thousand Seven Hundred Fifty Dollars ($5,709,750) in total (the “Tenant Improvement Allowance”), towards the construction of Tenant Improvements (as defined in the Workletter) in the Premises. Construction of such Tenant Improvements shall be governed by the provisions of Article 7 hereof (in the case of any such Tenant Improvements constructed by Tenant) and by the Workletter, and such Tenant Improvements shall be constructed in compliance with all of the provisions thereof (including, without limitation, all conditions relating to approval of plans and specifications), as well as the provisions of this Section 2.3. The Tenant Improvement Allowance shall not be used or useable by Tenant for any moving or relocation expenses of Tenant, or for any cost or expense associated with any moveable furniture, trade fixtures, personal property or any other item or element which, under the applicable provisions of this Lease, will not become Landlord’s property and remain with the Building upon expiration or termination of this Lease. Any portion of the Tenant Improvement Allowance which has not been claimed or drawn by Tenant within eighteen (18) months after the Rent Commencement Date shall expire and shall no longer be available to Tenant thereafter. Additional conditions and procedures relating to the disbursement of the Tenant Improvement Allowance shall be as set forth in the Workletter or as otherwise reasonably prescribed in writing by Landlord.

(c) Landlord warrants to Tenant that the Premises as they exist on the Rent Commencement Date (but without regard to the particular use for which Tenant will occupy the Premises, and excluding any improvements constructed by Tenant) and the Tenant Improvements constructed by Landlord under the Workletter shall not violate any covenants or restrictions of record or any applicable law, building code, regulation or ordinance in effect on the Rent Commencement Date. Tenant warrants to Landlord that any Tenant Improvements constructed by Tenant and any other improvements constructed by Tenant from time to time shall not violate any applicable law, building code, regulation or ordinance in effect on the Rent Commencement Date or at such later time as such improvements are placed in service. Without limiting the generality of the foregoing, the parties acknowledge that Landlord shall be responsible for Americans with Disabilities Act (“ADA”) and building code compliance for all improvements in the Building and Common Areas as they exist on the Rent Commencement Date (excluding any improvements constructed by Tenant), for all Landlord’s Section 2.3 Work and for all Tenant Improvements constructed by Landlord hereunder and under the Workletter (except to the extent, if any, that the application of ADA or building code requirements to any such improvements is triggered or materially affected by Tenant’s construction of any improvements) and that Tenant shall be responsible for ADA and building code compliance required in connection with or as a result of improvements constructed by Tenant. If it is determined that any of these warranties has been violated, then it shall be the obligation of the warranting party, after written notice from the other party, to correct the condition(s) constituting such violation promptly, at the warranting party’s sole cost and expense. Tenant acknowledges that except as expressly set forth in this Lease, neither Landlord nor any agent of Landlord has

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made any representation or warranty as to the present or future suitability of the Center or the Premises for the conduct of Tenant’s business or proposed business therein.

(d) As part of Landlord’s Section 2.3 Work, Landlord shall construct in a good and workmanlike manner and in compliance with all applicable laws, ordinances, rules and regulations a combined service yard and loading area and related systems and improvements (collectively, the “Service Annex”) located in the area between the Building and the adjacent building located at 900 Chesapeake Drive (the “Adjacent Building”) and serving both the Building and the Adjacent Building. The parties intend that the Service Annex will include (but not necessarily be limited to) appropriate areas for vehicle deliveries, trash and hazardous materials storage, future emergency generator areas, and an elevator suitable for freight/passenger use to serve second floor spaces in the Building and the Adjacent Building, and that the Service Annex will also include areas in which systems and equipment can be installed by or at the request of the respective tenants of the Building and the Adjacent Building to support their occupancy of and operations in the Building and the Adjacent Building, respectively. The approximate location and preliminary layout of the Service Annex are shown on the Building Plan. Also shown on the Building Plan are two areas immediately adjacent to the Building, designated respectively as “Chemical Storage Enclosure” (the “Chemical Storage Area”) and “Emergency Generator Enclosure” (the “Emergency Generator Area”), which areas are for the exclusive use of the occupant of the Building and shall be deemed to be part of the Service Annex for purposes of Landlord’s construction obligations under this Section 2.3, but are not enclosed and are therefore not included in the calculation of the square footage of the Premises and/or of the Service Annex for purposes of any formulas or other calculations under this Lease that are based on the square footage of the Premises and/or of the Service Annex. Landlord shall have the final authority with respect to the design and layout of the Service Annex and with respect to all plans, drawings and specifications for the Service Annex, but Landlord shall consult reasonably and in good faith with Tenant regarding all such matters. As part of the design and development of the Service Annex, Landlord shall have the right, in its reasonable discretion (but after reasonable consultation with Tenant), to designate various portions of the Service Annex for exclusive use by the occupant of the Building, for exclusive use by the occupant of the Adjacent Building, or for shared, nonexclusive use by the occupant of the Building and the occupant of the Adjacent Building. For purposes of measuring the square footage of the Premises under this Lease (including, but not limited to, measurements contemplated in Section 3.1(c) below), Landlord shall make a reasonable allocation of the square footage of the Service Annex (measured from exterior faces of exterior walls, and from interior faces of common walls shared with the Building or the Adjacent Building) between the Building and the Adjacent Building; so long as the areas (if any) designated for exclusive use of the Building and for exclusive use of the Adjacent Building are generally comparable in size and the balance of the Service Annex is designated for shared, nonexclusive use, Landlord’s present intention is to allocate the square footage of the Service Annex fifty percent (50%) to the Building and fifty percent (50%) to the Adjacent Building, and Tenant agrees that such an allocation would be reasonable under those circumstances.

2.4 Acknowledgment of Rent Commencement Date. Promptly following the Rent Commencement Date, Landlord and Tenant shall execute a written acknowledgment of the Rent

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Commencement Date, Termination Date and related matters, substantially in the form attached hereto as Exhibit C (with appropriate insertions), which acknowledgment shall be deemed to be incorporated herein by this reference. Notwithstanding the foregoing requirement, the failure of either party to execute such a written acknowledgment shall not affect the determination of the Rent Commencement Date, Termination Date and related matters in accordance with the provisions of this Lease.

2.5 Holding Over. If Tenant holds possession of the Premises or any portion thereof after the term of this Lease with Landlord’s written consent, then except as otherwise specified in such consent, Tenant shall become a tenant from month to month at one hundred twenty-five percent (125%) of the minimum rental and otherwise upon the terms herein specified for the period immediately prior to such holding over and shall continue in such status until the tenancy is terminated by either party upon not less than thirty (30) days prior written notice. If Tenant holds possession of the Premises or any portion thereof after the term of this Lease without Landlord’s written consent, then Landlord in its sole discretion may elect (by written notice to Tenant) to have Tenant become a tenant either from month to month or at will, at one hundred fifty percent (150%) of the minimum rental (prorated on a daily basis for an at-will tenancy, if applicable) and otherwise upon the terms herein specified for the period immediately prior to such holding over, or may elect to pursue any and all legal remedies available to Landlord under applicable law with respect to such unconsented holding over by Tenant. Tenant shall indemnify and hold Landlord harmless from any loss, damage, claim, liability, cost or expense (including reasonable attorneys’ fees) resulting from any delay by Tenant in surrendering the Premises or any portion thereof, including but not limited to any claims made by a succeeding tenant by reason of such delay. Acceptance of rent by Landlord following expiration or termination of this Lease shall not constitute a renewal of this Lease.

2.6 Options to Extend Term. Tenant shall have the option to extend the term of this Lease, at the minimum rental set forth in Section 3.1(b) and otherwise upon all the terms and provisions set forth herein with respect to the initial term of this Lease, for up to two (2) additional periods of five (5) years each, the first such period commencing upon the expiration of the initial term hereof and, if such first extension period is duly elected by Tenant, the second such period commencing upon the expiration of the first extended term. Exercise of such option shall be by written notice to Landlord at least nine (9) months and not more than twelve (12) months prior to the expiration of the initial term hereof, in the case of the first extended term, and at least nine (9) months and not more than twelve (12) months prior to the expiration of the first extended term hereof, in the case of the second extended term (if applicable). If Tenant is in default hereunder, beyond any applicable notice and cure periods, on the date of such notice or on the date the applicable extended term is to commence, then the exercise of the option shall be of no force or effect, the applicable extended term shall not commence and this Lease shall expire at the end of the then current term hereof (or at such earlier time as Landlord may elect pursuant to the default provisions of this Lease). If Tenant properly exercises one or both extension options under this Section, then all references in this Lease (other than in this Section 2.6) to the “term” of this Lease shall be construed to include the extension term(s) thus elected by Tenant. Except as expressly set forth in this Section 2.6, Tenant shall have no right to extend the term of this Lease beyond its prescribed term.

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3. RENTAL

3.1 Minimum Rental.

(a) Rental Amounts. Tenant shall pay to Landlord as minimum rental for the Premises, in advance, without deduction, offset, notice or demand, on or before the Rent Commencement Date and on or before the first day of each subsequent calendar month of the initial term of this Lease, the following amounts per month (subject to adjustment under Section 3.1(c) below, if applicable):

Months	Sq Ft		PSF/PM		Monthly  Minimum Rental
01 - 12		30,000	$	3.250	$	97,500.00
13 - 18		36,000	$	3.400	$	122,499.00
19 - 24		45,678	$	3.400	$	155,305.00
25 - 36		45,678	$	3.600	$	164,441.00
37 - 48		45,678	$	3.744	$	171,018.00
49 - 60		45,678	$	3.894	$	177,859.00
61 - 72		45,678	$	4.050	$	184,974.00
73 - 84		45,678	$	4.211	$	192,372.00

If the obligation to pay minimum rental hereunder commences on other than the first day of a calendar month or if the term of this Lease terminates on other than the last day of a calendar month, the minimum rental for such first rental payment month or last month of the term of this Lease, as the case may be, shall be prorated based on the number of days the term of this Lease (from and after the Rent Commencement Date, if applicable) is in effect during such month. If an increase in minimum rental becomes effective on a day other than the first day of a calendar month, the minimum rental for that month shall be the sum of the two applicable rates, each prorated for the portion of the month during which such rate is in effect.

(b) Rental Amounts During Extended Term(s). If Tenant properly exercises its right to extend the term of this Lease pursuant to Section 2.6 hereof, then (i) the monthly minimum rental during the first year of each extended term shall be equal to one hundred four percent (104%) of the monthly minimum rental payable for the last full calendar month preceding the commencement of such extended term, and (ii) the monthly minimum rental during each subsequent year of the applicable extended term shall be equal to one hundred four percent (104%) of the monthly minimum rental payable during the immediately preceding year of the extended term.

(c) Square Footage of Premises. The Building was fully constructed prior to the date of this Lease, has been measured by Landlord’s Architect and, applying the measurement formula customarily used by Landlord to measure square footage of buildings in the Center, has been determined to contain 41,821 square feet, which measurement is final and binding on the parties, is hereby accepted by the parties for all purposes under this Lease and is not subject to remeasurement or adjustment. The square footage of the Premises, for all

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purposes under this Lease (including, without limitation, calculation of minimum rental payments under Section 3.1(a), calculation of the Tenant Improvement Allowance, and calculation of Tenant’s Operating Cost Share under Article 5), shall consist of the sum of such Building square footage and the portion of the Service Annex square footage allocated to the Building pursuant to Section 2.3(d) above. An estimated square footage of 45,678 square feet (the Building square footage plus an estimate of 3,857 square feet for the Service Annex, excluding the Chemical Storage Area and the Emergency Generator Area as provided in Section 2.3(d) above) has been used in this Lease in order to provide estimates of the calculations described in the preceding sentence, but upon completion of construction of the Service Annex and notification by Landlord to Tenant of Landlord’s final determination of the allocation of the square footage of the Service Annex as contemplated in Section 2.3(d) above, (i) the final square footage for the Premises shall be determined by adding such allocable portion of the Service Annex square footage to the Building square footage of 41,821 square feet, (ii) such final square footage shall be inserted in the Acknowledgment of Rent Commencement Date form to be executed by the parties pursuant to Section 2.4 above, and (iii) the minimum rental payments under Section 3.1(a), the Tenant Improvement Allowance, Tenant’s Operating Cost Share, and any other calculations or amounts determined with reference to the square footage of the Premises shall be deemed to be amended automatically to reflect such final square footage of the Premises. Notwithstanding the foregoing provisions, the square footages used in Section 3.1(a) for calculation of minimum rental for Months 1 through 18 are not subject to adjustment or recalculation based on the allocable portion of the Service Annex square footage, nor are such square footages, in being less than the estimated entire square footage of the Premises, meant to imply any limitation on Tenant’s right or ability to use the entire Premises during such months; such reduced square footages merely represent a method of implementing an economic agreement between the parties with respect to the calculation of Tenant’s minimum rental obligation during Months 1 through 18.

3.2 Late Charge. If Tenant fails to pay when due rental or other amounts due Landlord hereunder, such unpaid amounts shall bear interest for the benefit of Landlord at a rate equal to the lesser of ten percent (10%) per annum or the maximum rate permitted by law, from the date due to the date of actual payment. In addition to such interest, Tenant shall pay to Landlord a late charge in an amount equal to five percent (5%) of any installment of minimum rental and any other amounts due Landlord if not paid in full on or before the fifth (5th) day after such rental or other amount is due; provided, however, that for the first two (2) instances of late payment during the term of this Lease, Tenant shall not be required to pay such late charge unless Tenant has failed to pay the past-due amount within three (3) days after Landlord has given Tenant written notice that such amount is past due. Tenant acknowledges that late payment by Tenant to Landlord of rental or other amounts due hereunder will cause Landlord to incur costs not contemplated by this Lease, including, without limitation, processing and accounting charges and late charges which may be imposed on Landlord by the terms of any loan relating to the Center. Tenant further acknowledges that it is extremely difficult and impractical to fix the exact amount of such costs and that the late charge set forth in this Section 3.2 represents a fair and reasonable estimate thereof. Acceptance of any late charge by Landlord shall not constitute a waiver of Tenant’s default with respect to overdue rental or other amounts, nor shall such acceptance prevent Landlord from exercising any other rights and remedies

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available to it. Acceptance of rent or other payments by Landlord shall not constitute a waiver of late charges or interest accrued with respect to such rent or other payments or any prior installments thereof, nor of any other defaults by Tenant, whether monetary or non-monetary in nature, remaining uncured at the time of such acceptance of rent or other payments.

4. TAXES

4.1 Personal Property. Tenant shall be responsible for and shall pay prior to delinquency all taxes and assessments levied against or by reason of any and all alterations, additions and items existing on or in the Premises from time to time during the term of this Lease and taxed as personal property rather than as real property, including (but not limited to) all personal property, trade fixtures and other property placed by Tenant on or about the Premises. Upon request by Landlord, Tenant shall furnish Landlord with satisfactory evidence of Tenant’s payment thereof. If at any time during the term of this Lease any of said alterations, additions or personal property, whether or not belonging to Tenant, shall be taxed or assessed as part of the Center, then such tax or assessment shall be paid by Tenant to Landlord within thirty (30) days after presentation by Landlord of copies of the tax bills in which such taxes and assessments are included and shall, for the purposes of this Lease, be deemed to be personal property taxes or assessments under this Section 4.1.

4.2 Real Property. To the extent any real property taxes and assessments on the Premises are assessed directly to Tenant, Tenant shall be responsible for and shall pay prior to delinquency all such taxes and assessments levied against the Premises. Upon request by Landlord, Tenant shall furnish Landlord with satisfactory evidence of Tenant’s payment thereof. To the extent the Premises are taxed or assessed to Landlord following the Rent Commencement Date, such real property taxes and assessments shall constitute Operating Expenses (as that term is defined in Section 5.2 of this Lease) and shall be paid in accordance with the provisions of Article 5 of this Lease. Notwithstanding the foregoing provisions, if real property taxes and assessments on the Service Annex are assessed directly to Tenant (which the parties do not expect to be the case), Tenant shall only be required to bear a share of such Service Annex taxes and assessments proportional to the percentage of square footage of the Service Annex that is allocated to the Building, and Landlord shall reimburse Tenant or cause Tenant to be reimbursed for the portion of such Service Annex taxes and assessments allocable to the Adjacent Building. Notwithstanding the foregoing, Tenant shall not be required to pay, and there shall not be included in Operating Expenses, any tax or assessment or increase therein (a) in the nature of a tax on Landlord’s net income, or in the nature of an inheritance, gift, transfer, estate or death tax; or (b) in excess of the amount which would be payable on a current basis if such tax or assessment were paid in installments over the full period for which such installments would customarily be paid; or (c) imposed on land or improvements other than those constituting part of the Center (except to the extent, if any, that an allocable share of real property taxes or assessments on land or improvements not constituting part of the Center may be chargeable to Landlord or the Center pursuant to the Master Declaration as defined in Section 15.4 below, in which event such real property taxes or assessments may be included in Operating Expenses to the extent permitted under Article 5 below).

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5. OPERATING EXPENSES

5.1 Payment of Operating Expenses.

(a) Tenant shall pay to Landlord, at the time and in the manner hereinafter set forth, as additional rental, Tenant’s Operating Cost Share of the Operating Expenses defined in Section 5.2, subject to adjustment pursuant to Section 5.1(b) when applicable. For purposes of this Section 5.1, “Tenant’s Operating Cost Share” shall be: (i) in the case of Operating Expenses that are reasonably allocable solely to the Building, one hundred percent (100%); (ii) in the case of Operating Expenses that are reasonably attributable to the Service Annex, a percentage amount equal to the percentage of the total square footage of the Service Annex that is included in the Premises pursuant to Section 2.3(d) and Section 3.1(c) above; and (iii) in the case of Operating Expenses that are determined and allocated on a Center-wide basis, seven and twenty-seven hundredths percent (7.27%).

(b) Tenant’s Operating Cost Share as specified in Section 5.1(a) with respect to matters allocable to the entire Center is based upon an estimated area of 45,678 square feet for the Premises (subject to determination of the allocable square footage from the Service Annex) and upon an aggregate area of 628,593 square feet for all of the buildings presently located in the Center. If the actual area of the Premises or of any of the buildings existing from time to time in the Center changes for any reason (including, but not limited to, modification of existing buildings, final determination of the allocable square footage from the Service Annex, construction of new buildings in the Center, or construction of new buildings on any adjacent property owned by Landlord and operated, for common area purposes, on an integrated basis with the Center), then Tenant’s Operating Cost Share shall be adjusted proportionately to reflect the new actual areas of the Premises and/or such other buildings, as applicable, as determined reasonably and in good faith by Landlord’s architect on the same basis of measurement as applied in determining the existing square footage of the Building.

5.2 Definition of Operating Expenses.

(a) Subject to the exclusions and provisions hereinafter contained and the allocation principles set forth in Section 5.1, the term “Operating Expenses” shall mean, without duplication, the total costs and expenses actually incurred by Landlord for management, operation and maintenance of the Building and the Center, including, without limitation, costs and expenses of (i) insurance (which may include, at Landlord’s option, environmental and seismic insurance as part of or in addition to any casualty or property insurance policy), property management, landscaping, and the operation, repair and maintenance of buildings and Common Areas; (ii) all utilities and services; (iii) real and personal property taxes and assessments or substitutes therefor levied or assessed against the Center or any part thereof, including (but not limited to) any possessory interest, use, business, license or other taxes or fees, any taxes imposed directly on gross rents or services, any assessments or charges for police or fire protection, housing, transit, open space, street or sidewalk construction or maintenance or other similar services from time to time by any governmental or quasi-governmental entity, and any other new taxes on landlords in addition to taxes now in effect; (iv) supplies, equipment, utilities

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and tools used in management, operation and maintenance of the Center; (v) capital improvements to the Center or the improvements therein, amortized over the useful life of such capital improvements as determined reasonably and in good faith by Landlord on the basis of generally accepted accounting principles or tax accounting principles, consistently applied, (aa) which reduce or will cause future reduction of other items of Operating Expenses for which Tenant is otherwise required to contribute or (bb) which are required by law, ordinance, regulation or order of any governmental authority (excluding, however, any such expenses incurred by Landlord in complying with Landlord’s obligations under Section 2.3) or (cc) of which Tenant has use or which benefit Tenant, and which in either case under this clause (cc) are reasonably consistent with the nature and quality of the Center as a first-class office and research and development campus; and (vi) any other costs (including, but not limited to, any parking or utilities fees or surcharges not otherwise specifically addressed elsewhere in this Lease) paid by Landlord, as owner of the Center, pursuant to any applicable laws, ordinances, regulations or orders of any governmental or quasi-governmental authority or pursuant to the terms of the Master Declaration (as hereinafter defined) or of any other declarations of covenants, conditions and restrictions now or hereafter affecting the Center or any other property over which Tenant has non-exclusive usage rights as contemplated in Section 1.1(b) hereof. Operating Expenses shall not include any costs attributable to the initial construction of buildings or Common Area improvements in the Center, nor any costs attributable to buildings the square footage of which is not taken into account in determining Tenant’s Operating Cost Share under Section 5.1 for the applicable period. The distinction between items of ordinary operating maintenance and repair and items of a capital nature shall be made in accordance with generally accepted accounting principles applied on a consistent basis or in accordance with tax accounting principles, as determined reasonably and in good faith by Landlord’s accountants.

(b) Notwithstanding any other provisions of this Section 5.2, the following shall not be included within Operating Expenses: (i) rent paid to any ground lessor; (ii) the cost of constructing tenant improvements for any other tenant of the Center; (iii) the costs of special services, goods or materials provided to any other tenant of the Center and not offered or made available to Tenant; (iv) repairs covered by proceeds of insurance or from funds provided by Tenant or any other tenant of the Center, or as to which any other tenant of the Center is obligated to make such repairs or to pay the cost thereof; (v) legal fees, advertising costs or other related expenses incurred by Landlord in connection with the leasing of space to individual tenants of the Center; (vi) repairs, alterations, additions, improvements or replacements needed to rectify or correct any defects in the design, materials or workmanship of the Building, the Center or the Common Areas; (vii) damage and repairs necessitated by the negligence or willful misconduct of Landlord or of Landlord’s employees, contractors or agents; (viii) executive salaries or salaries of service personnel to the extent that such personnel perform services other than in connection with the management, operation, repair or maintenance of the Building or the Center; (ix) Landlord’s general overhead expenses not related to the Building or the Center; (x) legal fees, accountants’ fees and other expenses incurred in connection with disputes with tenants or other occupants of the Center, or in connection with the enforcement of the terms of any leases with tenants or the defense of Landlord’s title to or interest in the Center or any part thereof; (xi) costs incurred due to a violation by Landlord or any other tenant of the Center of the terms and conditions of any lease; (xii) costs of any service provided to Tenant or to other

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occupants of the Center for which Landlord is reimbursed other than through recovery of Operating Expenses; (xiii) personal property taxes due and payable by any other tenant of the Center; (xiv) costs incurred in connection with an event of casualty or condemnation governed by Article 13 of this Lease (including, but not limited to, any applicable deductible and/or coinsurance amounts under applicable insurance policies); (xv) costs to comply with Landlord’s obligations under Section 2.3 of this Lease; (xvi) costs incurred in connection with the presence of any hazardous substance or hazardous waste (as such terms are defined in Section 9.6) on, under or about the Property or the Center (but in the event of any use or release of such a hazardous substance or hazardous waste by Tenant or related parties as described in Section 9.6, Tenant’s responsibility therefor shall be determined pursuant to Section 9.6); (xvii) interest, charges and fees incurred on debt; (xviii) costs in the nature of depreciation, amortization or other expense reserves, except in connection with any amortization of capital expenditures that is expressly authorized under any provision of this Lease; (xix) costs or expenditures for capital repairs, replacements and improvements (as determined pursuant to Section 5.2(a) above) in excess of the amortized amounts which are expressly authorized to be included as Operating Expenses under the provisions of clause (v) of Section 5.2(a) above or under any other applicable provision of this Lease; (xx) costs incurred in connection with any construction of additional buildings in the Center; (xxi) wages, compensation and labor burden for any employee not stationed at the Center on a substantially full-time basis; (xxii) taxes and assessments excluded pursuant to the last sentence of Section 4.2 above; and (xxiii) any fee, profit or compensation paid to or retained by Landlord or any person or entity controlling, controlled by or under common control with Landlord for the management or administration of the Center, to the extent the portion of such aggregate fees, profits or compensation chargeable to Tenant as an Operating Expense under this Article 5 exceeds three percent (3%) of the minimum monthly rental and Operating Expenses (provided, however, that solely for purposes of applying the foregoing limitation during the first eighteen (18) months following the Rent Commencement Date, such limitation shall be calculated using a deemed minimum monthly rental amount calculated on the entire square footage of the Premises and not on the reduced square footage otherwise applicable under Section 3.1(a) during such initial 18-month period).

5.3 Determination of Operating Expenses. On or before the Rent Commencement Date and during the last month of each subsequent calendar year of the term of this Lease (“Expense Year”), or as soon thereafter as practical, Landlord shall provide Tenant notice of Landlord’s estimate of the Operating Expenses for the ensuing Expense Year or applicable portion thereof. On or before the first day of each month during the term of this Lease, beginning on the Rent Commencement Date, Tenant shall pay to Landlord Tenant’s Operating Cost Share of the portion of such estimated Operating Expenses allocable (on a prorata basis) to such month; provided, however, that if such notice is not given in the last month of an Expense Year, Tenant shall continue to pay on the basis of the prior year’s estimate, if any, until the month after such notice is given. If at any time or times it appears to Landlord that the actual Operating Expenses will vary from Landlord’s estimate by more than five percent (5%), Landlord may, by notice to Tenant, revise its estimate for the applicable Expense Year and subsequent payments by Tenant for such Expense Year shall be based upon such revised estimate.

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5.4 Final Accounting for Expense Year.

(a) Within ninety (90) days after the close of each Expense Year, or as soon after such 90-day period as practicable, Landlord shall deliver to Tenant a statement of Tenant’s Operating Cost Share of the Operating Expenses for such Expense Year prepared by Landlord from Landlord’s books and records, which statement shall be final and binding on Landlord and Tenant (except as provided in Section 5.4(b)). If on the basis of such statement Tenant owes an amount that is more or less than the estimated payments for such Expense Year previously made by Tenant, Tenant or Landlord, as the case may be, shall pay the deficiency to the other party within thirty (30) days after delivery of the statement. Failure or inability of Landlord to deliver the annual statement within such ninety (90) day period shall not impair or constitute a waiver of Tenant’s obligation to pay Operating Expenses, or cause Landlord to incur any liability for damages.

(b) At any time within three (3) months after receipt of Landlord’s annual statement of Operating Expenses as contemplated in Section 5.4(a), Tenant shall be entitled, upon reasonable written notice to Landlord and during normal business hours at Landlord’s office or such other places as Landlord shall reasonably designate, to inspect and examine those books and records of Landlord relating to the determination of Operating Expenses for the immediately preceding Expense Year covered by such annual statement or, if Tenant so elects by written notice to Landlord, to request an independent audit of such books and records. Any such independent audit of the books and records shall be conducted by a certified public accountant reasonably acceptable to both Landlord and Tenant or, if the parties are unable to agree, by a certified public accountant appointed by the Presiding Judge of the San Mateo County Superior Court upon the application of either Landlord or Tenant (with notice to the other party). In either event, such certified public accountant shall be one who is not then employed in any capacity by Landlord or Tenant or by any of their respective affiliates. The audit shall be limited to the determination of the amount of Operating Expenses for the subject Expense Year, and shall be based on generally accepted accounting principles and tax accounting principles, consistently applied. If it is determined, by mutual agreement of Landlord and Tenant or by independent audit, that the amount of Operating Expenses billed to or paid by Tenant for the applicable Expense Year was incorrect, then the appropriate party shall pay to the other party the deficiency or overpayment, as applicable, within thirty (30) days after the final determination of such deficiency or overpayment. All costs and expenses of the audit shall be paid by Tenant unless the audit shows that Landlord overstated Operating Expenses for the subject Expense Year by more than five percent (5%), in which case Landlord shall pay all costs and expenses of the audit. Each party agrees to maintain the confidentiality of the findings of any audit in accordance with the provisions of this Section 5.4.

5.5 Proration. If the Rent Commencement Date falls on a day other than the first day of an Expense Year or if this Lease terminates on a day other than the last day of an Expense Year, then the amount of Operating Expenses payable by Tenant with respect to such first or last partial Expense Year shall be prorated on the basis which the number of days during such Expense Year in which this Lease is in effect bears to 365. The termination of this Lease shall

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not affect the obligations of Landlord and Tenant pursuant to Section 5.4 to be performed after such termination.

6. UTILITIES

6.1 Payment. Commencing with the Rent Commencement Date and thereafter throughout the term of this Lease, Tenant shall pay, before delinquency, all charges for water, gas, heat, light, electricity, power, sewer, telephone, alarm system, janitorial and other services or utilities supplied to or consumed in or with respect to the Premises (other than any costs for water, electricity or other services or utilities furnished with respect to the Common Areas, which costs shall be paid by Landlord and shall constitute Operating Expenses under Section 5.2 hereof), including any taxes on such services and utilities. It is the intention of the parties that all such services shall be separately metered to the Premises. In the event that any utilities or services supplied to the Premises are not separately metered, then the amount thereof shall be allocated in a reasonable, good faith and appropriate manner by Landlord between the Premises and the other buildings, premises or areas sharing such utilities or services, and the portion thereof allocable to the Building may, in Landlord’s discretion, either be included in Operating Expenses allocable to the Building under Section 5.1 hereof or be billed directly to Tenant and paid or reimbursed by Tenant within thirty (30) days after receipt of Landlord’s statement and request for payment, accompanied by reasonable supporting documentation evidencing the calculation or determination of the amount for which payment or reimbursement is requested. Notwithstanding the foregoing provisions, during the period from the Lease Commencement Date to the Rent Commencement Date, (a) if Tenant is neither operating its business in the Premises nor performing any material construction of improvements in the Premises, Landlord shall bear all utilities charges for the Premises, but to the extent Landlord is then performing construction of improvements in the Premises pursuant to this Lease and/or the Workletter, Landlord may, in its discretion, make a reasonable, good faith allocation of such utilities charges between (i) Landlord’s Work and (ii) the Cost of Improvements (as defined in the Workletter) for the Tenant Improvements being constructed by Landlord; and (b) if Tenant is operating its business in the Premises and/or performing any material construction of improvements in the Premises, utilities charges for the Premises shall be allocated between Landlord and Tenant on the basis of a reasonable, good faith estimate of their respective usage of such utilities.

6.2 Interruption. There shall be no abatement of rent or other charges required to be paid hereunder and Landlord shall not be liable in damages or otherwise for interruption or failure of any service or utility furnished to or used with respect to the Premises, the Building or the Center because of accident, making of repairs, alterations or improvements, severe weather, difficulty or inability in obtaining services or supplies, labor difficulties or any other cause. Notwithstanding the foregoing provisions of this Section 6.2, however, in the event of any interruption or failure of any service or utility to the Premises that (i) is caused in whole or in material part by the active negligence or willful misconduct of Landlord or its agents, employees or contractors and (ii) continues for more than three (3) business days and (iii) materially impairs Tenant’s ability to use the Premises for the intended purpose hereunder, then following such three (3) business day period, Tenant’s obligations for payment of rent and other charges under this Lease shall be abated in proportion to the degree of impairment of Tenant’s use of the

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Premises, and such abatement shall continue until Tenant’s use of the Premises is no longer materially impaired thereby. Tenant expressly waives any benefits of any applicable existing or future law (including, but not limited to, the provisions of California Civil Code Section 1932(1)) to the extent the same would permit the termination of the Lease due to any such interruption or failure of any service or utility, it being the intention of the parties that their respective rights in such circumstances shall be governed solely by the provisions of this Section 6.2.

7. ALTERATIONS; SIGNS

7.1 Right to Make Alterations. Tenant shall make no alterations, additions or improvements to the Premises, other than interior non-structural alterations in the Premises costing less than Twenty-Five Thousand Dollars ($25,000) in each instance and less than Fifty Thousand Dollars ($50,000) in the aggregate during any twelve (12) month period, without the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed. All such alterations, additions and improvements shall be completed with due diligence in a good and workmanlike manner, in compliance with plans and specifications approved in writing by Landlord and in compliance with all applicable laws, ordinances, rules and regulations, and to the extent Landlord’s consent is not otherwise required hereunder for such alterations, additions or improvements, Tenant shall give prompt written notice thereof to Landlord. Tenant shall cause any contractors engaged by Tenant for work in the Building or in the Center to maintain public liability and property damage insurance, and other customary insurance, with such terms and in such amounts as Landlord may reasonably require, naming as additional insureds Landlord and any of its partners, shareholders, property managers, project managers and lenders designated by Landlord for this purpose, and shall furnish Landlord with certificates of insurance or other evidence that such coverage is in effect. Notwithstanding any other provisions of this Section 7.1, under no circumstances shall Tenant make any structural alterations or improvements, or any changes to the roof or equipment installations on the roof, or any alterations materially affecting any building systems, without Landlord’s prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed).

7.2 Title to Alterations. All alterations, additions and improvements installed by Tenant in, on or about the Premises, the Building or the Center (including, but not limited to, lab benches, fume hoods, clean rooms, cold rooms and other similar improvements and equipment) shall become part of the Property and shall become the property of Landlord, unless Landlord elects to require Tenant to remove the same upon the termination of this Lease; provided, however, that the foregoing shall not apply to Tenant’s movable furniture, equipment and trade fixtures, except to the extent any such items are specifically described in the parenthetical in the initial portion of this sentence. Tenant shall promptly repair any damage caused by its removal of any such furniture, equipment or trade fixtures.

(a) Notwithstanding any other provisions of this Article 7, (i) under no circumstances shall Tenant have any right to remove from the Premises or the Building, at the expiration or termination of this Lease, any lab benches, fume hoods, clean rooms, cold rooms or other similar improvements and equipment installed in the Building, even if such equipment and improvements were installed by Tenant; (ii) under no circumstances shall Tenant have any right

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to remove from the Premises or the Building, at the expiration or termination of this Lease, any alterations, additions, improvements or equipment acquired, constructed or installed with the use, in whole or in part, of any funds from the Tenant Improvement Allowance; (iii) if Tenant requests Landlord’s written consent to any alterations, additions or improvements under Section 7.1 hereof and, in requesting such consent, asks that Landlord specify whether Landlord will require removal of such alterations, additions or improvements upon termination or expiration of this Lease, then Landlord shall not be entitled to require such removal unless Landlord specified its intention to do so at the time of granting of Landlord’s consent to the requested alterations, additions or improvements; and (iv) Tenant shall not be required to remove any Tenant Improvements constructed or installed pursuant to the Workletter unless Landlord specifies its intention to do so at the time of granting of Landlord’s approval of the plans and specifications for the applicable elements of such Tenant Improvements, for which purpose Landlord agrees that (A) it will not withhold its approval of specific elements of the Tenant Improvements, or condition its approval upon Tenant’s agreement to remove such elements upon termination or expiration of this Lease, unless Landlord believes reasonably and in good faith that the functionality and marketability of the Premises for purposes of re-leasing to a successor tenant would be materially and adversely affected by the presence of such specific elements, and (B) it will not require Tenant to remove upon termination or expiration of this Lease, or condition its approval upon Tenant’s agreement to remove upon termination or expiration of this Lease, any Tenant Improvements (including, but not limited to, Larc improvements) which constitute standard, non-extraordinary improvements for ordinary office, laboratory and/or Larc uses in biotech facilities.

(b) Notwithstanding any other provisions of this Article 7, (i) it is the intention of the parties that Landlord shall be entitled to claim all tax attributes associated with alterations, additions, improvements and equipment constructed or installed by Tenant or Landlord with funds provided by Landlord pursuant to the Tenant Improvement Allowance; and (ii) it is the intention of the parties that Tenant shall be entitled to claim, during the term of this Lease, all tax attributes associated with alterations, additions, improvements and equipment constructed or installed by Tenant with Tenant’s own funds (and without any payment or reimbursement by Landlord pursuant to the Tenant Improvement Allowance), despite the fact that the items described in this clause (ii) are characterized in this Section 7.2 as becoming Landlord’s property upon installation, in recognition of the fact that Tenant will have installed and paid for such items, will have the right of possession of such items during the term of this Lease (from and after the Rent Commencement Date) and will have the obligation to pay (directly or indirectly) property taxes on such items, carry insurance on such items to the extent provided in Article 10 hereof and bear the risk of loss with respect to such items to the extent provided in Article 13 hereof. If and to the extent it becomes necessary, in implementation of the foregoing intentions, to identify (either specifically or on a percentage basis, as may be required under applicable tax laws) which alterations, additions, improvements and equipment constructed as part of the Tenant Improvements have been funded through the Tenant Improvement Allowance and which (if any) have been constructed or installed with Tenant’s own funds, Landlord and Tenant agree to cooperate reasonably and in good faith to make such an identification by mutual agreement.

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7.3 Tenant Trade Fixtures. Subject to the third sentence of Section 7.2 and to Section 7.5, Tenant may install, remove and reinstall trade fixtures without Landlord’s prior written consent, except that installation and removal of any trade fixtures which are affixed to the Building or which affect the exterior or structural portions of the Building or which materially affect the Building systems shall require Landlord’s written approval, which approval shall not be unreasonably withheld, conditioned or delayed. Subject to the provisions of Section 7.5, the foregoing shall apply to Tenant’s signs, which Tenant shall have the right to place and remove and replace (a) only with Landlord’s prior written consent as to location, size and composition, which consent shall not be unreasonably withheld, conditioned or delayed, and (b) only in compliance with all restrictions and requirements of applicable law and of any covenants, conditions and restrictions or other written agreements now or hereafter applicable to the Center. Tenant shall immediately repair any damage caused by installation and removal of trade fixtures under this Section 7.3.

7.4 No Liens. Tenant shall at all times keep the Building and the Center free from all liens and claims of any contractors, subcontractors, materialmen, suppliers or any other parties employed either directly or indirectly by Tenant in construction work on the Building or the Center. Tenant may contest any claim of lien, but only if, prior to such contest, Tenant either (i) posts security in the amount of the claim, plus estimated costs and interest, or (ii) records a bond of a responsible corporate surety in such amount as may be required to release the lien from the Building and the Center. Tenant shall indemnify, defend and hold Landlord harmless against any and all liability, loss, damage, cost and other expenses, including, without limitation, reasonable attorneys’ fees, arising out of claims of any lien for work performed or materials or supplies furnished at the request of Tenant or persons claiming under Tenant; provided, however, that the foregoing indemnity shall not apply with respect to (x) any Landlord’s Work, or (y) any work (or related materials and supplies) performed by Tenant but for which Landlord is obligated to make direct payment to the contractor or supplier out of the Tenant Improvement Allowance.

7.5 Signs. Without limiting the generality of the provisions of Section 7.3 hereof, Tenant shall have the right to install building and monument signage comparable to that maintained by the preceding tenant of the Premises, subject to Landlord’s prior approval as to location, size, design and composition (which approval shall not be unreasonably withheld or delayed), subject to the established sign criteria for the Center and subject to all restrictions and requirements of applicable law and of any covenants, conditions and restrictions or other written agreements now or hereafter applicable to the Center. All costs for installation, maintenance and removal or restoration of such signage shall be at Tenant’s sole expense.

8. MAINTENANCE AND REPAIRS

8.1 Landlord’s Obligation for Maintenance.

(a) Repairs and Maintenance. Landlord shall repair and maintain or cause to be repaired and maintained the Common Areas of the Center; the roof, exterior walls and other structural portions of the Building and Service Annex; and the shared-use areas of the Service

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Annex, except to the extent Landlord enters into an alternative arrangement with Tenant and the tenant of the Adjacent Building regarding janitorial and/or other repair and maintenance services relating to such shared-use areas. The cost of all work performed by Landlord under this Section 8.1 shall be an Operating Expense hereunder, except to the extent such work (i) is required due to the negligence of Landlord; (ii) involves the repair or correction of a condition or defect that Landlord is required to correct pursuant to Section 2.3 hereof; (iii) is a capital expense not includible (or in excess of the amount includible on an amortized basis) as an Operating Expense under Section 5.2 hereof, or is otherwise expressly excluded from treatment as an Operating Expense under any other applicable provision of Section 5.2 hereof; (iv) results from an event of casualty or condemnation covered by Article 13 hereof (in which event the provisions of such Article 13 shall govern the parties’ respective rights and obligations); or (v) is required due to the negligence or willful misconduct of Tenant or its agents, employees or invitees (in which event Tenant shall bear the full cost of such work pursuant to the indemnification provided in Section 10.6 hereof, subject to the release set forth in Section 10.4 hereof). Tenant knowingly and voluntarily waives the right to make repairs at Landlord’s expense (except as specifically provided in Section 8.1(b) hereof), or to offset the cost thereof against rent, under any law, statute, regulation or ordinance now or hereafter in effect.

(b) Tenant’s Remedy. If (i) Landlord fails to perform promptly any repair, maintenance or replacement required to be performed by Landlord on the Building or Premises (including the portions of the Service Annex designated for exclusive use by the occupant of the Building, but excluding the shared use areas of the Service Annex) under Section 8.1(a) and (ii) such failure creates a material risk to health and safety or a material risk of damage to property or a material impairment of Tenant’s ability to conduct its business in the Premises and (iii) such failure continues for more than thirty (30) days after Tenant gives Landlord written notice of such failure (or, if such repairs or maintenance cannot reasonably be performed within such 30-day period, then if Landlord fails to commence performance within such 30-day period and thereafter to pursue such performance diligently to completion), then Tenant shall have the right, but not the obligation, to perform such repairs or maintenance and Landlord shall reimburse Tenant for the reasonable cost thereof within fifteen (15) days after written notice from Tenant of the completion and cost of such work, accompanied by copies of invoices or other documentation reasonably supporting the costs for which Tenant is requesting reimbursement. Under no circumstances, however, shall Tenant have any right to offset or deduct the cost of any such work against rent or other charges falling due from time to time under this Lease.

8.2 Tenant’s Obligation for Maintenance.

(a) Good Order, Condition and Repair. Except as provided in Section 8.1 hereof, and subject to the provisions of Article 13 hereof (which shall be controlling in the event of any casualty or condemnation covered by such Article 13), Tenant at its sole cost and expense shall keep and maintain in good and sanitary order, condition and repair the Premises and every part thereof, wherever located (excluding the shared-use areas of the Service Annex, subject to Section 8.1 above, but including any and all portions of the Service Annex designated for exclusive use by the occupant of the Building), including but not limited to the signs, interior,

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ceiling, electrical system, plumbing system, telephone and communications systems serving the Premises, the HVAC equipment and related mechanical systems serving the Premises (for which equipment and systems Tenant shall enter into a service contract with a person or entity reasonably approved by Landlord), all doors, door checks, windows, plate glass, door fronts, exposed plumbing and sewage and other utility facilities, fixtures, lighting, wall surfaces, floor surfaces and ceiling surfaces of the Premises and all other interior repairs, foreseen and unforeseen, with respect to the Premises, as required.

(b) Landlord’s Remedy. If Tenant, after notice from Landlord, fails to make or perform promptly (and in all events within any applicable notice and cure periods) any repairs or maintenance which are the obligation of Tenant hereunder, Landlord shall have the right, but shall not be required, to enter the Premises and make the repairs or perform the maintenance necessary to restore the Premises to good and sanitary order, condition and repair. Immediately on demand from Landlord, the cost of such repairs shall be due and payable by Tenant to Landlord.

(c) Condition Upon Surrender. At the expiration or sooner termination of this Lease, Tenant shall surrender the Premises and Building and the improvements located therein, including any additions, alterations and improvements thereto (except for items which Tenant is permitted and elects to remove, or is required to remove, pursuant to the provisions of this Lease), broom clean, in good and sanitary order, condition and repair (excluding the effects of ordinary wear and tear, casualty damage or condemnation governed by the provisions of Article 13 hereof, and hazardous substances and/or hazardous wastes, except to the extent Tenant is responsible for the same pursuant to the provisions of Section 9.6 or any other applicable provisions of this Lease), first, however, removing all goods and effects of Tenant and all and fixtures and items required to be removed or specified to be removed at Landlord’s election pursuant to this Lease (including, but not limited to, any such removal required as a result of an election duly made by Landlord to require such removal as contemplated in Section 7.2), and repairing any damage caused by such removal. Tenant expressly waives any and all interest in any personal property and trade fixtures not removed from the Center by Tenant at the expiration or termination of this Lease, agrees that any such personal property and trade fixtures may, at Landlord’s election, be deemed to have been abandoned by Tenant, and authorizes Landlord (at its election and without prejudice to any other remedies under this Lease or under applicable law) to remove and either retain, store or dispose of such property at Tenant’s cost and expense, and Tenant waives all claims against Landlord for any damages resulting from any such removal, storage, retention or disposal.

9. USE OF PROPERTY

9.1 Permitted Use. Subject to Sections 9.3, 9.4 and 9.6 hereof, Tenant shall use the Premises solely for an office, research and development, engineering, laboratory, and/or warehousing facility, and for administrative and other lawful purposes reasonably related to or incidental to such specified uses (subject in each case to receipt of all necessary approvals from the City of Redwood City and all other governmental agencies having jurisdiction over the

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Premises), and for no other purpose, unless Landlord in its sole discretion otherwise consents in writing.

9.2 [Intentionally Deleted.]

9.3 No Nuisance. Tenant shall not use the Premises for or carry on or permit within the Center or any part thereof any offensive, noisy or dangerous trade, business, manufacture, occupation, odor or fumes, or any nuisance or anything against public policy, nor interfere with the rights or business of Landlord in the Building or the Center, nor commit or allow to be committed any waste in, on or about the Center. Tenant shall not do or permit anything to be done in or about the Center, nor bring nor keep anything therein, which will in any way cause the Center or any portion thereof to be uninsurable with respect to the insurance required by this Lease or with respect to standard fire and extended coverage insurance with vandalism, malicious mischief and riot endorsements.

9.4 Compliance with Laws. Tenant shall not use the Premises, the Building or the Center or permit the Premises, the Building or the Center to be used in whole or in part for any purpose or use that is in violation of any applicable laws, ordinances, regulations or rules of any governmental agency or public authority. Tenant shall keep the Premises equipped with all safety appliances required by law, ordinance or insurance on the Center, or any order or regulation of any public authority, because of Tenant’s particular use of the Premises. Tenant shall procure all licenses and permits required for Tenant’s particular use of the Premises. Tenant shall use the Premises in strict accordance with all applicable ordinances, rules, laws and regulations and shall comply with all requirements of all governmental authorities now in force or which may hereafter be in force pertaining to the particular use of the Premises and the Center by Tenant, including, without limitation, regulations applicable to noise, water, soil and air pollution, and making such nonstructural alterations and additions thereto as may be required from time to time by such laws, ordinances, rules, regulations and requirements of governmental authorities or insurers of the Center (collectively, “Requirements”) because of Tenant’s construction of improvements in or other particular use of the Premises or the Center. Any structural alterations or additions required from time to time by applicable Requirements because of Tenant’s construction of improvements in the Premises or other particular use of the Center shall, at Landlord’s election, either (i) be made by Tenant, at Tenant’s sole cost and expense, in accordance with the procedures and standards set forth in Section 7.1 for alterations by Tenant, or (ii) be made by Landlord at Tenant’s sole cost and expense, in which event Tenant shall pay to Landlord as additional rent, within thirty (30) days after demand by Landlord, an amount equal to all reasonable costs incurred by Landlord in connection with such alterations or additions. The judgment of any court, or the admission by Tenant in any proceeding against Tenant, that Tenant has violated any law, statute, ordinance or governmental rule, regulation or requirement shall be conclusive of such violation as between Landlord and Tenant. Notwithstanding the foregoing, Tenant shall not be required to comply with or cause the Premises or the Center to comply with any Requirements except to the extent such compliance is necessitated due to Tenant’s construction of improvements in, or Tenant’s particular use of, the Premises.

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9.5 Liquidation Sales. Tenant shall not conduct or permit to be conducted any auction, bankruptcy sale, liquidation sale, or going out of business sale, in, upon or about the Center, whether said auction or sale be voluntary, involuntary or pursuant to any assignment for the benefit of creditors, or pursuant to any bankruptcy or other insolvency proceeding.

9.6 Environmental Matters.

(a) For purposes of this Section, “hazardous substance” shall mean (i) the substances included within the definitions of the term “hazardous substance” under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. §§ 9601 et seq., and the regulations promulgated thereunder, as amended, (ii) the substances included within the definition of “hazardous substance” under the California Carpenter-Presley-Tanner Hazardous Substance Account Act, California Health & Safety Code §§ 25300 et seq., and regulations promulgated thereunder, as amended, (iii) the substances included within the definition of “hazardous materials” under the Hazardous Materials Release Response Plans and Inventory Act, California Heath & Safety Code §§ 25500 et seq., and regulations promulgated thereunder, as amended, (iv) the substances included within the definition of “hazardous substance” under the Underground Storage of Hazardous Substances provisions set forth in California Health & Safety Code §§ 25280 et seq., and (v) petroleum or any fraction thereof; “hazardous waste” shall mean (i) any waste listed as or meeting the identified characteristics of a “hazardous waste” under the Resource Conservation and Recovery Act of 1976, 42 U.S.C. §§ 6901 et seq., and regulations promulgated pursuant thereto, as amended (collectively, “RCRA”), (ii) any waste meeting the identified characteristics of “hazardous waste,” “extremely hazardous waste” or “restricted hazardous waste” under the California Hazardous Waste Control Law, California Health & Safety Code §§ 25100 et seq., and regulations promulgated pursuant thereto, as amended (collectively, the “CHWCL”), and/or (iii) any waste meeting the identified characteristics of “medical waste” under California Health & Safety Code §§ 25015-25027.8, and regulations promulgated thereunder, as amended; “hazardous waste facility” shall mean a hazardous waste facility as defined under the CHWCL; and “pollutant” shall mean all substances defined as a “pollutant,” “pollution,” “waste,” “contamination” or “hazardous substance” under the Porter-Cologne Water Quality Control Act, California Water Code §§ 13000 et seq.

(b) Without limiting the generality of the obligations set forth in Section 9.4 of this Lease:

(i) Tenant shall not cause or permit any hazardous substance or hazardous waste to be brought upon, kept, stored or used in or about the Center without the prior written consent of Landlord, which consent shall not be unreasonably withheld, except that Tenant, in connection with its permitted use of the Premises and the Center as provided in Section 9.1, may keep, store and use materials that constitute hazardous substances which are customary for such permitted use, provided such hazardous substances are kept, stored and used in quantities which are customary for such permitted use and are kept, stored and used in full compliance with clauses (ii) and (iii) immediately below.

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(ii) Tenant shall comply with all applicable laws, rules, regulations, orders, permits, licenses and operating plans of any governmental authority with respect to the receipt, use, handling, generation, transportation, storage, treatment and/or disposal of hazardous substances or wastes by Tenant or its agents or employees, and Tenant will provide Landlord with copies of all permits, licenses, registrations and other similar documents that authorize Tenant to conduct any such activities in connection with its authorized use of the Premises and the Center from time to time.

(iii) Tenant shall not (A) operate on or about the Center any facility required to be permitted or licensed as a hazardous waste facility or for which interim status as such is required, nor (B) store any hazardous wastes on or about the Center for ninety (90) days or more, nor (C) conduct any other activities on or about the Center that could result in the Center or any portion thereof being deemed to be a “hazardous waste facility” (including, but not limited to, any storage or treatment of hazardous substances or hazardous wastes which could have such a result), nor (D) store any hazardous wastes on or about the Center in violation of any federal or California laws or in violation of the terms of any federal or state licenses or permits held by Tenant.

(iv) Tenant shall not install any underground storage tanks on the Property without the prior written consent of Landlord and prior approval by all applicable governmental authorities. If and to the extent that Tenant obtains all such required consents and approvals and installs any underground storage tanks on the Property, Tenant shall comply with all applicable laws, rules, regulations, orders and permits relating to such underground storage tanks (including any installation, monitoring, maintenance, closure and/or removal of such tanks) as such tanks are defined in California Health & Safety Code § 25281(x), including, without limitation, complying with California Health & Safety Code §§ 25280-25299.7 and the regulations promulgated thereunder, as amended. Tenant shall furnish to Landlord copies of all registrations and permits issued to or held by Tenant from time to time for any and all underground storage tanks located on or under the Property.

(v) If applicable, Tenant shall provide Landlord in writing the following information and/or documentation within fifteen (15) days after the Rent Commencement Date, and shall update such information at least annually, on or before each anniversary of the Rent Commencement Date, to reflect any change in or addition to the required information and/or documentation (provided, however, that in the case of the materials described in subparagraphs (B), (C) and (E) below, Tenant shall not be required to deliver copies of such materials to Landlord but shall maintain copies of such materials to such extent and for such periods as may be required by applicable law and shall permit Landlord or its representatives to inspect and copy such materials during normal business hours at any time and from time to time upon reasonable notice to Tenant; and provided further, however, that Landlord shall keep all such materials reviewed by Landlord confidential, except to the extent disclosure of such materials or of the contents thereof (x) to Landlord’s employees, counsel, managers and/or consultants is necessary or appropriate in the course of their employment or their representation of or advice to

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Landlord or in the enforcement of Landlord’s rights and Tenant’s obligations under this Lease, or (y) to any prospective lender or purchaser of the Center is necessary or appropriate in connection with any proposed sale or financing of the Center, or (z) is compelled by any governmental or quasi-governmental authority or by applicable law):

(A) A list of all hazardous substances, hazardous wastes and/or pollutants that Tenant receives, uses, handles, generates, transports, stores, treats or disposes of from time to time in connection with its operations in the Center.

(B) All Material Safety Data Sheets (“MSDS’s”), if any, required to be completed with respect to operations of Tenant at the Center from time to time in accordance with Title 26, California Code of Regulations § 8-5194 or 42 U.S.C. § 11021, or any amendments thereto, and any Hazardous Materials Inventory Sheets that detail the MSDS’s.

(C) All Hazardous Waste Manifests, if any, that Tenant is required to complete from time to time under California Health & Safety Code § 25160, any regulations promulgated thereunder, any similar successor provisions and/or any amendments to any of the foregoing, in connection with its operations in the Center.

(D) Any Hazardous Materials Management Plan required from time to time with respect to Tenant’s operations in the Center, pursuant to California Health & Safety Code §§ 25500 et seq., any regulations promulgated thereunder, any similar successor provisions and/or any amendments to any of the foregoing.

(E) Any Air Toxics Emissions Inventory Plan required from time to time with respect to Tenant’s operations in the Center, pursuant to California Health & Safety Code §§ 44340 et seq., any regulations promulgated thereunder, any similar successor provisions and/or any amendments to any of the foregoing.

(F) Any biennial Hazardous Waste Generator reports or notifications furnished by Tenant to the California Department of Toxic Substances Control or other applicable governmental authorities from time to time pursuant to California Code of Regulations Title 22, § 66262.41, any similar successor provisions and/or any amendments to any of the foregoing, in connection with Tenant’s operations in the Center.

(G) Any Hazardous Waste Generator Reports regarding source reductions, as required from time to time pursuant to California Health & Safety Code §§ 25244.20 et seq., any regulations promulgated thereunder, any similar successor provisions and/or any amendments to any of the foregoing, in connection with Tenant’s operations in the Center.

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(H) Any Hazardous Waste Generator Reports or notifications not otherwise described in the preceding subparagraphs and required from time to time pursuant to California Health & Safety Code § 25153.6, California Code of Regulations Title 22, Division 4.5, Chapter 12, §§ 66262.10 etseq.(“Standards Applicable to Generators of Hazardous Waste”), any other regulations promulgated thereunder, any similar successor provisions and/or any amendments to any of the foregoing, in connection with Tenant’s operations in the Center.

(I) All industrial wastewater discharge permits issued to or held by Tenant from time to time in connection with its operations in the Center, and all air quality management district permits issued to or held by Tenant from time to time in connection with its operations in the Center.

(J) Copies of any other lists or inventories of hazardous substances, hazardous wastes and/or pollutants on or about the Center that Tenant is otherwise required to prepare and file from time to time with any governmental or regulatory authority.

(vi) Tenant shall secure Landlord’s prior written approval for any proposed receipt, storage, possession, use, transfer or disposal of “radioactive materials” or “radiation,” as such materials are defined in Title 26, California Code of Regulations § 17-30100, and/or any other materials possessing the characteristics of the materials so defined, which approval Landlord may withhold in its sole and absolute discretion; provided, that such approval shall not be required for any radioactive materials (x) for which Tenant has secured prior written approval of the Nuclear Regulatory Commission and delivered to Landlord a copy of such approval (if applicable), or (y) which Tenant is authorized to use pursuant to the terms of any radioactive materials license issued by the State of California. Tenant, in connection with any such authorized receipt, storage, possession, use, transfer or disposal of radioactive materials or radiation, shall:

(A) Comply with all federal, state and local laws, rules, regulations, orders, licenses and permits issued to or applicable to Tenant with respect to its operations in the Center;

(B) Maintain, to such extent and for such periods as may be required by applicable law, and permit Landlord and its representatives to inspect during normal business hours at any time and from time to time upon reasonable notice to Tenant, a list of all radioactive materials or radiation received, stored, possessed, used, transferred or disposed of by Tenant or in connection with Tenant’s operations in the Center from time to time, to the extent not already disclosed through delivery of a copy of a Nuclear Regulatory Commission approval with respect thereto as contemplated above; and

(C) Maintain, to such extent and for such periods as may be required by applicable law, and permit Landlord or its representatives to inspect during normal business hours at any time and from time to time upon reasonable

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notice to Tenant, all licenses, registration materials, inspection reports, governmental orders and permits in connection with the receipt, storage, possession, use, transfer or disposal of radioactive materials or radiation by Tenant or in connection with Tenant’s operations in the Center from time to time.

(vii) Tenant shall comply with any and all applicable laws, rules, regulations and orders of any governmental authority with respect to the release into the environment of any hazardous wastes, hazardous substances, pollutants, radiation or radioactive materials by Tenant or its agents or employees. If and to the extent Tenant becomes aware of any unauthorized release of any such hazardous wastes, hazardous substances, pollutants, radiation or radioactive materials into the environment and such release (x) creates a significant risk to human health or safety, (y) creates a significant risk of contamination of any of the improvements, soil or groundwater on or under the Property, or (z) is required to be reported to any governmental authority (including, but not limited to, any release of a Reportable Quantity, under the Emergency Planning and Community Right to Know Act, of any hazardous substance, hazardous waste, pollutant, radiation or radioactive material), then in each such event, Tenant shall give Landlord verbal notice of such release as immediately as practicable, shall follow such verbal notice with written notice to Landlord of such release within one (1) business day after Tenant became aware of such release, and shall provide Landlord with a copy of any written report or disclosure filed by Tenant with any governmental authority with respect to such release, substantially concurrently with Tenant’s filing of such written report or disclosure with the applicable governmental authority.

(viii) Tenant shall indemnify, defend and hold Landlord harmless from and against any and all claims, losses (including, but not limited to, loss of rental income), damages, liabilities, costs, legal fees and expenses of any sort arising out of or relating to (A) any failure by Tenant to comply with any provisions of this Section 9.6(b), or (B) any receipt, use handling, generation, transportation, storage, treatment, release and/or disposal of any hazardous substance, hazardous waste, pollutant, radioactive material or radiation on or about the Center as a proximate result of Tenant’s use of the Center or as a result of any intentional or negligent acts or omissions of Tenant or of any agent, employee or invitee of Tenant. Notwithstanding the foregoing provisions, Landlord acknowledges and agrees that losses of rental or other income compensable under the preceding sentence do not include any actual or alleged loss of rental or other income arising from another tenant’s or prospective tenant’s or prospective purchaser’s objection to the mere fact of Tenant’s use of hazardous substances or materials on or about the Premises, absent any material violation by Tenant or its agents or employees of the provisions of this Lease or of applicable law in the course of such use.

(ix) Tenant shall cooperate with Landlord in furnishing Landlord with complete information regarding Tenant’s receipt, handling, use, storage, transportation, generation, treatment and/or disposal of any hazardous substances, hazardous wastes, pollutants, radiation or radioactive materials in or about the Center. Upon request, but subject to Tenant’s reasonable operating and security procedures, Tenant shall grant

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Landlord reasonable access at reasonable times to the Premises to inspect Tenant’s receipt, handling, use, storage, transportation, generation, treatment and/or disposal of hazardous substances, hazardous wastes, pollutants, radiation and radioactive materials, without Landlord thereby being deemed guilty of any disturbance of Tenant’s use or possession or being liable to Tenant in any manner.

(x) Notwithstanding Landlord’s rights of inspection and review under this Section 9.6(b), Landlord shall have no obligation or duty to so inspect or review, and no third party shall be entitled to rely on Landlord to conduct any sort of inspection or review by reason of the provisions of this Section 9.6(b).

(xi) Prior to, or as soon as practicable after, mutual execution of this Lease, Landlord shall obtain, at Landlord’s expense, a Phase I environmental study evaluating the presence or absence of hazardous substances, hazardous wastes, pollutants, radiation and radioactive materials in and under the Building, and shall provide a copy of that study to Tenant. The purpose of this study is to provide evidence of the “baseline” condition of the Building prior to Tenant’s occupancy and use thereof, but such evidence is not intended to be conclusive or irrebuttable. Tenant shall also have the right (but not the obligation), if it so elects and at its own expense, to conduct its own environmental study of the Premises prior to or at the time of Tenant’s occupancy, in which event Tenant shall provide a copy of such study to Landlord. If Tenant or its employees, agents, contractors, vendors, customers or guests receive, handle, use, store, transport, generate, treat and/or dispose of any hazardous substances or wastes or radiation or radioactive materials on or about the Center at any time during the term of this Lease, then within thirty (30) days after Tenant vacates the Premises upon termination or expiration of this Lease, Landlord shall obtain a further environmental study (which study shall be at least a Phase I study, and shall be a Phase II study to the extent the results of the Phase I study reasonably suggest the necessity or desirability of a Phase II level investigation in any areas), performed by GeoSyntec or Geomatrix or another reputable environmental consultant selected by Landlord, evaluating the presence or absence of hazardous substances, hazardous wastes, pollutants, radiation and radioactive materials on and about those portions of the Center affected by Tenant’s operations in the Center and attributable or potentially attributable to such operations (the “Exit Study”). Liability for any remedial actions required or recommended on the basis of the Exit Study shall be allocated in accordance with Sections 9.4, 9.6, 10.6 and other applicable provisions of this Lease. The cost of the Exit Study shall be borne by Landlord, except that if the Exit Study identifies any required or recommended remedial work that is Tenant’s responsibility under the applicable provisions of this Lease, then Tenant shall also reimburse Landlord for the cost of the Exit Study, which reimbursement shall be paid within thirty (30) days after written demand by Landlord, accompanied by a copy of the invoice(s) reflecting the cost of the Exit Study. The Exit Study is not intended to be conclusive or irrebuttable. Tenant shall also have the right (but not the obligation), if it so elects and at its own expense, to conduct its own environmental study of the Premises to verify the results of the Exit Study.

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(c) Landlord shall indemnify, defend and hold Tenant harmless from and against any and all claims, losses, damages, liabilities, costs, legal fees and expenses of any sort arising out of or relating to (i) the presence on the Center of any hazardous substances, hazardous wastes, pollutants, radiation or radioactive materials present on the Center as of the Rent Commencement Date (other than as a result of any intentional or negligent acts or omissions of Tenant or of any agent, employee or invitee of Tenant), and/or (ii) any unauthorized release into the environment (including, but not limited to, the Center) of any hazardous substances, hazardous wastes, pollutants, radiation or radioactive materials to the extent such release results from the negligence of or willful misconduct or omission by Landlord or its agents or employees.

(d) The provisions of this Section 9.6 shall survive the termination of this Lease.

10. INSURANCE AND INDEMNITY

10.1 Insurance.

(a) Tenant shall procure and maintain in full force and effect at all times during the term of this Lease, from and after the Early Access Date, at Tenant’s cost and expense, commercial general liability insurance to protect against liability arising out of or related to the use of or resulting from any accident occurring in, upon or about the Premises, with limits of liability of not less than (i) Three Million Dollars ($3,000,000.00) per occurrence for bodily injury, personal injury and death, and Five Hundred Thousand Dollars ($500,000.00) per occurrence for property damage, or (ii) a combined single limit of liability of not less than Five Million Dollars ($5,000,000.00) per occurrence for bodily injury (including personal injury and death) and property damage, which insurance may be provided in a combination of primary and excess limits (i.e., umbrella coverage). Such insurance shall name Landlord, its general partners, its property manager and any lender holding a deed of trust on the Center from time to time (as designated in writing by Landlord to Tenant from time to time) as additional insureds thereunder. The amount of such insurance shall not be construed to limit any liability or obligation of Tenant under this Lease. Tenant shall also procure and maintain in full force and effect at all times during the term of this Lease, at Tenant’s cost and expense, products/completed operations coverage on terms and in amounts (A) customary in Tenant’s industry for companies engaged in the marketing of products on a scale comparable to that in which Tenant is engaged from time to time and (B) mutually satisfactory to Landlord and Tenant in their respective reasonable discretion, provided that such coverage is reasonably available to Tenant on commercially reasonable terms.

(b) Landlord shall procure and maintain in full force and effect at all times during the term of this Lease, at Landlord’s cost and expense (but reimbursable as an Operating Expense under Section 5.2 hereof), commercial general liability insurance to protect against liability arising out of or related to the use of or resulting from any accident occurring in, upon or about the Center, with a combined single limit of liability of not less than Five Million Dollars ($5,000,000.00) per occurrence for bodily injury (including personal injury and death) and property damage.

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(c) Landlord shall procure and maintain in full force and effect at all times during the term of this Lease, at Landlord’s cost and expense (but reimbursable as an Operating Expense under Section 5.2 hereof), policies of property insurance providing protection against “all risk of direct physical loss” (as defined by and detailed in the Insurance Service Office’s Commercial Property Program “Cause of Loss—Special Form [CP 1030]” or its equivalent) for the shell of the Building and for the improvements in the Common Areas of the Center, on a full replacement cost basis (with no co-insurance or, if coverage without co-insurance is not reasonably available, then on an “agreed amount” basis or with a commercially reasonable margin clause). Such insurance may include earthquake and/or environmental coverage, as part of the same policy or as a separate policy or policies, to the extent Landlord in its sole discretion elects to carry such coverage, and shall have such commercially reasonable deductibles and other terms as Landlord in its discretion determines to be appropriate. Landlord shall have no obligation to carry property damage insurance for any alterations, additions or improvements installed by Tenant in the Building or on or about the Center.

(d) Landlord shall procure and maintain in full force and effect at all times during the term of this Lease, at Tenant’s cost and expense (chargeable, pursuant to and subject to Article 5, as an Operating Expense), policies of property insurance providing protection against “all risk of direct physical loss” (as defined by and detailed in the Insurance Service Office’s Commercial Property Program “Cause of Loss—Special Form [CP 1030]” or its equivalent) for the tenant improvements existing in the Premises on the Early Access Date and for all Tenant Improvements constructed by Landlord pursuant to this Lease and the Workletter (other than Tenant’s Property, which it shall be Tenant’s responsibility to insure pursuant to paragraph (e) below), on a full replacement cost basis (with no co-insurance or, if coverage without co-insurance is not reasonably available, then on an “agreed amount” basis or with a commercially reasonable margin clause). Such insurance may have such commercially reasonable deductibles and other terms as Landlord in its reasonable discretion determines to be appropriate. The coverage required to be maintained under this paragraph (d) may, in Landlord’s discretion, be added to or combined with Landlord’s master policy carried under paragraph (c) above. Tenant shall cooperate with Landlord in the preparation of a mutually approved initial list or schedule of such existing improvements and Tenant Improvements, for purposes of identifying the items Landlord is responsible for insuring under this paragraph (d), and Tenant shall thereafter provide to Landlord from time to time, upon request by Landlord annually or at other reasonable intervals, an updated version of such list or schedule (the intended purpose of such updating being to reflect any modification or removal of any such items that would have the effect of eliminating them from the scope of Landlord’s insurance obligation under this paragraph (d)). Landlord, in its discretion, may elect from time to time to obtain appraisals of any or all alterations, additions, improvements and Tenant Improvements which Landlord is required to insure hereunder.

(e) Tenant shall procure and maintain in full force and effect at all times during the term of this Lease, from and after the Early Access Date, at Tenant’s cost and expense, policies of property insurance providing protection against “all risk of direct physical loss” (as defined by and detailed in the Insurance Service Office’s Commercial Property Program “Cause of Loss-Special Form [CP 1030]” or its equivalent) for Tenant’s movable

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personal property, office furniture, movable equipment and trade fixtures, and all other alterations, additions and improvements placed or installed by Tenant from time to time in or about the Premises (collectively, “Tenant’s Property,” which term is not intended to imply any conclusion regarding ultimate ownership of alterations, additions and improvements that are otherwise covered by Article 7 above, but is used solely as a defined term for purposes of the specific contexts in which it is used as such in this Lease), on a full replacement cost basis (with no co-insurance or, if coverage without co-insurance is not reasonably available, then on an “agreed amount” basis or with a commercially reasonable margin clause). Such insurance may have such commercially reasonable deductibles and other terms as Tenant in its discretion determines to be appropriate, and shall name both Tenant and Landlord as insureds as their interests may appear. Without limiting the generality of the foregoing provisions, Tenant’s property insurance on Tenant’s Property shall in all events include earthquake insurance in an amount at least equal to the amount (if any) of the Tenant Improvement Allowance paid by Landlord pursuant to this Lease in connection with the construction of any Tenant Improvements constructed by Tenant pursuant to the Workletter.

(f) During the construction of the Tenant Improvements, each party constructing such Tenant Improvements or any portion thereof shall also procure and maintain in full force and effect, at Tenant’s sole cost and expense (but chargeable against the Tenant Improvement Allowance to the extent any portion of the Tenant Improvement Allowance is available for that purpose), a policy of builder’s risk insurance on the Tenant Improvements being constructed by such party, in such amounts and with such commercially reasonable deductibles as Landlord and Tenant may mutually and reasonably determine to be appropriate with respect to such insurance. Without limiting the generality of the foregoing provisions, any party’s builder’s risk insurance with respect to the Tenant Improvements shall in all events include earthquake insurance in an amount at least equal to the cumulative amount of the Tenant Improvement Allowance paid by Landlord from time to time in connection with the construction of such Tenant Improvements by the applicable party.

10.2 Quality of Policies and Certificates. All policies of insurance required hereunder shall be issued by responsible insurers and, in the case of policies carried or required to be carried by Tenant, shall be written as primary policies not contributing with and not in excess of any coverage that Landlord may carry. Tenant shall deliver to Landlord copies of policies or certificates of insurance showing that said policies are in effect. The coverage provided by such policies shall include the clause or endorsement referred to in Section 10.4. If Tenant fails to acquire, maintain or renew any insurance required to be maintained by it under this Article 10 or to pay the premium therefor, then Landlord, at its option and in addition to its other remedies, but without obligation so to do, may procure such insurance, and any sums expended by it to procure any such insurance on behalf of or in place of Tenant shall be repaid upon demand, with interest as provided in Section 3.2 hereof. Tenant shall give Landlord at least thirty (30) days prior written notice of any cancellation or nonrenewal of insurance required to be maintained under this Article 10, and shall obtain written undertakings from each insurer under policies required to be maintained by it to endeavor to notify all insureds thereunder at least thirty (30) days prior to cancellation of coverage (or ten (10) days prior to cancellation of coverage due to nonpayment of premiums).

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10.3 Workers’ Compensation; Employees. Tenant shall maintain in full force and effect during the term of this Lease workers’ compensation insurance in at least the minimum amounts required by law, covering all of Tenant’s employees working at or about the Premises. In addition, Tenant shall maintain in full force and effect during the term of this Lease employer’s liability coverage with limits of liability of not less than One Hundred Thousand Dollars ($100,000) per accident, One Hundred Thousand Dollars ($100,000) per employee for disease, and Five Hundred Thousand Dollars ($500,000) policy limit for disease.

10.4 Waiver of Subrogation. Notwithstanding anything to the contrary elsewhere in this Lease, to the extent permitted by law, Landlord and Tenant each waive any right to recover against the other with respect to (i) damage to property, (ii) damage to the Center or any part thereof, or (iii) claims arising by reason of any of the foregoing, but only to the extent that any of the foregoing damages and claims under clauses (i)-(iii) hereof are covered or would have been covered, and only to the extent of such actual or deemed coverage, by property insurance actually carried or required to be carried hereunder by either Landlord or Tenant, regardless of any negligence of the party receiving the benefit of such waiver. This provision is intended to waive fully, and for the benefit of each party, any rights and claims which might give rise to a right of subrogation in any insurance carrier. Each party shall procure a clause or endorsement on any property insurance policy denying to the insurer rights of subrogation against the other party to the extent rights have been waived by the insured prior to the occurrence of injury or loss. Coverage provided by insurance maintained by Landlord or Tenant shall not be limited, reduced or diminished by virtue of the subrogation waiver herein contained.

10.5 Increase in Premiums. Tenant shall do all acts and pay all expenses reasonably necessary to ensure that the Premises are not used for purposes prohibited by any applicable fire insurance, and that Tenant’s use of the Premises, Building and Center complies with all requirements necessary to obtain any such insurance. If Tenant uses or permits the Premises, Building or Center to be used in a manner which increases the existing rate of any insurance carried by Landlord on the Center and such use continues for longer than a reasonable period specified in any written notice from Landlord to Tenant identifying the rate increase and the factors causing the same, then Tenant shall pay the amount of the increase in premium caused thereby, and Landlord’s costs of obtaining other replacement insurance policies, including any increase in premium, within thirty (30) days after demand therefor by Landlord.

10.6 Indemnification.

(a) Except as otherwise expressly provided for in this Lease, Tenant shall indemnify, defend and hold Landlord and its members, partners, shareholders, officers, directors, agents, employees and contractors harmless from any and all liability for injury to or death of any person, or loss of or damage to the property of any person, and all actions, claims, demands, costs (including, without limitation, reasonable attorneys’ fees), damages or expenses of any kind arising therefrom which may be brought or made against Landlord or which Landlord may pay or incur by reason of the use, occupancy and enjoyment of the Center by Tenant or any invitees, sublessees, licensees, assignees, employees, agents or contractors of Tenant or holding under Tenant (including, but not limited to, any such matters arising out of or in connection with

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any early entry upon the Center by Tenant pursuant to Section 2.2 hereof) from any cause whatsoever other than (i) negligence or willful misconduct or omission by Landlord or its agents, employees or contractors or (ii) Landlord’s material breach of its obligations under this Lease. Except as otherwise expressly provided for in this Lease, Landlord and its members, partners, shareholders, officers, directors, agents, employees and contractors shall not be liable for, and Tenant hereby waives all claims against such persons for, damages to goods, wares and merchandise in or upon the Center, or for injuries to Tenant, its agents or third persons in or upon the Center, from any cause whatsoever other than (x) negligence or willful misconduct or omission by Landlord or its agents, employees or contractors or (y) Landlord’s material breach of its obligations under this Lease. Tenant shall give prompt notice to Landlord of any casualty or accident in, on or about the Center.

(b) Except as otherwise expressly provided for in this Lease, Landlord shall indemnify, defend and hold Tenant and its partners, shareholders, officers, directors, agents, employees and contractors harmless from any and all liability for injury to or death of any person, or loss of or damage to the property of any person, and all actions, claims, demands, costs (including, without limitation, reasonable attorneys’ fees), damages or expenses of any kind arising therefrom which may be brought or made against Tenant or which Tenant may pay or incur, to the extent such liabilities or other matters arise in, on or about the Center by reason of any negligence or willful misconduct or omission by Landlord or its agents, employees or contractors.

10.7 Blanket Policy. Any policy required to be maintained hereunder may be maintained under a so-called “blanket policy” insuring other parties and other locations so long as the amount of insurance required to be provided hereunder is not thereby diminished. Without limiting the generality of the requirement set forth at the end of the preceding sentence, property insurance provided under a blanket policy shall provide full replacement cost coverage and liability insurance provided under a blanket policy shall include per location aggregate limits meeting or exceeding the limits required under this Article 10.

11. SUBLEASE AND ASSIGNMENT

11.1 Assignment and Sublease of Building. Except in the case of a Permitted Transfer, Tenant shall not have the right or power to assign its interest in this Lease, or make any sublease of the Premises or any portion thereof, nor shall any interest of Tenant under this Lease be assignable involuntarily or by operation of law, without on each occasion obtaining the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed. Any purported sublease or assignment of Tenant’s interest in this Lease requiring but not having received Landlord’s consent thereto (to the extent such consent is required hereunder) shall be void. Without limiting the generality of the foregoing provisions, Landlord may withhold consent to any proposed subletting or assignment solely on the ground, if applicable, that the use by the proposed subtenant or assignee is not a permitted use hereunder and is reasonably likely to be incompatible with Landlord’s use of the balance of the Center. Except in the case of a Permitted Transfer, any dissolution, consolidation, merger or other reorganization of Tenant, or any sale or transfer of substantially all of the stock or assets of Tenant in a single

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transaction or series of related transactions, shall be deemed to be an assignment hereunder and shall be void without the prior written consent of Landlord as required above. Notwithstanding the foregoing, (i) neither an initial public offering of the common stock of Tenant nor any other sale of Tenant’s capital stock through any public securities exchange or market nor any other issuance of Tenant’s capital stock for bona fide financing purposes nor any sale or transfer of Tenant’s capital stock in connection with any merger or consolidation with, or acquisition of, Tenant, nor any consolidation, merger or reorganization in which Tenant is the surviving entity, shall be deemed to be an assignment, subletting or transfer hereunder; and (ii) Tenant shall have the right to assign this Lease or sublet the Premises, or any portion thereof, without Landlord’s consent (but with prior or concurrent written notice by Tenant to Landlord), to any Affiliate of Tenant, or to any entity which results from a merger or consolidation involving Tenant, or to any entity which acquires substantially all of the stock or assets of Tenant as a going concern (hereinafter each a “Permitted Transfer”). For purposes of the preceding sentence, an “Affiliate” of Tenant shall mean any entity in which Tenant owns at least a fifty percent (50%) equity interest, any entity which owns at least a fifty percent (50%) equity interest in Tenant, and/or any entity which is related to Tenant by a chain of ownership interests involving at least a fifty percent (50%) equity interest at each level in the chain. Landlord shall have no right to terminate this Lease in connection with, and shall have no right to any sums or other economic consideration resulting from, any Permitted Transfer. Except as expressly set forth in this Section 11.1, however, the provisions of Section 11.2 shall remain applicable to any Permitted Transfer and the transferee under such Permitted Transfer shall be and remain subject to all of the terms and provisions of this Lease.

11.2 Rights of Landlord.

(a) Consent by Landlord to one or more assignments of this Lease, or to one or more sublettings of the Premises or any portion thereof, or collection of rent by Landlord from any assignee or sublessee, shall not operate to exhaust Landlord’s rights under this Article 11, nor constitute consent to any subsequent assignment or subletting. No assignment of Tenant’s interest in this Lease and no sublease shall relieve Tenant of its obligations hereunder, notwithstanding any waiver or extension of time granted by Landlord to any assignee or sublessee, or the failure of Landlord to assert its rights against any assignee or sublessee, and regardless of whether Landlord’s consent thereto is given or required to be given hereunder. In the event of a default by any assignee, sublessee or other successor of Tenant in the performance of any of the terms or obligations of Tenant under this Lease, Landlord may proceed directly against Tenant without the necessity of exhausting remedies against any such assignee, sublessee or other successor. In addition, Tenant immediately and irrevocably assigns to Landlord, as security for Tenant’s obligations under this Lease, all rent from any subletting of all or a part of the Premises as permitted under this Lease, and Landlord, as Tenant’s assignee, or any receiver for Tenant appointed on Landlord’s application, may collect such rent and apply it toward Tenant’s obligations under this Lease; except that, until the occurrence and during the continuance of an event of default by Tenant, Tenant shall have the right to collect such rent and to retain all sublease profits (subject to the provisions of Section 11.2(c), below),

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(b) Upon any assignment of Tenant’s interest in this Lease for which Landlord’s consent is required under Section 11.1 hereof, Tenant shall pay to Landlord, within ten (10) days after receipt thereof by Tenant from time to time, one-half ( ¹/2) of all cash sums and other economic considerations received by Tenant in connection with or as a result of such assignment, after first deducting therefrom (i) any costs incurred by Tenant for leasehold improvements (including, but not limited to, third-party architectural and space planning costs) in the Premises in connection with such assignment, amortized over the remaining term of this Lease, (ii) any real estate commissions and/or reasonable attorneys’ fees actually incurred by Tenant in connection with such assignment, and (iii) the unamortized cost (assuming straight-line amortization over the entire period from the Rent Commencement Date through the remainder of the initial term of this Lease) of any alterations, additions and improvements made to the Premises at Tenant’s expense and remaining in the Premises at the time of such assignment.

(c) Upon any sublease of all or any portion of the Premises for which Landlord’s consent is required under Section 11.1 hereof, Tenant shall pay to Landlord, within ten (10) days after receipt thereof by Tenant from time to time, one-half ( ¹/2) of all cash sums and other economic considerations received by Tenant in connection with or as a result of such sublease, after first deducting therefrom (i) the minimum rental due hereunder for the corresponding period, prorated (on the basis of the average per-square-foot cost paid by Tenant for the Premises for the applicable period under this Lease) to reflect the size of the subleased portion of the Premises, (ii) any costs incurred by Tenant for leasehold improvements in the subleased portion of the Premises (including, but not limited to, third-party architectural and space planning costs) for the specific benefit of the sublessee in connection with such sublease, amortized over the remaining term of this Lease, (iii) any real estate commissions and/or reasonable attorneys’ fees actually incurred by Tenant in connection with such sublease, amortized over the term of such sublease, and (iv) amortized over the term of such sublease, the portion allocable to the sublease term of the unamortized cost (assuming straight-line amortization over the entire period from the Rent Commencement Date through the remainder of the initial term of this Lease) of any alterations, additions and improvements made to the Premises at Tenant’s expense and reasonably allocable to the subleased portion of the Premises at the time of the sublease. Notwithstanding anything to the contrary contained in this paragraph (c), in no event shall the economic considerations required to be shared by Tenant with Landlord hereunder include the reasonable, good faith value of any goods or services provided by Tenant to any sublessee in connection with any subletting, including, but not limited to, any shipping, receiving, security, reception, facilities management, laboratory, repair, maintenance, utilities and other similar goods and services provided to the sublessee in excess of the goods and services provided by Landlord to Tenant under this Lease.

12. RIGHT OF ENTRY AND QUIET ENJOYMENT

12.1 Right of Entry. Landlord and its authorized representatives shall have the right, subject to Tenant’s reasonable operating and security procedures, to enter the Premises at any time during the term of this Lease, provided that after the Rent Commencement Date, such entry shall be made only during normal business hours and upon not less than one (1) business day’s

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prior notice, except in the case of emergency (in which event no notice shall be required and entry may be made at any time), for the purpose of inspecting and determining the condition of the Premises and Building or for any other proper purpose including, without limitation, to make repairs, replacements or improvements which Landlord may deem necessary, to show the Premises and Building to prospective purchasers, to show the Premises and Building to prospective tenants (but only during the final year of the term of this Lease, except that in the case of the initial term or first extended term [if applicable] of this Lease, such period shall instead begin only on the earlier of the date nine (9) months prior to expiration of such initial term or first extended term of this Lease or the date [if any] on which Tenant informs Landlord in writing that Tenant does not intend to exercise its renewal right under Section 2.6 hereof as of the end of such initial term or first extended term of this Lease, but in no event earlier than one (1) year prior to the scheduled expiration date of such initial term or first extended term of this Lease), and to post notices of nonresponsibility. Landlord shall not be liable for inconvenience, annoyance, disturbance, loss of business, quiet enjoyment or other damage or loss to Tenant by reason of making any repairs or performing any work upon the Building or the Center or by reason of erecting or maintaining any protective barricades in connection with any such work, and the obligations of Tenant under this Lease shall not thereby be affected in any manner whatsoever, provided, however, Landlord shall use reasonable efforts to minimize the inconvenience to Tenant’s normal business operations caused thereby.

12.2 Quiet Enjoyment. Landlord covenants that Tenant, upon paying the rent and performing its obligations hereunder within any applicable notice and cure periods and subject to all the terms and conditions of this Lease, shall peacefully and quietly have, hold and enjoy the Premises and the Center throughout the term of this Lease, or until this Lease is terminated as provided by this Lease.

13. CASUALTY AND TAKING

13.1 Damage or Destruction.

(a) If the Premises or any portion of the Common Areas of the Center necessary for Tenant’s use and occupancy of the Premises is damaged or destroyed in whole or in any substantial part during the period from the Rent Commencement Date through the remaining term of this Lease, Landlord shall obtain from Landlord’s architect, as soon as practicable (and in all events within forty-five (45) days following the damage or destruction, (i) the architect’s reasonable, good faith estimate of the time within which repair and restoration of the Premises and Common Areas (if applicable) can reasonably be expected to be completed to the extent necessary to enable Tenant to resume its full business operations in the Premises without material impairment and (ii) the architect’s reasonable, good faith opinion as to whether repair and restoration to that extent will be permitted under applicable governmental laws, regulations and building codes then in effect (collectively, the “Architect’s Estimate”). If the damage or destruction materially impairs Tenant’s ability to conduct its business operations in the Premises, and if either (A) the estimated repair time specified in the Architect’s Estimate exceeds six (6) months (or, in the case of an occurrence during the final year of the term of this Lease, sixty (60) days), or (B) the Architect’s Estimate states that repair and restoration of the

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affected areas to the extent necessary to enable Tenant to resume its full business operations in the Premises without material impairment will not be permitted under applicable governmental laws, regulations and building codes then in effect, then in either such event either Landlord or Tenant may terminate this Lease as of the date of the occurrence by giving written notice to the other party within thirty (30) days after the damage has occurred or fifteen (15) days after delivery of the Architect’s Estimate, whichever is later; provided, however, that if Landlord elects to terminate this Lease under clause (A) of this sentence on the basis of an Architect’s Estimate showing an estimated repair time of more than sixty (60) days but not more than six (6) months with respect to a casualty occurring during the final year of the initial term or first extended term (if applicable) of this Lease but occurring prior to a valid exercise by Tenant of its option to extend the then-current term of this Lease, and if Tenant, within ten (10) days after receipt of written notice of Landlord’s election to terminate, validly exercises in writing any then-exercisable option of Tenant to extend the term of this Lease under Section 2.6 above, then Landlord’s election to terminate shall be void and of no force or effect and the rights and obligations of the parties shall be determined under this Article 13 without regard to such purported termination by Landlord. In addition, Landlord shall have a similar termination right if the damage or destruction arises from a risk that is not required to be insured against (and is not actually insured against) by Landlord under this Lease and if Landlord’s architect reasonably estimates that the uninsured cost to restore the portions of the Premises for which Landlord is responsible to the condition required above would exceed five percent (5%) of the then applicable replacement cost of the entire Premises, unless Tenant agrees in writing, within ten (10) days after being notified of Landlord’s exercise of its termination right, to bear the restoration costs in excess of such five percent (5%) limit and, if reasonably requested by Landlord, agrees to provide security in an amount and on terms reasonably satisfactory to Landlord for Tenant’s performance of such payment obligation. If the circumstances creating a termination right under the preceding two sentences do not exist, or if such circumstances exist but neither party timely exercises any applicable termination right, then this Lease shall remain in full force and effect and (1) Landlord, as to the Common Areas of the Center, as to the Premises as they existed prior to any construction or installation of Tenant Improvements or other fixtures or personal property by Tenant, and as to all Tenant Improvements constructed by Landlord pursuant to this Lease and the Workletter, and (2) Tenant, as to all Tenant Improvements (if any) constructed by Tenant pursuant to this Lease and the Workletter and as to all other alterations, additions, improvements, fixtures and personal property constructed or installed by Tenant, shall commence and complete, with all due diligence and as promptly as is reasonably practicable under the conditions then existing, all such repair and restoration as may be required to return the affected portions of the Premises and Center to a condition comparable to that existing immediately prior to the occurrence; provided, however, that Tenant in its discretion may elect not to repair, restore or replace any or all of the items which would otherwise be Tenant’s responsibility under clause (2) of this sentence to the extent such items were constructed or installed at Tenant’s sole expense and without any use of funds from the Tenant Improvement Allowance.

(b) If this Lease is terminated pursuant to the foregoing provisions of this Section 13.1 following an occurrence which is a peril actually insured or required to be insured against pursuant to Section 10.1(c), (d) and/or (e), Landlord and Tenant agree (and any Lender

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shall be asked to agree) that such insurance proceeds shall be allocated between Landlord and Tenant in a manner which fairly and reasonably reflects their respective ownership rights under this Lease, as of the termination or expiration of the term of this Lease, with respect to the improvements, fixtures, equipment and other items to which such insurance proceeds are attributable.

(c) From and after the date of an occurrence resulting in damage to or destruction of the Premises or of Common Areas necessary for Tenant’s use and occupancy of the Premises, and continuing until repair and restoration thereof are completed to the extent necessary to enable Tenant to resume operation of its business in the Premises without substantial impairment, there shall be an equitable abatement of minimum rental and of Tenant’s Operating Cost Share of Operating Expenses based upon the degree to which Tenant’s ability to conduct its business in the Premises is impaired.

(d) Each party expressly waives the provisions of California Civil Code Sections 1932(2), 1933(4) and any other applicable existing or future law to the extent the same would permit the termination of this Lease in the event of damage to or destruction of the leased property, it being the intention of the parties that their respective rights in such circumstances shall be governed solely by the provisions of this Article 13.

13.2 Condemnation.

(a) If during the term of this Lease the Building or any Common Areas of the Center that are necessary for Tenant’s use and occupancy of the Premises, or any substantial part of either of them, is taken by eminent domain or by reason of any public improvement or condemnation proceeding, or in any manner by exercise of the right of eminent domain (including any transfer in lieu of or in avoidance of an exercise of the power of eminent domain), or receives irreparable damage by reason of anything lawfully done under color of public or other authority, then (i) this Lease shall terminate as to the entire Premises at Landlord’s election by written notice given to Tenant within thirty (30) days after the taking has occurred, and (ii) this Lease shall terminate as to the entire Premises at Tenant’s election, by written notice given to Landlord within thirty (30) days after the nature and extent of the taking have been finally determined, if the portion of the Building or Center taken is of such extent and nature as substantially to handicap, impede or permanently impair Tenant’s use of the Premises. If Tenant elects to terminate this Lease, Tenant shall also notify Landlord of the date of termination, which date shall not be earlier than thirty (30) days nor later than ninety (90) days after Tenant has notified Landlord of Tenant’s election to terminate, except that this Lease shall terminate on the date of taking if such date falls on any date before the date of termination designated by Tenant. If neither party elects to terminate this Lease as hereinabove provided, this Lease shall continue in full force and effect (except that there shall be an equitable abatement of minimum rental and of Tenant’s Operating Cost Share of Operating Expenses based upon the degree to which Tenant’s ability to conduct its business in the Premises is impaired), Landlord shall restore the improvements for which Landlord is responsible (as provided above) to a complete architectural whole and a functional condition and as nearly as reasonably possible to the condition existing before the taking, and Tenant shall restore the improvements for which Tenant is responsible

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under clause (2) of Section 13.1(a) above to a complete architectural whole and a functional condition and as nearly as reasonably possible to the condition existing before the taking; provided, however, that Tenant in its discretion may elect not to repair, restore or replace any or all of the items which would otherwise be Tenant’s responsibility under such clause (2) to the extent such items were constructed or installed at Tenant’s sole expense and without any use of funds from the Tenant Improvement Allowance. In connection with any such restoration, each party shall use its respective reasonable efforts (including, without limitation, any necessary negotiation or intercession with its respective lender, if any) to ensure that any severance damages or other condemnation awards intended to provide compensation for rebuilding or restoration costs are promptly collected and made available to Landlord and Tenant in portions reasonably corresponding to the cost and scope of their respective restoration obligations, subject only to such payment controls as either party or its lender may reasonably require in order to ensure the proper application of such proceeds toward the restoration of the Building and the Center. Each party expressly waives the provisions of California Code of Civil Procedure Section 1265.130 and of any other existing or future law to the extent the same would allow either party to terminate (or to petition the Superior Court to terminate) this Lease in the event of a partial condemnation or taking of the leased property, it being the intention of the parties that their respective rights in such circumstances shall be governed solely by the provisions of this Article 13.

(b) If this Lease is terminated pursuant to the foregoing provisions of this Section 13.2, or if this Lease remains in effect but any condemnation awards or other proceeds become available as compensation for the loss or destruction of all or any portion of the Building or the Center, then Landlord and Tenant agree (and any Lender shall be asked to agree) that such proceeds shall be allocated between Landlord and Tenant, respectively, in the respective proportions in which Landlord and Tenant would have shared, under Section 13.1(b), the proceeds of any insurance proceeds following loss or destruction of the applicable improvements due to an insured casualty.

13.3 Reservation of Compensation. Landlord reserves, and Tenant waives and assigns to Landlord, all rights to any award or compensation for damage to the Center, the improvements located therein and the leasehold estate created hereby, accruing by reason of any taking in any public improvement, condemnation or eminent domain proceeding or in any other manner by exercise of the right of eminent domain or of anything lawfully done by public authority, except that (a) Tenant shall be entitled to pursue recovery from the applicable public authority for Tenant’s moving expenses, trade fixtures and equipment and any leasehold improvements installed by Tenant in the Premises or Building at its own sole expense, but only to the extent Tenant would have been entitled to remove such items at the expiration of the term of this Lease and then only to the extent of the then remaining unamortized value of such improvements computed on a straight-line basis over the period from the Rent Commencement Date through the remainder of the then current term of this Lease, and (b) any condemnation awards or proceeds described in Section 13.2(b) shall be allocated and disbursed in accordance with the provisions of Section 13.2(b), notwithstanding any contrary provisions of this Section 13.3.

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13.4 Restoration of Improvements. In connection with any repair or restoration of improvements by either party following a casualty or taking as hereinabove set forth, the party responsible for such repair or restoration shall, to the extent possible, return such improvements to a condition substantially equal to that which existed immediately prior to the casualty or taking. To the extent such party wishes to make material modifications to such improvements, such modifications shall be subject to the prior written approval of the other party (not to be unreasonably withheld or delayed), except that no such approval shall be required for modifications that are required by applicable governmental authorities as a condition of the repair or restoration, unless such required modifications would impair or impede Tenant’s conduct of its business in the Premises (in which case any such modifications in Landlord’s work shall require Tenant’s consent, not unreasonably withheld or delayed) or would materially and adversely affect the exterior appearance, the structural integrity or the mechanical or other operating systems of the Premises or Building (in which case any such modifications in Tenant’s work shall require Landlord’s consent, not unreasonably withheld or delayed).

14. DEFAULT

14.1 Events of Default. The occurrence of any of the following shall constitute an event of default on the part of Tenant:

(a) Abandonment. Abandonment of the Premises. “Abandonment” is hereby defined to include, but is not limited to, any absence by Tenant from the Premises for fifteen (15) consecutive days or more while Tenant is in default, beyond any applicable notice and cure periods, under any other provision of this Lease;

(b) Nonpayment. Failure to pay, when due, any amount payable to Landlord hereunder, such failure continuing for a period of five (5) business days after written notice of such failure; provided, however, that any such notice shall be in lieu of, and not in addition to, any notice required under California Code of Civil Procedure Section 1161 et seq., as amended from time to time, so long as such notice is given in the manner required by California Code of Civil Procedure Section 1162;

(c) Other Obligations. Failure to perform any obligation, agreement or covenant under this Lease other than those matters specified in subsection (b) hereof (including, but not limited to, any breach by Tenant of the Master Declaration or Association Documents (if any) as provided in Section 15.4 below), such failure continuing for thirty (30) days after written notice of such failure; provided, however, that if such failure is curable in nature but cannot reasonably be cured within such 30-day period, then Tenant shall not be in default if and so long as, Tenant promptly (and in all events within such 30-day period) commences such cure and thereafter diligently pursues such cure to completion; and provided further, however, that any such notice shall be in lieu of and not in addition to, any notice required under California Code of Civil Procedure Section 1161 et seq., as amended from time to time, so long as such notice is given in the manner required by California Code of Civil Procedure Section 1162;

(d) General Assignment. A general assignment by Tenant for the benefit of creditors;

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(e) Bankruptcy. The filing of any voluntary petition in bankruptcy by Tenant, or the filing of an involuntary petition by Tenant’s creditors, which involuntary petition remains undischarged for a period of sixty (60) days. In the event that under applicable law the trustee in bankruptcy or Tenant has the right to affirm this Lease and continue to perform the obligations of Tenant hereunder, such trustee or Tenant shall, in such time period as may be permitted by the bankruptcy court having jurisdiction, cure all defaults of Tenant hereunder outstanding as of the date of the affirmance of this Lease and provide to Landlord such adequate assurances as may be necessary to ensure Landlord of the continued performance of Tenant’s obligations under this Lease. Specifically, but without limiting the generality of the foregoing, such adequate assurances must include assurances that the Premises continue to be operated only for the use permitted hereunder. The provisions hereof are to assure that the basic understandings between Landlord and Tenant with respect to Tenant’s use of the Center and the benefits to Landlord therefrom are preserved, consistent with the purpose and intent of applicable bankruptcy laws;

(f) Receivership. The employment of a receiver appointed by court order to take possession of substantially all of Tenant’s assets or the Premises, if such receivership remains undissolved for a period of sixty (60) days;

(g) Attachment. The attachment, execution or other judicial seizure of all or substantially all of Tenant’s assets or the Premises, if such attachment or other seizure remains undismissed or undischarged for a period of sixty (60) days after the levy thereof; or

(h) Insolvency. The admission by Tenant in writing of its inability to pay its debts as they become due, the filing by Tenant of a petition seeking any reorganization or arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation, the filing by Tenant of an answer admitting or failing timely to contest a material allegation of a petition filed against Tenant in any such proceeding or, if within sixty (60) days after the commencement of any proceeding against Tenant seeking any reorganization or arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation, such proceeding shall not have been dismissed.

14.2 Remedies Upon Tenant’s Default.

(a) Upon the occurrence of any event of default described in Section 14.1 hereof, Landlord, in addition to and without prejudice to any other rights or remedies it may have, shall have the right either (i) to terminate this Lease and recover from Tenant all damages incurred by Landlord as a result of Tenant’s default, as hereinafter provided, or (ii) to continue this Lease in effect and recover rent and other charges and amounts as they become due.

(b) Even if Tenant has breached this Lease and abandoned the Premises, this Lease shall continue in effect for so long as Landlord does not terminate Tenant’s right to possession under subsection (a) hereof and Landlord may enforce all of its rights and remedies under this Lease, including the right to recover rent as it becomes due, and Landlord, without terminating this Lease, may exercise all of the rights and remedies of a lessor under California Civil Code Section 1951.4 (lessor may continue lease in effect after lessee’s breach and

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abandonment and recover rent as it becomes due, if lessee has right to sublet or assign, subject only to reasonable limitations), or any successor Code section. Acts of maintenance, preservation or efforts to relet the Premises or the appointment of a receiver upon application of Landlord to protect Landlord’s interests under this Lease shall not constitute a termination of Tenant’s right to possession.

(c) If Landlord terminates this Lease pursuant to this Section 14.2, Landlord shall have all of the rights and remedies of a landlord provided by Section 1951.2 of the Civil Code of the State of California, or any successor Code section, which remedies include Landlord’s right to recover from Tenant (i) the worth at the time of award of the unpaid rent and additional rent which had been earned at the time of termination, (ii) the worth at the time of award of the amount by which the unpaid rent and additional rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided, (iii) the worth at the time of award of the amount by which the unpaid rent and additional rent for the balance of the term after the time of award exceeds the amount of such rental loss that Tenant proves could be reasonably avoided, and (iv) any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant’s failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom, including, but not limited to, the cost of recovering possession of the Premises, expenses of reletting, including necessary repair, renovation and alteration of the Premises, reasonable attorneys’ fees, and other reasonable costs. The “worth at the time of award” of the amounts referred to in clauses (i) and (ii) above shall be computed by allowing interest at ten percent (10%) per annum from the date such amounts accrued to Landlord. The “worth at the time of award” of the amounts referred to in clause (iii) above shall be computed by discounting such amount at one percentage point above the discount rate of the Federal Reserve Bank of San Francisco at the time of award.

14.3 Remedies Cumulative. All rights, privileges and elections or remedies of Landlord contained in this Article 14 are cumulative and not alternative to the extent permitted by law and except as otherwise provided herein.

15. SUBORDINATION, ATTORNMENT AND SALE

15.1 Subordination to Mortgage. This Lease, and any sublease entered into by Tenant under the provisions of this Lease, shall be subject and subordinate to any ground lease, mortgage, deed of trust, sale/leaseback transaction or any other hypothecation for security now or hereafter placed upon the Premises, the Building, the Center, or any of them, and the rights of any assignee of Landlord or of any ground lessor, mortgagee, trustee, beneficiary or leaseback lessor under any of the foregoing, and to any and all advances made on the security thereof and to all renewals, modifications, consolidations, replacements and extensions thereof; provided, however, that such subordination in the case of any future ground lease, mortgage, deed of trust, sale/leaseback transaction or any other hypothecation for security placed upon the Premises, the Building, the Center, or any of them shall be conditioned on Tenant’s receipt from the ground lessor, mortgagee, trustee, beneficiary or leaseback lessor of a Non-Disturbance Agreement in a form reasonably acceptable to Tenant (i) confirming that so long as Tenant is not in material

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default hereunder beyond any applicable cure period (for which purpose the occurrence and continuance of any event of default under Section 14.1 hereof shall be deemed to be “material”), Tenant’s rights hereunder shall not be disturbed by such person or entity and (ii) agreeing that the benefit of such Non-Disturbance Agreement shall be transferable to any transferee under a Permitted Transfer and to any other assignee or subtenant that is acceptable to the ground lessor, mortgagee, trustee, beneficiary or leaseback lessor at the time of transfer. If any mortgagee, trustee, beneficiary, ground lessor, sale/leaseback lessor or assignee elects to have this Lease be an encumbrance upon the Center prior to the lien of its mortgage, deed of trust, ground lease or leaseback lease or other security arrangement and gives notice thereof to Tenant, this Lease shall be deemed prior thereto, whether this Lease is dated prior or subsequent to the date thereof or the date of recording thereof. Tenant, and any sublessee, shall execute such documents as may reasonably be requested by any mortgagee, trustee, beneficiary, ground lessor, sate/leaseback lessor or assignee to evidence the subordination herein set forth, subject to the conditions set forth above, or to make this Lease prior to the lien of any mortgage, deed of trust, ground lease, leaseback lease or other security arrangement, as the case may be. Upon any default by Landlord in the performance of its obligations under any mortgage, deed of trust, ground lease, leaseback lease or assignment, provided that Tenant has received such a Non-Disturbance Agreement from the applicable party, Tenant (and any sublessee) shall, notwithstanding any subordination hereunder, attorn to the mortgagee, trustee, beneficiary, ground lessor, leaseback lessor or assignee thereunder upon demand and become the tenant of the successor in interest to Landlord, at the option of such successor in interest, and shall execute and deliver any instrument or instruments confirming the attornment herein provided for. Landlord represents and warrants to Tenant that as of the date of this Lease, neither the Premises, the Building nor the Center is subject to any existing ground lease, mortgage, deed of trust, sale/leaseback transaction or any other hypothecation for security.

15.2 Sale of Landlord’s Interest. Upon sale, transfer or assignment of Landlord’s entire interest in the Building and the Center, Landlord shall be relieved of its obligations hereunder with respect to liabilities accruing from and after the date of such sale, transfer or assignment.

15.3 Estoppel Certificates. Tenant or Landlord (the “responding party”), as applicable, shall at any time and from time to time, within ten (10) business days after written request by the other party (the “requesting party”), execute, acknowledge and deliver to the requesting party a certificate in writing stating: (i) that this Lease is unmodified and in full force and effect, or if there have been any modifications, that this Lease is in full force and effect as modified and stating the date and the nature of each modification; (ii) the date to which rental and all other sums payable hereunder have been paid; (iii) that the requesting party is not in default in the performance of any of its obligations under this Lease, that the certifying party has given no notice of default to the requesting party and that no event has occurred which, but for the expiration of the applicable time period, would constitute an event of default hereunder, or if the responding party alleges that any such default, notice or event has occurred, specifying the same in reasonable detail; and (iv) such other matters as may reasonably be requested by the requesting party or by any institutional lender, mortgagee, trustee, beneficiary, ground lessor, sale/leaseback lessor or prospective purchaser of the Center, or prospective sublessee or assignee

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of this Lease. Any such certificate provided under this Section 15.3 may be relied upon by any lender, mortgagee, trustee, beneficiary, assignee or successor in interest to the requesting party, by any prospective purchaser, by any purchaser on foreclosure or sale, by any grantee under a deed in lieu of foreclosure of any mortgage or deed of trust on the Property, by any subtenant or assignee, or by any other third party. Failure to execute and return within the required time any estoppel certificate requested hereunder, if such failure continues for five (5) days after a second written request by the requesting party for such estoppel certificate, shall be deemed to be an admission of the truth of the matters set forth in the form of certificate submitted to the responding party for execution.

15.4 Subordination to CC&R’s. This Lease, and any permitted sublease entered into by Tenant under the provisions of this Lease, and the interests in real property conveyed hereby and thereby shall be subject and subordinate (a) to any declarations of covenants, conditions and restrictions or other recorded restrictions affecting the Center or any portion thereof from time to time, provided that the terms of such declarations or restrictions are reasonable (or, to the extent they are not reasonable, are mandated by applicable law), do not materially impair Tenant’s ability to conduct the uses permitted hereunder on the Premises and in the Center, and do not discriminate against Tenant relative to other similarly situated tenants occupying the portion(s) of the Center covered by such declarations or restrictions, (b) to the Master Declaration of Covenants, Conditions and Restrictions for Seaport Centre, San Mateo County, California, dated October 5, 1987 and recorded on October 6, 1987 as Instrument No. 87153374, Official Records of San Mateo County, as amended from time to time (the “Master Declaration”), the provisions of which Master Declaration are an integral part of this Lease, and (c) to the Articles, Bylaws and Association Rules (if any), as amended from time to time, of the Seaport Centre Owners’ Association created under the Master Declaration (the “Association Documents”). Any failure by Tenant to comply with the applicable terms of the Master Declaration and the Association Documents (if any) shall be a default under this Lease. Tenant agrees to execute, upon request by Landlord, any documents reasonably required from time to time to evidence the foregoing subordination.

15.5 Mortgagee Protection. If, following a default by Landlord under any mortgage, deed of trust, ground lease, leaseback lease or other security arrangement covering the Building, the Center, or any portion of them, the Building and/or the Center, as applicable, is acquired by the mortgagee, beneficiary, master lessor or other secured party, or by any other successor owner, pursuant to a foreclosure, trustee’s sale, sheriff’s sale, lease termination or other similar procedure (or deed in lieu thereof), then any such person or entity so acquiring the Building and/or the Center shall not be:

(a) liable for any act or omission of a prior landlord or owner of the Center (including, but not limited to, Landlord), except that such person or entity shall be liable for the cure or correction of any continuing defaults, such as a continuing failure to repair or maintain;

(b) subject to any offsets or defenses that Tenant may have against any prior landlord or owner of the Center (including, but not limited to, Landlord);

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(c) bound by any rent or additional rent that Tenant may have paid in advance to any prior landlord or owner of the Center (including, but not limited to, Landlord) for a period in excess of one month, or by any security deposit, cleaning deposit or other prepaid charge that Tenant may have paid in advance to any prior landlord or owner (including, but not limited to, Landlord), except to the extent such deposit or prepaid amount has been expressly turned over to or credited to the successor owner thus acquiring the Center;

(d) liable for any warranties or representations of any nature whatsoever, whether pursuant to this Lease or otherwise, by any prior landlord or owner of the Center (including, but not limited to, Landlord) with respect to the use, construction, zoning, compliance with laws, title, habitability, fitness for purpose or possession, or physical condition (including, without limitation, environmental matters) of the Building or the Center, except for any then remaining obligations of Landlord arising under Section 2.3 of the Lease or under the Workletter; or

(e) liable to Tenant in any amount beyond the interest of such mortgagee, beneficiary, master lessor or other secured party or successor owner in the Center as it exists from time to time, and in the proceeds from any disposition of such interest, it being the intent of this provision that Tenant shall look solely to the interest of any such mortgagee, beneficiary, master lessor or other secured party or successor owner in the Center for the payment and discharge of the landlord’s obligations under this Lease and that such mortgagee, beneficiary, master lessor or other secured party or successor owner shall have no separate personal liability for any such obligations.

16. SECURITY

16.1 Deposit. Tenant shall have no obligation to provide a security deposit in connection with this Lease.

17. MISCELLANEOUS

17.1 Notices. All notices, consents, waivers and other communications which this Lease requires or permits either party to give to the other shall be in writing and shall be deemed given when delivered personally (including delivery by private same-day or overnight courier or express delivery service) or by telecopier with mechanical confirmation of transmission, effective upon personal delivery to or refusal of delivery by the recipient (in the case of personal delivery by any of the means described above) or, except with respect to notices of a party’s failure to perform its obligations under this Lease, upon telecopier transmission during normal business hours at the recipient’s office (in the case of telecopier transmission, with any transmission outside of normal business hours being effective as of the beginning of the first business day commencing after the time of actual transmission) to the parties at their respective addresses as follows:

To Tenant:	(until the Rent Commencement Date)
	OncoMed Pharmaceuticals, Inc.
	265 N. Whisman Road

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	Mountain View, CA 94043 Attn: Chief Executive Officer Telecopier: (650) 938-4570
	(after the Rent Commencement Date)
	OncoMed Pharmaceuticals, Inc.
	800 Chesapeake Drive
	Redwood City, CA 94063
	Attn: Chief Executive Officer
	Telecopier: (650) 938-4570
with a copy to:	Holme, Roberts & Owen LLP
	560 Mission Street, 25th Floor
	San Francisco, CA 94105-2994
	Attn: Kenneth R. Whiting, Jr.
	Telecopier: (415) 268-1999
To Landlord:	Slough Redwood City, LLC
	c/o Slough Estates USA Inc.
	444 North Michigan Avenue, Suite 3230
	Chicago, IL 60611
	Attn: Randy Rohner
	Telecopier: (312) 755-0717
with a copy to:	Britannia Management Services, Inc.
	555 Twelfth Street, Suite 1650
	Oakland, CA 94607
	Attn: Magdalena Shushan
	Telecopier: (510) 763-6262
and a copy to:	Folger Levin & Kahn LLP
	Embarcadero Center West
	275 Battery Street, 23rd Floor
	San Francisco, CA 94111
	Attn: Donald E. Kelley, Jr.
	Telecopier: (415) 986-2827

or to such other address(es) as may be contained in a notice of address change given by either party to the other pursuant to this Section, effective no earlier than fifteen (15) days after delivery of such notice to the receiving party. Rental payments and other sums required by this Lease to be paid by Tenant shall be delivered to Landlord in care of Britannia Management Services, Inc., 555 Twelfth Street, Suite 1650, Oakland, CA 94607, or at such other address as Landlord may from time to time specify in writing to Tenant, and shall be deemed to be paid only upon actual receipt.

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17.2 Successors and Assigns. The obligations of this Lease shall run with the land, and this Lease shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that the original Landlord named herein and each successive Landlord under this Lease shall be liable only for obligations accruing during the period of its ownership of the Center, and any liability for obligations accruing after termination of such ownership shall terminate as of the date of such termination of ownership and shall pass to the successor lessor.

17.3 No Waiver. The failure of Landlord or Tenant to seek redress for violation, or to insist upon the strict performance, of any covenant or condition of this Lease shall not be deemed a waiver of such violation, or prevent a subsequent act which would originally have constituted a violation from having all the force and effect of an original violation.

17.4 Severability. If any provision of this Lease or the application thereof is held to be invalid or unenforceable, the remainder of this Lease or the application of such provision to persons or circumstances other than those as to which it is invalid or unenforceable shall not be affected thereby, and each of the provisions of this Lease shall be valid and enforceable, unless enforcement of this Lease as so invalidated would be unreasonable or grossly inequitable under all the circumstances or would materially frustrate the purposes of this Lease.

17.5 Litigation Between Parties. In the event of any litigation or other dispute resolution proceedings between the parties hereto arising out of or in connection with this Lease, the prevailing party shall be reimbursed for all reasonable costs, including, but not limited to, reasonable accountants’ fees and attorneys’ fees, incurred in connection with such proceedings (including, but not limited to, any appellate proceedings relating thereto) or in connection with the enforcement of any judgment or award rendered in such proceedings. “Prevailing party” within the meaning of this Section shall include, without limitation, a party who dismisses an action for recovery hereunder in exchange for payment of the sums allegedly due, performance of covenants allegedly breached or consideration substantially equal to the relief sought in the action.

17.6 Surrender. A voluntary or other surrender of this Lease by Tenant, or a mutual termination thereof between Landlord and Tenant, shall not result in a merger but shall, at the option of Landlord, operate either as an assignment to Landlord of any and all existing subleases and subtenancies, or a termination of all or any existing subleases and subtenancies. This provision shall be contained in any and all assignments or subleases made pursuant to this Lease.

17.7 Interpretation. The provisions of this Lease shall be construed as a whole, according to their common meaning, and not strictly for or against Landlord or Tenant. The captions preceding the text of each Section and subsection hereof are included only for convenience of reference and shall be disregarded in the construction or interpretation of this Lease.

17.8 Entire Agreement. This written Lease, together with the exhibits hereto, contains all the representations and the entire understanding between the parties hereto with respect to the subject matter hereof. Any prior correspondence, memoranda or agreements are replaced in total

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by this Lease and the exhibits hereto. This Lease may be modified only by an agreement in writing signed by each of the parties.

17.9 Governing Law. This Lease and all exhibits hereto shall be construed and interpreted in accordance with and be governed by all the provisions of the laws of the State of California.

17.10 No Partnership. The relationship between Landlord and Tenant is solely that of a lessor and lessee. Nothing contained in this Lease shall be construed as creating any type or manner of partnership, joint venture or joint enterprise with or between Landlord and Tenant.

17.11 Financial Information. From time to time Tenant shall promptly provide directly to prospective lenders and purchasers of the Center designated by Landlord such financial information pertaining to the financial status of Tenant as Landlord may reasonably request; provided, Tenant shall be permitted to provide such financial information in a manner which Tenant deems reasonably necessary to protect the confidentiality of such information. In addition, from time to time, Tenant shall provide Landlord with such financial information pertaining to the financial status of Tenant as Landlord may reasonably request. Landlord agrees that all financial information supplied to Landlord by Tenant shall be treated as confidential material, and shall not be disseminated to any party or entity (including any entity affiliated with Landlord) without Tenant’s prior written consent, except that Landlord shall be entitled to provide such information, subject to reasonable precautions to protect the confidential nature thereof, (i) to Landlord’s partners and professional advisors, solely to use in connection with Landlord’s execution and enforcement of this Lease, and (ii) to prospective lenders and/or purchasers of the Center, solely for use in connection with their bona fide consideration of a proposed financing or purchase of the Center, provided that such prospective lenders and/or purchasers are not then engaged in businesses directly competitive with the business then being conducted by Tenant. For purposes of this Section, without limiting the generality of the obligations provided herein, it shall be deemed reasonable for Landlord to request copies of Tenant’s most recent audited annual financial statements, or, if audited statements have not been prepared, unaudited financial statements for Tenant’s most recent fiscal year, accompanied by a certificate of Tenant’s chief financial officer that such financial statements fairly present Tenant’s financial condition as of the date(s) indicated. Notwithstanding any other provisions of this Section 17.11, during any period in which Tenant has outstanding a class of publicly traded securities and is filing with the Securities and Exchange Commission, on a regular basis, Forms 10Q and 10K and any other periodic filings required under the Securities Exchange Act of 1934, as amended, it shall constitute sufficient compliance under this Section 17.11 for Tenant to furnish Landlord with copies of such periodic filings substantially concurrently with the filing thereof with the Securities and Exchange Commission.

Landlord and Tenant recognize the need of Tenant to maintain the confidentiality of information regarding its financial status and the need of Landlord to be informed of, and to provide to prospective lenders and purchasers of the Center financial information pertaining to, Tenant’s financial status. Landlord and Tenant agree to cooperate with each other in achieving these needs within the context of the obligations set forth in this Section.

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17.12 Costs. If Tenant requests the consent of Landlord under any provision of this Lease for any act that Tenant proposes to do hereunder, including, without limitation, assignment or subletting of the Premises, Tenant shall, as a condition to doing any such act and the receipt of such consent, reimburse Landlord promptly for any and all reasonable costs and expenses incurred by Landlord in connection therewith, including, without limitation, reasonable attorneys’ fees.

17.13 Time. Time is of the essence of this Lease, and of every term and condition hereof.

17.14 Rules and Regulations. Tenant shall observe, comply with and obey, and shall cause its employees, agents and, to the best of Tenant’s ability, invitees to observe, comply with and obey such reasonable rules and regulations for the safety, care, cleanliness, order and use of the Building and the Center as Landlord may promulgate and deliver to Tenant from time to time, provided that such rules and regulations are reasonable (or, to the extent they are not reasonable, are mandated by applicable law), do not materially impair Tenant’s ability to conduct the uses permitted hereunder on the Premises and in the Center, and do not discriminate against Tenant relative to other similarly situated tenants occupying portions of the Center.

17.15 Brokers. Landlord agrees to pay a brokerage commission in connection with the consummation of this Lease to CB Richard Ellis, Inc., which has acted as dual representative for both Landlord and Tenant, in accordance with a separate written agreement. Each party represents and warrants that no other broker participated in the consummation of this Lease and agrees to indemnify, defend and hold the other party harmless against any liability, cost or expense, including, without limitation, reasonable attorneys’ fees, arising out of any claims for brokerage commissions or other similar compensation in connection with any conversations, prior negotiations or other dealings by the indemnifying party with any other broker.

17.16 Memorandum of Lease. At any time during the term of this Lease, either party, at its sole expense, shall be entitled to record a memorandum of this Lease and, if either party so requests, both parties agree to cooperate in the preparation, execution, acknowledgment and recordation of such document in reasonable form. If such a memorandum of lease is recorded, then upon expiration or termination of this Lease, Tenant agrees promptly to execute, acknowledge and deliver to Landlord, upon written request by Landlord, a Termination of Memorandum of Lease in such form as Landlord may reasonably request, for the purpose of terminating any continuing effect of the previously recorded memorandum of lease as a cloud upon title to the Center.

17.17 Organizational Authority. Each party to this Lease represents and warrants that the person signing this Lease on behalf of such party is fully authorized to do so and, by so doing, to bind such party.

17.18 Execution and Delivery. Submission of this Lease for examination or signature by Tenant does not constitute an agreement or reservation of or option for lease of the Premises. This instrument shall not be effective or binding upon either party, as a lease or otherwise, until executed and delivered by both Landlord and Tenant. This Lease may be executed in one or

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more counterparts and by separate parties on separate counterparts, but each such counterpart shall constitute an original and all such counterparts together shall constitute one and the same instrument.

17.19 Survival. Without limiting survival provisions which would otherwise be implied or construed under applicable law, the provisions of Sections 2.5, 5.4, 7.2, 7.3, 7.4, 8.2(b) and (c), 9.6, 10.6, 17.5, 17.11 and 17.16 hereof shall survive the termination of this Lease with respect to matters occurring prior to the expiration of this Lease.

17.20 Parking. Landlord agrees that the Common Areas, taken as a whole, shall include parking in amounts sufficient to satisfy the minimum parking requirements of the City of Redwood City applicable to the Center from time to time; that Tenant shall have the non-exclusive and non-reserved use of approximately three (3) automobile parking stalls per 1,000 rentable square feet of space in the Premises; and that there shall be no additional cost or charge to Tenant for the nonexclusive, non-reserved use of such parking by Tenant and its employees and invitees. Landlord represents to Tenant that the existing parking in the Center consists of approximately 3.0 spaces per 1,000 square feet. Landlord shall not agree with any other tenant of the Center that such tenant may have the use of parking spaces in excess of such tenant’s proportional share of the available parking spaces in the Center as it exists from time to time.

17.21 Warrant. Concurrently with the mutual execution of this Lease, Tenant shall issue and deliver to Landlord or Landlord’s designees (which may be any members, partners, shareholders or affiliates of Landlord or any affiliates of any such members, partners, shareholders or affiliates of Landlord) a warrant or warrants registered in the name of Landlord or Landlord’s designee(s) for the acquisition of an aggregate of Fifty-Five Thousand (55,000) shares of Tenant’s Series B preferred stock, which warrant(s) shall be in the form of Exhibit D attached hereto and incorporated herein by this reference. The warrant(s) shall have an exercise price per share equal to one hundred twenty-five percent (125%) of the price per share at which Tenant’s Series B preferred stock is issued in its first issuance to one or more institutional investors, and shall be exercisable for a period beginning on the date of issuance and ending on the seventh (7^th) anniversary of the date of issuance, subject to earlier termination upon certain events as specified in the form of warrant. If no Series B preferred stock has been issued by Tenant to one or more institutional investors within eighteen (18) months after the mutual execution of this Lease, then as set forth in the form of warrant attached hereto as Exhibit D, without further action by Tenant or by the holder of the warrant issued hereunder, such warrant shall automatically be deemed to entitle the holder to acquire, in lieu of such Series B preferred stock, an aggregate of Fifty-Five Thousand (55,000) shares of Tenant’s Series A preferred stock, with an exercise price per share equal to one hundred twenty-five percent (125%) of the price per share at which Tenant’s Series A preferred stock was previously issued to institutional investors. Landlord hereby designates its affiliate Kwacker Limited, a corporation organized and existing under the laws of England, as the entity to which Landlord’s warrant(s) hereunder should be issued in satisfaction of the foregoing provisions.

17.22 Approvals. Whenever this Lease requires an approval, consent, designation, determination, selection or judgment either by Landlord or Tenant, then except to the extent a

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different standard is expressly provided in the applicable provision where such requirement is set forth, such approval, consent, designation, determination, selection or judgment shall not be unreasonably withheld, conditioned or delayed.

[rest of page intentionally left blank]

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IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the day and year first set forth above.

“Landlord”			“Tenant”
SLOUGH REDWOOD CITY, LLC, a Delaware limited liability company			ONCOMED PHARMACEUTICALS, INC., a Delaware corporation
By:	Slough Estates USA Inc., a Delaware corporation, Its Manager		By:	/s/ Paul J. Hastings
			Its:	President & CEO
	By:	/s/ Jonathan M. Bergschneider	By:
		Jonathan M. Bergschneider Vice President	Its:

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EXHIBITS

EXHIBIT A-1	Site Plan (The Center)
EXHIBIT A-2	Building Plan/Service Annex
EXHIBIT B	Workletter
EXHIBIT C	Form of Acknowledgment of Rent Commencement Date
EXHIBIT D	Form of Warrant

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EXHIBIT A-1

SITE PLAN (THE CENTER)

[See attached two (2) pages.]

EXHIBIT A-2 TO LEASE

EXHIBIT A-2 TO LEASE

EXHIBIT B

WORKLETTER

[See attached.]

EXHIBIT B

WORKLETTER

This Workletter (“Workletter”) constitutes part of the Lease dated as of May 30, 2006 (the “Lease”) between SLOUGH REDWOOD CITY, LLC, a Delaware limited liability company (“Landlord”), and ONCOMED PHARMACEUTICALS, INC., a Delaware corporation (“Tenant”). The terms of this Workletter are incorporated in the Lease for all purposes.

1. Defined Terms. As used in this Workletter, the following capitalized terms have the following meanings:

(a) Approved TI Plans: As defined in Paragraph 2(a) hereof, plans and specifications prepared by the TI Architect for the Tenant Improvements and approved by the applicable parties in accordance with Paragraph 2 of this Workletter, subject to further modification from time to time to the extent provided in and in accordance with such Paragraph 2.

(b) Base Building: The existing Building shell and existing interior improvements which are to be modified and upgraded pursuant to Landlord’s Section 2.3 Work and delivered to Tenant, at Landlord’s expense, subject to such demolition (if any) of existing improvements and such construction of additional improvements as are required to be performed in connection with the construction of the Tenant Improvements. A detailed but not necessarily exhaustive description of the Base Building (including both existing elements and modifications or improvements to be constructed as part of Landlord’s Section 2.3 Work) is set forth in Schedule B-1 attached hereto and incorporated herein by this reference.

(c) Cost of Improvement: See definition in Paragraph 2(c) hereof.

(d) Final TI Working Drawings: See definition in Paragraph 2(a) hereof.

(e) Improvements: Collectively, Landlord’s Section 2.3 Work and the Tenant Improvements to be constructed pursuant to this Workletter.

(f) Landlord Delay: Any of the following types of delay in the completion of construction of Tenant’s Work (if any), but in each instance only to the extent that any of the following has actually and proximately caused substantial completion of Tenant’s Work to be delayed beyond the later of February 7, 2007 or the date by which the applicable Tenant’s Work would have been completed but for such delay:

(i) Any delay resulting from Landlord’s failure to furnish, in a timely manner, information reasonably requested by Tenant or by the TI Architect or TI General Contractor in connection with the design or construction of Tenant’s Work, or from Landlord’s failure to approve in a timely manner any matters requiring approval by Landlord; or

(ii) Any delay caused by Landlord (or Landlord’s contractors, agents or employees) materially interfering with the performance of Tenant’s Work.

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(g) Landlord’s Architect: DES Architects/Engineers, or any other architect selected by Landlord in its sole discretion, with respect to Landlord’s Section 2.3 Work.

(h) Landlord’s General Contractor: Hathaway Dinwiddie Construction Company, or any other general contractor selected by Landlord in its sole discretion, with respect to Landlord’s Section 2.3 Work.

(i) Landlord’s Section 2.3 Work: See definition in Section 2.3(a) of the Lease.

(j) Landlord’s TI Work: The Tenant Improvements to be constructed by Landlord pursuant to this Workletter.

(k) Landlord’s Work: Collectively, Landlord’s Section 2.3 Work and Landlord’s TI Work.

(l) Project Manager: Project Management Advisors, Inc., or any other project manager designated by Landlord in its sole discretion from time to time to act in an oversight, project management or other similar capacity on behalf of Landlord in connection with the design and/or construction of Landlord’s Section 2.3 Work and the Tenant Improvements.

(m) Punch List Work: Minor corrections of construction or decoration details, and minor mechanical adjustments, that are required in order to cause any applicable portion of the Tenant Improvements as constructed to conform to the Approved TI Plans in all material respects and that do not materially interfere with Tenant’s use or occupancy of the Building and the Property.

(n) Substantial Completion Certificate: See definition in Paragraph 3(a) hereof.

(o) Tenant Change Request: See definition in Paragraph 2(e)(ii) hereof.

(p) Tenant Delay: Any of the following types of delay in the completion of construction of Landlord’s Work, but in each instance, only to the extent that any of the following has actually and proximately caused substantial completion of Landlord’s Work to be delayed beyond the later of February 7, 2007 or the date by which Landlord’s Work would have been completed but for such delay:

(i) Any delay resulting from Tenant’s failure to furnish, in a timely manner, information reasonably requested by Landlord or by Project Manager in connection with the design or construction of Landlord’s Work, or from Tenant’s failure to approve in a timely manner any matters requiring approval by Tenant;

(ii) Any delay resulting from Tenant Change Requests initiated by Tenant, including any delay resulting from the need to revise any drawings or obtain further governmental approvals as a result of any such Tenant Change Request; or

(iii) Any delay of any other kind or nature caused by Tenant (or Tenant’s contractors, agents or employees) materially interfering with the performance of Landlord’s Work.

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(q) Tenant Improvements: The improvements to or within the Building (excluding the Base Building and Landlord’s Section 2.3 Work) shown on the Approved TI Plans from time to time and to be constructed by Tenant and/or Landlord, as applicable, pursuant to the Lease and this Workletter. A detailed but not necessarily exhaustive description of certain elements that the parties contemplate as being included within the Tenant Improvements is set forth in Schedule B-2 attached hereto and incorporated herein by this reference.

(r) Tenant’s Work: All of the Tenant Improvements (if any) which Landlord and Tenant mutually agree in writing shall be constructed by Tenant pursuant to this Workletter, and such other materials and improvements (if any) as Tenant deems necessary or appropriate for Tenant’s initial use and occupancy of the Building. The parties presently contemplate that substantially all of the Tenant Improvements will be constructed by Landlord and will constitute Landlord’s TI Work under this Workletter. However, in anticipation of the possibility that Tenant may perform some equipment installations or other minor improvements in the Premises during the initial construction phase, the definition of “Tenant’s Work” is retained and the provisions of this Workletter pertaining to such Tenant’s Work, as well as the provisions of Article 7 of the Lease, shall govern the performance of such work by Tenant. The parties acknowledge, nevertheless, that the foregoing allocation of responsibilities with respect to Tenant Improvements is subject to further discussion and modification by mutual agreement of the parties.

(s) TI Architect: The architect for the Landlord’s TI Work and for Tenant’s Work (if any), which architect shall be mutually selected and approved by Landlord and Tenant, such approval not to be unreasonably withheld, conditioned or delayed by either party. Upon such mutual approval, the TI Architect shall be engaged by Landlord to design the Tenant Improvements. Landlord and Tenant hereby mutually select and approve DES Architects + Engineers as the TI Architect.

(t) TI General Contractor: The general contractor for the Landlord’s TI Work and for Tenant’s Work (if any), which general contractor shall be mutually selected and approved by Landlord and Tenant, such approval not to be unreasonably withheld, conditioned or delayed by either party. Upon such mutual approval, the TI General Contractor shall be engaged by Landlord to construct the Tenant Improvements constituting Landlord’s TI Work and shall be engaged by Tenant to construct the Tenant Improvements constituting Tenant’s Work (if any). Notwithstanding Tenant’s right to approve and mutually select the TI General Contractor, the TI General Contractor with respect to Landlord’s TI Work shall be the contractor of Landlord only, and Tenant shall have no liability to such TI General Contractor. Landlord and Tenant hereby mutually select and approve Hathaway Dinwiddie Construction Company as the TI General Contractor with respect to Landlord’s TI Work. Landlord shall cause the TI General Contractor to construct Landlord’s TI Work on a cost of work plus fee basis, with a guaranteed maximum price reasonably approved by Tenant and with such fee (for overhead and profit) being limited to 2.1% of the total direct cost of construction, general conditions and insurance relating to Landlord’s TI Work.

(u) Unavoidable Delays: Delays due to acts of God, acts of public agencies, labor disputes, strikes, fires, freight embargoes, rainy or stormy weather, inability (despite the exercise of reasonable diligence) to obtain supplies, materials, fuels or permits, delays of contractors or

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subcontractors, or other causes or contingencies (excluding financial inability) beyond the reasonable control of Landlord or Tenant, as applicable.

(v) Capitalized terms not otherwise defined in this Workletter shall have the definitions set forth in the Lease.

2. Plans, Cost of Improvements and Construction. Landlord and Tenant shall comply with the procedures set forth in this Paragraph 2 in preparing, delivering and approving matters relating to the Tenant Improvements.

(a) Plans, Drawings and Specifications for Landlord’s Section 2.3 Work. Landlord shall promptly and diligently (subject to Tenant Delays and Unavoidable Delays) prepare or cause to be prepared all necessary plans, drawings and specifications for Landlord’s Section 2.3 Work. In the course thereof, Landlord shall use reasonable efforts to coordinate the design and construction of Landlord’s Section 2.3 Work with Tenant’s final interior layout and with the final plans and specifications for the Tenant Improvements, shall provide copies of the proposed plans, drawings and specifications for Landlord’s Section 2.3 Work to Tenant and shall consult reasonably and in good faith with Tenant regarding such plans, drawings and specifications, and regarding any changes therein proposed to be made by Landlord from time to time. Nevertheless, Landlord shall have the final authority with respect to the design of Landlord’s Section 2.3 Work and with respect to all plans, drawings and specifications relating thereto, and shall not be required to obtain Tenant’s consent to or approval of such plans, drawings or specifications or of any changes therein made by Landlord from time to time.

(b) Approved Plans and Working Drawings for Tenant Improvements. Tenant shall promptly and diligently (subject to Landlord Delays and Unavoidable Delays) develop with TI Architect a space plan for the Tenant Improvements and cause TI Architect to prepare proposed schematic plans for the Tenant Improvements. Tenant shall deliver copies of such proposed schematic plans to Landlord for Landlord’s approval, which shall not be unreasonably withheld, conditioned or delayed. Following mutual approval of such proposed schematic plans by Landlord and by Tenant (as so approved, the “Approved TI Plans”), Tenant shall then cause to be prepared, promptly and diligently (assuming timely delivery by Landlord of any information and decisions required to be furnished or made by Landlord in order to permit preparation of final working drawings), final detailed working drawings and specifications for the Tenant Improvements, including (without limitation) any applicable life safety, mechanical, electrical and plumbing working drawings and final architectural drawings (collectively, “Final TI Working Drawings”), which Final TI Working Drawings shall substantially conform to the Approved TI Plans. Tenant shall deliver copies of the Final TI Working Drawings to Landlord for Landlord’s approval, which shall not be unreasonably withheld, conditioned or delayed. Landlord shall promptly and diligently either approve Tenant’s proposed schematic plans or proposed Final TI Working Drawings, as applicable, or set forth in writing with particularity any changes necessary to bring the aspects of such proposed schematic plans or proposed Final TI Working Drawings into a form which will be reasonably acceptable to Landlord or, in the case of - the Final TI Working Drawings, into substantial conformity with the Approved TI Plans. Notwithstanding any other provisions of this paragraph, Landlord reserves the right to condition its approval of the proposed schematic plans and/or Final TI Working Drawings upon reasonable specific modifications to reasonably facilitate future uses of the Building. Upon approval of the

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Final TI Working Drawings by Landlord and Tenant, the Final TI Working Drawings shall be deemed to be incorporated in and considered part of the Approved TI Plans, superseding (to the extent of any inconsistencies) any inconsistent features of the previously existing Approved TI Plans.

(c) Approved Plans and Working Drawings for Any Other Tenant’s Work. To the extent Tenant wishes to perform, in the course of the initial build-out of the Premises, any alterations, additions or improvements which are not part of the Tenant Improvements, Tenant shall proceed in the same manner set forth in Paragraph 2(b) above to cause plans, specifications and working drawings for such alterations, additions and improvements to be prepared and delivered to Landlord for approval (which approval shall not be unreasonably withheld, conditioned or delayed by Landlord).

(d) Cost of Improvements. “Cost of Improvement” shall mean, with respect to any item or component for which a cost must be determined in order to allocate such cost, or an increase in such cost, to Landlord and/or Tenant pursuant to this Workletter, the sum of the following (unless otherwise agreed in writing by Landlord and Tenant with respect to any specific item or component or any category of items or components): (i) all sums paid to contractors or subcontractors for labor and materials furnished in connection with construction of such item or component; (ii) all costs, expenses, payments, fees and charges (other than penalties) paid or incurred to or at the direction of any city, county or other governmental or quasi-governmental authority or agency which are required to be paid in order to obtain all necessary governmental permits, licenses, inspections and approvals relating to construction of such item or component; (iii) engineering and architectural fees for services rendered in connection with the design and construction of such item or component (including, but not limited to, the applicable Architect for such item or component and an electrical engineer, mechanical engineer and civil engineer); (iv) sales and use taxes; (v) testing and inspection costs; (vi) the cost of power, water and other utility facilities and the cost of collection and removal of debris required in connection with construction of such item or component; (vii) all other “hard” and “soft” costs incurred in the construction of such item or component in accordance with the applicable Approved TI Plans (if applicable) and this Workletter; and (viii) a reasonable allocation of a portion of the project management fee payable to Project Manager in connection with Project Manager’s activities on behalf of Landlord as set forth in Paragraph 2(h) below.

(i) Notwithstanding anything to the contrary in this Workletter, Cost of Improvement allocable to Tenant shall not include, Landlord shall be solely responsible for, and the Tenant Improvement Allowance shall not be used for any of the following: (A) costs incurred to remove from the Premises, the Building and/or the Center any hazardous substances, hazardous wastes and pollutants existing therein prior to the Rent Commencement Date, except to the extent (if any) that such hazardous substances, hazardous wastes or pollutants were brought onto or released onto the Premises, the Building or the Center through the acts or omissions of Tenant or its employees, agents or contractors; (B) costs incurred to perform Landlord’s Section 2.3 Work (including, without limitation, any ADA or other legal compliance costs associated with or triggered by Landlord’s Section 2.3 Work, except to the extent [if any] otherwise expressly provided in Section 2.3(c) of the Lease); (C) costs for improvements which are not shown on or described in the Approved TI Plans, unless otherwise approved by Tenant; (D) attorneys’ fees incurred by Landlord in connection with the negotiation of construction

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contracts, and attorneys’ fees, experts’ fees and other costs incurred by Landlord in connection with disputes with third parties; (E) interest and other financing costs incurred by Landlord in connection with any financing of construction costs or Tenant Improvements; (F) costs of Landlord’s TI Work incurred as a consequence of any delay (other than Unavoidable Delay or Tenant Delay), construction defects, or default by any contractor or subcontractor performing any part of Landlord’s TI Work; (G) costs actually recovered by Landlord on account of warranties and insurance (for which purpose Landlord agrees to pursue, with reasonable diligence, recovery of any amounts which appear to be reasonably recoverable on account of warranties and insurance); (H) restoration costs in excess of insurance proceeds recovered with respect to any casualty occurring in the course of construction of Landlord’s TI Work; (I) penalties and late charges attributable to Landlord’s failure to pay, when due, construction costs for which Landlord is responsible under this Workletter, including (but not limited to) any failure to make timely disbursements of the Tenant Improvement Allowance following satisfaction of all applicable conditions to the making of such disbursements; (J) off-site management or other general overhead costs incurred by Landlord; (K) construction management fees and charges paid to Landlord, to any affiliate of Landlord, or to any Project Manager for Landlord, except for the Project Manager’s fee described in Paragraph 2(h) of this Workletter; and (L) wages, labor and/or overhead for overtime or premium time, except to the extent such charges can be accommodated within the approved budget and guaranteed maximum price construction contract or are expressly provided for under or included in the cost provisions of an approved Tenant Change Request as defined below.

(ii) For purposes of this Paragraph 2(d) and of Section 2.3 of the Lease, the parties wish to clarify their intention with respect to the allocation of costs of compliance with ADA or other code requirements or other legal compliance requirements (collectively, “Legal Compliance Costs”) as follows: If Legal Compliance Costs arise from legal requirements which have not previously been applicable to or enforced against the Building but which become applicable to or enforceable against the Building in connection with the permitting and construction of the Tenant Improvements solely because of the extent, cost or value of the Tenant Improvements and/or because of the mere fact that permits are being obtained for the Tenant Improvements, and not because of the particular nature or design of the Tenant Improvements, then Landlord shall bear such Legal Compliance Costs without any charge against the Tenant Improvement Allowance and without any inclusion of such Legal Compliance Costs in the Cost of Improvements for the Tenant Improvements. Landlord specifically agrees that ADA-related compliance costs for the existing toilet cores in the Premises will be part of the Legal Compliance Costs borne by Landlord pursuant to the preceding sentence. If Legal Compliance Costs arise from legal requirements which become applicable to or enforceable against the Building as a result of the particular nature or design of the Tenant Improvements (such as, but not limited to, installation of improvements or equipment which trigger seismic, vibration, firewall, sprinkler, life safety, ventilation or other requirements that would not apply in the absence of the installation and use of such specific improvements or equipment), then Tenant shall be responsible for such Legal Compliance Costs and such Legal Compliance Costs shall be part of the Cost of Improvements for the Tenant Improvements, chargeable against the Tenant Improvement Allowance to the extent they are not excluded from eligibility for payment or reimbursement from the Tenant Improvement Allowance and to the extent the Tenant Improvement Allowance has not otherwise been spent or fully committed at the time.

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(e) Budgeting. Following approval by Landlord and Tenant of the Final TI Working Drawings and the selection of subcontractors as provided in this Workletter, Landlord shall prepare an estimated budget for the Tenant Improvements. Tenant shall have five (5) business days after the receipt of such budget to approve or disapprove such estimated budget. Further, if Tenant disapproves the estimated budget and if the Approved TI Plans must be modified to change the scope of the work or to modify finishes or materials shown on the Approved TI Plans in order to reduce the cost of the Tenant Improvements as shown on the estimated budget to a level satisfactory to Tenant, then Tenant shall cause the TI Architect to modify the Approved TI Plans, at Tenant’s expense (but chargeable against the Tenant Improvement Allowance to the extent funds are available under the TI Allowance for that purpose), in order to achieve such cost reduction. Any and all revisions to the Approved TI Plans shall be subject to Landlord’s approval (which approval shall not be unreasonably withheld, conditioned or delayed) in the same manner provided in Paragraph 2(b) above. Notwithstanding anything to the contrary in this Workletter, the parties agree that if Tenant disapproves the initial estimated budget and if modifications of the Approved TI Plans are then considered or implemented on a “value engineering” basis in order to attempt to address Tenant’s objections, then on a one-time basis, any period of not more than ten (10) business days (in the aggregate) of actual delay in the completion of Landlord’s TI Work proximately caused by such consideration of or request for revisions of the Approved TI Plans shall not be considered a Tenant Delay under this Workletter.

(f) Construction of Tenant Improvements. Promptly following approval of the Final TI Working Drawings, Landlord shall apply for and use reasonable efforts to obtain the necessary permits and approvals to allow construction of Landlord’s TI Work. Upon receipt of such permits and approvals, Landlord shall, at Tenant’s expense (subject to the application of the Tenant Improvement Allowance provided in this Workletter, and subject to any other applicable provisions of the Lease or of this Workletter expressly making any specific item of expense or cost the responsibility of Landlord), diligently construct and complete Landlord’s TI Work substantially in accordance with the Approved TI Plans, subject to Unavoidable Delays and Tenant Delays (if any). Such construction shall be performed in a good and workmanlike manner and shall conform to all applicable governmental codes, laws and regulations in force at the time such work is completed. Without limiting the generality of the foregoing, Landlord shall be responsible for compliance of Landlord’s TI Work with the requirements of the Americans with Disabilities Act and all similar or related requirements pertaining to access by persons with disabilities, but nothing in this sentence shall be construed to make Landlord responsible for bearing the cost of any such compliance, to the extent the compliance work is reasonably attributable to or related to the particular nature or design of the Tenant Improvements or is for any other reason expressly made Tenant’s cost or responsibility under any applicable provision of the Lease or of this Workletter. Landlord shall have the right, in its sole discretion, to decide whether and to what extent to use union labor on or in connection with Landlord’s Work, and shall use the TI General Contractor to construct all of Landlord’s TI Work. Landlord and Tenant shall each have a right to approve all subcontractors engaged in connection with the construction of the Tenant Improvements and to review and approve all competitive bids for any elements of the Tenant Improvements, such approval in each instance not to be unreasonably withheld, conditioned or delayed by either party.

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(g) Changes.

(i) If Landlord determines at any time that changes in the Final TI Working Drawings or in any other aspect of the Approved TI Plans relating to any Landlord’s TI Work arc required as a result of applicable law or governmental requirements, or are required at the insistence of any other third party whose approval may be required with respect to the Tenant Improvements, or are required as a result of unanticipated conditions encountered in the course of construction, then Landlord shall promptly (A) advise Tenant of such circumstances and (B) cause revised Approved TI Plans and/or Final TI Working Drawings, as applicable, reflecting such changes to be prepared by the TI Architect and submitted to Tenant for Tenant’s information, review and approval, which approval shall not be unreasonably withheld, conditioned or delayed. Landlord shall concurrently notify Tenant of any estimated additional cost or delay associated with such proposed changes. Notwithstanding the foregoing provisions, Tenant shall not have the right to disapprove any such changes necessitated by applicable law or as a condition of any required governmental or other third-party approvals or consents or as a result of unanticipated conditions, but to the extent Tenant identifies to Landlord any concerns arising out of any such requirements, conditions or changes described in this sentence, Landlord and Tenant shall cooperate reasonably, diligently and in good faith to discuss possible changes in the nature or scope of the Tenant Improvements that might minimize or avoid the effects of such requirements, conditions or changes. Upon completion of any changes in the Approved TI Plans approved or deemed approved by Landlord and Tenant as a result of the circumstances and processes described in the preceding sentences, the Approved TI Plans shall be deemed to be modified accordingly. Landlord shall have no liability or responsibility for any costs or cost increases incurred by Tenant as a result of such required changes.

(ii) If Tenant at any time desires any changes, alterations or additions to the Approved TI Plans with respect to any of the Tenant Improvements, Tenant shall submit a detailed written request to Landlord specifying such changes, alterations or additions (a “Tenant Chance Request”). Upon receipt of any such request, Landlord shall promptly notify Tenant of (A) whether the matters proposed in the Tenant Change Request are approved by Landlord (which approval shall not be unreasonably withheld, conditioned or delayed by Landlord), (B) Landlord’s estimate of the number of days of delay, if any, which shall be caused by such Tenant Change Request if implemented (including, without limitation, delays due to the need to obtain any revised plans or drawings and any governmental approvals), and (C) Landlord’s estimate of the increase, if any, which shall occur in the Cost of Improvement for the items or components affected by such Tenant Change Request if such Tenant Change Request is implemented (including, but not limited to, any costs of compliance with laws or governmental regulations that become applicable because of the implementation of the Tenant Change Request). If Landlord approves the Tenant Change Request and Tenant notifies Landlord in writing, within five (5) business days after receipt of such notice of approval from Landlord, of Tenant’s approval of the Tenant Change Request (including the estimated delays and cost increases, if any, described in Landlord’s notice), then Landlord shall cause such Tenant Change Request to be implemented and Tenant shall be responsible for all actual costs or cost increases and all actual schedule delays (if any) resulting from or attributable to the implementation of the Tenant Change Request, subject to the application of the Tenant Improvement Allowance. If Tenant fails to notify Landlord in writing of Tenant’s approval of such Tenant Change Request

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within said five (5) business day period, then such Tenant Change Request shall be deemed to be withdrawn and shall be of no further effect.

(iii) If Tenant at any time desires to make any changes, alterations or additions to the approved plans for any other Tenant’s Work as described in Paragraph 2(c) above, such changes, alterations or additions shall be presented to Landlord and shall be subject to approval by Landlord in the same manner as the original plans submitted to and approved by Landlord pursuant to such Paragraph 2(c).

(h) Project Management. Unless and until revoked by Landlord by written notice delivered to Tenant, Landlord hereby (i) delegates to Project Manager the authority to oversee the design and manage the construction of the Tenant Improvements on behalf of Landlord and to exercise all approval rights, supervisory rights and other rights and powers of Landlord under this Workletter with respect to the design and construction of the Tenant Improvements, and (ii) requests that Tenant work with Project Manager with respect to any and all logistical or other coordination matters arising in the course of design and construction of the Tenant Improvements, in which regard Project Manager’s role on behalf of Landlord may include (but need not be limited to) facilitating and assisting in coordination between teams performing the Base Building portion of Landlord’s Work and teams constructing the Tenant Improvements, managing the TI General Contractor, reviewing and processing requests for disbursement of the Tenant Improvement Allowance, and monitoring Landlord’s and Tenant’s performance of their respective obligations under this Workletter and under the Lease in connection with the design and construction of the Tenant Improvements. Tenant acknowledges the foregoing delegation and request, and agrees to cooperate reasonably with Project Manager as Landlord’s representative pursuant to such delegation and request. Landlord shall be fully liable and responsible for all acts and omissions of Project Manager and for the payment and performance of all of Landlord’s obligations under the Lease and under this Workletter, notwithstanding such delegation of authority to Project Manager; however, Landlord’s engagement of Project Manager and delegation of authority to Project Manager for the management services described in this paragraph shall not cause Landlord to incur or be subject to any additional or broader obligations or responsibilities for construction and delivery of the Tenant Improvements than those obligations and responsibilities that are expressly documented or assigned to Landlord elsewhere in the Lease or in this Workletter. Project Manager’s fees for its services on behalf of Landlord in connection with the Tenant Improvements shall be charged at the rate of Three Dollars ($3.00) per square foot of space in the Premises (determined in accordance with Section 3.1(c) of the Lease) and shall be charged against the Tenant Improvement Allowance, and Landlord shall not charge Tenant or the Tenant Improvement Allowance for any other supervisory or review costs with respect to the design or construction of the Tenant Improvements, except to the extent [if any] that any increase in Project Manager’s fees is expressly provided for under or included in the cost provisions of an approved Tenant Change Request.

3. Completion.

(a) When Landlord receives written certification from the TI Architect that construction of Landlord’s TI Work has been substantially completed in accordance with the Approved TI Plans (except for Punch List Work), Landlord shall prepare and deliver to Tenant a certificate signed by both Landlord and the TI Architect (the “TI Substantial Completion

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Certificate”) certifying that the construction of Landlord’s TI Work has been substantially completed in accordance with the Approved TI Plans and this Workletter in all material respects, subject only to completion of Punch List Work, and specifying the date of that completion. To the extent the construction of Landlord’s Larc Work (as defined in the Lease) takes longer than construction of the balance of Landlord’s TI Work, the TI Substantial Completion Certificate may be submitted upon substantial completion of all of Landlord’s TI Work other than Landlord’s Larc Work, and a separate substantial completion certificate with respect to Landlord’s Larc Work (the “Larc Substantial Completion Certificate”) may be submitted at such later time as Landlord’s Larc Work is substantially completed in accordance with the Approved TI Plans and this Workletter in all material respects, subject to completion of Punch List Work.

(b) Promptly following delivery of the TI Substantial Completion Certificate and/or Larc Substantial Completion Certificate for the respective portions of Landlord’s TI Work, Project Manager or other representatives of Landlord shall conduct one or more “walkthroughs” of the Premises with Tenant and Tenant’s representatives, to identify any items of Punch List Work that may require correction and to prepare a joint punch list reflecting any such items, following which Landlord shall diligently complete the Punch List Work reflected in such joint punch list. At any time within forty-five (45) days after delivery of the applicable Substantial Completion Certificate, Tenant shall be entitled to submit one or more lists to Landlord supplementing such joint punch list by specifying any additional items of Punch List Work to be performed on the applicable Landlord’s TI Work, and upon receipt of such list(s), Landlord shall diligently complete such additional Punch List Work. All completion of Punch List Work by Landlord shall be part of the Cost of Improvement for the applicable Tenant Improvements and shall be at Tenant’s expense, subject to application of the Tenant Improvement Allowance and subject to any other applicable provisions of this Workletter making any specific item of expense or cost the responsibility of Landlord. Promptly after Landlord provides Tenant with the applicable Substantial Completion Certificates and completes all applicable Punch List Work for the Premises, Landlord shall cause the recordation of a Notice of Completion (as defined in Section 3093 of the California Civil Code) with respect to Landlord’s Work in the Premises.

(c) Effective upon delivery of the applicable Substantial Completion Certificates and delivery of the Premises by Landlord to Tenant, and subject to completion of any Punch List Work as described above, Landlord warrants to Tenant as follows: (i) Landlord’s TI Work has been constructed in a good and workmanlike manner, using new materials of good quality (except to the extent, if any, that reuse of existing materials is expressly provided for in the Approved TI Plans), and in accordance with the Approved TI Plans in all material respects (provided that except with respect to Punch List Items, which shall be governed by Paragraph 3(b) above, and except with respect to latent defects, Tenant’s failure to notify Landlord in writing regarding any alleged defects in the Landlord’s TI Work (x) in the case of elements of Landlord’s TI Work which constitute new construction with new materials, within one (1) year after delivery of the applicable Substantial Completion Certificate for such Landlord’s TI Work, and (y) in the case of elements of Landlord’s TI Work which constitute re-use of existing materials from the Premises as they existed prior to commencement of Landlord’s TI Work, within one hundred eighty (180) days after delivery of the applicable Substantial Completion Certificate for such Landlord’s TI Work, shall in each such respective case give rise to a conclusive and irrebuttable presumption that the applicable portion of Landlord’s TI Work

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complies with the warranty set forth in this clause (i) in all respects); and (ii) Landlord’s TI Work complies with all laws, rules, regulations, codes, ordinances, requirements, covenants, conditions and restrictions applicable thereto at the time of such delivery. Landlord shall cooperate with Tenant in a commercially reasonable manner to assist in enforcing, for the benefit of Tenant, all construction, product and equipment warranties and guaranties obtained by Landlord with respect to any element of Landlord’s TI Work. TENANT ACKNOWLEDGES THAT THE WARRANTIES AND OBLIGATIONS CONTAINED IN THIS PARAGRAPH 3 AND IN SECTION 2.3 OF THE LEASE (TO THE EXTENT APPLICABLE TO LANDLORD’S TI WORK) ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO LANDLORD’S TI WORK, AND THAT LANDLORD MAKES NO OTHER WARRANTIES WITH RESPECT TO LANDLORD’S TI WORK EXCEPT AS EXPRESSLY SET FORTH IN THIS PARAGRAPH 3 OR IN SECTION 2.3 OF THE LEASE (TO THE EXTENT APPLICABLE TO LANDLORD’S TI WORK). Notwithstanding anything to the contrary in the Lease, in the Acknowledgment of Rent Commencement Date attached to the Lease, or in this Workletter, Tenant’s acceptance of the Premises shall not be deemed a waiver of the Landlord warranties and obligations set forth in this Paragraph 3 or in Section 2.3 of the Lease, and subject to the provisions of Paragraph 3(b) above with respect to Punch List Work, Landlord shall promptly repair or cause to be repaired all violations of the warranties and obligations set forth in this Paragraph 3(c) at Landlord’s sole cost and expense.

(d) Notwithstanding any other provisions of this Workletter or of the Lease, if Landlord is actually delayed in substantially completing any of Landlord’s Work as a proximate result of any Tenant Delay, and if such delay results in any actual delay in the Rent Commencement Date as determined under Section 2.1(a) of the Lease, then notwithstanding any other provisions of Section 2.1(a) of the Lease to the contrary, the amount of any actual delay in substantial completion of Landlord’s TI Work directly and proximately attributable to such Tenant Delay shall be ignored in calculating the Rent Commencement Date, and the Rent Commencement Date shall instead be deemed to occur on the date it would have otherwise occurred without the period of actual delay directly and proximately attributable to such Tenant Delay.

4. Payment of Costs.

(a) Landlord’s Work. Except as otherwise expressly provided in this Workletter, in the Lease or by mutual written agreement of Landlord and Tenant, (i) the cost of design and construction of Landlord’s TI Work shall be at Tenant’s sole cost and expense, including any costs or cost increases incurred as a result of Unavoidable Delays, governmental requirements or unanticipated conditions, subject to application of the Tenant Improvement Allowance in accordance with this Workletter; and (ii) the cost of design and construction of Landlord’s Section 2.3 Work shall be at Landlord’s sole cost and expense, including any costs or cost increases incurred as a result of Unavoidable Delays, governmental requirements or unanticipated conditions. To the extent the estimated entire amount that Landlord is committed to pay (under contracts and obligations in effect from time to time) with respect to Landlord’s TI Work exceeds the net Tenant Improvement Allowance available pursuant to this Workletter, the excess Cost of Improvements for Landlord’s TI Work, over and above the Tenant Improvement Allowance, shall be payable by Tenant on a pro rata basis as illustrated in the diagram attached

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hereto as Schedule B-4 and incorporated herein by this reference (the “TI Allowance Disbursement Diagram”). To the extent the final net Cost of Improvement with respect to Landlord’s TI Work is not covered by the Tenant Improvement Allowance plus any payments made by Tenant from time to time during the course of construction, the remaining balance of the final net Cost of Improvement of Landlord’s TI Work shall be reimbursed by Tenant to Landlord in cash within thirty (30) days after final completion of Landlord’s TI Work (including any applicable Punch List Work), subject to the provisions of subparagraph (c) below.

(b) Tenant’s Work. Subject to any restrictions, conditions or limitations expressly set forth in this Workletter or in the Lease or as otherwise expressly provided by mutual written agreement of Landlord and Tenant, the cost of construction of the Tenant Improvements shall be paid or reimbursed by Landlord up to a maximum contribution by Landlord equal to One Hundred Twenty-Five Dollars ($125.00) per square foot times the square footage of the Premises as determined pursuant to Section 3.1(c) of the Lease, or approximately Five Million Seven Hundred Nine Thousand Seven Hundred Fifty Dollars ($5,709,750) in total (such maximum amount, the “Tenant Improvement Allowance”), less any reduction in or charge against such sums pursuant to any applicable provisions of the Lease or of this Workletter. Except as otherwise expressly provided in this Workletter, in the Lease or by mutual written agreement of Landlord and Tenant, Tenant shall be responsible, at its sole cost and expense, for payment of the entire Cost of Improvements of the Tenant Improvements in excess of the Tenant Improvement Allowance, including (but not limited to) any costs or cost increases incurred as a result of Unavoidable Delays, governmental requirements or unanticipated conditions, but Tenant shall be entitled to use or apply the entire Tenant Improvement Allowance for the Tenant Improvements (subject to any applicable restrictions, conditions, limitations, reductions or charges as described above) prior to being required to expend any of Tenant’s own funds on an unreimbursed basis for the Tenant Improvements. The funding of the Tenant Improvement Allowance shall be made on a monthly basis or at other convenient intervals mutually approved by Landlord and Tenant and in all other respects shall be based on such commercially reasonable disbursement conditions and procedures as Landlord, Project Manager and Landlord’s lender (if any) may reasonably prescribe (which conditions may include, without limitation, delivery of invoices and/or other evidence reasonably satisfactory to Landlord or Project Manager that Landlord or Tenant, as applicable, has expended or incurred expenses for the design and construction of Tenant Improvements for which the Tenant Improvement Allowance is eligible to be expended or applied, and delivery of conditional or unconditional lien releases from all parties performing the applicable work), which procedures shall (without limitation) be generally consistent with the TI Allowance Disbursement Diagram. Since the parties intend that Landlord will perform most (if not all) of the Tenant Improvements and will hold the contracts for the same, Landlord will generally make direct payment of amounts due to the TI General Contractor, the TI Architect and others under applicable contracts and will charge such payments against the Tenant Improvement Allowance, but prior to making any such payments, Landlord will first present Tenant with a copy of the full “draw request package” (including invoices, certifications, lien releases and similar items substantially comparable to the documentation that would be required from Tenant with respect to any funding of portions of the Tenant Improvement Allowance to be applied to Tenant’s Work, if any) and will request Tenant’s approval (not to be unreasonably withheld, conditioned or delayed) of the proposed disbursements. To the extent Tenant objects to any such proposed disbursements, Landlord shall still be entitled to make payments to the extent Landlord in its sole discretion determines that such payment is required or

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appropriate, but amounts not approved by Tenant (so long as such approval is not unreasonably withheld or conditioned) shall not be chargeable against the Tenant Improvement Allowance. Notwithstanding the foregoing provisions, (i) under no circumstances shall the Tenant Improvement Allowance or any portion thereof be used or useable for any moving or relocation expenses of Tenant, or for any Cost of Improvement (or any other cost or expense) associated with any moveable furniture, trade fixtures, personal property or any other item or element which, under the applicable provisions of the Lease, will not become Landlord’s property and remain with the Building upon expiration or termination of the Lease, and (ii) any portion of the Tenant Improvement Allowance which has not been claimed or drawn by Tenant within eighteen (18) months after the Rent Commencement Date shall expire and shall no longer be available to Tenant thereafter.

(c) Upon completion of Landlord’s TI Work, Landlord shall submit promptly to Tenant a final and detailed accounting of the Cost of Improvements for Landlord’s TI Work, and of the disbursement of the Tenant Improvement Allowance. At any time within three (3) months after receipt of such accounting, Tenant shall be entitled, upon reasonable written notice to Landlord and during normal business hours at Landlord’s office, at Project Manager’s office or at such other place or places in the Bay Area as Landlord may reasonably designate, to inspect and examine the books, records and supporting documents of Landlord and Project Manager relating to the construction of Landlord’s TI Work and the disbursement of the Tenant Improvement Allowance, to the extent reasonably necessary to determine the accuracy of such accounting. During the same period Tenant may also elect, by written notice to Landlord, to request an independent audit of such books and records. Any such independent audit shall be conducted by a certified public accountant reasonably acceptable to both Landlord and Tenant or, if the parties are unable to agree, by a certified public accountant appointed by the Presiding Judge of the San Mateo County Superior Court upon the application of either Landlord or Tenant (with notice to the other party). In either case, such certified public accountant shall be one who is not then employed in any capacity by Landlord or Tenant or any of their respective affiliates. If it is determined, by mutual agreement of Landlord and Tenant or by independent audit, that the Cost of Improvement for Landlord’s TI Work or the amount disbursed by Landlord from the Tenant Improvement Allowance was incorrect, then the appropriate party shall make an appropriate corrective payment within thirty (30) days after the final determination thereof. All costs and expenses of the audit shall be paid by Tenant unless the audit shows that Landlord overstated the Cost of Improvements for Landlord’s TI Work by more than five percent (5%), in which event Landlord shall pay all costs and expenses of the audit. Each party agrees to maintain the confidentiality of the findings of any audit in accordance with the provisions of this paragraph (c).

5. Tenant’s Work. Tenant shall construct and install Tenant’s Work (if any) substantially in accordance with the plans and specifications approved by Landlord for such work. Tenant’s Work shall be performed in accordance with, and shall in all respects be subject to, the terms and conditions of the Lease (to the extent not inconsistent with this Workletter), and shall also be subject to the following conditions:

(a) Contractor Requirements. The contractor engaged by Tenant for Tenant’s Work, and any subcontractors, shall be duly licensed in California and shall be subject to Landlord’s prior written approval (in accordance with, and to the extent provided in, Paragraph 1(t) above).

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Tenant shall engage only union contractors for the construction of Tenant’s Work and for the installation of Tenant’s fixtures and equipment in the Building, and shall require all such contractors engaged by Tenant, and all of their subcontractors, to use only union labor on or in connection with such work, except to the extent Landlord determines, in its reasonable discretion, that the use of non-union labor would not create a material risk of labor disputes, picketing or work interruptions at the Center, in which event Landlord shall, to that extent, waive such union labor requirement at Tenant’s request.

(b) Costs and Expenses of Tenant’s Work. Subject to Landlord’s payment or reimbursement obligations under this Workletter and the Lease, Tenant shall promptly pay all costs and expenses arising out of the performance of Tenant’s Work (including the costs of permits) and shall furnish Landlord with evidence of payment on request. Tenant shall provide Landlord with ten (10) days prior written notice before commencing any Tenant’s Work. On completion of Tenant’s Work, Tenant shall deliver to Landlord a release and unconditional lien waiver executed by each contractor, subcontractor and materialman involved in the design or construction of Tenant’s Work.

(c) Tenant’s Indemnification. Tenant shall indemnify, defend (with counsel reasonably satisfactory to Landlord) and hold Landlord harmless from all suits, claims, actions, losses, costs and expenses (including, but not limited to, claims for workers’ compensation, attorneys’ fees and costs) based on personal injury or property damage or contract claims (including, but not limited to, claims for breach of warranty) arising from the performance of Tenant’s Work, except to the extent (i) any such claims or matters arise from (A) negligence or willful misconduct or omission by Landlord or its agents, employees or contractors or (B) Landlord’s material breach of its obligations under this Workletter or the Lease, or (ii) any such specific items of costs or expenses are expressly made the responsibility of Landlord under any other applicable provisions of this Workletter (provided that the exception set forth in this clause (ii) shall not apply to the extent the applicable items of costs or expenses would not have arisen or been incurred except for the negligence or willful misconduct or omission of Tenant or its agents, employees or contractors). Subject to Section 10.4 of the Lease, Tenant shall repair or replace (or, at Landlord’s election, reimburse Landlord for the cost of repairing or replacing) any portion of Landlord’s Work and/or any of Landlord’s real or personal property or equipment that is damaged, lost or destroyed in the course of or in connection with the performance of Tenant’s Work.

(d) Insurance. Tenant’s contractors shall obtain and provide to Landlord certificates evidencing workers’ compensation, public liability and property damage insurance in amounts and forms and with companies reasonably satisfactory to Landlord, and Tenant shall provide to Landlord certificates evidencing Tenant’s compliance with the insurance requirements of Article 10 of the Lease (except to the extent any such requirements by their terms are clearly relevant only after Tenant’s commencement of business operations on the Premises), including, without limitation, the requirements of Section 10.1(f) of the Lease with respect to builder’s risk insurance on any Tenant Improvements being constructed by Tenant as part of Tenant’s Work. In addition, to the extent Landlord or Project Manager advises Tenant of any specific insurance requirements with respect to Tenant’s Work that are commercially reasonable and customary during a “course of construction” period (such as, but not limited to, designation of specified “additional insureds” who would not ordinarily be required to be named in that capacity during

B-14

the Lease term under Article 10 of the Lease), Tenant shall comply and/or cause its contractors to comply, as applicable, with such additional requirements.

(e) Rules and Regulations. Tenant and Tenant’s contractors shall comply with any other rules, regulations and requirements that Landlord or Project Manager or Landlord’s General Contractor or the TI General Contractor may reasonably impose with respect to the performance of Tenant’s Work. Tenant’s agreement with Tenant’s contractors shall require each contractor to provide daily cleanup of the construction area to the extent that such cleanup is necessitated by the performance of Tenant’s Work.

(f) Risk of Loss. All materials, work, installations and decorations of any nature brought onto or installed in the Premises, by or at the direction of Tenant or in connection with the performance of Tenant’s Work, prior to the Rent Commencement Date shall be at Tenant’s risk, and neither Landlord nor any party acting on Landlord’s behalf shall be responsible for any damage, loss or destruction thereof from any cause whatsoever other than negligence or willful misconduct or omission by Landlord or its agents, employees or contractors.

(g) Condition of Tenant’s Work. All work performed by Tenant shall be performed in a good and workmanlike manner, and shall be completed in compliance with the plans approved by Landlord for such Tenant’s Work in all material respects and in compliance with all applicable governmental laws, ordinances, codes and regulations in force at the time such work is completed. Without limiting the generality of the foregoing, Tenant shall be responsible for compliance of all Improvements designed and constructed by Tenant with the requirements of the Americans with Disabilities Act and all similar or related requirements pertaining to access by persons with disabilities.

6. No Agency. Nothing contained in this Workletter shall make or constitute Tenant as the agent of Landlord.

7. Survival. Without limiting any survival provisions which would otherwise be implied or construed under applicable law, the provisions of Paragraph 5(c) of this Workletter shall survive the termination of the Lease with respect to matters occurring prior to expiration of the Lease.

8. Miscellaneous. All references in this Workletter to a number of days shall be construed to refer to calendar days, unless otherwise specified herein. In all instances where Landlord’s or Tenant’s approval is required, if no written notice of disapproval is given within the applicable time period, at the end of that period Landlord or Tenant, as applicable, shall be deemed to have given approval (unless the provision requiring Landlord’s or Tenant’s approval expressly states that non-response is deemed to be a disapproval or withdrawal of the pending action or request, in which event such express statement shall be controlling over the general statement set forth in this sentence) and the next succeeding time period shall commence. If any item requiring approval is disapproved by Landlord or Tenant (as applicable) in a timely manner, the procedure for preparation of that item and approval shall be repeated.

[rest of page intentionally, left blank]

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IN WITNESS WHEREOF, the parties have executed this Workletter concurrently with and as of the date of the Lease.

“Landlord”			“Tenant”
SLOUGH REDWOOD CITY, LLC, a Delaware limited liability company			ONCOMED PHARMACEUTICALS, INC., a Delaware corporation
By:	Slough Estates USA Inc., a Delaware corporation, Its Manager		By:	/s/ Paul J. Hastings
			Its:	/s/ President & CEO
	By:	/s/ Jonathan M. Bergschneider
		Jonathan M. Bergschneider
		Vice President	By:
			Its:

Attachments:

Schedule B-1        800 Chesapeake Base Building

Schedule B-2        800 Chesapeake Tenant Improvements

Schedule B-3        Construction Schedule (preliminary)

Schedule B-4        TI Allowance Disbursement Diagram

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Schedule B-1 to Workletter

800 CHESAPEAKE BASE BUILDING

The “Base Building” as defined in the Workletter to which this Schedule B-1 is attached shall consist of the following:

Existing building envelope and waterproofing (the Building “shell”), except as specifically indicated as being included in Tenant Improvements under Schedule B-2, including: reinforced grade beam foundation on precast concrete piles; ground floor is a reinforced structural concrete slab supported by precast concrete piles; elevated floors consist of metal decking with concrete topping slab; roof structure consists of glulam beams and girders with plywood sheathing; visual mechanical roof screen; roof membrane to be new built-up system, flashing and sealants; building structural framing consists of open web steel joists, girders, columns with a non-bearing exterior EIFS and curtain wall; seismic system utilizing steel braced frames; roof live load is 20 PSF; floor to floor heights of 14 feet, all floors

New Service Annex including foundations, structure, enclosure and waterproofing. This includes base building life safety systems (electrical, mechanical, fire protection, and plumbing systems) required by code. The Service Annex floor is designed for 100 PSF uniform live load capacity (reducible as allowed by code) plus the weight of “normal” lab mechanical equipment. The Service Annex roof is designed for 20 PSF uniform live load capacity (reducible as allowed by code) plus the weight of “normal” lab mechanical equipment

New structural foundation and visual screen walls for emergency generator/chemical storage enclosure

Existing ground floor designed for 150 PSF uniform live load capacity (reducible as allowed by code)

Existing second floor designed for 100 PSF uniform live load capacity (reducible as allowed by code)

Existing building entrances (including modifications for ADA compliance, if any)

Existing stairs, including ADA required modifications

Existing exterior paving, hardscape and landscape, including modifications for ADA compliance, if any

Existing site underground water, fire, storm, and sanitary service

Existing building storm and overflow drainage systems

Existing site underground conduits for electrical and communication, including the existing electrical utility pad, existing PG&E pad mounted transformer (300 kva), and the existing five 5” primary service conduits terminated at the existing building switchgear (1600 amp rated)

Existing gas service up to exterior meter location at Building (including existing meter)

Schedule B-1 to Workletter

Existing wet fire protection (risers, loops, branches and heads), evenly distributed for “ordinary hazard” occupancy

Shell modification (including Service Annex) design and permitting fees, except as specifically included in Tenant Improvements under Schedule B-2

Existing underslab sanitary waste main trunk line and branch distribution

Existing toilet room cores

Schedule B-1 to Workletter

Schedule B-2 to Workletter

800 CHESAPEAKE TENANT IMPROVEMENTS

The “Tenant Improvements” as defined in the Workletter to which this Schedule B-2 is attached will include, but not necessarily be limited to, the following:

All tenant construction, design fees, fixtures, furnishings, etc. to support tenant operations, including use space, offices, lobbies, circulation, restrooms and all other features not specifically indicated as part of the Building Shell in Schedule B-1. Although included in the definition of Tenant Improvements, use of TI Allowance for furniture, fixtures or personal property is not permitted.

Additions and modifications to the new Service Annex, including emergency generator and associated conduits, chemical storage cabinets, eyewash facilities and associated utilities, cage wash equipment and utilities

Interior demolition required for TI construction

ADA modifications triggered by TI construction (subject to any specific provisions of the Workletter or the Lease providing for a different allocation of ADA compliance costs)

Exterior Building skin modifications to support TI systems (e.g., louvers for HVAC equipment)

Topical emission barriers on slabs, if required

Slab depressions for special finishes or special uses (including cage wash area)

Enhancement of structure for live loading above designed maximums or vibration control criteria

Modification of structure for openings at floors and roof

Modification or repair of structure required by TI construction

All minor support structures for ducts, conduits, pipes, etc. required by TI

Additional stairs, stair enclosures, handrails and guardrails (if required by TI design)

New exterior wall insulation, if required by TI modifications

New firesafing at floor decks, exterior walls and interior openings, if required by TI modifications

Custom doors

Security or other upgrades to existing exterior doors

Supporting structures/platforms/sleepers, etc. for rooftop equipment, ducts, plumbing, electrical, etc., related to Tenant Improvements

Schedule B-2 to Workletter

Roof patching for all penetrations relating to Tenant Improvements

Skylights, if installed, including curbs, roof patching, etc.

Additional elevators, if required by Tenant

Shaft walls or other fire separations required for vertical openings (stairs, elevators) or control zones

New distribution/laterals from sanitary waste main trunk line required by TI

New lab waste main trunk line and distribution/laterals required by TI

Upsized gas meter and piping from gas meter to Building areas, if required by TI

Modifications/enhancements to wet fire protection systems required by TI design

Modifications to fire alarm systems

Signal and security systems

Modifications or upsizing of primary electrical service (from existing 1600 amp service)

Modifications and additions to all secondary electrical service for Tenant demand loads, including main service disconnect, Tenant meter section and distribution panels

Standby electrical generator, transfer switch and conduits, if required

All communications wire and service not specifically included in Building Shell

All TI design fees and reimbursables

All other “soft” costs, including Ti permit fees, project management fees, utility company charges, temporary utilities during TI construction, etc.

All testing and inspection of TI construction

Builders risk insurance for TI construction

Schedule B-2 to Workletter

Schedule B-3 to Workletter

Construction Schedule (Preliminary)

[See attached page.]

Schedule B-3 to Workletter

SCHEDULE B-4

* Note: To the extent Slough commitments are later increased (due to Tenant Change Requests, for example), these numbers will need to be recalibrated and the project may even move from the “LESS” to the “MORE” category.

Example 1

HDCC:	$	5,100,000
DES:	$	340,000
PMA:	$	130,000
	$	5,570,000	=	Commitments
	$	5,709,750	=	TI Allowance

Slough funds 100% of its commitments plus $139,750 of approved invoices submitted by OncoMed.

Example 2

HDCC:	$	5,500,000
DES:	$	340,000
PMA:	$	130,000
	$	5,970,000	=	Commitments
	$	5,709,750	=	TI Allowance

OncoMed pro-rata share of commitments =	$5,970,000 - $5,709,750	= 4.36%
	$5,970,000

Therefore, OncoMed would contribute 4.36% of each payment application for the commitments and would fund 100% of all expenditures incurred directly by OncoMed.

Schedule B-4 to Workletter

EXHIBIT C

ACKNOWLEDGMENT OF RENT COMMENCEMENT DATE

This Acknowledgment is executed as of                     , 200    , by SLOUGH REDWOOD CITY, LLC, a Delaware limited liability company (“Landlord”), and ONCOMED PHARMACEUTICALS, INC., a Delaware corporation (“Tenant”), pursuant to Section 2.4 of the Lease dated May 30, 2006 between Landlord and Tenant (the “Lease”) covering premises located at 800 Chesapeake Drive, Redwood City, CA 94063 (the “Premises”).

Landlord and Tenant hereby acknowledge and agree as follows:

1. The Rent Commencement Date under the Lease is                     , 20    .

2. The termination date under the Lease shall be                    , 20    , subject to any applicable provisions of the Lease for extension or early termination thereof.

3. The square footage of the Premises (including allocable portions of the Service Annex, as defined in the Lease) is              square feet.

4. Tenant accepts the Premises, subject only to Landlord’s warranties, representations and obligations expressly set forth in Section 2.3 of the Lease and in the Workletter (as defined in the Lease).

EXECUTED as of the date first set forth above.

“Landlord”			“Tenant”
SLOUGH REDWOOD CITY, LLC, a Delaware limited liability company			ONCOMED PHARMACEUTICALS, INC., a Delaware corporation
By:	Slough Estates USA Inc., a Delaware corporation, Its Manager		By:
			Its:
	By:
		Jonathan M. Bergschneider
		Vice President	By:
			Its:

EXHIBIT C TO LEASE

EXHIBIT D

FORM OF WARRANT

[See attached.]

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. SUCH SECURITIES AND ANY SECURITIES OR SHARES ISSUED HEREUNDER MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR QUALIFICATION OR AN EXEMPTION THEREFROM UNDER SAID ACT OR LAWS.

Warrant No.	Warrant to Purchase 55,000 Shares
Date of Issuance:	of Series B Preferred Stock

WARRANT TO PURCHASE PREFERRED STOCK

OF

ONCOMED PHARMACEUTICALS, INC.

This certifies that, for value received, Kwacker Limited, a corporation organized and existing under the laws of England (“Holder”) is entitled, subject to the terms and conditions set forth below, to purchase from OncoMed Pharmaceuticals, Inc., a Delaware corporation (the “Company”), in whole or in part fifty-five thousand (55,000) fully paid and nonassessable shares (the “Warrant Shares”) of Series B Preferred Stock, par value $0.001 per share, (the “Preferred Stock”) of the Company at a purchase price per share equal to the product obtained by multiplying (x) 125% by (y) the price per share at which the Company’s Series B Preferred Stock is issued in its first issuance to one or more institutional investors (the “Exercise Price”). Notwithstanding the foregoing, in the event that no Series B Preferred Stock has been issued by the Company to one or more institutional investors within eighteen (18) months after the mutual execution of the Agreement (as defined below), this Warrant shall automatically be deemed to entitle Holder, in lieu of the right to purchase shares of Series B Preferred Stock set forth in the foregoing sentence and subject to the terms and conditions set forth below, to purchase from the Company in whole or in part fifty-five thousand (55,000) fully paid and nonassessable shares of Series A Preferred Stock, par value $0.001 per share, of the Company at a purchase price per share equal to the product obtained by multiplying (x) 125% by (y) the price per share at which the Company’s Series A Preferred Stock was previously issued to institutional investors, and all references to “Warrant Shares,” “Preferred Stock” and “Exercise Price” contained in this Warrant shall be deemed to be updated accordingly. The number, character and Exercise Price of such Warrant Shares are subject to adjustment as provided below and all references to “Warrant Shares” and “Exercise Price” herein shall be deemed to include any such adjustment or series of adjustments. The term “Warrant” as used herein shall mean this Warrant, and any warrants delivered in substitution or exchange therefor as provided herein.

This Warrant is being issued in connection with services or other consideration to be provided to the Company pursuant to that certain Lease between the Company and Slough Redwood City, LLC, an affiliate of the Holder, dated as of May 30, 2006 (the “Agreement”).

1. Term of Warrant. Subject to the terms and conditions set forth herein, this Warrant shall be exercisable, in whole or in part, during the term commencing on the date hereof and ending at 5:00 p.m., Pacific time, on the earliest of the following: (i) the closing of a merger, consolidation or other reorganization of the Company pursuant to which the stockholders of the Company hold less than 50% of the voting securities of the surviving entity, or a sale of all or substantially all of

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the assets of the Company; (ii) the consummation of the initial public offering of the Company’s securities pursuant to a registration statement filed under the Act or (iii) the seventh (7^th) anniversary of the date hereof, and shall be void thereafter (the “Exercise Period”).

2. Exercise of Warrant.

(a) Cash Exercise. This Warrant may be exercised by the Holder by (i) the surrender of this Warrant to the Company, with the Notice of Exercise annexed hereto duly completed and executed on behalf of the Holder, at the office of the Company (or such other office or agency of the Company as it may designate by notice in writing to the Holder at the address of the Holder appearing on the books of the Company) during the Exercise Period and (ii) the delivery of payment to the Company, for the account of the Company, by cash, wire transfer of immediately available funds to a bank account specified by the Company, or by certified or bank cashier’s check, of the Exercise Price for the number of Warrant Shares specified in the Exercise Form in lawful money of the United States of America. The Company agrees that such Warrant Shares shall be deemed to be issued to the Holder as the record holder of such Warrant Shares as of the close of business on the date on which this Warrant shall have been surrendered and payment made for the Warrant Shares as aforesaid. A stock certificate or certificates for the Warrant Shares specified in the Exercise Form shall be delivered to the Holder as promptly as practicable, and in any event within 10 days, thereafter. If this Warrant shall have been exercised only in part, the Company shall, at the time of delivery of the stock certificate or certificates, deliver to the Holder a new Warrant evidencing the rights to purchase the remaining Warrant Shares, which new Warrant shall in all other respects be identical with this Warrant. No adjustments shall be made on Warrant Shares issuable on the exercise of this Warrant for any cash dividends paid or payable to holders of record of Common Stock prior to the date as of which the Holder shall be deemed to be the record holder of such Warrant Shares.

(b) Net Issue Exercise. In lieu of exercising this Warrant pursuant to Section 2(a), this Warrant may be exercised by the Holder by the surrender of this Warrant to the Company, with a duly executed Exercise Form marked to reflect Net Issue Exercise and specifying the number of shares of Preferred Stock to be purchased, during normal business hours on any Business Day during the Exercise Period. The Company agrees that such shares of Preferred Stock shall be deemed to be issued to the Holder as the record holder of such shares of Preferred Stock as of the close of business on the date on which this Warrant shall have been surrendered as aforesaid. Upon such exercise, the Holder shall be entitled to receive shares equal to the value of this Warrant (or the portion thereof being canceled) by surrender of this Warrant to the Company together with notice of such election in which event the Company shall issue to Holder a number of shares of Preferred Stock computed as of the date of surrender of this Warrant to the Company using the following formula:

X	= Y(A-B)
	A

Where X = the number of shares of Preferred Stock to be issued to Holder under this Section 2(b);

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Y =	the number of shares of Preferred Stock covered by this Warrant (as adjusted to the date of such calculation) in respect of which the net issue exercise election is made under this Section 2(b);
A =	the fair market value of one share of the Preferred Stock at the date of such calculation;
B =	the Exercise Price (as adjusted to the date of such calculation).

(c) Fair Market Value. For purposes of Section 2(b) and Section 3, the fair market value of one share of the Company’s Preferred Stock shall be the price per share which the Company could obtain from a willing buyer for the shares sold by the Company from authorized but unissued shares, as such price shall be determined in good faith by the Board of Directors of the Company.

(d) Effective Time of Exercise. This Warrant shall be deemed to have been exercised immediately prior to the close of business on the date of its surrender for exercise as provided above, and the person entitled to receive the shares of Preferred Stock issuable upon such exercise shall be treated for all purposes as the holder of record of such shares as of the close of business on such date. As promptly as practicable on or after such date and in any event within ten days thereafter, the Company at its expense shall issue and deliver to the person or persons entitled to receive the same a certificate or certificates for the number of shares issuable upon such exercise. In the event that this Warrant is exercised in part, the Company at its expense will execute and deliver a new Warrant of like tenor exercisable for the number of shares for which this Warrant may then be exercised.

3. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. In lieu of any fractional share to which the Holder would otherwise be entitled, the Company shall make a cash payment equal to the product of the fair market value of a share of the Company’s Preferred Stock multiplied by such fraction.

4. Replacement of Warrant. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement, with surety if reasonably required, in an amount reasonably satisfactory to the Company, or in the case of mutilation, on surrender and cancellation of this Warrant, the Company at its expense shall execute and deliver, in lieu of this Warrant, a new warrant of like tenor and amount.

5. No Rights as Stockholder. Subject to Sections 9 and 12 of this Warrant, the Holder shall not be entitled to vote or receive dividends or be deemed the holder of Preferred Stock or any other securities of the Company that may at any time be issuable on the exercise hereof for any purpose, nor shall anything contained herein be construed to confer upon the Holder, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value, or change of stock to no par value, consolidation,

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merger, conveyance, or otherwise) or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until the Warrant shall have been exercised as provided herein.

6. Transfer of Warrant.

(a) Restrictions on Transferability. This Warrant and the Warrant Shares shall not be sold, assigned, transferred or pledged except upon satisfaction of the conditions herein. Holder will cause any proposed transferee of the Warrant or the Warrant Shares, as the case may be, to agree in writing to be bound by the terms of this Warrant, including, but not limited to the restrictions on transfer and “market stand-off.” The Holder will not make any disposition of any Warrant, Warrant Shares or other Company security to any of the Company’s competitors as such is determined in good faith by the Company. The restrictions set forth in this Section 6 (other than restrictions relating to compliance with applicable securities laws) shall not apply to any disposition of Warrant Shares or other Company securities in a transaction pursuant to Rule 144 or any other transaction effected on a securities exchange or in a public securities market.

(b) Notice of Proposed Transfer. Except as otherwise provided herein, prior to any proposed transfer of this Warrant and the Warrant Shares, the Holder shall give written notice to the Company of its intention to effect such transfer. Each such notice shall identify the proposed transferee, shall describe the manner of the proposed transfer and, if requested by the Company, shall be accompanied by a written opinion of counsel, satisfactory in form and substance to the Company, to the effect that the proposed transfer may be effected without registration under the Act and any applicable state securities laws, whereupon the holder of such security shall be entitled to transfer such security in accordance with the terms of its notice, subject to compliance with all other applicable requirements of this Section 6. Each certificate for this Warrant and the Warrant Shares transferred as provided for above shall bear the legend set forth herein, except that such certificate shall not bear such legend if (i) such transfer is in accordance with the provisions of Rule 144 (or any other rule permitting public sale without registration under the Act) or (ii) the opinion of counsel referred to above is to the further effect that the transferee and any subsequent transferee (other than an affiliate of the Company) would be entitled to transfer such securities in a public sale without registration under the Act. The Company may issue stop transfer instructions to its transfer agent in connection with restrictions on transferability of this Warrant or the Warrant Shares. Notwithstanding the restrictions set forth above, no registration statement or opinion of counsel or prior notice to the Company shall be necessary, and such transfer shall be automatically effected on the stock records of the Company effective as of the date of such transfer, for a transfer (x) by a Holder to an affiliate of the Holder or (y) by a Holder which is (A) a partnership to its partners or retired partners in accordance with partnership interests, (B) a limited liability company to its members or former members in accordance with their interest in the limited liability company, (C) a corporation to its subsidiary or parent, or (D) to the Holder’s family member or trust for the benefit of an individual Holder, provided that in the case of any transfer pursuant to the foregoing clause (x) or clauses (y)(A) – (D), (i) the restrictions in the second and third sentences of Section 6(a) above shall apply to the transfer and to the transferee, (ii) the transfer shall be conducted in compliance with all applicable securities laws, and (iii) the transferring Holder shall provide the Company with a completed written notice of the transfer pursuant to this sentence no later than 30 days following the transfer to an affiliate or other permitted transferee pursuant to this sentence and, upon request by the Company, with

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evidence reasonably satisfactory to the Company that the conditions and requirements applicable to such transfer pursuant to this sentence have been satisfied.

7. Reservation of Stock. The Company covenants that during the term this Warrant is exercisable, the Company will reserve from its authorized and unissued Preferred Stock a sufficient number of shares to provide for the issuance of Preferred Stock upon the exercise of this Warrant and, from time to time, will take all steps necessary to amend its Amended and Restated Certificate of Incorporation, as it may be amended from time to time (“Restated Certificate”) to provide sufficient reserves of shares of Preferred Stock issuable upon exercise of the Warrant. The Company further covenants that all shares that may be issued upon the exercise of rights represented by this Warrant, upon exercise of the rights represented by this Warrant and payment of the Exercise Price, all as set forth herein, will be free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously or otherwise specified herein).

8. Representations and Covenants of the Holder. Holder hereby represents and warrants as follows:

(a) Experience. Holder is experienced in evaluating and investing in private placement transactions of securities of start up companies such as the Company, and has either individually or through its current officers such knowledge and experience in financial and business matters that Holder is capable of evaluating the merits and risks of Holder’s prospective investment in the Company, and has the ability to bear the economic risks of the investment. Holder has, if an entity, its principal place of business or, if an individual, its primary residence at the address provided to the Company in writing.

(b) Accredited Investor. Holder is an “accredited investor” within the meaning of Securities and Exchange Commission Rule 501 of Regulation D, as presently in effect, under the Act.

(c) Acquire Entirely for Own Account. Holder is acquiring the Warrant and Warrant Shares for investment for Holder’s own account, not as a nominee or agent, and not with the view to, or for resale in connection with, any distribution thereof. Holder further represents that it does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to any third person with respect to the Warrant or any of the Warrant Shares.

(d) Restricted Securities. Holder acknowledges that the Warrant Shares must be held indefinitely unless subsequently registered under the Act or an exemption from such registration is available. Holder is aware of the provisions of Rule 144 promulgated under the Act which permit limited resale of shares acquired in a private placement subject to the satisfaction of certain conditions; among the conditions for use of Rule 144 may be the availability of current information to the public about the Company; such information is not now available and the Company has no present plans to make such information available.

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(e) No Public Market. Holder understands that no public market now exists for any of the securities issued by the Company, and that there is no assurance that a public market will ever exist for this Warrant and the Warrant Shares.

(f) Regulation S. If Holder is not a U.S. person as defined in Rule 902 under the Act, Holder understands that this agreement is made in reliance upon Holder’s representation to the Company, and by execution of this Agreement, Holder hereby confirms, that:

(i) Holder is not a U.S. person as such term is defined in Rule 902 under the Act;

(ii) Holder is not acquiring the securities for the account or benefit of any U.S. person; and

(iii) Holder agrees to resell the Warrant and the Warrant Shares only in accordance with the provisions of Regulation S, pursuant to registration under the Act, or pursuant to an available exemption from registration, and agrees not to engage in hedging transactions with regard to the Warrant and the Warrant Shares unless in compliance with the Act.

(g) Legends. Holder acknowledges that, to the extent applicable, each certificate evidencing the Warrant Shares shall be endorsed with the legends substantially in the form set forth below, as well as any additional legend imposed or required by the Company’s Bylaws or applicable state securities laws:

“THE SECURITIES ISSUABLE HEREUNDER OR REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED (A) UNLESS AND UNTIL REGISTERED UNDER SUCH ACT, (B) UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED OR (C) IN COMPLIANCE WITH THE PROVISIONS OF REGULATION S PROMULGATED PURSUANT TO THE ACT AND, IF REQUIRED BY THE COMPANY, SUCH COMPLIANCE IS CONFIRMED BY AN OPINION OF COUNSEL. HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED HEREBY MAY NOT BE CONDUCTED EXCEPT IN COMPLIANCE WITH THE ACT.”

(h) Access to Data. Holder has received and reviewed information about the Company and has had an opportunity to discuss the Company’s business, management and financial affairs with its management and to review the Company’s facilities. Holder believes it has received all the information it considers necessary or appropriate for deciding whether to acquire the Warrant to acquire the Warrant Shares. Holder understands and acknowledges that any such discussions, as well as any written information issued by the Company, (i) were intended to describe the aspects of the Company’s business and prospects which the Company believes to be material, but were not necessarily an exhaustive description, and (ii) may have

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contained forward-looking statements involving known and unknown risks and uncertainties which may cause the Company’s actual results in future periods or plans for future periods to differ materially from what was anticipated and that no representations or warranties were or are being made with respect to any such forward-looking statements or the probability of achieving any of the results projected in any of such forward-looking statements.

(i) Authorization. Holder has full power and authority to enter into this Warrant. This Warrant when executed and delivered by Holder will constitute valid and legally binding obligations of Holder, enforceable in accordance with its terms, subject to (i) judicial principles limiting the availability of specific performance, injunctive relief, and other equitable remedies; and (ii) bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect generally relating to or affecting creditors’ rights generally.

(j) Reliance Upon Holders’ Representations. Holder understands that the Warrant and the Warrant Shares have not been registered under the Act by reason of a specific exemption from the registration provisions of the Act which depends upon, among other things, the bona fide nature of the investment intent as expressed herein. Holder understands and acknowledges that the offering of the Warrant and the Warrant Shares pursuant to this Warrant will not be registered under the Act on the ground that the sale provided for in this Warrant and the issuance of securities hereunder is exempt from the registration requirements of the Act.

9. Notices.

(a) Whenever the Exercise Price or number of shares purchasable hereunder shall be adjusted pursuant to Section 12 hereof, the Company shall issue a certificate signed by its Chief Financial Officer setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the Exercise Price and number of shares purchasable hereunder after giving effect to such adjustment, and shall cause a copy of such certificate to be transmitted by facsimile, or mailed (by first class mail, postage prepaid) to the Holder of this Warrant.

(b) In case:

(i) the Company shall take a record of the holders of its Preferred Stock (or other stock or securities at the time receivable upon the exercise of this Warrant) for the purpose of entitling them to receive any dividend or other distribution;

(ii) of any capital reorganization of the Company, any reclassification of the capital stock of the Company, any consolidation or merger of the Company with or into another corporation, or any conveyance of all or substantially all of the assets of the Company to another corporation; or

(iii) of any voluntary dissolution, liquidation or winding-up of the Company;

then, and in each such case, the Company will transmit by facsimile, or mail or cause to be mailed to the Holder or Holders a notice specifying, as the case may be, (A) the date on which a record is to be taken for the purpose of such dividend or other distribution, and stating the amount and character of such dividend or other distribution or (B) the date on which such

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reorganization, reclassification, consolidation, merger, conveyance, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of Preferred Stock shall be entitled to exchange their shares of Preferred Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, conveyance, dissolution, liquidation or winding-up. Such notice shall be delivered at least seven business days prior to the date therein specified.

(c) All such notices, advices and communications shall be deemed effectively delivered upon deposit with a nationally recognized overnight courier or upon transmission by facsimile (upon receipt of appropriate electronic confirmation of successful transmission).

10. Market Standoff Agreement.

(a) The Holder agrees in connection with any registration of the Company’s securities (other than a registration of securities in a Rule 145 transaction or with respect to an employee benefit plan), upon request of the underwriters managing any underwritten offering of the Company’s securities, not to sell, make any short sale of, loan, pledge or otherwise hypothecate or encumber, grant any option for the purchase of, or otherwise dispose of any securities of the Company (other than those included in the registration, securities acquired in the Company’s initial public offering of its Common Stock (the “IPO”) or securities acquired in market transactions following the IPO) without the prior written consent of such underwriters, as the case may be, for such period of time (not to exceed one hundred eighty (180) days from the effective date of such registration in the case of a registration for the Company’s IPO) as may be requested by such managing underwriter(s); provided that all officers and directors of the Company and holders of at least five percent (5%) of the Company’s capital stock enter into similar agreements.

(b) The Company may impose stack-transfer instructions with respect to any of its securities subject to the foregoing restriction until the end of such period.

(c) The underwriters are intended third-party beneficiaries of this Section 10 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto. To the extent that a party executes and delivers a market standoff agreement in the form requested by the Company’s underwriters in connection with the IPO, then the agreement with the underwriters will supersede the provisions of this Section 10.

11. Amendments. This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing executed by the Company and the Holder. Any amendment or waiver effected in accordance with such terms shall be binding upon the Company, the Holder and any transferee or assignee of this Warrant.

12. Adjustments. The Exercise Price and the number of shares purchasable hereunder are subject to adjustment from time to time as follows:

(a) Stock Conversion of Preferred Stock. Should all of the Company’s Series B Preferred Stock, at any time prior to the expiration of this Warrant, be converted into shares of the Company’s Common Stock in accordance with the Company’s Restated Certificate, then this Warrant shall immediately become exercisable for that number of shares of the Company’s

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Common Stock equal to the number of shares of the Common Stock that would have been received if this Warrant had been exercised in full and the Preferred Stock received thereupon had been simultaneously converted immediately prior to such event, and the Exercise Price shall be immediately adjusted to equal the quotient obtained by dividing (x) the aggregate Exercise Price of the maximum number of shares of Preferred Stock for which this Warrant was exercisable immediately prior to such conversion, by (y) the number of shares of Common Stock for which this Warrant is exercisable immediately after such conversion. For purposes of the foregoing, the “Restated Certificate” shall mean the Certificate of Incorporation of the Company as amended and/or restated and effective immediately prior to the conversion of all of the Company’s Series B Preferred Stock.

(b) Reclassification, etc. If the Company, at any time while this Warrant, or any portion thereof, remains outstanding and unexpired by reclassification of securities or otherwise, shall change any of the securities as to which purchase rights under this Warrant exist into the same or a different number of securities of any other class or classes, this Warrant shall thereafter represent the right to acquire such number and kind of securities as would have been issuable as the result of such change with respect to the securities that were subject to the purchase rights under this Warrant immediately prior to such reclassification or other change and the Exercise Price therefor shall be appropriately adjusted, all subject to further adjustment as provided in this Section 12. No adjustment shall be made pursuant to this Section 12 (b), upon any conversion of the Preferred Stock which is the subject of Section 12 (a).

(c) Split, Subdivision or Combination of Shares. If the Company at any time while this Warrant, or any portion thereof, remains outstanding and unexpired shall split, subdivide or combine the securities as to which purchase rights under this Warrant exist, into a different number of securities of the same class, then (i) in the case of a split or subdivision, the Exercise Price for such securities shall be proportionately decreased and the securities issuable upon exercise of this Warrant shall be proportionately increased, and (ii) in the case of a combination, the Exercise Price for such securities shall be proportionately increased and the securities issuable upon exercise of this Warrant shall be proportionately decreased.

(d) Adjustments for Dividends in Stock or Other Securities or Property. If while this Warrant, or any portion hereof, remains outstanding and unexpired the holders of the securities as to which purchase rights under this Warrant exist at the time shall have received, or, on or after the record date fixed for the determination of eligible stockholders, shall have become entitled to receive, without payment therefor, other or additional stock or other securities or property (other than cash) of the Company by way of dividend, then and in each case, this Warrant shall represent the right to acquire, in addition to the number of shares of the security receivable upon exercise of this Warrant, and without payment of any additional consideration therefor, the amount of such other or additional stock or other securities or property (other than cash) of the Company that such holder would hold on the date of such exercise had it been the holder of record of the security receivable upon exercise of this Warrant on the date hereof and had thereafter, during the period from the date hereof to and including the date of such exercise, retained such shares and/or all other additional stock available by it as aforesaid during such period, giving effect to all adjustments called for during such period by the provisions of this Section 12.

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(e) Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment pursuant to this Section 12, the Company at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each Holder of this Warrant a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, upon the written request, at any time, of any such Holder, furnish or cause to be furnished to such Holder a like certificate setting forth: (i) all such adjustments and readjustments cumulatively made up to the date of the certificate; (ii) the Exercise Price at the time in effect; and (iii) the number of shares and the amount, if any, of other property that at the time would be received upon the exercise of the Warrant.

(f) No Impairment. The Company will not, by any voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Section 12 and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holders of this Warrant against impairment.

13. Miscellaneous.

(a) This Warrant shall constitute a contract under the laws of the State of Delaware and for all purposes shall be construed in accordance with and governed by the laws of said state, without regard to the conflicts of law provisions thereof.

(b) In the event of a dispute with regard to the interpretation of this Warrant, the prevailing party may collect the cost of attorney’s fees, litigation expenses or such other expenses as may be incurred in the enforcement of the prevailing party’s rights hereunder.

(c) This Warrant shall be exercisable as provided for herein, except that in the event that the expiration date of this Warrant shall fall on a Saturday, Sunday and or United States federally recognized Holiday, this expiration date for this Warrant shall be extended to 5:00 p.m. Pacific time on the business day following such Saturday, Sunday or recognized Holiday.

(d) Acceptance. Receipt of this Warrant by the holder shall constitute acceptance of and agreement to all of the terms and conditions contained herein.

(e) Counterparts. This Warrant may be executed in two counterparts, each of which shall be deemed an original, but both of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, ONCOMED PHARMACEUTICALS, INC. has caused this Warrant to be executed by its officers thereunto duly authorized.

Date: 

ONCOMED PHARMACEUTICALS, INC.

By

Name:

Title:

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The undersigned hereby accepts the Warrant in accordance with Section 13(d) above.

HOLDER:	Kwacker Limited
	By:
	Name:
	Title:

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NOTICE OF EXERCISE

To: ONCOMED PHARMACEUTICALS, INC.:

(1) The undersigned hereby elects to purchase                     shares of Series B Preferred Stock of OncoMed Pharmaceuticals, Inc., pursuant to the terms of the attached Warrant, and                     tenders herewith payment of the purchase price for such shares in full or             elects to exercise such Warrant pursuant to the net issue exercise provisions provided for in Section 2(b) thereof (PLEASE CHECK THE APPROPRIATE FORM OF PAYMENT).

(2) In exercising this Warrant, the undersigned hereby confirms and acknowledges that (A) the shares of Series B Preferred Stock and/or other securities to be issued upon exercise thereof are being acquired solely for the account of the undersigned and not as a nominee for any other party, or for investment, and (B) the undersigned will not offer, sell or otherwise dispose of any such shares of Preferred Stock except under circumstances that will not result in a violation of the Securities Act of 1933, as amended, or any applicable state securities laws.

(3) Please issue a certificate or certificates representing said shares of Series B Preferred Stock in the name of the undersigned or in such other name as is specified below:

(Name)

(Name)

(4) Please issue a new Warrant for the unexercised portion of the attached Warrant in the name of the undersigned:

	(Name)
(Date)	(Signature)

EXHIBIT B

FORM OF TRANSFER

(To be signed only upon transfer of Warrant)

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto                     the right represented by the attached Warrant to purchase                     shares of                     of ONCOMED PHARMACEUTICALS, Inc. to which the attached Warrant relates, and appoints                     Attorney to transfer such right on the books of                     , with full power of substitution in the premises.

Dated: 

(Signature must conform in all respects to name of Holder as specified on the face of the Warrant)

Address:

Signed in the presence of

* Insert here the number of shares without making any adjustment for additional shares of Common Stock or any other stock or other securities or property or cash which, pursuant to the adjustment provisions of the Warrant, may be deliverable upon exercise.

FIRST AMENDMENT TO LEASE

THIS FIRST AMENDMENT TO LEASE (“First Amendment”) is dated as of November     , 2006 and is entered into between SLOUGH REDWOOD CITY, LLC, a Delaware limited liability company (“Landlord”) and ONCOMED PHARMACEUTICALS, INC., a Delaware corporation (“Tenant”), with reference to the following facts:

Recitals

A. Landlord and Tenant are parties to a Lease dated as of May 30, 2006 (the “Lease”), covering the building commonly known as 800 Chesapeake Drive (the “Building”) in the Britannia Seaport Centre in Redwood City, California.

B. Landlord and Tenant wish to modify certain provisions of the Lease and certain of their respective rights and obligations thereunder, all as more particularly set forth in this First Amendment. This First Amendment modifies and amends the Lease and supersedes any inconsistent provisions of the Lease with respect to the matters covered by this First Amendment.

C. Capitalized terms used in this First Amendment as defined terms but not specifically defined in this First Amendment shall have the meanings assigned to such terms in the Lease.

Agreement

NOW, THEREFORE, in consideration of the mutual agreements contained in this First Amendment and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant agree as follows, effective upon their mutual execution of this First Amendment:

1. Rent Adjustment. Nothing in this First Amendment shall modify or affect Tenant’s obligation for payment of Tenant’s Operating Cost Share of Operating Expenses with respect to the Building pursuant to the terms of the Lease. The minimum rental provisions set forth in Section 3.1(a) of the Lease are amended to provide that for the period commencing on the Rent Commencement Date and ending two (2) months later (the “Abatement Period”), Tenant’s minimum monthly rental obligation under Section 3.1(a) of the Lease shall be zero ($0.00) [i.e., no minimum monthly rental due for those two months]. The remaining minimum monthly rental schedule in Section 3.1(a) of the Lease remains in full force and effect, and nothing in this First Amendment shall modify or affect in any way (a) Tenant’s obligation for payment of any other amounts (such as, but not limited to, utilities, personal property taxes, and Tenant’s Operating Cost Share of Operating Expenses with respect to the Building) for any period under the Lease, with the sole exception of the minimum monthly rent adjustment for the Abatement Period as set forth above, or (b) the calculation of the duration, term or expiration date of the Lease.

2. Brokers. Each party respectively (i) represents and warrants that no broker participated in the consummation of this First Amendment and (ii) agrees to indemnify, defend and hold the other party harmless against any liability, cost or expense, including (but not limited

to) reasonable attorneys’ fees, arising out of any claims for brokerage commissions or other similar compensation in connection with any conversations, prior negotiations, agreements or other dealings by the indemnifying party with any broker in connection with this First Amendment.

3. Entire Agreement. This First Amendment constitutes the entire agreement between Landlord and Tenant regarding the subject matter hereof and supersedes all prior negotiations, discussions, terms sheets, understandings and agreements, whether oral or written, between the parties with respect to such subject matter (other than the Lease itself, as expressly amended hereby).

4. Execution and Delivery. This First Amendment may be executed in one or more counterparts and by separate parties on separate counterparts, effective when each party has executed at least one such counterpart or separate counterpart, but each such counterpart shall constitute an original and all such counterparts together shall constitute one and the same instrument.

5. Full Force and Effect. Except as expressly set forth herein, the Lease has not been modified or amended and remains in full force and effect.

IN WITNESS WHEREOF, Landlord and Tenant have executed this First Amendment as of the date first set forth above.

“Landlord”			“Tenant”
SLOUGH REDWOOD CITY, LLC, a Delaware limited liability company			ONCOMED PHARMACEUTICALS, INC., a Delaware corporation
By:	Slough Estate USA Inc., a Delaware
	corporation, Its Manager		By:	/s/ Paul Hastings
			Name:
	By:	/s/ Jonathan M. Bergschneider
			Title:
	Name:	Jonathan M. Bergschneider
	Title:	Senior Vice President
			By:
			Name:
			Title:

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EXHIBIT C

ACKNOWLEDGMENTOFRENTCOMMENCEMENTDATE

ThisAcknowledgmentisexecutedasof March 9th,2007,by SLOUGHREDWOOD CITY,LLC,aDelawarelimitedpartnership ("Landlord"),and ONCOMEDPHARMACEUTICALS, INC., aDelaware corporation ("Tenant"), pursuanttoSection2.4oftheLeasedatedMay30,2006betweenLandlordandTenant, andasamendedon November30,2006inaFirstAmendmenttotheLease(collectively, the"Lease")coveringpremiseslocatedat800ChesapeakeDrive,RedwoodCity,CA 94063  (the "Premises").

LandlordandTenantherebyacknowledgeandagreeasfollows:

1. The Rent Commencement Date under the Lease is February 7, 2007.

2. Thetermination dateundertheLeaseshallbeFebruary6,2014,subject toanyapplicableprovisionsoftheLeaseforextensionorearly terminationthereof.

3. ThesquarefootageofthePremisesis45,690squarefeet.

4. TenantacceptsthePremises,subjectonlytoLandlord'swarranties, representationsandobligationsexpresslysetforthinSection2.3ofthe LeaseandintheWorkletter(asdefinedintheLease).

EXECUTEDasofthedatefirstsetforthabove.

"Landlord"                                                             "Tenant"

SLOUGHREDWOODCITY,LLC,aONCOMED PHARMACEUTICALS

DelawarelimitedpartnershipINC., a Delaware corporation

By:      SLOUGHREDWOODCITY,By:/s/ Martin H. Goldstein

LLC,aDelawarecorporation,

ItsGeneralPartnerIts: SVP Corporate Development

By:   /s/ Jonathon M. BergschneiderBy:  /s/ John Lewicki

Jonathon M. Bergschneider

SeniorVicePresidentIts: SVP, R&D

SECOND AMENDMENT TO OFFICE LEASE

This SECOND AMENDMENT TO OFFICE LEASE (“Amendment”) is made and entered into as of December 22, 2010, by and between HCP LS REDWOOD CITY, LLC, a Delaware limited liability company (“Landlord”), and ONCOMED PHARMACEUTICALS, INC., a Delaware corporation (“Tenant”).

R E C I T A L S:

A. Landlord (as successor in interest to Slough Redwood City, LLC) and Tenant are parties to that certain Lease dated May 30, 2006 (the “Lease”), as amended by that certain First Amendment to Lease dated November, 2006 (the “First Amendment”), and that certain Acknowledgement of Rent Commencement Date dated as of March 9, 2007, pursuant to which Lease Tenant leases from Landlord approximately 45,690 rentable square feet of space (the “Premises”) consisting of the entire building (the “Building”) located at 800 Chesapeake Drive, in the Britannia Seaport Centre in Redwood City, California.

B. The parties desire to amend the Lease on the terms and conditions set forth in this Amendment.

A G R E E M E N T:

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1. Terms. All capitalized terms when used herein shall have the same respective meanings as are given such terms in the Lease unless expressly provided otherwise in this Amendment.

2. Condition of the Premises. Commencing on January 1, 2011, Landlord shall provide Tenant with an improvement allowance equal to One Million Six Hundred Thousand Dollars ($1,600,000) (the “Tenant Improvement Allowance”) to be applied toward the construction of tenant improvements and other renovations to the Premises in accordance with the terms of the Tenant Work Letter attached hereto as Exhibit A. Except as expressly provided above, Tenant shall continue to accept the Premises in their currently existing “as-is” condition, and Landlord shall not be obligated to provide or pay for any work or services related to the improvement of the Premises.

3. Extended Lease Term. Pursuant to the Lease, the Lease Term is scheduled to expire on February 6, 2014. Landlord and Tenant hereby agree to extend the Lease Term for a period of five (5) years, to February 6, 2019 (the “Extended Lease Term”), on the terms and conditions set forth in this Amendment.

4. Rent.

4.1 Base Rent. Prior to February 6, 2012. Tenant shall continue to pay monthly installments of Base Rent for the Premises in accordance with the terms of

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Section 3.1(a) the Lease. Commencing on February 7, 2012, and continuing through the Extended Lease Term, Tenant shall pay monthly installments of Base Rent for the Premises as follows:

Period During Extended Term	AnnualBase Rent		Monthly Installmentof Base Rent		MonthlyRental Rate per Square  Foot
February 7, 2012 - February 6, 2013	$	1,781,910.00	$	148,492.50	$	3.25
February 7, 2013 - February 6, 2014	$	1,836,738.00	$	153,061.50	$	3.35
February 7, 2014 - February 6, 2015	$	1,891,566.00	$	157,630.50	$	3.45
February 7, 2015 - February 6, 2016	$	1,946,394.00	$	162,199.50	$	3.55
February 7, 2016 - February 6, 2017	$	2,006,704.80	$	167,225.40	$	3.66
February 7, 2017 - February 6, 2018	$	2,067,015.60	$	172,251.30	$	3.77
February 7, 2018 - February 6, 2019	$	2,127,326.40	$	177,277.20	$	3.88

4.2 Additional Rent. Prior to and during the Extended Term, Tenant shall continue to pay Tenant’s Operating Cost Share of the Operating Expenses and all other monetary obligations of Tenant in accordance with the terms of the Lease.

5. Option to Extend Term. Tenant shall continue to have two (2) options to extend the term of the Lease as of the end of the Extended Term as provided in Section 2.6 of the Original Lease, provided that the Original Lease as it relates to such options is hereby amended as follows.

5.1 Term of Extension. The length of each such option term shall be three (3) years, and not five (5) years as provided in the Original Lease.

5.2 Rental During Option Term. The rental increases of “one hundred four percent (104%)” as provided in subsections (i) and (ii) of Section 3.1(b) of the Original Lease, are hereby amended to be rental increases of “one hundred three percent (103%)”.

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6. Notices. Landlord’s address for Notices under Section 17.1 of the Lease shall be changed to the following:

if to Landlord:	HCP LS Redwood City, LLC
	c/o HCP, Inc.
	3760 Kilroy Airport Way, Suite 300
	Long Beach, CA 90806
	Attention: Legal Department
	and
	HCP Life Science Estates
	400 Oyster Point Boulevard, Suite 409
	South San Francisco, CA 94080
	Attention: Jon Bergschneider
	and
	Allen Matkins Leck Gamble Mallory & Natsis LLP
	1901 Avenue of the Stars
	Suite 1800
	Los Angeles, California 90067
	Attention: Anton N. Natsis, Esq.

7. Broker. Landlord and Tenant hereby warrant to each other that they have had no dealings with any real estate broker or agent in connection with the negotiation of this Amendment other than CB Richard Ellis, Inc. (the “Broker”), representing both Landlord and Tenant, and that they know of no other real estate broker or agent who is entitled to a commission in connection with this Amendment. Each party agrees to indemnify and defend the other party against and hold the other party harmless from any and all claims, demands, losses, liabilities, lawsuits, judgments, costs and expenses (including without limitation reasonable attorneys’ fees) with respect to any leasing commission or equivalent compensation alleged to be owing on account of any dealings with any real estate broker or agent, other than the Broker, occurring by, through, or under the indemnifying party. Landlord shall be responsible for all leasing commissions and/or equivalent compensation payable to the Broker in connection with this Amendment. The terms of this Section 7 shall survive the expiration or earlier termination of the term of the Lease, as hereby amended.

8. No Further Modification. Except as specifically set forth in this Amendment, all of the terms and provisions of the Lease shall remain unmodified and in full force and effect.

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IN WITNESS WHEREOF, this Amendment has been executed as of the day and year first above written.

“LANDLORD”	HCP LS REDWOOD CITY, LLC,
	a Delaware limited liability company
	By:	/s/ Jonathan M. Bergschneider
		Name:	Jonathan M. Bergschneider
		Its:	SVP
“TENANT”	ONCOMED PHARMACEUTICALS, INC.,
	a Delaware corporation
	By:	/s/ Paul J. Hastings
		Its:	CEO & President
		Date:	12/22/10

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EXHIBIT A

TENANT WORK LETTER

This Tenant Work Letter shall set forth the terms and conditions relating to the initial improvement of the Premises for Tenant following the date of this Amendment. This Tenant Work Letter is essentially organized chronologically and addresses the issues of construction, in sequence, as such issues will arise during construction in the Premises.

SECTION 1

CONDITION OF PREMISES

Tenant acknowledges that Tenant has been occupying the Premises in accordance with the Lease, and shall continue to accept the Premises in their existing, “as-is” condition on the date of delivery thereof to Tenant. Except for the payment of the Tenant Improvement Allowance as provided in Section 2, below, Landlord shall have no obligation to make or pay for any improvements to the Premises.

SECTION 2

TENANT IMPROVEMENTS

2.1 Tenant Improvement Allowance. Commencing as of January 1, 2011, Tenant shall be entitled to use the “Tenant Improvement Allowance”, as defined in Section 2 of this Amendment, for the costs relating to the design and construction of Tenant’s improvements or which are otherwise “Tenant Improvement Allowance items,” as that term is defined in Section 2.2.1, below (collectively, the “Tenant Improvements”). In no event shall Landlord be obligated to make disbursements pursuant to this Tenant Work Letter or otherwise in connection with Tenant’s construction of the Tenant Improvements or any Tenant Improvement Allowance Items, as defined below, in a total amount which exceeds the sum of the Tenant Improvement Allowance. All Tenant Improvements for which the Tenant Improvement Allowance has been made available shall be deemed Landlord’s property under the terms of the Lease; provided, however, Landlord may, by written notice to Tenant given concurrently with Landlord’s approval of the “Final Working Drawings”, as that term is defined in Section 3.3, below, require Tenant, prior to the end of the Lease Term or promptly following any earlier termination of this Lease, at Tenant’s expense, to remove any Tenant Improvements and to repair any damage to the Premises and Building caused by such removal and return the affected portion of the Premises to a Building standard general office condition; provided, however, that Landlord shall not require Tenant to remove upon termination or expiration of this Lease, or condition its approval upon Tenant’s agreement to remove upon termination or expiration of this Lease, any Tenant Improvements constructed pursuant to this Tenant Work Letter (including, without limitation, Larc improvements) which constitute standard, non-extraordinary improvements for ordinary office, laboratory and/or Larc uses in biotech facilities. Any portion of the Tenant Improvement Allowance that is not disbursed or allocated for disbursement by December 31, 2013, shall revert to Landlord and Tenant shall have no further rights with respect thereto.

EXHIBIT A

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2.2 Disbursement of the Tenant Improvement Allowance.

2.2.1 Tenant Improvement Allowance Items. Except as otherwise set forth in this Tenant Work Letter, the Tenant Improvement Allowance shall be disbursed by Landlord only for the following items and costs (collectively the “Tenant Improvement Allowance Items”):

2.2.1.1 Payment of all reasonable fees of the “Architect” and the “Engineers,” as those terms are defined in Section 3.1 of this Tenant Work Letter, project management fees, and payment of the fees incurred by, and the cost of documents and materials supplied by, Tenant and Tenant’s consultants in connection with the preparation and review of the “Construction Drawings,” as that term is defined in Section 3.2 of this Tenant Work Letter;

2.2.1.2 The payment of plan check, permit and license fees relating to construction of the Tenant Improvements;

2.2.1.3 The payment for all demolition and removal of existing improvements in the Premises;

2.2.1.4 The cost of the design and construction of the Tenant Improvements, including, without limitation, testing and inspection costs, costs incurred for removal of existing furniture, fixtures or equipment in the Premises, hoisting and trash removal costs, costs to remove wiring and cabling, costs to install wiring and cabling other than related to telecom or data uses, costs to purchase and install in the Premises equipment customarily incorporated into laboratory improvements or laboratory utility systems, including, without limitation, UPS, DI Systems, boilers, air compressors, glass/cage washers and autoclaves, painting, and contractors’ fees and general conditions;

2.2.1.5 The cost of any changes in the Base Building when such changes are required by the Construction Drawings (including if such changes are due to the fact that such work is prepared on an unoccupied basis), such cost to include all direct architectural and/or engineering fees and expenses incurred in connection therewith;

2.2.1.6 The cost of any changes to the Construction Drawings or Tenant Improvements required by all applicable building codes (the “Code”);

2.2.1.7 Sales and use taxes; and

2.2.1.8 Up to Three Hundred Twenty Thousand Dollars ($320,000) of the Tenant Improvement Allowance not otherwise used for items set forth in Section 2.2.1.4, above, may be used toward the purchase of furniture, fixtures and equipment (“FF&E”) (any FF&E purchased through the use of the Tenant Improvement Allowance in accordance with this Tenant Work Letter shall become property of the Landlord and remain in the Premises upon the expiration or earlier termination of the Lease), and for telecom and/or data wiring and cabling (provided that no more than $15,000 of such amount may be used for Such cabling purposes).

EXHIBIT A

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2.2.3 Disbursement of Tenant Improvement Allowance. During the construction of the Tenant Improvements, Landlord shall make monthly disbursements of the Tenant Improvement Allowance for Tenant Improvement Allowance Items for the benefit of Tenant and shall authorize the release of monies for the benefit of Tenant as follows.

2.2.3.1 Monthly Disbursements. On or before the fifth (5^th) day of each calendar month, during the design and construction of the Tenant Improvements (or such other date as Landlord may designate), Tenant shall deliver to Landlord: (i) a request for reimbursement of amounts paid to the “Contractor,” as that term is defined in Section 4.1.1 of this Tenant Work Letter, approved by Tenant, in a commercially reasonable form to be provided by Landlord, showing the schedule, by trade, of percentage of completion of the Tenant Improvements in the Premises, detailing the portion of the work completed and the portion not completed; (ii) invoices from all of “Tenant’s Agents,” as that term is defined in Section 4.1.2 of this Tenant Work Letter, for labor rendered and materials for the Premises; (iii) executed mechanic’s lien releases, as applicable, from all of Tenant’s Agents which shall comply with the appropriate provisions, as reasonably determined by Landlord, of California Civil Code Section 3262(d); and (iv) all other information reasonably requested by Landlord. Tenant’s request for payment shall be deemed Tenant’s acceptance and approval of the work furnished and/or the materials supplied as set forth in Tenant’s payment request. Within forty-five (45) days thereafter, Landlord shall deliver a check to Tenant made payable to Tenant in payment of the lesser of: (A) the amounts so requested by “tenant as set forth in this Section 2.2.3.1, above (or, subject to the terms of Section 4.2.1, below, a percentage thereof), and (B) the balance of any remaining available portion of the Tenant Improvement Allowance, provided that Landlord does not dispute any request for payment based on non-compliance of any work with the “Approved Working Drawings,” as that term is defined in Section 3.5 below, or due to any substandard work. Landlord’s payment of such amounts shall not be deemed Landlord’s approval or acceptance of the work furnished or materials supplied as set forth in Tenant’s payment request.

2.2.3.2 Final Deliveries. Following the completion of construction of the Tenant Improvements, Tenant shall deliver to Landlord properly executed final mechanic’s lien releases in compliance with both California Civil Code Section 3262(d)(2) and either Section 3262(d)(3) or Section 3262(d)(4) from all of Tenant’s Agents, and a certificate certifying that the construction of the Tenant Improvements in the Premises has been substantially completed. Tenant shall record a valid Notice of Completion in accordance with the requirements of Section 4.3 of this Tenant Work Letter.

2.2.3.3 Other Terms. Landlord shall only be obligated to make disbursements from the Tenant Improvement Allowance to the extent costs are incurred by Tenant for Tenant Improvement Allowance Items. All Tenant Improvement Allowance Items for which the Tenant Improvement Allowance has been made available shall be deemed Landlord’s property under the terms of this Lease.

2.3 Building Standards. The quality of Tenant Improvements shall be in keeping with the existing improvements in the Premises.

EXHIBIT A

3

SECTION 3

CONSTRUCTION DRAWINGS

3.1 Selection of Architect. Tenant shall retain an architect/space planner (the “Architect”) approved in advance by Landlord (which approval shall not be unreasonably withheld) to prepare the Final Space Plan and Final Working Drawings as provided in Section 3.2 and 3.3, below. Landlord hereby approves of WHL Architects*Planners, Inc., as a permitted Architect hereunder. Tenant shall retain the engineering consultants or design/build subcontractors designated by Tenant and reasonably approved in advance by Landlord (the “Engineers”) to prepare all plans and engineering working drawings relating to the structural, mechanical, electrical, plumbing, HVAC, lifesafety, and sprinkler work in the Premises, which work is not part of the Base Building. All such plans and drawings shall comply with the drawing format and specifications reasonably determined by Landlord, and shall be subject to Landlord’s reasonable approval. Tenant and Architect shall verify, in the field, the dimensions and conditions as shown on the relevant portions of the Base Building plans, and Tenant and Architect shall be solely responsible for the same, and Landlord shall have no responsibility in connection therewith. Landlord’s review of any plans or drawings as set forth in this Section 3, shall be for its sole purpose and shall not imply Landlord’s review of the same, or obligate Landlord to review the same, for quality, design, Code compliance or other like matters.

3.2 Final Space Plan. Tenant shall supply Landlord with four (4) copies signed by Tenant of its final space plan for the Premises before any architectural working drawings or engineering drawings have been commenced. The final space plan (the “Final Space Plan”) shall include a layout and designation of all offices, labs, rooms and other partitioning, their intended use, and equipment to be contained therein. Landlord may request clarification or more specific drawings for special use items not included in the Final Space Plan. Landlord shall not unreasonably withhold, condition, or delay its approval of the Final Space Plan. Landlord shall approve or reasonably disapprove of the Final Space Plan within five (5) business days after Landlord’s receipt thereof. If Landlord reasonably withholds its approval, Landlord shall provide Tenant with the specific reasons therefor.

3.3 Final Working Drawings. After the Final Space Plan has been approved by Landlord, Tenant shall supply the Engineers with a complete listing of standard and non-standard equipment and specifications, including, without limitation, Title 24 calculations, electrical requirements and special electrical receptacle requirements for the Premises, to enable the Engineers and the Architect to complete the “Final Working Drawings” (as that term is defined below) in the manner as set forth below. Upon the approval of the Final Space Plan by Landlord and Tenant, Tenant shall promptly cause the Architect and the Engineers to complete the architectural and engineering drawings for the Premises, and Architect shall compile a fully coordinated set of architectural, structural, mechanical, electrical and plumbing working drawings in a form which is sufficiently complete to allow all of Tenant’s Agents to bid on the work and to obtain all applicable permits (collectively, the ‘‘Final Working Drawings”) and shall submit the same to Landlord for Landlord’s approval, which shall not be unreasonably withheld, conditioned, or delayed. Tenant shall supply Landlord with four (4) copies signed by Tenant of such Final Working Drawings, Landlord shall not unreasonably withhold, condition, or delay its approval of the Final Working Drawings. Landlord shall approve or reasonably

EXHIBIT A

4

disapprove of the Final Working Drawings within ten (10) business days after Landlord’s receipt thereof. If Landlord reasonably withholds its approval, Landlord shall provide Tenant with the specific reasons therefor.

3.4 Approved Working Drawings. The Final Working Drawings shall be approved by Landlord (the “Approved Working Drawings”) prior to the commencement of construction of the Premises by Tenant. Concurrently with Tenant’s delivery of the Final Working Drawings to Landlord for Landlord’s approval, Tenant may submit the same to the appropriate municipal authorities for all applicable building permits. Tenant hereby agrees that neither Landlord nor Landlord’s consultants shall be responsible for obtaining any building permit or certificate of occupancy for the Premises and that obtaining the same shall be Tenant’s responsibility; provided, however, that Landlord shall cooperate with Tenant in executing permit applications and performing other ministerial acts reasonably necessary to enable Tenant to obtain any such permit or certificate of occupancy. No changes, modifications or alterations in the Approved Working Drawings may be made without the prior written consent of Landlord, which shall not be unreasonably withheld, conditioned, or delayed, except that Tenant shall be entitled to make minor changes customarily made in the field without Landlords consent, provided that Tenant shall provide notice to Landlord thereof and any documentation received in connection with any such changes.

SECTION 4

CONSTRUCTION OF THE TENANT IMPROVEMENTS

4.1 Tenant’s Selection of Contractors.

4.1.1 The Contractor; Landlord’s Project Manager. Tenant shall retain a licensed general contractor, approved in advance by Landlord, to construct the Tenant Improvements (“Contractor”). Landlord’s approval of the Contractor shall not be unreasonably withheld. Landlord hereby approves of Landmark Builders Incorporated as a permitted Contractor hereunder. Landlord shall retain Project Management Advisors, Inc. (“PMA”) as a third party project manager for construction oversight of the Tenant Improvements on behalf of Landlord. Landlord shall be solely responsible for any fee associated with such services.

4.1.2 Tenant’s Agents. All subcontractors, laborers, materialmen, and suppliers used by Tenant (such subcontractors, laborers, materialmen, and suppliers, and the Contractor to be known collectively as “Tenant’s Agents”). The subcontractors used by Tenant, but not any laborers, materialmen, and suppliers, must be approved in writing by Landlord, which approval shall not be unreasonably withheld, conditioned, or delayed; provided, however, Landlord may nevertheless reasonably designate and reasonably require the use of particular mechanical, engineering, plumbing, fire life-safety and other Base Building subcontractors. If Landlord does not approve any of Tenant’s proposed subcontractors, Tenant shall submit other proposed subcontractors for Landlord’s written approval.

EXHIBIT A

5

4.2 Construction of Tenant Improvements by Tenant’s Agents.

4.2.1 Construction Contract; Cost Budget. Tenant shall engage the Contractor under a commercially reasonable and customary construction contract, reasonably approved by Landlord (collectively, the “Contract”). Prior to the commencement of the construction of the Tenant Improvements, and after Tenant has accepted all bids for the Tenant Improvements, Tenant shall provide Landlord with a detailed breakdown, by trade, of the final costs to be incurred or which have been incurred, as set forth more particularly in Sections 2.2.1.1 through 2.2.1.9, above, in connection with the design and construction of the Tenant Improvements to be performed by or at the direction of Tenant or the Contractor, which costs form a basis for the estimated total costs of the work of the Tenant Improvement project (the “Final Budget”). Prior to the commencement of construction of the Tenant Improvements, Tenant shall inform Landlord of the amount (the “Over-Allowance Amount”), if any, by which the amount of the Final Budget exceeds the amount of the Tenant Improvement Allowance (less any portion thereof already disbursed by Landlord, or in the process of being disbursed by Landlord, on or before the commencement of construction of the Tenant Improvements). Tenant shall be responsible to pay any Over-Allowance Amount in progress payments on a pro rata basis based on the total Over-Allowance Amount as compared to the Tenant Improvement Allowance.

4.2.2 Tenant’s Agents.

4.2.2.1 Compliance with Drawings and Schedule. Tenant’s and Tenant’s Agent’s construction of the Tenant Improvements shall comply with the following: (i) the Tenant Improvements shall be constructed in substantial accordance with the Approved Working Drawings; and (ii) Tenant’s Agents shall endeavor to submit schedules of all work relating to the Tenant’s Improvements to Contractor and Contractor shall endeavor, within five (5) business days of receipt thereof, to inform Tenant’s Agents of any changes which are necessary thereto, and Tenant’s Agents shall endeavor to adhere to such corrected schedule.

4.2.2.2 Indemnity. Tenant’s indemnity of Landlord as set forth in this Lease shall also apply with respect to any and all costs, losses, damages, injuries and liabilities related in any way to any act or omission of Tenant or Tenant’s Agents, or anyone directly or indirectly employed by any of them, or in connection with Tenant’s non-payment of any amount arising out of the Tenant improvements and/or Tenant’s disapproval of all or any portion of any request for payment. Such indemnity by Tenant, as set forth in this Lease, shall also apply with respect to any and all costs, losses, damages, injuries and liabilities related in any way to Landlord’s performance of any ministerial acts reasonably necessary (i) to permit Tenant to complete the Tenant Improvements, and (ii) to enable Tenant to obtain any building permit or certificate of occupancy for the Premises. The foregoing indemnities shall not apply to claims caused by the negligence or willful misconduct of Landlord, its member partners, shareholders, officers, directors, agents, employees, and/or contractors.

4.2.2.3 Requirements of Tenant’s Agents. Each of Tenant’s Agents shall provide to Tenant and for the benefit of Landlord a commercially reasonable and customary warranty covering the portion of the Tenant Improvements for which it is responsible, which warranty shall be for a period of not less than one (1) year from the date of substantial

EXHIBIT A

6

completion of the work under the Contract (“Substantial Completion”). All such warranties as to materials or workmanship of or with respect to the Tenant Improvements shall be contained in the Contract or subcontract and shall be written such that such warranties shall inure to the benefit of both Landlord and Tenant, as their respective interests may appear, and can be directly enforced by either.

4.2.2.4 Insurance Requirements.

4.2.2.4.1 General Coverages. All of Tenant’s Agents shall carry worker’s compensation insurance covering all of their respective employees, and shall also carry public liability insurance, including property damage, all with limits, in form and with companies as are required to be carried by Tenant’s contractors as set forth in Section 7.1 of the Lease.

4.2.2.4.2 Special Coverages. Tenant shall carry “Builder’s All Risk” insurance in an amount approved by Landlord covering the construction of the Tenant Improvements, and such other insurance as Landlord may require, but Landlord shall insure the Tenant Improvements pursuant to the Lease immediately upon completion thereof in the same manner as Landlord is required to insure the “Tenant Improvements constructed by Landlord” pursuant to Section 10.1(d) of the Lease. Such insurance shall be in amounts and shall include such extended coverage endorsements as may be reasonably required by Landlord including, but not limited to, the requirement that all of Tenant’s Agents, including all contractors, shall carry general liability, including Products and Completed Operation Coverage insurance, each in amounts not less than (i) for the Contractor, $5,000,000 per incident, $5,000,000 in aggregate, and (ii) for subcontractors, $2,000,000 per incident, $2,000,000 in aggregate (or such lesser amounts as are reasonably approved in advance by Landlord), as well as workers compensation insurance and in form and with companies as are required to be carried by Tenant’s contractors as set forth in the Lease.

4.2.2.4.3 General Terms. Certificates for all insurance carried pursuant to this Section 4.2.2.4 Shall be delivered to Landlord before the commencement of construction of the Tenant Improvements and before any equipment of Tenant’s Agents is moved onto the site. All such policies of insurance must contain a provision that the company writing said policy will endeavor to give Landlord thirty (30) days prior written notice of any cancellation or lapse of the effective date or any reduction in the amounts of such insurance. Tenant shall provide Landlord notice of any cancellation or lapse of the effective date or reduction in the amounts of such insurance promptly following Tenant’s receipt of such notice from its insurer. In the event that the Tenant Improvements are damaged by any cause during the course of the construction thereof, Tenant shall immediately repair the same at Tenant’s sole cost and expense. Tenant’s Agents shall maintain all of the foregoing insurance coverage in force until the Tenant Improvements are fully completed and accepted by Landlord, except for Products and Completed Operations Coverage insurance required by Landlord, which is to be maintained for a commercially reasonable period following completion of the Tenant Improvements and acceptance by Landlord and Tenant. The builders risk policy carried under thisSection 4.2.2.4 shall name Tenant’s agents and Landlord as Additional Insureds. All insurance maintained by Tenant’s Agents shall preclude subrogation claims by the insurer against anyone insured thereunder, and the public liability insurance shall name Landlord, HCP, Inc., Project Management Advisors, Inc., CB Richard Ellis, or other manager of the Project, as

EXHIBIT A

7

an additional insured or loss payee, as applicable. Such insurance shall provide that it is primary insurance and that any other insurance maintained by Landlord is excess and noncontributing with the insurance required hereunder, The requirements for the foregoing insurance shall not serve to limit the indemnification of Landlord by Tenant under Section 4.2.2.2 of this Tenant Work Letter. If the Over-Allowance Amount is more than fifty percent of the total amount of the Tenant Improvement Allowance, then Landlord may, in its reasonable discretion, require Tenant to obtain a lien and completion bond or some alternate form of security satisfactory to Landlord in an amount sufficient to ensure the lien-free completion of the Tenant Improvements and naming Landlord as a co-obligee.

4.2.3 Governmental Compliance. The Tenant Improvements shall comply in all respects with the following: (i) all state, federal, city or quasi-governmental laws, codes, ordinances and regulations, as each may apply according to the rulings of the controlling public official, agent or other person; (ii) applicable standards of the American Insurance Association (formerly, the National Board of Fire Underwriters) and the National Electrical Code; and (iii) building material manufacturer’s specifications.

4.2.4 Inspection by Landlord. Landlord shall have the right to reasonably inspect the Tenant Improvements at all times, provided however, that Landlord’s failure to inspect the Tenant Improvements shall in no event constitute a waiver of any of Landlord’s rights hereunder nor shall Landlord’s inspection of the Tenant Improvements constitute Landlord’s approval of the same. Should Landlord reasonably disapprove any portion of the Tenant Improvements, on the grounds that the construction is defective or fails to comply with the Approved Working Drawings, Landlord shall notify Tenant in writing of such disapproval and shall specify the items disapproved. Any such defects or deviations shall be rectified by Tenant at no expense to Landlord, provided however, that in the event Landlord determines that a defect or deviation exists that might adversely affect the mechanical, electrical, plumbing, heating, ventilating and air conditioning or life-safety systems of the Building, the structure or exterior appearance of the Building or any other tenant’s use of such other tenant’s leased premises, Landlord may, take such action as Landlord reasonably deems necessary, at Tenant’s expense and without incurring any liability on Landlord’s part, to correct any such defect and/or deviation, including, without limitation, causing the cessation of performance of the construction of the Tenant Improvements until such time as the defect and/or deviation is corrected to Landlord’s reasonable satisfaction.

4.2.5 Meetings. Commencing upon the execution of this Lease, Tenant shall hold weekly meetings at a reasonable time, as reasonably required, with the Architect and the Contractor regarding the progress of the preparation of Construction Drawings and the construction of the Tenant Improvements, and Landlord and/or its agents shall receive prior notice of, and shall have the right to attend, all such meetings, and, upon Landlord’s request, certain of Tenant’s Agents shall attend such meetings. In addition, minutes shall be taken at all such meetings, a copy of which minutes shall be promptly delivered to Landlord. One such meeting each month shall include the review of Contractor’s current request for payment.

4.3 Notice of Completion; Copy of Record Set of Plans. Within ten (10) days after completion of construction of The Tenant Improvements, Tenant shall cause a valid Notice of Completion to be recorded in the office of the Recorder of the county in which the Building is

EXHIBIT A

8

located in accordance with Section 3093 of the Civil Code of the State of California or any successor statute, and shall furnish a copy thereof to Landlord upon such recordation. If Tenant fails to do so, Landlord may execute and file the same on behalf of Tenant as Tenant’s agent for such purpose, at Tenant’s sole cost and expense. At the conclusion of construction, (i) Tenant shall cause the Architect and Contractor (x) to update the Approved Working Drawings as necessary to reflect all changes made to the Approved Working Drawings during the course of construction, (y) to certify to the best of their knowledge that the “record-set” of as-built drawings are true and correct, which certification shall survive the expiration or termination of this Lease, and (z) to deliver to Landlord two (2) sets of copies of such record set of drawings (hard copy and CAD files) within ninety (90) days following issuance of a certificate of occupancy for the Premises, and (ii) Tenant shall deliver to Landlord a copy of all warranties and operating manuals and information relating to the Tenant Improvements. Within fifteen (15) days after request by Tenant following the Substantial Completion of the Tenant Improvements, Landlord will acknowledge its approval of the Tenant Improvements (provided that such approval has been granted) by placing its signature on a Contractor’s Certificate of Substantial Completion fully executed by the Architect, Contractor and Tenant. Landlord’s approval shall not create any contingent liabilities for Landlord with respect to any latent quality, design, Code compliance or other like matters that may arise subsequent to Landlord’s approval.

SECTION 5

MISCELLANEOUS

5.1 Tenant’s Representative. Tenant has designated Chuck Alaimo as its sole representatives with respect to the matters set forth in this Tenant Work Letter, who shall each have full authority and responsibility to act on behalf of the Tenant as required in this Tenant Work Letter.

5.2 Landlord’s Representative. Landlord has designated Bernie Baker and/or Jeff Marcowitz with PMA, as its sole representatives with respect to the matters set forth in this Tenant Work Letter, who, until further notice to Tenant, shall have full authority and responsibility to act on behalf of the Landlord as required in this Tenant Work Letter.

5.3 Time is of the Essence in This Tenant Work Letter. Unless otherwise indicated, all references herein to a “number of days” shall mean and refer to calendar days. If any item requiring approval is timely disapproved by Landlord, the procedure for preparation of the document and approval thereof shall be repeated until the document is approved by Landlord.

5.4 Tenant’s Lease Default. Notwithstanding any provision to the contrary contained in the Lease or this Tenant Work Letter, if any default by Tenant under the Lease or this Tenant Work Letter (including, without limitation, any failure by Tenant to fund any portion of the Over-Allowance Amount) occurs at any time on or before the substantial completion of the Tenant Improvements and such default remains uncured ten (10) days following Landlord’s notice of such default to Tenant, then in addition to all other rights and remedies granted to Landlord pursuant to the Lease, Landlord shall have the right, during the continuation of such default, to withhold payment of all or any portion of the Tenant Improvement Allowance and/or, without any liability whatsoever, to cause the cessation of construction of the Tenant

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Improvements (in which case, Tenant shall be responsible for any delay in the substantial completion of the Tenant Improvements and any costs occasioned thereby).

EXHIBIT A

10

THIRD AMENDMENT TO LEASE

This THIRD AMENDMENT TO LEASE (this "Third Amendment") is made and entered into as of the 11 day of November, 2016, by and between HCP LS REDWOOD CITY, LLC, a Delaware limited liability company ("Landlord"), and ONCOMED PHARMACEUTICALS, INC., a Delaware corporation("Tenant").

R E C I T A L S :

A.Landlord (as successor in interest to Slough Redwood City, LLC) and Tenant are parties to that certain Lease dated May 30, 2006 (the "Original Lease"), as amended by that certain First Amendment to Lease dated November, 2006 (the "First Amendment"), that certain Acknowledgement of Rent Commencement Date dated as of March 9, 2007 ("Commencement Letter"), and that certain Second Amendment to Office Lease dated December 22, 2010 (the "Second Amendment") pursuant to which Lease Tenant leases from Landlord approximately 45,690 rentable square feet of space (the "Existing Premises") consisting of the entire building (the " 800 Building") located at 800 Chesapeake Drive, in the Britannia Seaport Centre in Redwood City, California.  The Original Lease, the First Amendment, the Commencement Letter and the Second Amendment are, collectively, the "Lease."

B.Landlord and Tenant desire (i) to extend the Lease Term of the Lease, (ii) to expand the Existing Premises to include that certain space consisting of approximately 22,750 rentable square feet of space consisting of space on the first (1^st) floor of the building (the "900 Building") located at 900 Chesapeake Drive, in the Britannia Seaport Centre in Redwood City, California (the "Expansion Premises"), as delineated on Exhibit A attached hereto and made a part hereof, and (iii) to make other modifications to the Lease, and in connection therewith, Landlord and Tenant desire to amend the Lease as hereinafter provided.

A G R E E M E N T :

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1.Capitalized Terms.  All capitalized terms when used herein shall have the same meaning as is given such terms in the Lease unless expressly superseded by the terms of this Third Amendment.

2.Modification of Premises.  Effective as of the date (the "Expansion Commencement Date") which is the earlier to occur of (i) the date upon which Tenant first commences to conduct business in the Expansion Premises and (ii) the Target Commencement Date (as defined below), Tenant shall lease from Landlord and Landlord shall lease to Tenant the Expansion Premises.  The “Target Commencement Date” shall mean June 1, 2018; provided, however, if Landlord fails to deliver possession of the Expansion Premises to Tenant on or before the Target Delivery Date (as defined below), then the Target Commencement Date shall be extended beyond June 1, 2018, by one (1) day for each day delivery of possession of the

761257.05/WLA 183305-00010/3-9-17/gjn/gjn   HCP LS Redwood City, LLC [Third Amendment] [Oncomed Pharmaceuticals, Inc.]

Expansion Premises to Tenant is delayed beyond the Target Delivery Date.  Landlord and Tenant hereby acknowledge that the Expansion Premises shall be occupied by a third-party tenant (the "Third Party") pursuant to a lease to be entered into between Landlord and such Third Party (the "Third-Party Lease").  Such Third-Party Lease shall contain an unconditional right of Landlord to terminate the Third-Party Lease.  In the event Tenant shall lease the Expansion Premises (either via delivery of the "Expansion Confirmation Notice" (as that term is defined in Section 7 below) or if Tenant fails to deliver the "Expansion Termination Notice" (as that term is defined in Section 7 below)) Landlord shall cause the Third-Party Lease to terminate on or prior to the Target Delivery Date (by exercise of the right to terminate or otherwise), but Landlord's ability to deliver the Expansion Premises to Tenant is expressly conditioned upon the full vacation and surrender of the Expansion Premises by the Third Party to Landlord.  Provided that Landlord has caused the Third-Party Lease to terminate on or before the Target Delivery Date (by exercise of the right to terminate or otherwise), if Landlord is unable for any reason to deliver possession of the Expansion Premises to Tenant on or before the Target Delivery Date, then Landlord shall not be subject to any liability for its failure to do so, and such failure shall not affect the validity of this Third Amendment or the obligations of Tenant hereunder.  In connection with the foregoing, Landlord agrees to utilize commercially reasonable efforts to deliver the Expansion Premises on or before the Target Delivery Date.  The “Target Delivery Date” shall mean the later of (a) six (6) months following the earlier to occur of (i) Landlord's receipt of the Expansion Confirmation Notice, and (ii) the last day upon which Tenant may deliver the "Expansion Termination Notice" (as that term is defined in Section 7 below) (i.e., September 15, 2017), or (b) January 1, 2018.  Effective upon the Expansion Commencement Date, the Existing Premises shall be increased to include the Expansion Premises.  Landlord and Tenant hereby acknowledge that such addition of the Expansion Premises to the Existing Premises shall, effective as of the Expansion Commencement Date, increase the size of the Premises to approximately 68,440 rentable square feet.  The Existing Premises and the Expansion Premises may hereinafter collectively be referred to as the "Premises".  Notwithstanding the foregoing, in the event Landlord is not able to deliver the Expansion Premises to Tenant on or before June 1, 2018 (subject to extension by virtue of delays resulting from events of "Force Majeure" (as that term is defined below), then commencing on the Expansion Commencement Date, Tenant shall receive one (1) day of abatement of Base Rent with respect to the Expansion Premises for each day delivery of the Expansion Premises is delayed beyond June 1, 2018.  For purposes of this Third Amendment, Force Majeure shall mean any prevention, delay or stoppage due to strikes, lockouts, labor disputes, acts of God, inability to obtain services, labor, or materials or reasonable substitutes therefor, governmental actions, civil commotions, fire or other casualty, and other causes beyond the reasonable control of the party obligated to perform (collectively, a "Force Majeure").  Force Majeure shall not include a holdover of the Expansion Premises by the Third Party.

3.Lease Term.  

3.1.Expansion Term.  Landlord and Tenant acknowledge that Tenant's lease of the Existing Premises is scheduled to expire on February 6, 2019, pursuant to the terms of the Lease.  Notwithstanding anything to the contrary in the Lease, the term of Tenant's lease of the Existing Premises is hereby extended and shall expire coterminously with the term of Tenant's lease of the Expansion Premises on May 31, 2028 (the "Expansion Expiration Date"), unless sooner terminated as provided in the Lease, as hereby amended, provided that in the event

761257.05/WLA 183305-00010/3-9-17/gjn/gjn -2-   HCP LS Redwood City, LLC [Third Amendment] [Oncomed Pharmaceuticals, Inc.]

Tenant timely exercises the Expansion Termination Right, then the Lease Term with respect to the Existing Premises shall still be extended to and shall expire on May 31, 2028.  The period of time commencing on the Expansion Commencement Date and terminating on the Expansion Expiration Date, shall be referred to herein as the "Expansion Term."  

3.2.Option Term.  Landlord and Tenant acknowledge and agree that notwithstanding the extension of the Lease Term set forth in Section 3.1 above, Tenant shall retain one (1) option to extend the Expansion Term (with respect to the Expansion Premises) and to further extend the Lease Term (with respect to the Existing Premises) as set forth in Section 2.6 of the Original Lease (as amended pursuant to Section 5 of the Second Amendment), provided that all references to the "Premises" therein shall be deemed to be references to both the Existing Premises and the Expansion Premises.

4.Base Rent.  

4.1.Existing Premises.  Prior to September 1, 2016, Tenant continued to pay Base Rent (also referred to as “minimum rental” under the Lease) for the Existing Premises in accordance with the terms of the Lease.  Commencing retroactively on September 1, 2016, and continuing throughout the remainder of the Lease Term, Tenant shall pay to Landlord monthly installments of Base Rent for the Existing Premises as follows:

Period During Expansion Term	Annualized Base Rent		MonthlyInstallment of Base Rent		Approximate Monthly Rental Rate per Rentable Square Foot
September 1, 2016 –  May 31, 2018	$2,275,362.00		$189,613.50		$4.15
June 1, 2018 –  May 31, 2019	$2,357,604.00		$196,467.00		$4.30
June 1, 2019 –  May 31, 2020	$2,440,120.14		$203,343.35		$4.45
June 1, 2020 –  May 31, 2021	$2,525,524.34		$210,460.36		$4.61
June 1, 2021 –  May 31, 2022	$2,613,917.70		$217,826.47		$4.77
June 1, 2022 –  May 31, 2023	$2,705,404.82		$225,450.40		$4.93
June 1, 2023 –  May 31, 2024	$2,800,093.98		$233,341.17		$5.11
June 1, 2024 –  May 31, 2025	$2,898,097.27		$241,508.11		$5.29
761257.05/WLA 183305-00010/3-9-17/gjn/gjn		-3-		HCP LS Redwood City, LLC [Third Amendment] [Oncomed Pharmaceuticals, Inc.]

June 1, 2025 –  May 31, 2026	$2,999,530.68	$249,960.89	$5.47
June 1, 2026 –  May 31, 2027	$3,104,514.25	$258,709.52	$5.66
June 1, 2027 –  May 31, 2028	$3,213,172.25	$267,764.35	$5.86

4.2.Existing Premises Abated Base Rent.  Provided that Tenant is not then in default of the Lease (as hereby amended) beyond the applicable notice and cure periods set forth in the Lease, as amended, then during the period commencing on September 1, 2016 and ending on March 31, 2017 (the "Existing Premises Rent Abatement Period"), Tenant shall not be obligated to pay any Base Rent otherwise attributable to the Existing Premises during such Existing Premises Rent Abatement Period (the "Existing Premises Rent Abatement").  Landlord and Tenant acknowledge that the aggregate amount of the Existing Premises Rent Abatement equals $1,327,294.50 (i.e., $189,613.50 per month).  Tenant acknowledges and agrees that the foregoing Existing Premises Rent Abatement has been granted to Tenant as additional consideration for entering into this Third Amendment, and for agreeing to pay the rent and performing the terms and conditions otherwise required under the Lease (as hereby amended).  

4.3.Expansion Premises.  Commencing on the Expansion Commencement Date and continuing throughout the Expansion Term, Tenant shall pay to Landlord monthly installments of Base Rent (also referred to as “minimum rental” under the Lease) for the Expansion Premises as follows:

Period During Expansion Term	Annual Base Rent		MonthlyInstallment of Base Rent		Approximate Monthly Rental Rate per Rentable Square Foot
Expansion Commencement Date –  May 31, 2019	$1,173,900.00		$97,825.00		$4.30
June 1, 2019 –  May 31, 2020	$1,214,986.50		$101,248.88		$4.45
June 1, 2020 –  May 31, 2021	$1,257,511.03		$104,792.59		$4.61
June 1, 2021 –  May 31, 2022	$1,301,523.91		$108,460.33		$4.77
June 1, 2022 –  May 31, 2023	$1,347,077.25		$112,256.44		$4.93
June 1, 2023 –  May 31, 2024	$1,394,224.95		$116,185.41		$5.11
761257.05/WLA 183305-00010/3-9-17/gjn/gjn		-4-		HCP LS Redwood City, LLC [Third Amendment] [Oncomed Pharmaceuticals, Inc.]

June 1, 2024 –  May 31, 2025	$1,443,022.83	$120,251.90	$5.29
June 1, 2025 –  May 31, 2026	$1,493,528.63	$124,460.72	$5.47
June 1, 2026 –  May 31, 2027	$1,545,802.13	$128,816.84	$5.66
June 1, 2027 –  May 31, 2028	$1,599,905.20	$133,325.43	$5.86

On or before the Expansion Commencement Date, Tenant shall pay to Landlord the Base Rent payable for the Expansion Premises for the first full month of the Expansion Term.

5.Tenant's Operating Cost Share of Operating Expenses.  

5.1.Existing Premises.  Notwithstanding the extension of the Lease Term as provided herein, Tenant shall continue to be obligated to pay Tenant's Operating Cost Share of the Operating Expenses in connection with the Existing Premises in accordance with the terms of the Lease; provided that Landlord and Tenant hereby acknowledge and agree that Tenant shall not be obligated to pay Tenant's Operating Cost Share of the Operating Expenses during the period commencing retroactively on September 1, 2016 through December 31, 2016.  In connection with the foregoing, Landlord and Tenant acknowledge and agree that Tenant has paid minimum rental and Tenant's Operating Cost Share of the Operating Expenses for September 2016, October 2016 and November 2016, and accordingly, within forty-five (45) days following the full execution and delivery of this Third Amendment by Landlord and Tenant, Landlord shall deliver a check to Tenant reimbursing Tenant for such payments previously received by Landlord.

5.2.Expansion Premises.  Except as specifically set forth in this Section 5.2, commencing on the Expansion Commencement Date, Tenant shall pay Tenant's Share of Direct Expenses in connection with the Expansion Premises in accordance with the terms of the Lease, provided that with respect to the calculation of Tenant's Operating Cost Share of the Operating Expenses in connection with the Expansion Premises, Tenant's Operating Cost Share shall equal 50% of the 900 Building.

6.Improvements.  Except as specifically set forth in the Tenant Work Letter attached to this Third Amendment as Exhibit B (the "Tenant Work Letter"), Landlord shall not be obligated to provide or pay for any improvement work or services related to the improvement of the Expansion Premises.  Landlord shall deliver the Expansion Premises to Tenant in good, vacant, broom clean condition, in compliance with all laws (to the extent required to obtain or maintain a certificate of occupancy for the Expansion Premises), with the roof water-tight and shall cause the plumbing, electrical systems, fire sprinkler system, lighting, and all other building systems serving the Expansion Premises to be in good operating condition and repair on or before the Expansion Commencement Date.  Tenant shall otherwise accept the Expansion Premises and continue to accept the Existing Premises in their presently existing, "as-is" condition.  For purposes of Section 1938 of the California Civil Code, Landlord hereby discloses

761257.05/WLA 183305-00010/3-9-17/gjn/gjn -5-   HCP LS Redwood City, LLC [Third Amendment] [Oncomed Pharmaceuticals, Inc.]

to Tenant, and Tenant hereby acknowledges that the Common Areas and the Premises have not undergone inspection by a Certified Access Specialist (CASp).

7.Expansion Premises Termination Right.  Notwithstanding any provision to the contrary contained in the Lease (as amended), Tenant shall have the right (the "Expansion Termination Right"), upon written notice to Landlord (the "Expansion Termination Notice") delivered no later than September 15, 2017, to terminate Tenant's lease of the Expansion Premises only.  Provided that Tenant timely delivers the Expansion Termination Notice as set forth above, then (i) the Lease with respect to the Expansion Premises only shall automatically terminate and be of no further force or effect, (ii) Landlord and Tenant shall be relieved of their respective obligations under the Lease, as amended, solely with respect to the Expansion Premises, (iii) the Premises shall be decreased to exclude the Expansion Premises and thereafter, all references in the Lease and this Third Amendment to the term "Premises" shall be deemed to refer to only the Existing Premises, (iv) the applicable portions of this Third Amendment which relate solely to the Expansion Premises (specifically including, without limitation, Sections 2, 4.3, 5.2 and 9) shall be deemed null and void and of no further force or effect, and the portions of this Amendment which relate solely to the Existing Premises shall remain unmodified and of full force and effect, and (v) Tenant shall only be entitled to receive the "Existing Premises Improvement Allowance" (as defined in the Tenant Work Letter) and Tenant would forfeit any and all right to the "Expansion Premises Improvement Allowance" (as defined in the Tenant Work Letter). In connection with the foregoing, Tenant hereby agrees that if prior to September 15, 2017, Tenant determines that Tenant shall lease the Expansion Premises pursuant to the terms of this Third Amendment, Tenant shall provide written notice of the same to Landlord (the "Expansion Confirmation Notice"), in which event Landlord and Tenant shall promptly thereafter execute an amendment (substantially in the form of Exhibit C attached hereto) to the Lease deleting the Expansion Premises Termination Right and confirming Tenant's lease of the Expansion Premises pursuant to the terms of this Third Amendment.  Notwithstanding the foregoing documentation obligation, Landlord and Tenant hereby acknowledge and agree that Tenant's delivery of the Expansion Confirmation Notice (or Tenant's failure to timely deliver the Expansion Termination Notice) shall, in and of itself, conclusively establish Tenant's obligation to lease the Expansion Premises and Landlord’s obligation to lease to Tenant the Expansion Premises) on the express terms, covenants and conditions set forth in this Third Amendment.  

8.Broker.  Landlord and Tenant hereby warrant to each other that they have had no dealings with any real estate broker or agent in connection with the negotiation of this Third Amendment other than CBRE, Inc. (the "Broker"), and that they know of no other real estate broker or agent who is entitled to a commission in connection with this Third Amendment.  Landlord shall pay the Brokers the commissions payable in connection with this Third Amendment pursuant to a separate agreement.  Each party agrees to indemnify and defend the other party against and hold the other party harmless from any and all claims, demands, losses, liabilities, lawsuits, judgments, and costs and expenses (including, without limitation, reasonable attorneys' fees) with respect to any leasing commission or equivalent compensation alleged to be owing on account of the indemnifying party's dealings with any real estate broker or agent, other than the Broker.  The terms of this Section 8 shall survive the expiration or earlier termination of the term of the Lease, as hereby amended.

761257.05/WLA 183305-00010/3-9-17/gjn/gjn -6-   HCP LS Redwood City, LLC [Third Amendment] [Oncomed Pharmaceuticals, Inc.]

9.Insurance / Restoration.  Landlord and Tenant agree that the Tenant Improvements under the Tenant Work Letter (and the Tenant Improvements under the Second Amendment) shall be deemed to be “Tenant Improvements constructed by Landlord” for purposes of Sections 10.1(c), 10.1(d) and 13.1(a) of the Lease.  

10.No Mortgage.  Landlord represents and warrants to Tenant that as of the date of this Third Amendment, neither the Premises, the 800 Building, the 900 Building nor the Center is subject to any existing ground lease, mortgage, deed of trust, sale/leaseback transaction or any other hypothecation for security.

11.No Further Modification.  Except as set forth in this Third Amendment, all of the terms and provisions of the Lease shall remain unmodified and in full force and effect.  The terms of that certain letter of intent dated September 19, 2016 executed by the parties hereto shall be deemed null and void and of no force or effect.

[signatures contained on following page]

761257.05/WLA 183305-00010/3-9-17/gjn/gjn -7-   HCP LS Redwood City, LLC [Third Amendment] [Oncomed Pharmaceuticals, Inc.]

IN WITNESS WHEREOF, this Third Amendment has been executed as of the day and year first above written.  

LANDLORD:		TENANT:
HCP LS REDWOOD CITY, LLC, a Delaware limited liability company		ONCOMED PHARMACEUTICALS, INC., a Delaware corporation
By:	/s/ Jonathan Bergschneider
	Jonathan Bergschneider	By:	/s/ Paul J. Hastings
	Executive Vice President
		Paul J. Hastings
		Print Name
		Its:	Chairman & CEO

761257.05/WLA 183305-00010/3-9-17/gjn/gjn -8-   HCP LS Redwood City, LLC [Third Amendment] [Oncomed Pharmaceuticals, Inc.]

EXHIBIT A

OUTLINE OF EXPANSION PREMISES

761257.05/WLA 183305-00010/3-9-17/gjn/gjn EXHIBIT A -1-   HCP LS Redwood City, LLC [Third Amendment] [Oncomed Pharmaceuticals, Inc.]

EXHIBIT B

TENANT WORK LETTER

This Tenant Work Letter shall set forth the terms and conditions relating to the initial improvement of the Premises for Tenant following the date of this Third Amendment.  This Tenant Work Letter is essentially organized chronologically and addresses the issues of construction, in sequence, as such issues will arise during construction in the Premises.    

SECTION 1

CONDITION OF PREMISES

Landlord shall deliver the Expansion Premises to Tenant in good, vacant, broom clean condition, in compliance with all laws (to the extent required to obtain or maintain a certificate of occupancy for the Expansion Premises), with the roof water-tight and shall cause the plumbing, electrical systems, fire sprinkler system, lighting, and all other building systems serving the Expansion Premises to be in good operating condition and repair on or before the Expansion Commencement Date.  Further, Landlord at its sole cost (and at no cost to Tenant through Operating Expenses or otherwise) shall be responsible to cause the exterior of the 900 Building and the structural portions of the 900  Building to be in compliance with applicable ADA requirements to the extent required to allow the legal occupancy of the Expansion Premises for the permitted use (subject to Tenant's interior design and utilization of existing entrances for required egress from the 900 Building).  Tenant acknowledges that except as provided in this Section, Tenant shall accept the Premises in their existing, "as-is" condition on the date of delivery thereof to Tenant.  Except for the payment of the Tenant Improvement Allowance as provided in Section 2, below, Landlord shall have no obligation to make or pay for any improvements to the Premises.  Further, any hazardous materials (as defined by applicable laws) existing in the Expansion Premises as of the date of delivery of the Expansion Premises to Tenant, if any, shall be removed or remediated by Landlord as required by applicable laws, at Landlord's sole cost and expense (i.e., the cost of the Tenant Improvements shall not include such costs, and the Tenant Improvement Allowance shall not be used for such costs), except to the extent (if any) that such hazardous materials were brought onto or released onto the Expansion Premises, the Building or the Center through the acts or omissions of Tenant or its employees, agents or contractors.    

SECTION 2

TENANT IMPROVEMENTS

2.1Tenant Improvement Allowance.  Commencing as of the Lease Commencement Date, Tenant shall be entitled to use a one-time improvement allowance in the aggregate amount of $2,400,000.00 which is comprised of (i) $1,600,000 (the "Existing Premises Improvement Allowance"), for the costs relating to the design and construction of Tenant's improvements, which are permanently affixed to the Existing Premises only (the "Existing Premises Improvements") or which are "Tenant Improvement Allowance Items," as that term is defined in Section 2.2.1, below, and (ii) $800,000.00 (the "Expansion Premises Improvement Allowance") for the costs relating to the design and construction of Tenant's improvements

761257.05/WLA 183305-00010/3-9-17/gjn/gjn EXHIBIT B -1-   HCP LS Redwood City, LLC [Third Amendment] [Oncomed Pharmaceuticals, Inc.]

which are permanently affixed to the Expansion Premises only (the "Expansion Premises Improvements") or which are Tenant Improvement Allowance Items.   Collectively, the Expansion Premises Improvements and the Existing Premises Improvements are the "Tenant Improvements" and collectively the Existing Premises Improvement Allowance and the Expansion Premises Improvement Allowance are the "Tenant Improvement Allowance".  Tenant hereby acknowledges and agrees that (A) Tenant shall not be entitled to receive more than $500,000.00 of the Existing Improvement Allowance during the calendar year 2016, and (B) Tenant shall not be entitled to receive any portion of the Expansion Premises Improvement Allowance until the earlier to occur of (a) the date upon which the Expansion Confirmation Notice is delivered to Landlord or (b) September 16, 2017 (assuming the Expansion Termination Notice has not been timely delivered by Tenant, as Tenant shall forfeit any and all rights to the Expansion Premises Improvement Allowance in the event the Expansion Termination Notice is timely delivered to Landlord).  In no event shall Landlord be obligated to make disbursements pursuant to this Tenant Work Letter or otherwise in connection with Tenant's construction of the Tenant Improvements or any Tenant Improvement Allowance Items, as defined below, in a total amount which exceeds the sum of the Tenant Improvement Allowance.  All Tenant Improvements for which the Tenant Improvement Allowance has been made available shall be deemed Landlord's property under the terms of the Lease; provided, however, Landlord may, by written notice to Tenant given concurrently with Landlord's approval of the "Final Working Drawings", as that term is defined in Section 3.3, below, require Tenant, prior to the end of the Lease Term, or promptly following any earlier termination of the Lease, at Tenant's expense, to remove any Tenant Improvements and to repair any damage to the Premises and Building caused by such removal and return the affected portion of the Premises to a Building standard general office condition; provided, however, that Landlord shall not require Tenant to remove upon termination or expiration of the Lease, or condition its approval upon Tenant’s agreement to remove upon termination or expiration of the Lease, any Tenant Improvements constructed pursuant to this Tenant Work Letter which constitute standard, non-extraordinary improvements for ordinary office use.  Any portion of the Existing Premises Improvement Allowance that is not disbursed or requested for disbursement by the end of the first twelve (12) months following the Expansion Commencement Date (or, in the event that Tenant timely exercises the Expansion Termination Notice, by September 15, 2018), shall revert to Landlord and Tenant shall have no further rights with respect thereto, and any portion of the Expansion Premises Improvement Allowance that is not disbursed or allocated for disbursement by the end of the first twelve (12) months following the Expansion Commencement Date, shall revert to Landlord and Tenant shall have no further rights with respect thereto.

2.2Disbursement of the Tenant Improvement Allowance.

2.2.1Tenant Improvement Allowance Items.  Except as otherwise set forth in this Tenant Work Letter, the Tenant Improvement Allowance shall be disbursed by Landlord only for the following items and costs (collectively the "Tenant Improvement Allowance Items"):

2.2.1.1Payment of all reasonable fees of the "Architect" and the "Engineers," as those terms are defined in Section 3.1 of this Tenant Work Letter, project management fees payable to Project Management Advisors, Inc. ("PMA"), as provided below, and payment of the reasonable fees incurred by, and the reasonable cost of documents and

761257.05/WLA 183305-00010/3-9-17/gjn/gjn EXHIBIT B -2-   HCP LS Redwood City, LLC [Third Amendment] [Oncomed Pharmaceuticals, Inc.]

materials supplied by, Landlord and Landlord's consultants in connection with third-party review of the "Construction Drawings," as that term is defined in Section 3.2 of this Tenant Work Letter, which consultants are reasonably deemed necessary by Landlord to review and oversee the Tenant Improvements and whose services are not the same as the services provided by PMA (e.g., structural engineers);

2.2.1.2The payment of plan check, permit and license fees relating to construction of the Tenant Improvements;

2.2.1.3The payment for all demolition and removal of existing improvements in the Premises;

2.2.1.4The cost of construction of the Tenant Improvements, including, without limitation, testing and inspection costs, costs incurred for removal of existing furniture, fixtures or equipment in the Premises, hoisting and trash removal costs, costs to purchase and install in the Premises equipment customarily incorporated into laboratory improvements or laboratory utility systems, including, without limitation, UPS, DI Systems, boilers, air compressors, glass/cage washers and autoclaves, painting, and contractors' fees and general conditions;

2.2.1.5The cost of any changes in the Base Building when such changes are required by the Construction Drawings (including if such changes are due to the fact that such work is prepared on an unoccupied basis), such cost to include all direct architectural and/or engineering fees and expenses incurred in connection therewith;

2.2.1.6The cost of any changes to the Construction Drawings or Tenant Improvements required by all applicable building codes (the "Code");

2.2.1.7Sales and use taxes;

2.2.1.8Costs expended by Landlord pursuant to Section 4.1.1 of this Tenant Work Letter, below.

2.2.2Disbursement of Tenant Improvement Allowance.  During the construction of the Tenant Improvements, Landlord shall make monthly disbursements of the Tenant Improvement Allowance for Tenant Improvement Allowance Items for the benefit of Tenant and shall authorize the release of monies for the benefit of Tenant as follows.

2.2.2.1Monthly Disbursements.  On or before the fifth (5^th) day of each calendar month, during the design and construction of the Tenant Improvements (or such other date as Landlord may designate), Tenant shall deliver to Landlord:  (i) a request for reimbursement of amounts paid to the "Contractor," as that term is defined in Section 4.1.1 of this Tenant Work Letter, approved by Tenant, in a form to be provided by Landlord, showing the schedule, by trade, of percentage of completion of the Tenant Improvements in the Premises, detailing the portion of the work completed and the portion not completed; (ii) invoices from all of "Tenant's Agents," as that term is defined in Section 4.1.2 of this Tenant Work Letter, for labor rendered and materials for the Premises; (iii) executed mechanic's lien releases, as applicable, from all of Tenant's Agents which shall comply with the appropriate provisions, as

761257.05/WLA 183305-00010/3-9-17/gjn/gjn EXHIBIT B -3-   HCP LS Redwood City, LLC [Third Amendment] [Oncomed Pharmaceuticals, Inc.]

reasonably determined by Landlord, of California Civil Code Sections 8132, 8134, 8136 and 8138; and (iv) all other information reasonably requested by Landlord.  As between Landlord and Tenant only, Tenant's request for payment shall be deemed Tenant's acceptance and approval of the work furnished and/or the materials supplied as set forth in Tenant's payment request.  Within forty-five (45) days thereafter, Landlord shall deliver a check to Tenant made payable to Tenant in payment of the lesser of:  (A) the amounts so requested by Tenant as set forth in this Section 2.2.3.1, above (or, subject to the terms of Section 4.2.1, below, the applicable percentage thereof), and (B) the balance of any remaining available portion of the Tenant Improvement Allowance provided that Landlord does not dispute any request for payment based on non-compliance of any work with the "Approved Working Drawings," as that term is defined in Section 3.5 below, or due to any substandard work.  Landlord's payment of such amounts shall not be deemed Landlord's approval or acceptance of the work furnished or materials supplied as set forth in Tenant's payment request.

2.2.2.2Final Deliveries.  Following the completion of construction of the Tenant Improvements, Tenant shall deliver to Landlord properly executed final mechanic's lien releases in compliance with both California Civil Code Section 8134 and either Section 8136 or Section 8138 from all of Tenant's Agents, and a certificate certifying that the construction of the Tenant Improvements in the Premises has been substantially completed.  Tenant shall record a valid Notice of Completion in accordance with the requirements of Section 4.3 of this Tenant Work Letter.

2.2.2.3Other Terms.  Landlord shall only be obligated to make disbursements from the Tenant Improvement Allowance to the extent costs are incurred by Tenant for Tenant Improvement Allowance Items.  All Tenant Improvement Allowance Items for which the Tenant Improvement Allowance have been made available shall be deemed Landlord's property under the terms of the Lease.

2.4Building Standards.  The quality of Tenant Improvements shall be in keeping with the existing improvements in the Existing Premises.

SECTION 3

CONSTRUCTION DRAWINGS

3.1Selection of Architect.  Tenant shall retain an architect/space planner (the "Architect") approved in advance by Landlord (which approval shall not be unreasonably withheld) to prepare the Final Space Plan and Final Working Drawings as provided in Section 3.2 and 3.3, below.  Tenant shall retain the engineering consultants or design/build subcontractors designated by Tenant and reasonably approved in advance by Landlord (the "Engineers") to prepare all plans and engineering working drawings relating to the structural, mechanical, electrical, plumbing, HVAC, lifesafety, and sprinkler work in the Premises, which work is not part of the Base Building.  All such plans and drawings shall comply with industry standard drawing format and specifications, and shall be subject to Landlord's reasonable approval.  Tenant and Architect shall verify, in the field, the dimensions and conditions as shown on the relevant portions of the Base Building plans, and Tenant and Architect shall be solely responsible for the same, and Landlord shall have no responsibility in connection therewith.  

761257.05/WLA 183305-00010/3-9-17/gjn/gjn EXHIBIT B -4-   HCP LS Redwood City, LLC [Third Amendment] [Oncomed Pharmaceuticals, Inc.]

Landlord's review of any plans or drawings as set forth in this Section 3, shall be for its sole purpose and shall not imply Landlord's review of the same, or obligate Landlord to review the same, for quality, design, Code compliance or other like matters.  

3.2Final Space Plan.  Tenant shall supply Landlord with four (4) copies signed by Tenant of its final space plan for the Premises before any architectural working drawings or engineering drawings have been commenced.  The final space plan (the "Final Space Plan") shall include a layout and designation of all offices, labs, rooms and other partitioning, their intended use, and equipment to be contained therein.  Landlord may request clarification or more specific drawings for special use items not included in the Final Space Plan.  Landlord shall advise Tenant within five (5) business days after Landlord's receipt of the Final Space Plan for the Premises if the same is unsatisfactory or incomplete in any respect.  If Tenant is so advised, Tenant shall promptly cause the Final Space Plan to be revised to correct any deficiencies or other matters Landlord may reasonably require.  Notwithstanding the foregoing, Landlord's approval of the Final Space Plan shall not be unreasonably withheld, provided that Landlord and Tenant hereby agree it shall be deemed reasonably for Landlord to withhold its approval of the Final Space Plan if a "Design Problem" exists.  A "Design Problem" shall mean and refer to any design criteria which would (a) adversely affect the Building structure or Building systems; (b) be in non-compliance with codes or other applicable laws; (c) be seen from the exterior of the Premises; (d) cause material interference with Landlord or other tenants of the Building (other than as typical for construction of improvements), or (e) affect the certificate of occupancy or its legal equivalent for the Building or any portion thereof.

3.3Final Working Drawings.  After the Final Space Plan has been approved by Landlord, Tenant shall supply the Engineers with a complete listing of standard and non-standard equipment and specifications, including, without limitation, Title 24 calculations, electrical requirements and special electrical receptacle requirements for the Premises, to enable the Engineers and the Architect to complete the "Final Working Drawings" (as that term is defined below) in the manner as set forth below.  Upon the approval of the Final Space Plan by Landlord and Tenant, Tenant shall promptly cause the Architect and the Engineers to complete the architectural and engineering drawings for the Premises, and Architect shall compile a fully coordinated set of architectural, structural, mechanical, electrical and plumbing working drawings, to the extent applicable to the Tenant Improvements, in a form which is sufficiently complete to allow all of Tenant's Agents to bid on the work and to obtain all applicable permits (collectively, the "Final Working Drawings") and shall submit the same to Landlord for Landlord's approval, which shall not be unreasonably withheld, conditioned, or delayed.  Tenant shall supply Landlord with four (4) copies signed by Tenant of such Final Working Drawings.  Landlord shall advise Tenant within ten (10) business days after Landlord's receipt of the Final Working Drawings for the Premises if the same is unsatisfactory or incomplete in any respect.  If Tenant is so advised, Tenant shall promptly cause the Final Working Drawings to be revised in accordance with such review and any disapproval of Landlord in connection therewith.  Notwithstanding the foregoing, Landlord's approval of the Final Working Drawings shall not be unreasonably withheld; provided that Landlord and Tenant hereby agree that it shall be deemed reasonable for Landlord to withhold its approval of the Final Working Drawings if a Design Problem exists or if the Final Working Drawings are inconsistent with the Final Space Plan.  

761257.05/WLA 183305-00010/3-9-17/gjn/gjn EXHIBIT B -5-   HCP LS Redwood City, LLC [Third Amendment] [Oncomed Pharmaceuticals, Inc.]

3.5Approved Working Drawings.  The Final Working Drawings shall be approved by Landlord (the "Approved Working Drawings," and collectively with the Final Space Plan and the Final Working Drawings, the “Construction Drawings”) prior to the commencement of construction of the Premises by Tenant.  Concurrently with Tenant's delivery of the Final Working Drawings to Landlord for Landlord's approval, Tenant may submit the same to the appropriate municipal authorities for all applicable building permits.  Tenant hereby agrees that neither Landlord nor Landlord's consultants shall be responsible for obtaining any building permit or certificate of occupancy for the Premises and that obtaining the same shall be Tenant's responsibility; provided, however, that Landlord shall cooperate with Tenant in executing permit applications and performing other ministerial acts reasonably necessary to enable Tenant to obtain any such permit or certificate of occupancy.  No changes, modifications or alterations in the Approved Working Drawings may be made without the prior written consent of Landlord, which shall not be unreasonably withheld, conditioned, or delayed; provided, however, Tenant shall be permitted, without Landlord’s prior written consent, to make minor changes in the Tenant Improvements that are customarily made in the field.  

SECTION 4

CONSTRUCTION OF THE TENANT IMPROVEMENTS

4.1Tenant's Selection of Contractors.

4.1.1The Contractor; Landlord's Project Manager.  Tenant shall retain a licensed general contractor, approved in advance by Landlord, to construct the Tenant Improvements ("Contractor").  Landlord's approval of the Contractor shall not be unreasonably withheld.  Landlord shall retain Project Management Advisors, Inc. ("PMA") as a third party project manager for construction oversight of the Tenant Improvements on behalf of Landlord, and Tenant shall pay a fee to Landlord with respect to the PMA services in the amount of $1.53/sf of the Expansion Premises ($34,808), but not less than $4,068 per month in which design and construction activity is occurring in the Existing Premises and/or Expansion Premises.  Said fee is to be deducted from the Tenant Improvement Allowance.

4.1.2Tenant's Agents.  All subcontractors, laborers, materialmen, and suppliers used by Tenant shall be known collectively as "Tenant's Agents".  The subcontractors used by Tenant, but not any laborers, materialmen, and suppliers, must be approved in writing by Landlord, which approval shall not be unreasonably withheld, conditioned, or delayed; provided, however, Landlord may nevertheless designate and require the use of particular mechanical, engineering, plumbing, fire life-safety and other Base Building subcontractors.  If Landlord does not approve any of Tenant's proposed subcontractors, Tenant shall submit other proposed subcontractors for Landlord's written approval.

4.2Construction of Tenant Improvements by Tenant's Agents.

4.2.1Construction Contract; Cost Budget.  Tenant shall engage the Contractor under a commercially reasonable and customary construction contract, reasonably approved by Landlord (collectively, the "Contract").  Prior to the commencement of the construction of the Tenant Improvements (or a phase thereof, as the case may be), and after

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Tenant has accepted all bids for the Tenant Improvements (or a phase thereof, as the case may be), Tenant shall provide Landlord with a detailed breakdown, by trade, of the good faith estimated costs to be incurred or which have been incurred, as set forth more particularly in Sections 2.2.1.1 through 2.2.1.10, above, in connection with the design and construction of the applicable phase of the Tenant Improvements to be performed by or at the direction of Tenant or the Contractor, which costs form a basis for the estimated total costs of the work of the applicable phase of the Tenant Improvement project (the "Estimated Budget").  The difference between the amount of the Estimated Budget and the amount of the Tenant Improvement Allowance (less any portion thereof already disbursed by Landlord, or in the process of being disbursed by Landlord, on or before the commencement of construction of the Tenant Improvements) is referred to herein as the "Over-Allowance Amount".  In the event that an Over-Allowance Amount exists in connection with any particular construction project involving the construction of the Improvements, then Tenant shall pay a percentage of each amount requested by Contractor or otherwise disbursed under this Work Letter, which percentage shall be equal to the Over-Allowance Amount divided by the amount of the Estimated Budget (after deducting from the Estimated Budget any amounts expended in connection with the preparation of the Construction Drawings, and the cost of other Tenant Improvement Allowance Items incurred prior to the commencement of construction of the Tenant Improvements) and such payments by Tenant (the “Over-Allowance Payments”) shall be a condition to Landlord’s obligation to pay any amounts from the Tenant Improvement Allowance.  In the event that, after the Estimated Budget has been delivered by Tenant to Landlord, the costs relating to the design and construction of the Tenant Improvements shall change, any additional costs necessary to such design and construction in excess of the Estimated Budget, shall be in accordance with the terms of the immediately preceding sentence and the amounts to be disbursed by Landlord pursuant to the terms of this Work Letter thereafter shall be accordingly adjusted so that Landlord’s disbursements in the aggregate pursuant to the terms of this Work Letter and Tenant’s Over-Allowance Payments are each proportionate to the adjusted Estimated Budget.  All Tenant Improvements paid for by the Over-Allowance Amount shall be deemed Landlord's property under the terms of the Lease.

4.2.2Tenant's Agents.

4.2.2.1Compliance with Drawings and Schedule.  Tenant's and Tenant's Agent's construction of the Tenant Improvements shall comply with the following:  (i) the Tenant Improvements shall be constructed in substantial accordance with the Approved Working Drawings; and (ii) Tenant's Agents shall submit schedules of all work relating to the Tenant's Improvements to Contractor and Contractor shall, within five (5) business days of receipt thereof, inform Tenant's Agents of any changes which are necessary thereto, and Tenant's Agents shall adhere to such corrected schedule.  

4.2.2.2Indemnity.  Tenant's indemnity of Landlord as set forth in the Lease shall also apply with respect to any and all costs, losses, damages, injuries and liabilities related in any way to any act or omission of Tenant or Tenant's Agents, or anyone directly or indirectly employed by any of them, or in connection with Tenant's non-payment of any amount arising out of the Tenant Improvements and/or Tenant's disapproval of all or any portion of any request for payment.  Such indemnity by Tenant, as set forth in the Lease, shall also apply with respect to any and all costs, losses, damages, injuries and liabilities related in any way to

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Landlord's performance of any ministerial acts reasonably necessary (i) to permit Tenant to complete the Tenant Improvements, and (ii) to enable Tenant to obtain any building permit or certificate of occupancy for the Premises.  The foregoing indemnity shall not apply to claims caused by the negligence or willful misconduct of Landlord, its member partners, shareholders, officers, directors, agents, employees, and/or contractors, or Landlord’s breach of the Lease.

4.2.2.2Requirements of Tenant's Agents.  Each of Tenant's Agents shall guarantee to Tenant and for the benefit of Landlord that the portion of the Tenant Improvements for which it is responsible shall be free from any defects in workmanship and materials for a period of not less than one (1) year from the date of substantial completion of the work under the Contract ("Substantial Completion").  Each of Tenant's Agents shall be responsible for the replacement or repair, without additional charge, of all work done or furnished in accordance with its contract that shall become defective within one (1) year after Substantial Completion.  The correction of such work shall include, without additional charge, all additional expenses and damages incurred in connection with such removal or replacement of all or any part of the Tenant Improvements, and/or the Building and/or common areas that may be damaged or disturbed thereby.  All such warranties or guarantees as to materials or workmanship of or with respect to the Tenant Improvements shall be contained in the Contract or subcontract and shall be written such that such guarantees or warranties shall inure to the benefit of both Landlord and Tenant, as their respective interests may appear, and can be directly enforced by either.  Tenant covenants to give to Landlord any assignment or other assurances which may be necessary to effect such right of direct enforcement.

4.2.2.4Insurance Requirements.

4.2.2.4.1General Coverages.  All of Tenant's Agents shall carry the following insurance with insurers having a  minimum A.M. best rating of A- VII or better (i) worker's compensation insurance covering all of Tenant's Agents' respective employees with a waiver of subrogation in favor of Landlord and the property manager, (ii) general liability insurance with a limit of not less than $1,000,000 per occurrence and $2,000,000 general aggregate, including products/completed operations and contractual coverage, and including Landlord and its property manager as additional insureds, and (ii) if the cost of such Tenant Improvements exceeds $100,000 in the aggregate, then Builders Risk insurance covering the construction of the Tenant Improvements (it being understood and agreed that the Tenant Improvements shall be insured by Landlord pursuant to the Lease immediately upon completion thereof in the same manner as Landlord is required to insure the “Tenant Improvements constructed by Landlord” pursuant to Section 10.1(d) of the Lease), and such policy shall include Landlord as an additional insured.

4.2.2.4.2Intentionally Omitted.  

4.2.2.4.3General Terms.  Certificates for all insurance carried pursuant to this Section 4.2.2.4 shall be delivered to Landlord before the commencement of construction of the Expansion Tenant Improvements and before the Contractor's equipment is moved onto the site.  All such policies of insurance must contain a provision that the company writing said policy will endeavor to give Landlord thirty (30) days prior written notice of any cancellation or lapse of the effective date or any reduction in the amounts of such insurance.  In

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the event that the Expansion Tenant Improvements are damaged by any cause during the course of the construction thereof, Tenant shall immediately repair the same at Tenant's sole cost and expense.  Tenant's Agents shall maintain all of the foregoing insurance coverage in force until the Expansion Tenant Improvements are fully completed, except for any Products and Completed Operation Coverage insurance required by Landlord, which is to be maintained for a commercially reasonable period following completion of the work.  Such insurance shall provide that it is primary insurance as respects the owner and that any other insurance maintained by owner is excess and noncontributing with the insurance required hereunder.  The requirements for the foregoing insurance shall not derogate from the provisions for indemnification of Landlord by Tenant under Section 4.2.2.2 of this Tenant Work Letter.

4.2.3Governmental Compliance.  The Tenant Improvements shall comply in all respects with the following:  (i) all state, federal, city or quasi-governmental laws, codes, ordinances and regulations, as each may apply according to the rulings of the controlling public official, agent or other person; (ii) applicable standards of the American Insurance Association (formerly, the National Board of Fire Underwriters) and the National Electrical Code; and (iii) building material manufacturer's specifications.

4.2.4Inspection by Landlord.  Landlord shall have the right to inspect the Tenant Improvements at all times, provided however, that Landlord's failure to inspect the Tenant Improvements shall in no event constitute a waiver of any of Landlord's rights hereunder nor shall Landlord's inspection of the Tenant Improvements constitute Landlord's approval of the same.  Should Landlord reasonably disapprove any portion of the Tenant Improvements, on the grounds that the construction is defective or fails to comply with the Approved Working Drawings, Landlord shall notify Tenant in writing of such disapproval and shall specify the items disapproved.  Any such defects or deviations shall be rectified by Tenant at no expense to Landlord, provided however, that in the event Landlord determines that a defect or deviation exists that might adversely affect the mechanical, electrical, plumbing, heating, ventilating and air conditioning or life-safety systems of the Building, the structure or exterior appearance of the Building or any other tenant's use of such other tenant's leased premises, Landlord may, take such action as Landlord reasonably deems necessary, at Tenant's expense and without incurring any liability on Landlord's part, to correct any such defect, deviation and/or matter, including, without limitation, causing the cessation of performance of the construction of the Tenant Improvements until such time as the defect, deviation and/or matter is corrected to Landlord's reasonable satisfaction.

4.2.5Meetings.  Commencing upon the date Tenant begins to plan the Existing Improvements or the Expansion Improvements, Tenant shall hold weekly meetings at a reasonable time, with the Architect and the Contractor regarding the progress of the preparation of Construction Drawings and the construction of the Existing Improvements or the Expansion Improvements as the case may be, and Landlord and/or its agents shall receive prior notice of, and shall have the right to attend, all such meetings, and, upon Landlord's request, certain of Tenant's Agents shall attend such meetings.  In addition, minutes shall be taken at all such meetings, a copy of which minutes shall be promptly delivered to Landlord.  One such meeting each month shall include the review of Contractor's current request for payment.

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4.3Notice of Completion; Copy of Record Set of Plans.  Within ten (10) days after completion of construction of the Tenant Improvements, Tenant shall cause a valid Notice of Completion to be recorded in the office of the Recorder of the county in which the Building is located in accordance with Section 3093 of the Civil Code of the State of California or any successor statute, and shall furnish a copy thereof to Landlord upon such recordation.  If Tenant fails to do so, Landlord may execute and file the same on behalf of Tenant as Tenant's agent for such purpose, at Tenant's sole cost and expense.  At the conclusion of construction, (i) Tenant shall cause the Architect and Contractor (x) to update the Approved Working Drawings as necessary to reflect all changes made to the Approved Working Drawings during the course of construction, (y) to certify to the best of their knowledge that the "record-set" of as-built drawings are true and correct, which certification shall survive the expiration or termination of the Lease, and (z) to deliver to Landlord two (2) sets of copies of such record set of drawings (hard copy and CAD files) within ninety (90) days following issuance of a certificate of occupancy for the Premises, and (ii) Tenant shall deliver to Landlord a copy of all warranties, guaranties, and operating manuals and information relating to the improvements, equipment, and systems in the Premises.  Within fifteen (15) days after request by Tenant following the Substantial Completion of the Tenant Improvements, Landlord will acknowledge its approval of the Tenant Improvements (provided that such approval has been granted) by placing its signature on a Contractor’s Certificate of Substantial Completion fully executed by the Architect, Contractor and Tenant.  Landlord’s approval shall not create any contingent liabilities for Landlord with respect to any latent quality, design, Code compliance or other like matters that may arise subsequent to Landlord’s approval.

SECTION 5

MISCELLANEOUS

5.1Tenant's Representative.  Tenant has designated Chuck Alaimo as its sole representative with respect to the matters set forth in this Tenant Work Letter, who, until further notice to Landlord, shall have full authority and responsibility to act on behalf of the Tenant as required in this Tenant Work Letter.

5.2Landlord's Representative.  Landlord has designated Jeff Marcowitz with PMA, as its sole representative with respect to the matters set forth in this Tenant Work Letter, who, until further notice to Tenant, shall have full authority and responsibility to act on behalf of the Landlord as required in this Tenant Work Letter.

5.3Time is of the Essence in This Tenant Work Letter.  Unless otherwise indicated, all references herein to a "number of days" shall mean and refer to calendar days.  If any item requiring approval is timely disapproved by Landlord, the procedure for preparation of the document and approval thereof shall be repeated until the document is approved by Landlord.

5.5Tenant's Lease Default.  Notwithstanding any provision to the contrary contained in the Lease or this Tenant Work Letter, if any default by Tenant under the Lease or this Tenant Work Letter (including, without limitation, any failure by Tenant to fund any portion of the Over-Allowance Amount) occurs at any time on or before the substantial completion of the Tenant Improvements and such default remains uncured ten (10) days following Landlord's

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notice of such default to Tenant, then in addition to all other rights and remedies granted to Landlord pursuant to the Lease, Landlord shall have the right, during the continuation of such default, to withhold payment of all or any portion of the Tenant Improvement Allowance and/or Landlord may, without any liability whatsoever, cause the cessation of construction of the Tenant Improvements (in which case, Tenant shall be responsible for any delay in the substantial completion of the Tenant Improvements and any costs occasioned thereby).

5.6Phased Construction.  Tenant may construct the Tenant Improvements (and submit the Final Space Plan and Working Drawings therefor) in phases at Tenant’s discretion.  

5.7Landlord Caused Delays.  The Expansion Commencement Date shall occur as provided in this Third Amendment, provided that the same shall be extended by the number of days of actual delay of the substantial completion of the Expansion Premises Improvements to the extent caused by a "Landlord Caused Delay," as that term is defined, below, but only to the extent such Landlord Caused Delay causes the substantial completion of the Expansion Premises Improvements to occur after the date which is five (5) months following the date upon which the Expansion Premises is delivered to Tenant.  As used herein, "Landlord Caused Delay" shall mean actual delays in the substantial completion of the Expansion Premises Improvements to the extent resulting from interference (when judged in accordance with industry custom and practice) with Tenant's construction of the Expansion Premises Improvements to the extent caused by (i) Landlord's failure to timely approve or disapprove any matter requiring Landlord's pertaining to the Expansion Premises Improvements within the time periods set forth above or if not specified, within a reasonable period of time; (iii) Landlord's failure to timely disburse the Expansion Premises Improvement Allowance; (ii) material and unreasonable interference by Landlord with substantial completion of the Expansion Premises if such interference (A) objectively precludes or delays the construction of tenant improvements in the Building or any portion thereof, and (B) relates to access by Tenant to the Expansion Premises or any of the Building's facilities (including loading docks and freight elevators) or services and utilities (including temporary power and parking areas as provided herein) during normal construction hours, or the use thereof during normal construction hours; or (iii) the negligence or willful misconduct of Landlord or the Landlord Parties pertaining to the Premises.  If Tenant contends that a Landlord Caused Delay has occurred, Tenant shall notify Landlord in writing of the event which constitutes such Landlord Caused Delay.  Tenant will additionally use reasonable efforts to mitigate the effects of any Landlord Caused Delay through the re-sequencing or re-scheduling of work, if feasible, but this sentence will not be deemed to require Tenant to incur overtime or after-hours costs unless Landlord agrees in writing to bear such costs.  In addition, Tenant shall endeavor to provide notice to Landlord when Tenant becomes aware of any expected or potential Landlord Caused Delays prior to any such delay actually occurring, in order to allow Landlord to attempt to mitigate such potential delay.  If such actions, inaction or circumstance described in the notice (the "Landlord Delay Notice") are not cured by Landlord within one (1) business day of Landlord’s receipt of the Landlord Delay Notice and if such action, inaction or circumstance otherwise qualify as a Landlord Caused Delay, then a Landlord Caused Delay shall be deemed to have occurred commencing as of the date of Landlord’s receipt of the Landlord Delay Notice and ending as of the date such delay ends.

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EXHIBIT C

This FOURTH AMENDMENT TO LEASE (this "Third Amendment") is made and entered into as of the _____ day of ________, 20__, by and between HCP LS REDWOOD CITY, LLC, a Delaware limited liability company ("Landlord"), and ONCOMED PHARMACEUTICALS, INC., a Delaware corporation("Tenant").

R E C I T A L S :

A.Landlord (as successor in interest to Slough Redwood City, LLC) and Tenant are parties to that certain Lease dated May 30, 2006 (the "Original Lease"), as amended by that certain First Amendment to Lease dated November, 2006 (the "First Amendment"), that certain Acknowledgement of Rent Commencement Date dated as of March 9, 2007 ("Commencement Letter"), that certain Second Amendment to Office Lease dated December 22, 2010 (the "Second Amendment") and that certain Third Amendment to Lease dated ________, 2016 (the "Third Amendment") pursuant to which Lease Tenant leases from Landlord approximately 68,440 rentable square feet of space (the "Premises") consisting of the entire building (the " 800 Building") located at 800 Chesapeake Drive, in the Britannia Seaport Centre in Redwood City, California, and a portion of the building located at 900 Chesapeake Drive, in the Britannia Seaport Centre in Redwood City, California.  The Original Lease, the First Amendment, the Commencement Letter, the Second Amendment and the Third Amendment are, collectively, the "Lease."

B.Landlord and Tenant to amend the Lease as hereinafter provided.

A G R E E M E N T :

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1.Capitalized Terms.  All capitalized terms when used herein shall have the same meaning as is given such terms in the Lease unless expressly superseded by the terms of this Third Amendment.

2.Deletion of Expansion Termination Right.  Effective as of the date of this Fourth Amendment, Section 7 of the Third Amendment is hereby deleted in its entirety and of no further force or effect, and Tenant shall lease the Expansion Premises from Landlord pursuant to the terms set forth in the Third Amendment.

3.California Accessibility Disclosure. For purposes of Section 1938 of the California Civil Code, Landlord hereby discloses to Tenant, and Tenant hereby acknowledges that the Common Areas and the Premises have not undergone inspection by a Certified Access Specialist (CASp).

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4.No Further Modification.  Except as set forth in this Third Amendment, all of the terms and provisions of the Lease shall apply with respect to the Expansion Premises and shall remain unmodified and in full force and effect.

IN WITNESS WHEREOF, this Fourth Amendment has been executed as of the day and year first above written.  

LANDLORD:			TENANT:
HCP LS REDWOOD CITY, LLC, a Delaware limited liability company			ONCOMED PHARMACEUTICALS, INC., a Delaware corporation
By:
	Jonathan Bergschneider	By:
	Executive Vice President
		Print Name
		Its:

761257.05/WLA 183305-00010/3-9-17/gjn/gjn EXHIBIT C -2-   HCP LS Redwood City, LLC [Third Amendment] [Oncomed Pharmaceuticals, Inc.]

EXHIBITB

SUBLEASEDPREMISES

EXHIBIT C

FURNITURE

• 16 lab stools

• NuAire biological safety cabinet, SR #11046012400, Asset tag #00669

• Thermo incubator, SR #307623-29985

-19-

EXHIBIT D

ENVIRONMENTAL QUESTIONNAIRE

-20-

EXHIBIT E

BRITANNIAPOINTEGRAND BUSINESS PARK

ENVIRONMENTALQUESTIONNAIRE

FOR COMMERCIAL AND INDUSTRIAL PROPERTIES

Venn Biosciences Corporation

TenantName:  

800 Chesapeake Dr, Redwood City, CA 94063

Lease Address:

Oncomed Pharmaceuticals

Lease Type (check correct box – right click to properties):  ☐ Primary Lease/Lessee    

☒ Sublease from:

Instructions:Thefollowing questionnaire is to be completed by theLessee representativewithknowledgeof theplanned operations for thespecified building/location.Pleaseprintclearly andattachadditionalsheetsas necessary.

1.0 PROCESS INFORMATION

Describe planned site use, including a brief description of manufacturing processes and/or pilot plants planned for this site, if any.

We are an early stage R&D company developing cancer diagnostic assays.  We anticipate analyzing human samples for research and diagnostic purposes, but there will be no manufacturing or pilot plants.

     

2.0 HAZARDOUS MATERIALS – OTHER THAN WASTE

Will (or are) non-waste hazardous materials be/being usedor stored at this site? If so, continue with the nextquestion.If not, go to Section 3.0.

2.1 Are anyof thefollowing materials handled on the Property?       ☒ Yes   ☐ No

[Amaterial ishandledifitisused,generated, processed, produced, packaged,treated,stored,emitted,discharged, ordisposed.]If YES, check (right click to properties) the applicable correct Fire Code hazard categories below.

☐	Combustible dusts/fibers	☐	Explosives	☒	Flammable liquids
☐	Combustible liquids (e.g., oils)	☒	Compressed gas - inert	☐	Flammable solids/pyrophorics
☐	Cryogenic liquids - inert	☐	Compressed gas - flammable/pyrophoric	☐	Organic peroxides
☐	Cryogenic liquids - flammable	☐	Compressed gas - oxidizing	☐	Oxidizers - solid or liquid
☐	Cryogenic liquids - oxidizing	☐	Compressed gas - toxic	☐	Reactives - unstable or water reactive
☐	Corrosives - solid or liquid	☐	Compressed gas - corrosive	☐	Toxics - solid or liquid

2-2. For all materials checked in Section 2.1 above, please list the specific material(s), use(s), and quantities of each used or stored on the site in thetable below; or attach a separate inventory.NOTE: If proprietary, the constituents need not be named but the hazard information and volumes are required.

Material/ Chemical PhysicalState(Solid,Liquid,orGas) ContainerSize NumberofContainers Used & Stored TotalQuantity Units (pounds for solids, gallons or liters for liquids, & cubic feet for gases)

Material/ Chemical	PhysicalState(Solid,Liquid,orGas)	ContainerSize	NumberofContainers Used & Stored	TotalQuantity	Units (pounds for solids, gallons or liters for liquids, & cubic feet for gases)
Nitrogen (Nitrogen Generator)	Gas	120 Gal of Air	1	1	120 liters/min of nitrogen
Acetonitrile	Liquid	4 L	4	16	L
Formic Acid	Liquid	50 mL	2	100	mL

2-3. Describe the planned storage area location(s) for the materials in Section 2-2 above.Include site maps and drawings as appropriate.

The nitrogen generator and compressor will be stored in the utility room on the second

 

   floor.  Acetonitrile and Formic Acid will be stored in a chemical fume hood or chemical

 

  cabinet in the lab.

 

2-4. Other hazardous materials. Check below (right click to properties) if applicable. NOTE: If either of the latter two are checked (BSL-3 and/or radioisotope/radiation), be advised that not all lease locations/cities or lease agreements allow these hazards; and if either of these hazards are planned, additional information will be required with copies of oversight agency authorizations/licenses as

they become available.

☒ Risk Group 2/Biosafety Level-2 Biohazards ☐ Risk Group 3/Biosafety Level-3 Biohazards ☐ Radioisotopes/Radiation

3.0 HAZARDOUSWASTE (i.e., REGULATED CHEMICAL WASTE)

Are (or will) hazardous wastes (be) generated?       ☒ Yes   ☐ No

If YES, continue withthenext question.If not, skip this sectionand goto section 4.0.

3.1 Are or will anyof the following hazardous (CHEMICAL) wastes generated, handled, or disposed of (where applicable and allowed) on the property?

☒	Liquids	☐	Process sludges	☐	PCBs
☐	Solids	☐	Metals	☐	wastewater

3-2. List and estimate the quantities of hazardous waste identified in Question 3-1 above.

HAZRDOUS (CHEMICAL) WASTE GENERATED	SOURCE	WASTE TYPE		APPROX.MONTHLYQUANTITY with units	DISPOSITION [e.g., off-site landfill, incineration, fuel blending scrap metal; wastewater neutralization (onsite or off-site)]
		RCRA listed (federal)	Non-RCRA (Calif-ornia ONLY or recycle)
Acetonitrile	Mass spectrometer	☐	☒	6 L	EH&S collection
Formic Acid	Mass spectrometer	☐	☒	7-8 mL	EH&S collection
		☐	☐
		☐	☐
		☐	☐

3-3. Waste characterization by:        Process knowledge ☒       EPA lab analysis ☐      Both ☐

3-4.   Please includename, location, and permit number (e.g.EPA IDNo.) for transporter and disposalfacility ifapplicable.Attach separate pages as necessary. If not yet known, write “TBD.”

Hazardous Waste Transporter/DisposalFacilityName	FacilityLocation	Transporter(T)orDisposal(D)Facility	PermitNumber
TBD

3-5. Are pollution controls or monitoringemployed in the process to preventor minimize the release of wastesinto the environment? NOTE: This does NOT mean fume hoods; examples include air scrubbers, cyclones, carbon or HEPA filters at building exhaust fans, sedimentation tanks, pH neutralization systems for wastewater, etc.

☐ Yes   ☒ No

If YES, please list/describe:    

4.0 OTHER REGULATED WASTE (i.e., REGULATED BIOLOGICAL WASTE, referred to as “Medical Waste” in California)

4-1. Will (or do) you generate medical waste?   ☒ Yes   ☐ No   If NO, skip to Section 5.0.

4-2. Check the types of waste that will be generated, all of which fall under the California Medical Waste Act:

☐	Contaminated sharps (i.e., if contaminated with  ≥ Risk Group 2 materials)	☐	Animal carcasses	☐	Pathology waste known or suspected to be contaminated with ≥ Risk Group 2 pathogens)
☐	Red bag  biohazardous waste (i.e., with  ≥ Risk Group 2 materials) for autoclaving	☒	Human or non-human primate blood, tissues, etc. (e.g., clinical specimens)	☐	Trace Chemotherapeutic Waste and/or Pharmaceutical waste NOT otherwise regulated as RCRA chemical waste

4-3. What vendor will be used for off-site autoclaving and/or incineration?

ACT

 

4-5. Do you have a Medical Waste Permit for this site?    ☐ Yes   ☐ No, not required.  

☒ No, but an application will be submitted.

5.0 UNDERGROUND STORAGE TANKS (USTS) & ABOVEGROUND STORAGE TANKS (ASTS)

5-1. Are underground storagetanks (USTs), aboveground storage tanks (ASTs), or associatedpipelines used for the storage of petroleumproducts, chemicals, or liquidwastes present on site (lease renewals) or required for planned operations (new tenants)?     ☐ Yes   ☒ No  

NOTE: If you will have your own diesel emergency power generator, then you will have at least one AST! [NOTE: If a backup generator services multiple tenants, then the landlord usually handles the permits.]

IfNO,skip tosection6.0.IfYES,pleasedescribecapacity,contents,age,typeoftheUSTsorASTs,aswellanyassociatedleakdetection/spillpreventionmeasures.Pleaseattachadditionalpagesifnecessary.

UST or AST Capacity (gallons)   Contents Year Installed Type(Steel, Fiberglass,etc.) Associated Leak Detection / Spill PreventionMeasures*

*NOTE: Thefollowing are examples of leak detection/ spill preventionmeasures:integrity testing, inventoryreconciliation, leak detection system, overfill spill protection, secondary containment, cathodic protection.

5-2. Please providecopies ofwritten tank integrity testresults and/or monitoring documentation, if available.

5-3. Is the UST/AST registered and permitted withthe appropriate regulatory agencies?     ☐ Yes   ☐ No, not yet  

If YES, please attach a copy of the required permit(s). See Section 7-1 for the oversight agencies that issue permits, with the exception of those for diesel emergency power generators which are permitted by the local Air Quality District (Bay Area Air Quality Management District = BAAQMD; or San Diego Air Pollution Control District = San Diego APCD).

5-4. If thisQuestionnaire isbeing completed fora lease renewal, and if any of the USTs/ASTs have leaked,please state the substance released, the media(s) impacted (e.g., soil, water, asphalt, etc.), the actions taken,and all remedial responses to the incident.

     

5-5. If this Questionnaireis being completedfor a leaserenewal,have USTs/ASTs been removed fromtheProperty?

☐ Yes   ☐ No

IfYES,pleaseprovideanyofficialclosurelettersorreportsandsupportingdocumentation(e.g.,analyticaltestresults,remediation reportresults,etc.).

5-6. For Leaserenewals, are there any above or below ground pipelineson site used to transfer chemicals or wastes?

☐ Yes   ☐ No

Fornewtenants,areinstallationsofthistyperequiredfortheplannedoperations?   ☐ Yes   ☐ No

IfYEStoeitherquestion in this section 5-6, pleasedescribe.

 

6.0 ASBESTOSCONTAININGBUILDING MATERIALS

PleasebeadvisedthatanasbestossurveymayhavebeenperformedattheProperty.Ifprovided,pleasereviewtheinformationthatidentifiesthelocationsofknownasbestoscontainingmaterialorpresumedasbestoscontainingmaterial.Allpersonnelandappropriatesubcontractorsshouldbenotifiedofthepresenceofthesematerials,andinformednottodisturbthesematerials.Anyactivitythatinvolvesthedisturbanceorremovalofthesematerialsmust be done by an appropriately trained individual/contractor.

7.0 OTHER REGULATORY PERMITS/REQUIREMENTS

7-1. Does the operation have or require an industrial wastewater permit to discharge into the local National Pollutant Discharge Elimination System (NPDES)? [Example: This applies when wastewater from equipment cleaning is routed through a pH neutralization system prior to discharge into the sanitary or lab sewer for certain pharmaceutical manufacturing wastewater; etc.] Permits are obtained from the regional sanitation district that is treating wastewater.

☐ Yes   ☒ No   ☐ No, but one will be prepared and submitted to the Landlord property management company.

If so, please attach a copy of this permit or provide it later when it has been prepared.

7-2. Has a Hazardous Materials Business Plan (HMBP) been developed for the site and submitted via the State of California Electronic Reporting System (CERS)? [NOTE: The trigger limits for having to do this are ≥ 200 cubic feet if any one type of compressed gas(except for carbon dioxide and inert simple asphyxiant gases, which have a higher trigger limit of  ≥ 1,000 cubic feet); ≥ 55 gallons if any one type of hazardous chemical liquid; and ≥500 pounds of any one type of hazardous chemical solid. So a full-sixe gas cylinder and a 260-liter of liquid nitrogen are triggers! Don’t forget the diesel fuel in a backup emergency generator if  the diesel tank size is ≥ 55 gallons and it is permitted under the tenant (rather than  under the landlord).] NOTE: Each local Certified Unified Program Agency (CUPA) in California governs the HMBP process so start there. Examples: the CUPA for cities in San Mateo County is the County Environmental Health Department; the CUPA for the City of Hayward, CA is the Hayward Fire Department; the CUPA for Mountain View is the Mountain View Fire Department; and, the CUPA for San Diego is the County of San Diego Hazardous Materials Division (HMD),

☐ Yes   ☒ No, not required.  ☐ No, but one will be prepared and submitted, and a copy will be provided to the landlord property management company.

If one has been completed, please attach a copy.  Continue to provide updated versions as they are completed. This is a legal requirement in that State law requires that the owner/operator of a business located on leased or rented real property shall notify, in writing, the owner of the property that the business is subject to and is in compliance with the Hazardous Materials Business Plan requirements (Health and Safety Code Chapter 6.95 Section 25505.1).

7-3. NOTE: Please be advised that if you are involved in any tenant improvements that require a construction permit, you will be asked to provide the local city with a Hazardous Materials Inventory Statement (HMIS) to ensure that your hazardous chemicals fall within the applicable Fire Code fire

control area limits for the applicable construction occupancy of the particular building.  The HMIS will include much of the information listed in Section 2-2.  Neither the landlord nor the landlord’s property management company expressly warrants that the inventory provided in Section 2-2 will necessarily meet the applicable California Fire Code fire control area limits for building occupancy, especially in shared tenant occupancy situations. It is the responsibility of the tenant to ensure that a facility and site can legally handle the intended operations and hazardous materials desired/ needed for its operations, but the landlord is happy to assist in this determination when possible.

CERTIFICATION

Iamfamiliarwiththerealpropertydescribedinthisquestionnaire.Bysigningbelow,Irepresentandwarrantthattheanswerstotheabovequestionsarecompleteandaccuratetothebestofmyknowledge.IalsounderstandthatLessorwillrelyonthecompletenessandaccuracyofmyanswersinassessinganyenvironmentalliabilityrisksassociatedwith the property.

Padraig Buckley

 

Signature:    

Padraig Buckley

Name:

Scientist

Title:

9/27/2018

Date:

[telephone number]

 

Telephone:

EXHIBIT E

FORMOFNDA

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MUTUAL CONFIDENTIALITY AGREEMENT

THIS MUTUAL CONFIDENTIALITY AGREEMENT (this “Agreement”) is made and entered into as of [DATE] (the “Effective Date”) by and between ONCOMED PHARMACEUTICALS, INC., a Delaware corporation, having its principal place of business at 800 Chesapeake Drive, Redwood City, California 94063, United States of America (“OncoMed”), and VENN BIOSCIENCES, INC., a Delaware corporation (“Venn”). OncoMed and Company may be referred to herein individually as “Party” or collectively, as “Parties”.

1. Purpose. OncoMed has subleased space within its facilities (the “Facilities”) to Venn

pursuant to the Sublease dated [DATE] by and between OncoMed and Venn (the “Sublease”), and in connection with such Sublease and the sharing of such Facilities, each Party will be exposed to the Confidential Information (as defined below) of the other Party. The Parties wish to set forth the terms and conditions governing such exposure in this Agreement.

2. Definition of Confidential Information. “Confidential Information” means any

information disclosed by a Party (the “Disclosing Party”) to the other Party (the “Receiving Party”) or otherwise learned by or exposed to the Receiving Party as a result of sharing the Facilities with the Disclosing Party, either directly or indirectly, either intentionally or inadvertently, in writing, orally, electronically or by inspection of tangible objects, regardless of whether any such information is marked “confidential” or “proprietary”. Any such disclosure, learning, or exposure to a Disclosing Party’s Confidential Information may be referred to herein as an “Exposure” to such Confidential Information. Confidential Information may include information relating to or constituting: intellectual property, such as, but not limited to, patents, patent applications, copyrights, copyright registrations, and trade secrets; ideas; physical, chemical or biological materials, and techniques for their handling and use; assays, techniques, schematics, drawings, designs, inventions, preclinical and clinical data, know-how, technical documentation, processes, equipment, algorithms, software programs, software source documents, formulae, research and development projects, design details and specifications;

manufacturing activities, processes and equipment; financial information, procurement

requirements, and purchasing; customer lists, product plans, product ideas, business strategies, and marketing or business plans; facilities, employees and/or personnel matters; financial matters, investors, business and contractual relationships, business forecasts, sales and merchandising activities, suppliers, customers, and third parties. Confidential Information may also include information previously disclosed to the Disclosing Party by third parties.

3. Non-Use and Non-Disclosure. The Receiving Party shall not use Confidential

Information of the Disclosing Party for any purpose. Without limiting the foregoing, the

Receiving Party shall not file any patent application containing any claim, the subject matter of which is derived from the Confidential Information. Subject to Section 4, the Receiving Party shall not disclose any Confidential Information of the Disclosing Party to third parties except as permitted in Section 5. The Receiving Party shall take all reasonable measures to protect the secrecy of and avoid disclosure and unauthorized use of the Confidential Information of the Disclosing Party. Without limiting the foregoing, the Receiving Party shall take at least those measures that it takes to protect its own confidential information to protect Confidential Information of the Disclosing Party. The Receiving Party shall promptly notify the Disclosing 1

Party in the event of any unauthorized use or disclosure of the Confidential Information in

violation of this Agreement.

4. Exceptions to Non-Disclosure Obligations. The Receiving Party’s obligations under

Section 3 shall not apply to any portion of Confidential Information that: (a) was publicly known or made generally available in the public domain prior to the time of Receiving Party’s Exposure thereto; (b) becomes publicly known or made generally available after Receiving Party’s Exposure thereto through no action or inaction of the Receiving Party; (c) is already in the possession of the Receiving Party at the time of Receiving Party’s Exposure thereto, as shown by the Receiving Party’s files and records prior to the time of disclosure; (d) is obtained by the Receiving Party from a third party not under confidentiality obligations and without a breach of any obligations of confidentiality; or (e) is independently developed by the Receiving Party without use of or reference to the Disclosing Party’s Confidential Information, as shown by documents and other competent evidence in the Receiving Party’s possession.

5. Compliance with Law. The Receiving Party may disclose Confidential Information of

the Disclosing Party to the extent required by an applicable court order or by law; provided,however, that the Receiving Party shall, when possible, give the Disclosing Party reasonable advance notice of such disclosure and use reasonable efforts to assist the Disclosing Party to secure confidential treatment of such Confidential Information (whether through protective order or otherwise). If and whenever any Confidential Information is disclosed in accordance with this Section 5, such disclosure shall not cause any such information to cease to be Confidential Information except to the extent that such permitted disclosure results in a public disclosure of such information.

6. Representatives. All directors, officers, employees, consultants, and other

representatives of the Receiving Party and its Affiliates with access to the Facilities (collectively, “Representatives”) shall be bound by obligations of confidentiality and non-use with regard to Confidential Information of the Disclosing Party substantially similar to those herein. In all cases, the Receiving Party shall remain responsible for any failure by any of its Representatives to treat Confidential Information as required under this Agreement. For purposes of this Agreement, “Affiliate” means any entity that, directly or indirectly, Controls, is Controlled by, or is under common Control with, a Party. “Control” means (i) the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of an entity, whether by the ownership of stock, by contract, or otherwise, and/or (ii) ownership or direct or indirect control of at least fifty percent (50%) of the voting stock of an entity.

7. Confidential Materials. Receiving Party shall not possess or maintain any documents or other tangible objects containing or representing Confidential Information of the Disclosing Party or any copies thereof (collectively, “Confidential Materials”). All Confidential Materials shall remain the property of the Disclosing Party. Upon Receiving Party becoming aware that any Confidential Materials have entered into its possession, Receiving Party shall promptly destroy all such Confidential Materials or return all such Confidential Materials to Disclosing Party, at Disclosing Party’s option.

2

8. No License. Nothing in this Agreement is intended to grant any option, license, or other

rights to the Receiving Party under any intellectual property rights of the Disclosing Party, nor shall this Agreement grant the Receiving Party any rights in or to the Confidential Information of the Disclosing Party.

9. Communications Networks. Neither Party shall connect to or otherwise access the

other Party’s computer, Internet, telephone, or other communications network, nor any

Confidential Information accessible through such network.

10. Term and Termination. This Agreement will be effective from the Effective Date and

shall remain in effect until the expiration or earlier termination of the Sublease. This Agreement may only be terminated prior to such date in a written agreement signed by both Parties. The obligations of the Receiving Party with regard to Confidential Information of the Disclosing Party shall survive any expiration or termination of this Agreement for seven (7) years.

11. Governing Law; Venue; Injunctive Relief. This Agreement and all claims or causes of action (whether in contract, tort, or otherwise) that may be based upon, arise out of, or relate to this Agreement, or the negotiation, execution, or performance of this Agreement, shall be governed by the laws of the State of California without giving effect to any conflict of laws principle that would result in the application of the laws of any other jurisdiction. Any disputes under this Agreement will be brought exclusively in the state and federal courts located in the State of California, and the Parties hereby consent to the personal jurisdiction and venue of these courts. Each Receiving Party acknowledges and agrees that any breach of any of its obligations under this Agreement may cause irreparable harm to the Disclosing Party and damages may not be an adequate remedy. Each Receiving Party therefore agrees that the Disclosing Party shall be entitled (without limitation of any other rights or remedies otherwise available to the Disclosing Party) to seek, without posting bond, specific performance and preliminary and permanent injunction from any court of competent jurisdiction prohibiting the continuance or recurrence of any breach of this Agreement.

12. Assignment. Neither Party may assign, or transfer any rights or obligations under, this

Agreement without the other Party’s prior written consent, except that no such consent shall be required for either Party to assign its rights or transfer its obligations to its Affiliate or in connection with the sale or transfer of the majority of its stock or all or substantially all of its assets to which this Agreement relates, whether as part of a merger, acquisition, or asset sale. Any assignment in violation of this Agreement will be null and void. This Agreement benefits and binds the Parties and their respective successors and permitted assigns.

13. Severability. If any provision of this Agreement is held to be invalid, unenforceable, or

illegal by a court of competent jurisdiction, such ruling will not affect or impair the validity, enforceability, or legality of any remaining portions of this Agreement, and, in such event, such provision will be changed and interpreted so as to best accomplish the objectives of such unenforceable or invalid provision within the limits of applicable law. All remaining portions will remain in full force and effect as if the original Agreement had been executed without the invalidated, unenforceable, or illegal part.

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14. Miscellaneous. This document contains the entire agreement between the Parties with

respect to the subject matter hereof. Any failure to enforce any provision of this Agreement shall not constitute a waiver thereof or of any other provision. This Agreement may not be amended, nor any obligation waived, except by a writing signed by both Parties. This Agreement may be executed in two or more counterparts, each of which will be considered an original, but all of which together will constitute one and the same instrument. A facsimile, PDF or any other type of copy of an executed version of this Agreement signed by a Party is binding upon the signing Party to the same extent as the original of the signed Agreement. Each Party agrees that electronic signatures may be used in lieu of hand signatures in the execution of this Agreement.

* * * * *

In witness whereof, the Parties have caused this Mutual Confidentiality Agreement to be

executed by their respective duly authorized officers as of the Effective Date.

ONCOMED PHARMACEUTICALS, INC. VENN BIOSCIENCES, INC.

By:___________________________ By: ___________________________

Name:________________________ Name:_________________________

Title:_________________________Title:__________________________

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EX-10.5

Exhibit 10.5

SUBLEASE

THIS SUBLEASE (this “Sublease”) is dated for reference purposes as of January 16, 2019, and

is made by and between ONCOMED PHARMACEUTICALS, INC., a Delaware corporation

(“Sublandlord”), and REVOLUTION MEDICINES, INC., a Delaware corporation (“Subtenant”).

Sublandlord and Subtenant hereby agree as follows:

1. Recitals: This Sublease is made with reference to the fact that HCP LS Redwood City, LLC,

as “Landlord,” (“Master Landlord”) and Sublandlord, as “Tenant,” are parties to that certain Lease dated

May 30, 2006, as amended by that certain First Amendment to Lease dated November, 2006, that certain

Acknowledgement of Rent Commencement Date dated as of March 9, 2007, that certain Second

Amendment to Office Lease dated December 22, 2010, and that certain Third Amendment to Lease dated

November 11, 2016 (as amended, the “Master Lease”), with respect to those certain premises consisting

of approximately 45,690 rentable square feet described therein (the “Master Premises”) located at 800

Chesapeake Drive, in the Britannia Seaport Centre in Redwood City, California. A copy of the Master

Lease is attached hereto as Exhibit A. Capitalized terms used and not defined herein shall have the

meaning ascribed to them in the Master Lease.

2. Subleased Premises: Subject to the terms and conditions of this Sublease, Sublandlord

hereby subleases to Subtenant, and Subtenant hereby subleases from Sublandlord, a portion of the Master

Premises shown on Exhibit B attached hereto (the “Subleased Premises”). In connection with its use of

the Subleased Premises, and subject to Sublandlord’s reasonable rules and regulations, Subtenant shall

have the non-exclusive right to use the shared areas outlined on Exhibit B, including the

shipping/receiving area for ingress and egress purposes only, the common lobby, shared break room,

common restrooms and locker rooms outlined thereon (collectively, the “Shared Areas”), in each case to

the extent permitted by and on the terms set forth in the Master Lease and subject to Sublandlord’s

reasonable rules and regulations. Subtenant shall have no right to enter, and shall prevent its employees,

agents, contractors and invitees from entering any portions of the Master Premises other than the

Subleased Premises and the Shared Areas.

3. Term:

A. Term. The term (the “Term”) of this Sublease shall be for the period commencing

on the date by which this Sublease is executed by Sublandlord and Subtenant, Master Landlord’s written

consent to this Sublease is obtained and Sublandlord delivers the Subleased Premises to Subtenant (the

“Commencement Date”) and ending one (1) year thereafter unless this Sublease is sooner terminated

pursuant to its terms or the Master Lease is sooner terminated pursuant to its terms (the “Expiration

Date”). In the event of (i) an event of default under the Master Lease of which Sublandlord becomes

aware, or (ii) notification of an event of default with a cure period, pursuant to Article 14 of the Master

Lease, Sublandlord shall promptly, and in no event less than two business days, notify Subtenant of such

event of default. To the extent practicable, but not including the payment of monies, the incurring of any

liabilities, or the institution of legal proceedings, Sublandlord will facilitate Subtenant’s discussion with

Master Landlord regarding the maintenance of this Sublease despite Sublandlord’s default or alleged

default. Sublandlord will use commercially reasonable efforts to obtain Master Landlord’s consent (not

including the payment of monies, the incurring of any liabilities, or the institution of legal proceedings).

Notwithstanding the foregoing, if neither party delivers to the other a written notice of termination at least

thirty (30) days prior to the scheduled Expiration Date, then the Term shall automatically be extended on

a month-to-month basis (the “Extension Term”). During the Extension Term, either party shall have the

right to terminate the Sublease upon thirty (30) days’ prior written notice to the other.

B. No Options to Extend or Expand. Notwithstanding anything to the contrary in the

Sublease or the Master Lease but subject to the foregoing month-to-month Extension Term, Subtenant

shall not have any options to extend or renew the term of the Sublease or any options to expand the

Subleased Premises (except as expressly set forth in Paragraph 3.C below).

C. Right of First Offer. So long as Subtenant is not and has not been in default of any

term or provision of this Sublease, if Sublandlord determines to sublease a portion of or the entire

remaining balance of the vivarium space in the Master Premises, then Sublandlord shall notify Subtenant

in writing (such written notice, the “Offer Notice”) of the terms on which Sublandlord would be willing to

sublease the same, which terms may include, without limitation, the subleasing of other portions of the

Master Premises at Sublandlord’s sole discretion (such vivarium space together with such other portions

of the Master Premises included in the Offer Notice, the “Offer Space”). If Subtenant, within five (5)

business days after receipt of Sublandlord’s Offer Notice, accepts Sublandlord’s offer in the Offer Notice

and indicates in writing its agreement to sublease the Offer Space on the terms stated in Offer Notice,

then, subject to Master Landlord’s consent, Sublandlord shall sublease to Subtenant and Subtenant shall

sublease from Sublandlord the Offer Space on the terms stated in the Offer Notice (and all other terms set

forth in this Sublease that are not inconsistent with the terms set forth in the Offer Notice). Upon such

acceptance by Subtenant, (i) Sublandlord shall prepare an amendment to the Sublease reflecting all such

terms, (ii) Subtenant shall promptly (and in all events within ten (10) business days after receipt of the

same) execute the same, and (iii) the rights of Subtenant under this Paragraph 3.C shall terminate in their

entirety and shall no longer be in effect. If Subtenant does not indicate in writing its agreement to

sublease the Offer Space on the terms contained in the Offer Notice within said five (5) business day

period, or if Master Landlord shall withhold its consent to the sublease of the Offer Space to Subtenant,

then the rights of Subtenant under this Paragraph 3.C shall terminate in their entirety and shall no longer

be in effect, and Sublandlord shall thereafter be free to sublease the Offer Space (or any other portion of

the Master Premises, including without limitation any vivarium space) to any third party upon any terms

and conditions in Sublandlord’s sole discretion. The rights of Subtenant contained herein shall be subject

and subordinate to any rights of renewal, extension or expansion under any other subleases in the Master

Premises.

4. Rent:

A. Base Rent. Commencing on the Commencement Date and continuing each month

throughout the Term (and any Extension Term) of this Sublease, Subtenant shall pay to Sublandlord as

base rent (“Base Rent”) for the Subleased Premises Sixty-Five Thousand Dollars ($65,000.00) per month.

Base Rent shall increase by five percent (5%) on each annual anniversary of the Commencement Date.

Base Rent shall be paid in advance on or before the first (1st) day of each month. Base Rent for any

period during the Term hereof which is for less than one (1) month of the Term shall be a pro rata portion

of the monthly installment based on a thirty (30) day month. Base Rent and Additional Rent (if any), as

defined in Paragraph 4.B below (collectively, “Rent”) shall be payable without notice or demand and

without any deduction, offset, or abatement, in lawful money of the United States of America. Rent shall

be paid directly to Sublandlord at 800 Chesapeake Drive, Redwood City, CA 94063, Attention:

Accounting, or such other address as may be designated in writing by Sublandlord.

B. Additional Rent. All monies other than Base Rent required to be paid by Subtenant

under this Sublease shall be deemed additional rent (“Additional Rent”). Along with any invoice for

Additional Rent due, Sublandlord will provide supporting documentation detailing the Additional Rent

charges. Base Rent shall include the cost to perform Sublandlord’s maintenance obligations under

Paragraph 8, electricity, water and heating, hazardous waste management (to the extent set forth in the

Animal Care Agreement, as defined below), and ventilation and air conditioning (“HVAC”) (collectively,

“Included Services”). Subtenant shall pay for all environmental health and safety services, hazardous

- 2 -

waste management (except as set forth in the Animal Care Agreement, defined below) , internet, phone

and information technology services and support, administrative support, and other similar items and

services with respect to the Subleased Premises (if applicable).

C. Animal Care Agreement. Subtenant shall pay all charges and amounts due and

payable under the Animal Care Agreement attached hereto as Exhibit C (the “Animal Care Agreement”).

D. Prepayment of Rent. Upon execution hereof by Subtenant, Subtenant shall pay to

Sublandlord the sum of Sixty-Five Thousand Dollars ($65,000.00), which shall constitute Base Rent for

the first (1st) month of the Term (with any remainder to be applied towards the second month of the

Term).

5. Security Deposit:

A. Within five (5) business days after execution of this Sublease, Subtenant shall deposit

with Sublandlord Sixty-Five Thousand Dollars ($65,000.00) in cash as security for the performance by

Subtenant of its obligations under this Sublease, and not as a prepayment of rent (collectively, the

“Security Deposit”). If Subtenant defaults under this Sublease, Sublandlord may apply all or any part of

the Security Deposit for the payment of any rent or other sum in default, the repair of any damage to the

Subleased Premises caused by Subtenant or the payment of any other amount which Sublandlord may

spend or become obligated to spend by reason of Subtenant’s default or to compensate Sublandlord for

any other loss or damage which Sublandlord may suffer by reason of Subtenant’s default to the full extent

permitted by law. Subtenant hereby waives any restriction on the use or application of the Security

Deposit by Sublandlord as set forth in California Civil Code Section 1950.7. To the extent any portion of

the Security Deposit is used, Subtenant shall within five (5) days after demand from Sublandlord restore

the Security Deposit to its full amount. Sublandlord may keep the Security Deposit in its general funds

and shall not be required to pay interest to Subtenant on the deposit amount. If Subtenant shall perform

all of its obligations under this Sublease and return the Subleased Premises to Sublandlord at the end of

the Term (as the same may be extended), Sublandlord shall return all of the remaining Security Deposit to

Subtenant within thirty (30) days after the end of the Term (as the same may be extended). The Security

Deposit shall not serve as an advance payment of rent or a measure of Sublandlord’s damages for any

default under this Sublease. Subtenant covenants and agrees that it shall not assign or encumber or

attempt to assign or encumber the Security Deposit and neither Sublandlord nor its successors or assigns

shall be bound by any such agreement, encumbrance, attempted assignment or attempted encumbrance.

6. Holdover: Subtenant acknowledges that it is critical that Subtenant surrender the Subleased

Premises on or before the expiration or earlier termination of the Sublease in accordance with the terms of

this Sublease. Accordingly, Subtenant shall indemnify, defend and hold harmless Sublandlord from and

against all losses, costs, claims, liabilities and damages resulting from Subtenant’s failure to surrender the

Subleased Premises on or before the expiration or earlier termination of the Sublease in the condition

required under the terms of this Sublease (including, without limitation, any liability or damages

sustained by Sublandlord as a result of a holdover of the Master Premises by Sublandlord occasioned by

the holdover of the Subleased Premises by Subtenant). In addition, Subtenant shall pay Sublandlord

holdover rent equal to one hundred fifty percent (150%) of Base Rent plus any Additional Rent payable

hereunder for any period from the Expiration Date through the date Subtenant surrenders the Subleased

Premises in the condition required hereunder. The provisions of this Paragraph 6 shall survive the

expiration or earlier termination of this Sublease.

7. “AS IS”Condition: The parties acknowledge and agree that Subtenant is subleasing the

Subleased Premises on an “AS IS” basis (except that Sublandlord shall deliver the same in vacant, broom

clean condition and, to the extent such compliance is Sublandlord’s obligation under the Master Lease, in

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compliance with applicable laws as currently interpreted and enforced), and that Sublandlord has made no

representations or warranties, express or implied, whatsoever, with respect to the Subleased Premises,

including, without limitation, any representation or warranty as to the suitability of the Subleased

Premises for Subtenant’s intended use or any representation or warranty made by Master Landlord under

the Master Lease. Sublandlord shall have no obligation whatsoever to make or pay the cost of any

alterations, improvements or repairs to the Subleased Premises, including, without limitation, any

improvement or repair required to comply with any law, regulation, building code or ordinance (including

the Americans with Disabilities Act of 1990, as may be amended). Subtenant expressly waives all rights

under law to make repairs at the expense of Sublandlord. Subtenant hereby expressly waives the

provisions of subsection 1 of Section 1932 and Sections 1941 and 1942 of the Civil Code of California

and all rights to make repairs at the expense of Sublandlord as provided in Section 1942 of said Civil

Code.

8. Repair and Maintenance. Subtenant shall repair and maintain the Subleased Premises in

good and sanitary order, condition and repair as set forth in Section 8.2(a) of the Master Lease

incorporated herein. Notwithstanding the foregoing, Sublandlord shall continue to repair and maintain

the Building electrical, plumbing and HVAC systems required to be maintained by “Tenant” pursuant to

Section 8.2(a) of the Master Lease. In the event Sublandlord’s cost to maintain and repair such Building

systems increases as a result of Subtenant’s use of the Subleased Premises, Subtenant shall pay to

Sublandlord such increase in cost. In addition, Subtenant shall pay the entire cost of any repair,

maintenance or replacement required as a result of the misuse or excess use of such systems, or the

negligence, willful misconduct or violation of this Sublease, by Subtenant or its agents, employees,

contractors or invitees.

9. Master Landlord Obligations. Sublandlord shall have no obligation to perform any repairs

or any other obligation of Master Landlord required to be performed by Master Landlord under the terms

of the Master Lease (including, without limitation, Master Landlord’s obligations under Sections 6, 8, 9,

10, 13, 15, and 17.20 of the Master Lease and Master Landlord’s obligation to comply with laws and

carry building insurance). Sublandlord shall, however, request performance of the same in writing from

Master Landlord promptly after being requested to do so by Subtenant, and shall use Sublandlord’s

reasonable efforts (not including the payment of monies, the incurring of any liabilities, or the institution

of legal proceedings) to obtain Master Landlord’s performance.

10. Right to Cure Defaults: If Subtenant fails to pay any sum of money to Sublandlord, or fails

to perform any other act on its part to be performed hereunder, then Sublandlord may, but shall not be

obligated to, make such payment or perform such act. All such sums paid, and all reasonable costs and

expenses of performing any such act, shall be deemed Additional Rent payable by Subtenant to

Sublandlord upon demand, together with interest thereon at the lesser of (i) ten percent (10%) per annum

or (ii) the maximum rate allowable under law (the “Interest Rate”) from the date of the expenditure until

repaid.

11. Assignment and Subletting: Notwithstanding anything to the contrary in the Sublease or

the terms of the Master Lease incorporated herein, Subtenant may not assign any interest in this Sublease

(by operation of law or otherwise), sublet any of the Subleased Premises, transfer any interest of

Subtenant therein or permit any use of the Subleased Premises by another party (collectively, “Transfer”).

Any Transfer by Subtenant shall be void and, at the option of Sublandlord, shall be a material default

under this Sublease. Notwithstanding the foregoing, Subtenant may enter into a “Permitted Transfer” of

Subtenant as described in Section 11.1 of the Master Lease, as incorporated herein, so long as Master

Landlord’s consent is received (to the extent Master Landlord’s consent is required under the Master

Lease) and the conditions therein are satisfied; provided, however, in the event of any such Permitted

Transfer of Subtenant (other than a venture equity financing, initial public offering, or other issuance of

- 4 -

capital stock for bona fide financing purposes), Sublandlord shall have the right to terminate this Sublease

upon written notice to Subtenant, in which event this Sublease shall terminate thirty (30) days after such

notice of termination.

12. Use:

A. Subject to the terms of the Master Lease, Subtenant may use the Subleased Premises

for research and development and/or laboratory purposes, and for administrative and other lawful

purposes reasonably related to or incidental to such specified uses (subject in each case to receipt of all

necessary approvals from the City of Redwood City and all other governmental agencies having

jurisdiction over the Subleased Premises), and for no other purpose whatsoever.

B. Subtenant shall not use, store, transport or dispose of any Hazardous Substances (as

defined in the Master Lease) in or about the Subleased Premises or the Master Premises, except that

Subtenant may keep, store and use in the Subleased Premises those Hazardous Substances, and their

respective quantities, specifically listed on the Environmental Questionnaire attached to this Sublease as

Exhibit D to the extent permitted pursuant to the terms and conditions of Section 9.6 of the Master Lease

incorporated herein. Subtenant shall at all times comply with Sublandlord’s environmental, health and

safety (“EH&S”) standards, rules and regulations, and Sublandlord shall have the right at any time to

audit Subtenant’s compliance with the same.

C. Subtenant shall have access to the Subleased Premises twenty-four (24) hours per

day, seven (7) days per week, subject to access procedures reasonably required by Sublandlord and/or

Master Landlord, the Building rules and regulations and other limitations set forth in this Sublease or the

Master Lease.

D. Subtenant shall comply with all reasonable rules and regulations promulgated from

time to time by Master Landlord or Sublandlord. Without limiting the generality of the foregoing,

Subtenant shall comply with Sublandlord’s emergency policies and procedures.

13. Effect of Conveyance: As used in this Sublease, the term “Sublandlord” means the holder of

the Tenant’s interest under the Master Lease. In the event of any assignment or transfer of the Tenant’s

interest under the Master Lease, which assignment or transfer may occur at any time during the Term

hereof in Sublandlord’s sole discretion, Sublandlord shall be and hereby is entirely relieved of all

covenants and obligations of Sublandlord hereunder, and it shall be deemed and construed, without

further agreement between the parties hereto, that any transferee has assumed and shall carry out all

covenants and obligations thereafter to be performed by Sublandlord hereunder. Sublandlord shall

transfer and deliver any security of Subtenant to the transferee of the Tenant’s interest under the Master

Lease, and thereupon Sublandlord shall be discharged from any further liability with respect thereto.

14. Delivery and Acceptance: This Sublease shall not be void or voidable, nor shall

Sublandlord be liable to Subtenant for any loss or damage, by reason of delays in the Commencement

Date or delays in Sublandlord delivering the Subleased Premises to Subtenant for any reason whatsoever;

provided, however, that Base Rent shall abate with respect to the applicable portion of the Subleased

Premises until Sublandlord delivers possession of the such portion of the Subleased Premises to

Subtenant.

15. Improvements: Subtenant shall not make any alterations or improvements to the Subleased

Premises (i) without the prior written consent of both Master Landlord and Sublandlord and (ii) except in

accordance with the Master Lease. Sublandlord’s consent may be withheld by Sublandlord in its sole and

absolute discretion. Notwithstanding anything to the contrary, by written notice delivered not later than

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sixty (60) days prior to the Expiration Date (or, during the Extension Term, by written notice delivered on

or around the same date as Sublandlord’s delivery or receipt of a notice of termination), Sublandlord may

require Subtenant, at Subtenant’s expense, to remove any alterations or improvements constructed by or

for Subtenant and restore the affected areas to their condition prior to such alteration or improvement.

16. Release and Waiver of Subrogation: Notwithstanding anything to the contrary in this

Sublease, the parties hereto release each other and their respective agents, employees, successors and

assigns from all liability for damage to any property that is actually covered by property insurance in

force or which would normally be covered by full replacement value “Special Form” property insurance,

without regard to the negligence or willful misconduct of the entity so released. Each party shall cause

each insurance policy it obtains to include a waiver of subrogation regarding the liabilities released

hereby. Sublandlord shall not be liable to Subtenant, nor shall Subtenant be entitled to terminate this

Sublease or to abate Base Rent for any (i) failure or interruption of any utility system or service or (ii)

failure of Master Landlord to maintain the Subleased Premises or the Building as may be required under

the Master Lease. Notwithstanding anything to the contrary in the Sublease or in the Animal Care

Agreement, in no event shall Sublandlord be liable to Subtenant for any lost profit, damage to or loss of

business or any form of special, indirect or consequential damages.

17. Insurance: Subtenant shall obtain and keep in full force and effect, at Subtenant’s sole cost

and expense, during the Term (including any Extension Term) the insurance required to be carried by the

“Tenant” under the Master Lease and business interruption insurance covering at least one (1) year of

Base Rent. Subtenant shall include Sublandlord and Master Landlord as an additional insured in any

policy of insurance carried by Subtenant in connection with this Sublease (other than business

interruption insurance) and shall provide Sublandlord with certificates of insurance upon Sublandlord’s

request.

18. Default: Subtenant shall be in material default of its obligations under this Sublease if any of

the following events occur:

A. Subtenant fails to pay any Rent within three (3) business days after written notice of

nonpayment; or

B. Subtenant fails to perform any term, covenant or condition of this Sublease (except

those requiring payment of Rent) or the Animal Care Agreement and fails to cure such breach within

twenty (20) days after delivery of a written notice specifying the nature of the breach; or

C. the bankruptcy or insolvency of Subtenant, transfer by Subtenant in fraud of

creditors, an assignment by Subtenant for the benefit of creditors, or the commencement of any

proceedings of any kind by or against Subtenant under any provision of the Federal Bankruptcy Act or

under any other insolvency, bankruptcy or reorganization act unless, in the event any such proceedings

are involuntary, Subtenant is discharged from the same within thirty (30) days thereafter;

D. the appointment of a receiver for a substantial part of the assets of Subtenant, which

receiver is not discharged within thirty (30) days;

E. the levy upon this Sublease or any estate of Subtenant hereunder by any attachment

or execution and the failure within thirty (30) days thereafter to have such attachment or execution

vacated or such other action taken with respect thereto so as to put Sublandlord at no risk of having an

unconsented transfer of this Sublease;

F. Subtenant abandons the Subleased Premises; or

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G. Subtenant commits any other act or omission which could constitute a default under

the Master Lease.

19. Remedies: In the event of any default by Subtenant, Sublandlord shall have all remedies

provided to the “Landlord” under Section 14.2 of the Master Lease as if an “event of default” had

occurred thereunder and all other rights and remedies otherwise available at law and in equity.

Sublandlord may resort to its remedies cumulatively or in the alternative.

20. Surrender:

A. On or before the Expiration Date or any sooner termination of this Sublease,

Subtenant shall remove all of its trade fixtures, personal property and all alterations constructed by

Subtenant in the Subleased Premises which are required to be removed under the terms of this Sublease or

the Master Lease and shall surrender the Subleased Premises to Sublandlord in good condition, order and

repair (reasonable wear and tear and damage by casualty or condemnation excepted), and fully

decommissioned and free of any Hazardous Substances used, stored, released, emitted or disposed of by

Subtenant or its agents, employees, contractors or invitees. Subtenant shall repair any damage to the

Subleased Premises caused by Subtenant’s removal of its personal property, furnishings and equipment.

If the Subleased Premises are not so surrendered, then Subtenant shall be liable to Sublandlord for all

costs incurred by Sublandlord in returning the Subleased Premises to the required condition, plus interest

thereon at the Interest Rate.

B. In connection with its surrender of the Subleased Premises, Subtenant shall submit to

Sublandlord, at least fifteen (15) days prior to the expiration date of this Sublease (or in the event of an

earlier termination of this Sublease, as soon as reasonably possible following such termination), an

environmental assessment of the Subleased Premises by a competent and experienced environmental

engineer or engineering firm reasonably satisfactory to Sublandlord (pursuant to a contract approved by

Sublandlord and providing that Sublandlord can rely on the environmental assessment). If such

environmental assessment reveals that removal, remediation or other clean-up is required under any

applicable laws, rules, regulations, orders, permits or licenses, Subtenant shall submit a remediation plan

prepared by a recognized environmental consultant and shall be responsible for all costs of such removal,

remediation and clean-up.

21. Broker: Sublandlord and Subtenant each represent to the other that they have dealt with no

real estate brokers, finders, agents or salesmen in connection with this transaction other than CBRE

representing Sublandlord ( “Sublandlord Broker”). Sublandlord and Subtenant each agrees to indemnify

and hold the other harmless from and against all claims for brokerage commissions, finder’s fees or other

compensation made by any other agent, broker, salesman or finder as a consequence of the indemnifying

party’s actions or dealings with such other agent, broker, salesman, or finder.

22. Notices: Unless at least five (5) days’ prior written notice is given in the manner set forth in

this paragraph, the address of each party for all purposes connected with this Sublease shall be that

address set forth below their signatures at the end of this Sublease. All notices, demands and

communications in connection with this Sublease shall be properly addressed and delivered as follows:

(a) personally delivered; or (b) submitted to an overnight courier service, charges prepaid; or (c) deposited

in the mail (certified, return-receipt requested, and postage prepaid). Notices shall be deemed delivered

upon receipt, if personally delivered, one (1) business day after being so submitted to an overnight courier

service and two (2) business days after deposit in the United States mail, if mailed as set forth above. All

notices given to Master Landlord under the Master Lease shall be considered received only when

delivered in accordance with the Master Lease.

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23. Other Sublease Terms:

A. Incorporation By Reference. Except as set forth below and except as otherwise

provided in this Sublease, the terms and conditions of this Sublease shall include all of the terms of the

Master Lease and such terms are incorporated into this Sublease as if fully set forth herein, except that: (i)

each reference in such incorporated sections to “Lease” shall be deemed a reference to this “Sublease”;

(ii) each reference to the “Premises” shall be deemed a reference to the “Subleased Premises”; (iii) each

reference to “Landlord” shall be deemed a reference to “Sublandlord” and each reference to “Tenant”

shall be deemed a reference to “Subtenant”, except as otherwise expressly set forth herein; (iv) each

reference to “Rent Commencement Date” shall be deemed a reference to the “Commencement Date”; (v)

with respect to work, services, utilities, electricity, repairs (or damage caused by Master Landlord),

restoration, insurance, indemnities, reimbursements, representations, warranties or the performance of any

other obligation of “Landlord” under the Master Lease, whether or not incorporated herein, the sole

obligation of Sublandlord shall be to request the same in writing from Master Landlord as and when

requested to do so by Subtenant, and to use Sublandlord’s reasonable efforts (not including the payment

of money, the incurring of any liabilities, or the institution of legal proceedings) to obtain Master

Landlord’s performance; (vi) with respect to any obligation of Subtenant to be performed under this

Sublease, wherever the Master Lease grants to “Tenant” a specified number of days to perform its

obligations under the Master Lease (including, without limitation, curing any defaults), except as

otherwise provided herein, Subtenant shall have three (3) fewer days to perform the obligation or one-half

the time period permitted under the Master Lease, which ever allows Subtenant the greater amount of

time; (vii) with respect to any approval required to be obtained from the “Landlord” under the Master

Lease, such approval must be obtained from both Master Landlord and Sublandlord, and Sublandlord’s

withholding of approval shall in all events be deemed reasonable if for any reason Master Landlord’s

approval is not obtained; (viii) in any case where the “Landlord” reserves or is granted the right to

manage, supervise, control, repair, alter, regulate the use of, enter or use the Premises or any areas

beneath, above or adjacent thereto, such reservation or grant of right of entry shall be deemed to be for the

benefit of both Master Landlord and Sublandlord; (ix) in any case where “Tenant” is to indemnify, release

or waive claims against “Landlord”, such indemnity, release or waiver shall be deemed to run from

Subtenant to both Master Landlord and Sublandlord; (x) in any case where “Tenant” is to execute and

deliver certain documents or notices to “Landlord”, such obligation shall be deemed to run from

Subtenant to both Master Landlord and Sublandlord; and (xi) the following modifications shall be made

to the Master Lease as incorporated herein:

(a) the following provisions of the Master Lease are not incorporated herein:

Sections 1.1(a)(except last sentence), 2, 3.1, 4.2, 5, 6.1, 7.1(first sentence), 7.2(a)(except clause (i)),

7.2(b), 7.3, 7.5, 8.1(b), 9.6(b)(xi) 9.6(c), 10.6(b), 11.1 (first three (3) sentences), 11.2, 14.1, 15.2, 16, 17.1,

17.15, 17.16, 17.21, Exhibit B, Exhibit C, Exhibit D, First Amendment to Lease, Acknowledgment of

Rent Commencement Date, Second Amendment to Lease, and Third Amendment to Lease; and

(b) any right to abate rent provided to Subtenant through incorporation of the

provisions of the Master Lease shall not exceed the rent actually abated under the Master Lease with

respect to the Subleased Premises.

B. Assumption of Obligations. This Sublease is and at all times shall be subject and

subordinate to the Master Lease and the rights of Master Landlord thereunder. Subtenant hereby

expressly assumes and agrees: (i) to comply with all provisions of the Master Lease which are

incorporated hereunder; and (ii) to perform all the obligations on the part of the “Tenant” to be performed

under the terms of the Master Lease which are incorporated hereunder with respect to the Subleased

Premises during the term of this Sublease except as set forth in Paragraph 8 above. In the event the

Master Lease is terminated for any reason whatsoever, this Sublease shall terminate simultaneously with

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such termination without any liability of Sublandlord to Subtenant. In the event of a conflict between the

provisions of this Sublease and the Master Lease, as between Sublandlord and Subtenant, the provisions

of this Sublease shall control.

24. Right to Contest: If Sublandlord does not have the right to contest any matter in the Master

Lease due to expiration of any time limit that may be set forth therein or for any other reason, then

notwithstanding any incorporation of any such provision from the Master Lease in this Sublease,

Subtenant shall also not have the right to contest any such matter.

25. Signage: Subtenant shall not have any signage rights under this Sublease.

26. Review Costs: Subtenant shall reimburse Master Landlord promptly for any and all

reasonable costs and expenses, including without limitation reasonable attorneys’ fees, incurred by Master

Landlord in connection with any consent requested from the Master Landlord in connection with the

Sublease, including without limitation, Master Landlord consent to this Sublease.

27. Inspection by a CASp in Accordance with Civil Code Section 1938: To Sublandlord’s

actual knowledge, the property being leased or rented pursuant to this Sublease has not undergone

inspection by a Certified Access Specialist (CASp). In addition, the following notice is hereby provided

pursuant to Section 1938(e) of the California Civil Code: “A Certified Access Specialist (CASp) can

inspect the subject premises and determine whether the subject premises comply with all of the applicable

construction-related accessibility standards under state law. Although state law does not require a CASp

inspection of the subject premises, the commercial property owner or lessor may not prohibit the lessee or

tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential

occupancy of the lessee or tenant, if requested by the lessee or tenant. The parties shall mutually agree on

the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp

inspection, and the cost of making any repairs necessary to correct violations of construction-related

accessibility standards within the premises.” Sublandlord and Subtenant agree that if Subtenant requests a

CASp inspection of the Subleased Premises, then Subtenant shall pay (a) the fee for such inspection, and (b) the cost of making any repairs necessary to correct violations of construction-related accessibility standards within the Subleased Premises or the Master Premises.

28. Conditions Precedent: Notwithstanding anything to the contrary in this Sublease or the

Animal Care Agreement, this Sublease and the Animal Care Agreement and Sublandlord’s obligations

hereunder and thereunder are conditioned upon Sublandlord’s receipt of the written consent of Master

Landlord to this Sublease. Unless waived in writing by Sublandlord, such consent shall provide that

Master Landlord waives its rights under Sections 11.2(b)-(c) of the Master Lease with respect to the Rent

payable under this Sublease or other charges under the Animal Care Agreement. If Sublandlord does not

receive such consent within thirty (30) days after execution of this Sublease by Sublandlord, then either

party may terminate this Sublease by giving the other party written notice of termination prior to

receiving Master Landlord’s consent to this Sublease, and upon such termination, Sublandlord shall return

to Subtenant all prepaid rent and the Security Deposit. This Sublease is further conditioned upon

Sublandlord and Subtenant entering into the Animal Care Agreement.

29. Termination; Recapture: Notwithstanding anything to the contrary herein, Subtenant

acknowledges that, under the Master Lease, both Master Landlord and Sublandlord have certain

termination and recapture rights, including, without limitation, in Sections 11 and 13 of the Master Lease.

Nothing herein shall prohibit Master Landlord or Sublandlord from exercising any such rights and neither

Master Landlord nor Sublandlord shall have any liability to Subtenant as a result thereof. In the event

Master Landlord or Sublandlord exercise any such termination or recapture rights, this Sublease shall

terminate without any liability to Master Landlord or Sublandlord.

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30. No Recording: Subtenant agrees that it will not record this Sublease, or a short

memorandum hereof.

31. No Drafting Presumption: The parties acknowledge that this Sublease has been agreed to

by both the parties, that both Sublandlord and Subtenant have consulted with attorneys with respect to the

terms of this Sublease and that no presumption shall be created against Sublandlord because Sublandlord

drafted this Sublease.

32. Entire Agreement; Amendment: This Sublease constitutes the entire agreement between

the parties with respect to the subject matter herein, and there are no binding agreements or

representations between the parties except as expressed herein. No subsequent amendment, change or

addition to this Sublease shall be binding unless in writing and signed by all parties hereto.

33. Counterparts: This Sublease may be executed in one (1) or more counterparts each of

which shall be deemed an original but all of which together shall constitute one (1) and the same

instrument. Signature copies may be detached from the counterparts and attached to a single copy of this

Sublease physically to form one (1) document.

[Remainder of page left intentionally blank]

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IN WITNESS WHEREOF, the parties have executed this Sublease as of the day and year first

above written.

SUBLANDLORD:SUBTENANT:

ONCOMED PHARMACEUTICALS, INC.,REVOLUTION MEDICINES, INC.,

a Delaware corporationa Delaware corporation

By: /s/ John A. LewickiBy: /s/ Mark A. Goldsmith

Print Name: John A. Lewicki, PhDPrint Name: Mark A. Goldsmith

Title: President & CEOTitle: Chief Executive Officer

Address:Address:

800 Chesapeake Drive700 Saginaw Drive

Redwood City, CA 94063Redwood City, CA 94063

Attn:Attn:

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EXHIBIT A

MASTER LEASE

(attached)

LEASE

Landlord:	Slough Redwood City, LLC
Tenant:	OncoMed Pharmaceuticals, Inc.
Date:	May 30, 2006

TABLE OF CONTENTS

1.	PROPERTY			1
	1.1	Lease of Premises		1
	1.2	Landlord’s Reserved Rights		2
2.	TERM			2
	2.1	Term		2
	2.2	Early Possession		4
	2.3	Condition of Premises		5
	2.4	Acknowledgment of Rent Commencement Date		8
	2.5	Holding Over		9
	2.6	Options to Extend Term		9
3.	RENTAL			10
	3.1	Minimum Rental		10
		(a)	Rental Amounts	10
		(b)	Rental Amounts During Extended Term(s)	10
		(c)	Square Footage of Premises	10
	3.2	Late Charge		11
4.	TAXES			12
	4.1	Personal Property		12
	4.2	Real Property		12
5.	OPERATING EXPENSES			13
	5.1	Payment of Operating Expenses		13
	5.2	Definition of Operating Expenses		13
	5.3	Determination of Operating Expenses		15
	5.4	Final Accounting for Expense Year		16
	5.5	Proration		16
6.	UTILITIES			17
	6.1	Payment		17
	6.2	Interruption		17
7.	ALTERATIONS; SIGNS			18
	7.1	Right to Make Alterations		18
	7.2	Title to Alterations		18
	7.3	Tenant Trade Fixtures		20
	7.4	No Liens		20
	7.5	Signs		20
8.	MAINTENANCE AND REPAIRS			20
	8.1	Landlord’s Obligation for Maintenance		20

		(a)	Repairs and Maintenance	20
		(b)	Tenant’s Remedy	21
	8.2	Tenant’s Obligation for Maintenance		21
		(a)	Good Order, Condition and Repair	21
		(b)	Landlord’s Remedy	22
		(c)	Condition Upon Surrender	22
9.	USE OF PROPERTY			22
	9.1	Permitted Use		22
	9.2	[Intentionally Deleted.]		23
	9.3	No Nuisance		23
	9.4	Compliance with Laws		23
	9.5	Liquidation Sales		24
	9.6	Environmental Matters		24
10.	INSURANCE AND INDEMNITY			30
	10.1	Insurance		30
	10.2	Quality of Policies and Certificates		32
	10.3	Workers’ Compensation; Employees		33
	10.4	Waiver of Subrogation		33
	10.5	Increase in Premiums		33
	10.6	Indemnification		33
	10.7	Blanket Policy		34
11.	SUBLEASE AND ASSIGNMENT			34
	11.1	Assignment and Sublease of Building		34
	11.2	Rights of Landlord		35
12.	RIGHT OF ENTRY AND QUIET ENJOYMENT			36
	12.1	Right of Entry		36
	12.2	Quiet Enjoyment		37
13.	CASUALTY AND TAKING			37
	13.1	Damage or Destruction		37
	13.2	Condemnation		39
	13.3	Reservation of Compensation		40
	13.4	Restoration of Improvements		41
14.	DEFAULT			41
	14.1	Events of Default		41
		(a)	Abandonment	41
		(b)	Nonpayment	41
		(c)	Other Obligations	41
		(d)	General Assignment	41
		(e)	Bankruptcy	42
		(f)	Receivership	42
		(g)	Attachment	42
		(h)	Insolvency	42
	14.2	Remedies Upon Tenant’s Default		42
	14.3	Remedies Cumulative		43
15.	SUBORDINATION, ATTORNMENT AND SALE			43
	15.1	Subordination to Mortgage		43

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	15.2	Sale of Landlord’s Interest		44
	15.3	Estoppel Certificates		44
	15.4	Subordination to CC&R’s		45
	15.5	Mortgagee Protection		45
16.	SECURITY			46
	16.1	Deposit		46
17.	MISCELLANEOUS			46
	17.1	Notices		46
	17.2	Successors and Assigns		48
	17.3	No Waiver		48
	17.4	Severability		48
	17.5	Litigation Between Parties		48
	17.6	Surrender		48
	17.7	Interpretation		48
	17.8	Entire Agreement		48
	17.9	Governing Law		49
	17.10	No Partnership		49
	17.11	Financial Information		49
	17.12	Costs		50
	17.13	Time		50
	17.14	Rules and Regulations		50
	17.15	Brokers		50
	17.16	Memorandum of Lease		50
	17.17	Organizational Authority		50
	17.18	Execution and Delivery		50
	17.19	Survival		51
	17.20	Parking		51
	17.21	Warrant		51
	17.22	Approvals		51
EXHIBITS
	EXHIBIT A-1		Site Plan (The Center)
	EXHIBIT A-2		Building Plan/Service Annex
	EXHIBIT B		Workletter
	EXHIBIT C		Form of Acknowledgment of Rent Commencement Date
	EXHIBIT D		Form of Warrant

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LEASE

THIS LEASE (“Lease”) is made and entered into as of May 30, 2006 (the “Lease Commencement Date”), by and between SLOUGH REDWOOD CITY, LLC, a Delaware limited liability company (“Landlord”), and ONCOMED PHARMACEUTICALS, INC., a Delaware corporation (“Tenant”).

THE PARTIES AGREE AS FOLLOWS:

1. PROPERTY

1.1 Lease of Premises.

(a) Landlord leases to Tenant and Tenant hires and leases from Landlord, on the terms, covenants and conditions hereinafter set forth, the premises (the “Premises”) of approximately 45,678 square feet of space (subject to the measurement provisions in Section 3.1(c) below) consisting of (i) the building commonly known as 800 Chesapeake Drive (the “Building”) located in the Britannia Seaport Centre (referred to interchangeably herein as the “Center” or the “Property”) in the City of Redwood City, County of San Mateo, State of California; and (ii) those portions of the Service Annex (as defined in Section 2.3 below) designated as being either for the exclusive use of the occupant of the Building, or for shared, nonexclusive use by the occupant of the Building and the occupant of the Adjacent Building (as defined in Section 2.3 below), including (but not limited to) the Chemical Storage Area and Emergency Generator Area (as described in Section 2.3 below) immediately adjacent to the Building, which Chemical Storage Area and Emergency Generator Area, respectively, are for the exclusive use of the occupant of the Building but are not fully enclosed and therefore are not included in the square footage calculation for the Premises. The location of the Building within the Center is depicted on the site plan attached hereto as Exhibit A-1 and incorporated herein by this reference (the “Site Plan”); the footprint of the Building is depicted on the drawing attached hereto as Exhibit A-2 and incorporated herein by this reference (the “Building Plan”). The parking areas, driveways, sidewalks, landscaped areas and other portions of the Center that lie outside the exterior walls of the buildings now or hereafter existing from time to time in the Center, as depicted in the Site Plan and as hereafter modified by Landlord from time to time in accordance with the provisions of this Lease, are sometimes referred to herein as the “Common Areas.”

(b) As an appurtenance to Tenant’s leasing of the Premises pursuant to Section 1.1(a), Landlord hereby grants to Tenant, for the benefit of Tenant and its employees, suppliers, shippers, customers and invitees, during the term of this Lease, the non-exclusive right to use, in common with others entitled to such use, (i) those portions of the Common Areas improved from time to time for use as parking areas, driveways, sidewalks, landscaped areas, or for other common purposes, and (ii) all access easements and similar rights and privileges relating to or appurtenant to the Center and created or existing from time to time under any access easement agreements, declarations of covenants, conditions and restrictions, or other written agreements now or hereafter of record with respect to the Center, subject however to any

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limitations applicable to such rights and privileges under applicable law, under this Lease and/or under the written agreements creating such rights and privileges.

1.2 Landlord’s Reserved Rights. To the extent reasonably necessary to permit Landlord to exercise any rights of Landlord and discharge any obligations of Landlord under this Lease, Landlord shall have, in addition to the right of entry set forth in Section 12.1 hereof; the following rights: (i) to make changes to the Common Areas, including, without limitation, changes in the location, size or shape of any portion of the Common Areas, and to construct and/or relocate parking structures and/or parking spaces in the Center; (ii) to close temporarily any of the Common Areas for maintenance or other reasonable purposes; (iii) to construct, alter or add to other buildings and Common Area improvements in the Center; (iv) to use the Common Areas while engaged in making additional improvements, repairs or alterations to the Center or any portion thereof; and (v) to do and perform such other acts with respect to the Common Areas and the Center as may be necessary or appropriate. Landlord shall not exercise rights reserved to it pursuant to this Section 1.2 in such a manner as to cause any material diminution of Tenant’s rights, or any material increase of Tenant’s obligations, under this Lease, or in such a manner as to leave Tenant without reasonable parking or reasonable access to the Premises or otherwise to materially impair Tenant’s ability to conduct its activities in the normal manner; provided, however, that the foregoing shall not limit or restrict Landlord’s right to undertake reasonable construction activity and Tenant’s use of the Premises shall be subject to reasonable temporary disruption incidental to such activity diligently prosecuted.

2. TERM

2.1 Term.

(a) The term of this Lease shall commence on the Lease Commencement Date as defined above. Subject to any applicable adjustments pursuant to Paragraph 3(d) of the Workletter attached hereto as Exhibit B and incorporated herein by this reference (the “Workletter”), Tenant’s obligation to pay minimum rental and Operating Expenses under this Lease shall commence on the date (the “Rent Commencement Date”) that is the earlier to occur of (i) the date on which Tenant commences actual business operations in at least a material portion of the Premises or (ii) the first date by which all of the following conditions are satisfied: (A) Landlord has delivered to Tenant both a TI Substantial Completion Certificate with respect to Landlord’s TI Work (as those terms are defined in the Workletter) and a Section 2.3 Substantial Completion Certificate with respect to Landlord’s Section 2.3 Work (as those terms are defined below); (B) Landlord has delivered possession of the Premises to Tenant with Landlord’s Work substantially completed, for which purpose “substantially completed” shall mean completed subject only to the performance of Punch List Work (as defined in the Workletter); and (C) Landlord has obtained from the appropriate governmental authorities all approvals and permits required for the legal occupancy and use of the Premises; provided that (I) for purposes of the foregoing clause (C), Landlord shall not be responsible for (and the occurrence of the Rent Commencement Date shall not be delayed by any delay in the receipt of) any such approvals or permits that are required by reason of improvements (if any) installed by Tenant pursuant to Article 7 hereof or the Workletter, or by reason of the particular nature of

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Tenant’s business operations to be conducted in the Premises (as distinguished from approvals or permits required for the general use and occupancy of the Premises and of the improvements constructed therein by Landlord); and (II) for purposes of the foregoing clauses (A), (B) and (C), (x) the issuability of the TI Substantial Completion Certificate and the Section 2.3 Substantial Completion Certificate shall be determined without reference to completion of any elements of Landlord’s Work that relate to the construction of the Larc facility and related systems and improvements (the “Larc”) to be constructed as part of Landlord’s TI Work under the Workletter (collectively, “Landlord’s Larc Work”); (y) the substantial completion of Landlord’s Work (subject only to Punch List Work) shall be determined without reference to completion of any elements of Landlord’s Larc Work; and (z) the concept of receipt of all governmental approvals and permits shall not be construed to include operational readiness of, or receipt of governmental approvals and permits for the operation of, the Larc, since the parties recognize that the time frame for permitting, construction and commissioning of the Larc may be materially longer than the time frame for the rest of Landlord’s TI Work. As used in this Lease, the term “Landlord’s Work” shall mean, collectively, Landlord’s Section 2.3 Work (as defined below) and Landlord’s TI Work (as defined in the Workletter). Subject to development and/or modification of construction schedules for Landlord’s Work as contemplated in the Workletter, the parties presently contemplate that the Rent Commencement Date will occur on or about February 7, 2007.

(b) If the Rent Commencement Date has not occurred for any reason whatsoever on or before August 7, 2007, then, in addition to any other rights or remedies available to Tenant under this Lease or under applicable law, Tenant shall have the right to terminate this Lease by written notice to Landlord at any time prior to the satisfaction of all conditions for the occurrence of the Rent Commencement Date; provided, however, that the foregoing deadline of August 7, 2007 shall be extended, day for day, by a period equal to the length of any actual delay in the completion of Landlord’s Work that is caused by Tenant Delay or Unavoidable Delay (as such terms are defined in the Workletter). Notwithstanding the foregoing proviso, however, to the extent there are any periods of such actual delay that are attributable solely to Unavoidable Delay and not to Tenant Delay, the maximum amount of such actual delay attributable solely to Unavoidable Delay that may be taken into account for purposes of extending such deadline of August 7, 2007 shall be sixty (60) days in the aggregate. Upon any valid exercise of Tenant’s termination right under this paragraph (b), (i) if the periods of actual delay that gave rise to Tenant’s termination right consisted primarily of periods attributable solely to Landlord Delay and not to any concurrent Tenant Delay or Unavoidable Delay, then Landlord shall refund to Tenant, within ten (10) business days after Tenant’s exercise of its termination right, any monies previously paid by Tenant to Landlord pursuant to this Lease and the Workletter (including, without limitation, any such amounts paid by Tenant to Landlord for Tenant’s pro rata share, if any, of the cost of Landlord’s TI Work), and (ii) if the periods of actual delay that gave rise to Tenant’s termination right consisted primarily of periods attributable solely to Tenant Delay and/or Unavoidable Delay and not to any concurrent Landlord Delay, then Tenant shall not be entitled to any such refund and Landlord shall instead be entitled to retain any such monies previously paid by Tenant pursuant to this Lease and the Workletter.

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(c) If Landlord has not completed construction of Landlord’s Larc Work (subject only to performance of Punch List Work) and delivered a Larc Substantial Completion Certificate (as defined in the Workletter) to Tenant within ninety (90) days after the Rent Commencement Date, then, in addition to any other rights or remedies available to Tenant under this Lease or under applicable law, beginning on the ninety-first (91^st) day after the Rent Commencement Date and continuing until completion of construction of Landlord’s Larc Work (subject only to performance of Punch List Work) and delivery of such Larc Substantial Completion Certificate, the square footage on which Tenant’s minimum rental obligation under Section 3.1(a) and Tenant’s Operating Cost Share under Article 5 are calculated shall be reduced by an amount equal to the square footage of the Larc, measured in a manner consistent with the manner in which other measurements of square footage are made under this Lease, and Tenant’s payment obligations with respect to minimum rental and Operating Expenses shall be reduced proportionately. If Landlord has not completed construction of Landlord’s Larc Work (subject only to performance of Punch List Work) and delivered a Larc Substantial Completion Certificate to Tenant within nine (9) months after the Rent Commencement Date, then, in addition to any other rights or remedies available to Tenant under this Lease or under applicable law, Tenant shall have the right to terminate this Lease by written notice to Landlord at any time prior to the completion of construction of Landlord’s Larc Work (subject only to performance of Punch List Work) and delivery of such Larc Substantial Completion Certificate; provided, however, that each of the foregoing deadlines shall be extended, day for day, by a period equal to the length of any actual delay in the completion of Landlord’s Larc Work that is caused by Tenant Delay (as defined in the Workletter). Upon any valid exercise of Tenant’s termination right under this paragraph (c), (i) if the periods of actual delay that gave rise to Tenant’s termination right consisted primarily of periods attributable solely to Landlord Delay and not to any concurrent Tenant Delay or Unavoidable Delay, then Landlord shall refund to Tenant, within ten (10) business days after Tenant’s exercise of its termination right, any monies previously paid by Tenant to Landlord pursuant to this Lease and the Workletter (including, without limitation, any such amounts paid by Tenant to Landlord for Tenant’s pro rata share, if any, of the cost of Landlord’s TI Work), and (ii) if the periods of actual delay that gave rise to Tenant’s termination right consisted primarily of periods attributable solely to Tenant Delay and/or Unavoidable Delay and not to any concurrent Landlord Delay, then Tenant shall not be entitled to any such refund and Landlord shall instead be entitled to retain any such monies previously paid by Tenant pursuant to this Lease and the Workletter.

(d) The term of this Lease shall end on the seventh (7^th) anniversary of the Rent Commencement Date (the “Termination Date”), estimated to be February 7, 2014 (if the Rent Commencement Date occurs on the target date indicated in Section 2.1(a) above), unless sooner terminated or extended as hereinafter provided.

2.2 Early Possession. Tenant shall have the nonexclusive right to enter and use the Premises for the purpose of constructing improvements in the Premises (subject to all the terms and conditions of Article 7 below and of the Workletter as defined below), installing fixtures and furniture, laboratory equipment, computer equipment, telephone equipment, low-voltage data wiring and personal property and performing other similar work preparatory to the commencement of Tenant’s business in the Premises, beginning on the Lease Commencement

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Date (which date is also sometimes interchangeably referred to herein, for purposes of such early access, as the “Early Access Date”). Such occupancy and possession shall be subject to and upon all of the terms and conditions of this Lease (including, but not limited to, conditions relating to maintenance of required insurance by Tenant), except that (i) Tenant shall have no obligation to pay minimum rental or Operating Expenses for any period prior to the Rent Commencement Date, (ii) subject to any applicable provisions to the contrary in Section 6.1 hereof and/or in the Workletter, Tenant shall have no obligation to pay the cost of utilities supplied to the Premises for any period prior to the Rent Commencement Date, and (iii) such early possession shall not advance or otherwise affect the Rent Commencement Date or Termination Date determined under Section 2.1. To the extent Landlord and/or its contractors or consultants are also performing work in the Premises prior to the Rent Commencement Date, Tenant shall not unreasonably interfere with or delay Landlord’s contractors or consultants by any early access, occupancy or possession under this Section 2.2, shall coordinate and cooperate with Landlord and its contractors and consultants (who shall similarly coordinate and cooperate with Tenant and its contractors) to minimize any interference or delay by either party with respect to the other party’s work following the Early Access Date, and shall indemnify Landlord and its agents and employees to the extent provided in Section 10.6(a) below and in Paragraph 5(c) of the Workletter in connection with Tenant’s early entry upon the Premises hereunder.

2.3 Condition of Premises. Tenant has had an opportunity to inspect the condition of the Premises and agrees to accept the Premises “as is” in their condition existing as of the date of this Lease, without any obligation on the part of Landlord to improve, alter, repair or clean the Premises in any way for Tenant’s occupancy hereunder, except as otherwise expressly provided herein. Notwithstanding the foregoing:

(a) Landlord shall, at Landlord’s sole expense, perform all work necessary to cause the following conditions to be satisfied (“Landlord’s Section 2.3 Work”): (i) all existing Building systems and improvements (including, but not limited to, the existing HVAC, electrical and plumbing systems and all utilities serving the Premises) shall be in good working order and repair, including selective retrofit and upgrade work to certain of such Building systems as reasonably determined by Landlord to be appropriate to accommodate a standard level of laboratory improvements; (ii) the Premises and Service Annex, as defined below (excluding any improvements constructed in either of them by Tenant) and the Common Areas of the Center shall comply with all laws, rules, regulations, codes, ordinances, requirements, covenants, conditions and restrictions applicable thereto at the Rent Commencement Date, and shall comply with the terms of Landlord’s warranty set forth in Section 2.3(c) below; (iii) the roof membrane of the Building shall be replaced; (iv) any additional shell or structural work which Landlord in its sole discretion deems necessary or appropriate to prepare the Building for occupancy by Tenant (which additional work may include, but will not necessarily include or be limited to, structural reinforcement and/or voluntary seismic upgrades) shall be substantially completed; and (v) Landlord shall have substantially completed construction of those portions of the Service Annex designated for exclusive or shared use by the occupant of the Building, including all systems and improvements reasonably required for the contemplated use thereof, in accordance with Section 2.3(d) below. As described in the Workletter, a detailed (but not necessarily

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exhaustive) description of the elements of the “Base Building” which it is Landlord’s responsibility to deliver to Tenant in accordance with this Section 2.3 and the Workletter (including, but not necessarily limited to, the elements of Landlord’s Section 2.3 Work as described above) is set forth in Schedule B-1 attached to the Workletter and incorporated by reference therein. Landlord shall use reasonable efforts to coordinate the design and construction of Landlord’s Section 2.3 Work with Tenant’s final interior layout and with the final plans and specifications for the Tenant Improvements. Landlord shall use reasonable efforts to endeavor to complete Landlord’s Section 2.3 Work and cause the conditions set forth in the first sentence of this paragraph to be satisfied by February 7, 2007, but to the extent it is not reasonably practicable to do so by February 7, 2007, Landlord shall thereafter continue to proceed diligently and with reasonable efforts to complete the required work and achieve the required conditions as promptly as practicable thereafter, and Landlord and Tenant shall continue to cooperate reasonably and in good faith with one another (and cause their respective consultants and contractors to cooperate reasonably and in good faith with one another) in the manner described in Section 2.2 above in connection with the concurrent performance of their respective work in the Building. When Landlord receives written certification from Landlord’s Architect that construction of Landlord’s Section 2.3 Work has been substantially completed (subject only to performance of Punch List Work), Landlord shall prepare and deliver to Tenant a certificate signed by both Landlord and Landlord’s Architect (the “Section 2.3 Substantial Completion Certificate”) certifying that the construction of Landlord’s Section 2.3 Work has been substantially completed in accordance with this Section 2.3 and specifying the date of that completion. Thereafter, beginning on the Rent Commencement Date and continuing during the rest of the term of this Lease, Tenant shall be responsible (subject, however, to any corrective obligations of Landlord as expressly set forth in this Lease) for maintenance, repair and/or replacement of all such systems and improvements to the extent required under the provisions of Article 8 hereof. If Landlord’s obligations under this paragraph are violated in any respect, then it shall be the obligation of Landlord, after receipt of written notice from Tenant setting forth with specificity the nature of the violation, to correct promptly and diligently, at Landlord’s sole cost, the condition(s) constituting such violation. However, in the case of the requirements set forth in clause (i) of the first sentence of this paragraph, Tenant’s failure to give such written notice to Landlord within six (6) months after the Rent Commencement Date shall give rise to a conclusive and irrebuttable presumption that Landlord has complied with all Landlord’s obligations under such clause (i), and in the case of the requirements set forth in clauses (ii) through (v) of the first sentence of this paragraph (except with respect to latent defects in the case of the requirements set forth in clauses (iii) and (v) of the first sentence of this paragraph), Tenant’ failure to give such written notice to Landlord regarding any alleged violation within one (1) year after the Rent Commencement Date shall give rise to a conclusive and irrebuttable presumption that Landlord has complied with all Landlord’s obligations under such clauses (ii) through (v). TENANT ACKNOWLEDGES THAT THE WARRANTIES AND/OR OBLIGATIONS CONTAINED IN THIS SECTION 2.3 AND IN THE WORKLETTER (IF APPLICABLE) ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE PHYSICAL CONDITION OF THE PREMISES, BUILDING SYSTEMS AND EXISTING IMPROVEMENTS (OTHER THAN TENANT IMPROVEMENTS) IN THE PREMISES, AND THAT LANDLORD MAKES NO OTHER WARRANTIES EXCEPT AS EXPRESSLY SET FORTH IN THIS SECTION 2.3 AND, IN

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THE CASE OF TENANT IMPROVEMENTS CONSTRUCTED BY LANDLORD UNDER THE WORKLETTER, AS EXPRESSLY SET FORTH IN THE WORKLETTER.

(b) As set forth in the Workletter, Landlord shall provide Tenant with a tenant improvement allowance in the maximum amount of One Hundred Twenty-Five Dollars ($125) per square foot, or approximately Five Million Seven Hundred Nine Thousand Seven Hundred Fifty Dollars ($5,709,750) in total (the “Tenant Improvement Allowance”), towards the construction of Tenant Improvements (as defined in the Workletter) in the Premises. Construction of such Tenant Improvements shall be governed by the provisions of Article 7 hereof (in the case of any such Tenant Improvements constructed by Tenant) and by the Workletter, and such Tenant Improvements shall be constructed in compliance with all of the provisions thereof (including, without limitation, all conditions relating to approval of plans and specifications), as well as the provisions of this Section 2.3. The Tenant Improvement Allowance shall not be used or useable by Tenant for any moving or relocation expenses of Tenant, or for any cost or expense associated with any moveable furniture, trade fixtures, personal property or any other item or element which, under the applicable provisions of this Lease, will not become Landlord’s property and remain with the Building upon expiration or termination of this Lease. Any portion of the Tenant Improvement Allowance which has not been claimed or drawn by Tenant within eighteen (18) months after the Rent Commencement Date shall expire and shall no longer be available to Tenant thereafter. Additional conditions and procedures relating to the disbursement of the Tenant Improvement Allowance shall be as set forth in the Workletter or as otherwise reasonably prescribed in writing by Landlord.

(c) Landlord warrants to Tenant that the Premises as they exist on the Rent Commencement Date (but without regard to the particular use for which Tenant will occupy the Premises, and excluding any improvements constructed by Tenant) and the Tenant Improvements constructed by Landlord under the Workletter shall not violate any covenants or restrictions of record or any applicable law, building code, regulation or ordinance in effect on the Rent Commencement Date. Tenant warrants to Landlord that any Tenant Improvements constructed by Tenant and any other improvements constructed by Tenant from time to time shall not violate any applicable law, building code, regulation or ordinance in effect on the Rent Commencement Date or at such later time as such improvements are placed in service. Without limiting the generality of the foregoing, the parties acknowledge that Landlord shall be responsible for Americans with Disabilities Act (“ADA”) and building code compliance for all improvements in the Building and Common Areas as they exist on the Rent Commencement Date (excluding any improvements constructed by Tenant), for all Landlord’s Section 2.3 Work and for all Tenant Improvements constructed by Landlord hereunder and under the Workletter (except to the extent, if any, that the application of ADA or building code requirements to any such improvements is triggered or materially affected by Tenant’s construction of any improvements) and that Tenant shall be responsible for ADA and building code compliance required in connection with or as a result of improvements constructed by Tenant. If it is determined that any of these warranties has been violated, then it shall be the obligation of the warranting party, after written notice from the other party, to correct the condition(s) constituting such violation promptly, at the warranting party’s sole cost and expense. Tenant acknowledges that except as expressly set forth in this Lease, neither Landlord nor any agent of Landlord has

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made any representation or warranty as to the present or future suitability of the Center or the Premises for the conduct of Tenant’s business or proposed business therein.

(d) As part of Landlord’s Section 2.3 Work, Landlord shall construct in a good and workmanlike manner and in compliance with all applicable laws, ordinances, rules and regulations a combined service yard and loading area and related systems and improvements (collectively, the “Service Annex”) located in the area between the Building and the adjacent building located at 900 Chesapeake Drive (the “Adjacent Building”) and serving both the Building and the Adjacent Building. The parties intend that the Service Annex will include (but not necessarily be limited to) appropriate areas for vehicle deliveries, trash and hazardous materials storage, future emergency generator areas, and an elevator suitable for freight/passenger use to serve second floor spaces in the Building and the Adjacent Building, and that the Service Annex will also include areas in which systems and equipment can be installed by or at the request of the respective tenants of the Building and the Adjacent Building to support their occupancy of and operations in the Building and the Adjacent Building, respectively. The approximate location and preliminary layout of the Service Annex are shown on the Building Plan. Also shown on the Building Plan are two areas immediately adjacent to the Building, designated respectively as “Chemical Storage Enclosure” (the “Chemical Storage Area”) and “Emergency Generator Enclosure” (the “Emergency Generator Area”), which areas are for the exclusive use of the occupant of the Building and shall be deemed to be part of the Service Annex for purposes of Landlord’s construction obligations under this Section 2.3, but are not enclosed and are therefore not included in the calculation of the square footage of the Premises and/or of the Service Annex for purposes of any formulas or other calculations under this Lease that are based on the square footage of the Premises and/or of the Service Annex. Landlord shall have the final authority with respect to the design and layout of the Service Annex and with respect to all plans, drawings and specifications for the Service Annex, but Landlord shall consult reasonably and in good faith with Tenant regarding all such matters. As part of the design and development of the Service Annex, Landlord shall have the right, in its reasonable discretion (but after reasonable consultation with Tenant), to designate various portions of the Service Annex for exclusive use by the occupant of the Building, for exclusive use by the occupant of the Adjacent Building, or for shared, nonexclusive use by the occupant of the Building and the occupant of the Adjacent Building. For purposes of measuring the square footage of the Premises under this Lease (including, but not limited to, measurements contemplated in Section 3.1(c) below), Landlord shall make a reasonable allocation of the square footage of the Service Annex (measured from exterior faces of exterior walls, and from interior faces of common walls shared with the Building or the Adjacent Building) between the Building and the Adjacent Building; so long as the areas (if any) designated for exclusive use of the Building and for exclusive use of the Adjacent Building are generally comparable in size and the balance of the Service Annex is designated for shared, nonexclusive use, Landlord’s present intention is to allocate the square footage of the Service Annex fifty percent (50%) to the Building and fifty percent (50%) to the Adjacent Building, and Tenant agrees that such an allocation would be reasonable under those circumstances.

2.4 Acknowledgment of Rent Commencement Date. Promptly following the Rent Commencement Date, Landlord and Tenant shall execute a written acknowledgment of the Rent

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Commencement Date, Termination Date and related matters, substantially in the form attached hereto as Exhibit C (with appropriate insertions), which acknowledgment shall be deemed to be incorporated herein by this reference. Notwithstanding the foregoing requirement, the failure of either party to execute such a written acknowledgment shall not affect the determination of the Rent Commencement Date, Termination Date and related matters in accordance with the provisions of this Lease.

2.5 Holding Over. If Tenant holds possession of the Premises or any portion thereof after the term of this Lease with Landlord’s written consent, then except as otherwise specified in such consent, Tenant shall become a tenant from month to month at one hundred twenty-five percent (125%) of the minimum rental and otherwise upon the terms herein specified for the period immediately prior to such holding over and shall continue in such status until the tenancy is terminated by either party upon not less than thirty (30) days prior written notice. If Tenant holds possession of the Premises or any portion thereof after the term of this Lease without Landlord’s written consent, then Landlord in its sole discretion may elect (by written notice to Tenant) to have Tenant become a tenant either from month to month or at will, at one hundred fifty percent (150%) of the minimum rental (prorated on a daily basis for an at-will tenancy, if applicable) and otherwise upon the terms herein specified for the period immediately prior to such holding over, or may elect to pursue any and all legal remedies available to Landlord under applicable law with respect to such unconsented holding over by Tenant. Tenant shall indemnify and hold Landlord harmless from any loss, damage, claim, liability, cost or expense (including reasonable attorneys’ fees) resulting from any delay by Tenant in surrendering the Premises or any portion thereof, including but not limited to any claims made by a succeeding tenant by reason of such delay. Acceptance of rent by Landlord following expiration or termination of this Lease shall not constitute a renewal of this Lease.

2.6 Options to Extend Term. Tenant shall have the option to extend the term of this Lease, at the minimum rental set forth in Section 3.1(b) and otherwise upon all the terms and provisions set forth herein with respect to the initial term of this Lease, for up to two (2) additional periods of five (5) years each, the first such period commencing upon the expiration of the initial term hereof and, if such first extension period is duly elected by Tenant, the second such period commencing upon the expiration of the first extended term. Exercise of such option shall be by written notice to Landlord at least nine (9) months and not more than twelve (12) months prior to the expiration of the initial term hereof, in the case of the first extended term, and at least nine (9) months and not more than twelve (12) months prior to the expiration of the first extended term hereof, in the case of the second extended term (if applicable). If Tenant is in default hereunder, beyond any applicable notice and cure periods, on the date of such notice or on the date the applicable extended term is to commence, then the exercise of the option shall be of no force or effect, the applicable extended term shall not commence and this Lease shall expire at the end of the then current term hereof (or at such earlier time as Landlord may elect pursuant to the default provisions of this Lease). If Tenant properly exercises one or both extension options under this Section, then all references in this Lease (other than in this Section 2.6) to the “term” of this Lease shall be construed to include the extension term(s) thus elected by Tenant. Except as expressly set forth in this Section 2.6, Tenant shall have no right to extend the term of this Lease beyond its prescribed term.

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3. RENTAL

3.1 Minimum Rental.

(a) Rental Amounts. Tenant shall pay to Landlord as minimum rental for the Premises, in advance, without deduction, offset, notice or demand, on or before the Rent Commencement Date and on or before the first day of each subsequent calendar month of the initial term of this Lease, the following amounts per month (subject to adjustment under Section 3.1(c) below, if applicable):

Months	Sq Ft		PSF/PM		Monthly  Minimum Rental
01 - 12		30,000	$	3.250	$	97,500.00
13 - 18		36,000	$	3.400	$	122,499.00
19 - 24		45,678	$	3.400	$	155,305.00
25 - 36		45,678	$	3.600	$	164,441.00
37 - 48		45,678	$	3.744	$	171,018.00
49 - 60		45,678	$	3.894	$	177,859.00
61 - 72		45,678	$	4.050	$	184,974.00
73 - 84		45,678	$	4.211	$	192,372.00

If the obligation to pay minimum rental hereunder commences on other than the first day of a calendar month or if the term of this Lease terminates on other than the last day of a calendar month, the minimum rental for such first rental payment month or last month of the term of this Lease, as the case may be, shall be prorated based on the number of days the term of this Lease (from and after the Rent Commencement Date, if applicable) is in effect during such month. If an increase in minimum rental becomes effective on a day other than the first day of a calendar month, the minimum rental for that month shall be the sum of the two applicable rates, each prorated for the portion of the month during which such rate is in effect.

(b) Rental Amounts During Extended Term(s). If Tenant properly exercises its right to extend the term of this Lease pursuant to Section 2.6 hereof, then (i) the monthly minimum rental during the first year of each extended term shall be equal to one hundred four percent (104%) of the monthly minimum rental payable for the last full calendar month preceding the commencement of such extended term, and (ii) the monthly minimum rental during each subsequent year of the applicable extended term shall be equal to one hundred four percent (104%) of the monthly minimum rental payable during the immediately preceding year of the extended term.

(c) Square Footage of Premises. The Building was fully constructed prior to the date of this Lease, has been measured by Landlord’s Architect and, applying the measurement formula customarily used by Landlord to measure square footage of buildings in the Center, has been determined to contain 41,821 square feet, which measurement is final and binding on the parties, is hereby accepted by the parties for all purposes under this Lease and is not subject to remeasurement or adjustment. The square footage of the Premises, for all

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purposes under this Lease (including, without limitation, calculation of minimum rental payments under Section 3.1(a), calculation of the Tenant Improvement Allowance, and calculation of Tenant’s Operating Cost Share under Article 5), shall consist of the sum of such Building square footage and the portion of the Service Annex square footage allocated to the Building pursuant to Section 2.3(d) above. An estimated square footage of 45,678 square feet (the Building square footage plus an estimate of 3,857 square feet for the Service Annex, excluding the Chemical Storage Area and the Emergency Generator Area as provided in Section 2.3(d) above) has been used in this Lease in order to provide estimates of the calculations described in the preceding sentence, but upon completion of construction of the Service Annex and notification by Landlord to Tenant of Landlord’s final determination of the allocation of the square footage of the Service Annex as contemplated in Section 2.3(d) above, (i) the final square footage for the Premises shall be determined by adding such allocable portion of the Service Annex square footage to the Building square footage of 41,821 square feet, (ii) such final square footage shall be inserted in the Acknowledgment of Rent Commencement Date form to be executed by the parties pursuant to Section 2.4 above, and (iii) the minimum rental payments under Section 3.1(a), the Tenant Improvement Allowance, Tenant’s Operating Cost Share, and any other calculations or amounts determined with reference to the square footage of the Premises shall be deemed to be amended automatically to reflect such final square footage of the Premises. Notwithstanding the foregoing provisions, the square footages used in Section 3.1(a) for calculation of minimum rental for Months 1 through 18 are not subject to adjustment or recalculation based on the allocable portion of the Service Annex square footage, nor are such square footages, in being less than the estimated entire square footage of the Premises, meant to imply any limitation on Tenant’s right or ability to use the entire Premises during such months; such reduced square footages merely represent a method of implementing an economic agreement between the parties with respect to the calculation of Tenant’s minimum rental obligation during Months 1 through 18.

3.2 Late Charge. If Tenant fails to pay when due rental or other amounts due Landlord hereunder, such unpaid amounts shall bear interest for the benefit of Landlord at a rate equal to the lesser of ten percent (10%) per annum or the maximum rate permitted by law, from the date due to the date of actual payment. In addition to such interest, Tenant shall pay to Landlord a late charge in an amount equal to five percent (5%) of any installment of minimum rental and any other amounts due Landlord if not paid in full on or before the fifth (5th) day after such rental or other amount is due; provided, however, that for the first two (2) instances of late payment during the term of this Lease, Tenant shall not be required to pay such late charge unless Tenant has failed to pay the past-due amount within three (3) days after Landlord has given Tenant written notice that such amount is past due. Tenant acknowledges that late payment by Tenant to Landlord of rental or other amounts due hereunder will cause Landlord to incur costs not contemplated by this Lease, including, without limitation, processing and accounting charges and late charges which may be imposed on Landlord by the terms of any loan relating to the Center. Tenant further acknowledges that it is extremely difficult and impractical to fix the exact amount of such costs and that the late charge set forth in this Section 3.2 represents a fair and reasonable estimate thereof. Acceptance of any late charge by Landlord shall not constitute a waiver of Tenant’s default with respect to overdue rental or other amounts, nor shall such acceptance prevent Landlord from exercising any other rights and remedies

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available to it. Acceptance of rent or other payments by Landlord shall not constitute a waiver of late charges or interest accrued with respect to such rent or other payments or any prior installments thereof, nor of any other defaults by Tenant, whether monetary or non-monetary in nature, remaining uncured at the time of such acceptance of rent or other payments.

4. TAXES

4.1 Personal Property. Tenant shall be responsible for and shall pay prior to delinquency all taxes and assessments levied against or by reason of any and all alterations, additions and items existing on or in the Premises from time to time during the term of this Lease and taxed as personal property rather than as real property, including (but not limited to) all personal property, trade fixtures and other property placed by Tenant on or about the Premises. Upon request by Landlord, Tenant shall furnish Landlord with satisfactory evidence of Tenant’s payment thereof. If at any time during the term of this Lease any of said alterations, additions or personal property, whether or not belonging to Tenant, shall be taxed or assessed as part of the Center, then such tax or assessment shall be paid by Tenant to Landlord within thirty (30) days after presentation by Landlord of copies of the tax bills in which such taxes and assessments are included and shall, for the purposes of this Lease, be deemed to be personal property taxes or assessments under this Section 4.1.

4.2 Real Property. To the extent any real property taxes and assessments on the Premises are assessed directly to Tenant, Tenant shall be responsible for and shall pay prior to delinquency all such taxes and assessments levied against the Premises. Upon request by Landlord, Tenant shall furnish Landlord with satisfactory evidence of Tenant’s payment thereof. To the extent the Premises are taxed or assessed to Landlord following the Rent Commencement Date, such real property taxes and assessments shall constitute Operating Expenses (as that term is defined in Section 5.2 of this Lease) and shall be paid in accordance with the provisions of Article 5 of this Lease. Notwithstanding the foregoing provisions, if real property taxes and assessments on the Service Annex are assessed directly to Tenant (which the parties do not expect to be the case), Tenant shall only be required to bear a share of such Service Annex taxes and assessments proportional to the percentage of square footage of the Service Annex that is allocated to the Building, and Landlord shall reimburse Tenant or cause Tenant to be reimbursed for the portion of such Service Annex taxes and assessments allocable to the Adjacent Building. Notwithstanding the foregoing, Tenant shall not be required to pay, and there shall not be included in Operating Expenses, any tax or assessment or increase therein (a) in the nature of a tax on Landlord’s net income, or in the nature of an inheritance, gift, transfer, estate or death tax; or (b) in excess of the amount which would be payable on a current basis if such tax or assessment were paid in installments over the full period for which such installments would customarily be paid; or (c) imposed on land or improvements other than those constituting part of the Center (except to the extent, if any, that an allocable share of real property taxes or assessments on land or improvements not constituting part of the Center may be chargeable to Landlord or the Center pursuant to the Master Declaration as defined in Section 15.4 below, in which event such real property taxes or assessments may be included in Operating Expenses to the extent permitted under Article 5 below).

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5. OPERATING EXPENSES

5.1 Payment of Operating Expenses.

(a) Tenant shall pay to Landlord, at the time and in the manner hereinafter set forth, as additional rental, Tenant’s Operating Cost Share of the Operating Expenses defined in Section 5.2, subject to adjustment pursuant to Section 5.1(b) when applicable. For purposes of this Section 5.1, “Tenant’s Operating Cost Share” shall be: (i) in the case of Operating Expenses that are reasonably allocable solely to the Building, one hundred percent (100%); (ii) in the case of Operating Expenses that are reasonably attributable to the Service Annex, a percentage amount equal to the percentage of the total square footage of the Service Annex that is included in the Premises pursuant to Section 2.3(d) and Section 3.1(c) above; and (iii) in the case of Operating Expenses that are determined and allocated on a Center-wide basis, seven and twenty-seven hundredths percent (7.27%).

(b) Tenant’s Operating Cost Share as specified in Section 5.1(a) with respect to matters allocable to the entire Center is based upon an estimated area of 45,678 square feet for the Premises (subject to determination of the allocable square footage from the Service Annex) and upon an aggregate area of 628,593 square feet for all of the buildings presently located in the Center. If the actual area of the Premises or of any of the buildings existing from time to time in the Center changes for any reason (including, but not limited to, modification of existing buildings, final determination of the allocable square footage from the Service Annex, construction of new buildings in the Center, or construction of new buildings on any adjacent property owned by Landlord and operated, for common area purposes, on an integrated basis with the Center), then Tenant’s Operating Cost Share shall be adjusted proportionately to reflect the new actual areas of the Premises and/or such other buildings, as applicable, as determined reasonably and in good faith by Landlord’s architect on the same basis of measurement as applied in determining the existing square footage of the Building.

5.2 Definition of Operating Expenses.

(a) Subject to the exclusions and provisions hereinafter contained and the allocation principles set forth in Section 5.1, the term “Operating Expenses” shall mean, without duplication, the total costs and expenses actually incurred by Landlord for management, operation and maintenance of the Building and the Center, including, without limitation, costs and expenses of (i) insurance (which may include, at Landlord’s option, environmental and seismic insurance as part of or in addition to any casualty or property insurance policy), property management, landscaping, and the operation, repair and maintenance of buildings and Common Areas; (ii) all utilities and services; (iii) real and personal property taxes and assessments or substitutes therefor levied or assessed against the Center or any part thereof, including (but not limited to) any possessory interest, use, business, license or other taxes or fees, any taxes imposed directly on gross rents or services, any assessments or charges for police or fire protection, housing, transit, open space, street or sidewalk construction or maintenance or other similar services from time to time by any governmental or quasi-governmental entity, and any other new taxes on landlords in addition to taxes now in effect; (iv) supplies, equipment, utilities

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and tools used in management, operation and maintenance of the Center; (v) capital improvements to the Center or the improvements therein, amortized over the useful life of such capital improvements as determined reasonably and in good faith by Landlord on the basis of generally accepted accounting principles or tax accounting principles, consistently applied, (aa) which reduce or will cause future reduction of other items of Operating Expenses for which Tenant is otherwise required to contribute or (bb) which are required by law, ordinance, regulation or order of any governmental authority (excluding, however, any such expenses incurred by Landlord in complying with Landlord’s obligations under Section 2.3) or (cc) of which Tenant has use or which benefit Tenant, and which in either case under this clause (cc) are reasonably consistent with the nature and quality of the Center as a first-class office and research and development campus; and (vi) any other costs (including, but not limited to, any parking or utilities fees or surcharges not otherwise specifically addressed elsewhere in this Lease) paid by Landlord, as owner of the Center, pursuant to any applicable laws, ordinances, regulations or orders of any governmental or quasi-governmental authority or pursuant to the terms of the Master Declaration (as hereinafter defined) or of any other declarations of covenants, conditions and restrictions now or hereafter affecting the Center or any other property over which Tenant has non-exclusive usage rights as contemplated in Section 1.1(b) hereof. Operating Expenses shall not include any costs attributable to the initial construction of buildings or Common Area improvements in the Center, nor any costs attributable to buildings the square footage of which is not taken into account in determining Tenant’s Operating Cost Share under Section 5.1 for the applicable period. The distinction between items of ordinary operating maintenance and repair and items of a capital nature shall be made in accordance with generally accepted accounting principles applied on a consistent basis or in accordance with tax accounting principles, as determined reasonably and in good faith by Landlord’s accountants.

(b) Notwithstanding any other provisions of this Section 5.2, the following shall not be included within Operating Expenses: (i) rent paid to any ground lessor; (ii) the cost of constructing tenant improvements for any other tenant of the Center; (iii) the costs of special services, goods or materials provided to any other tenant of the Center and not offered or made available to Tenant; (iv) repairs covered by proceeds of insurance or from funds provided by Tenant or any other tenant of the Center, or as to which any other tenant of the Center is obligated to make such repairs or to pay the cost thereof; (v) legal fees, advertising costs or other related expenses incurred by Landlord in connection with the leasing of space to individual tenants of the Center; (vi) repairs, alterations, additions, improvements or replacements needed to rectify or correct any defects in the design, materials or workmanship of the Building, the Center or the Common Areas; (vii) damage and repairs necessitated by the negligence or willful misconduct of Landlord or of Landlord’s employees, contractors or agents; (viii) executive salaries or salaries of service personnel to the extent that such personnel perform services other than in connection with the management, operation, repair or maintenance of the Building or the Center; (ix) Landlord’s general overhead expenses not related to the Building or the Center; (x) legal fees, accountants’ fees and other expenses incurred in connection with disputes with tenants or other occupants of the Center, or in connection with the enforcement of the terms of any leases with tenants or the defense of Landlord’s title to or interest in the Center or any part thereof; (xi) costs incurred due to a violation by Landlord or any other tenant of the Center of the terms and conditions of any lease; (xii) costs of any service provided to Tenant or to other

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occupants of the Center for which Landlord is reimbursed other than through recovery of Operating Expenses; (xiii) personal property taxes due and payable by any other tenant of the Center; (xiv) costs incurred in connection with an event of casualty or condemnation governed by Article 13 of this Lease (including, but not limited to, any applicable deductible and/or coinsurance amounts under applicable insurance policies); (xv) costs to comply with Landlord’s obligations under Section 2.3 of this Lease; (xvi) costs incurred in connection with the presence of any hazardous substance or hazardous waste (as such terms are defined in Section 9.6) on, under or about the Property or the Center (but in the event of any use or release of such a hazardous substance or hazardous waste by Tenant or related parties as described in Section 9.6, Tenant’s responsibility therefor shall be determined pursuant to Section 9.6); (xvii) interest, charges and fees incurred on debt; (xviii) costs in the nature of depreciation, amortization or other expense reserves, except in connection with any amortization of capital expenditures that is expressly authorized under any provision of this Lease; (xix) costs or expenditures for capital repairs, replacements and improvements (as determined pursuant to Section 5.2(a) above) in excess of the amortized amounts which are expressly authorized to be included as Operating Expenses under the provisions of clause (v) of Section 5.2(a) above or under any other applicable provision of this Lease; (xx) costs incurred in connection with any construction of additional buildings in the Center; (xxi) wages, compensation and labor burden for any employee not stationed at the Center on a substantially full-time basis; (xxii) taxes and assessments excluded pursuant to the last sentence of Section 4.2 above; and (xxiii) any fee, profit or compensation paid to or retained by Landlord or any person or entity controlling, controlled by or under common control with Landlord for the management or administration of the Center, to the extent the portion of such aggregate fees, profits or compensation chargeable to Tenant as an Operating Expense under this Article 5 exceeds three percent (3%) of the minimum monthly rental and Operating Expenses (provided, however, that solely for purposes of applying the foregoing limitation during the first eighteen (18) months following the Rent Commencement Date, such limitation shall be calculated using a deemed minimum monthly rental amount calculated on the entire square footage of the Premises and not on the reduced square footage otherwise applicable under Section 3.1(a) during such initial 18-month period).

5.3 Determination of Operating Expenses. On or before the Rent Commencement Date and during the last month of each subsequent calendar year of the term of this Lease (“Expense Year”), or as soon thereafter as practical, Landlord shall provide Tenant notice of Landlord’s estimate of the Operating Expenses for the ensuing Expense Year or applicable portion thereof. On or before the first day of each month during the term of this Lease, beginning on the Rent Commencement Date, Tenant shall pay to Landlord Tenant’s Operating Cost Share of the portion of such estimated Operating Expenses allocable (on a prorata basis) to such month; provided, however, that if such notice is not given in the last month of an Expense Year, Tenant shall continue to pay on the basis of the prior year’s estimate, if any, until the month after such notice is given. If at any time or times it appears to Landlord that the actual Operating Expenses will vary from Landlord’s estimate by more than five percent (5%), Landlord may, by notice to Tenant, revise its estimate for the applicable Expense Year and subsequent payments by Tenant for such Expense Year shall be based upon such revised estimate.

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5.4 Final Accounting for Expense Year.

(a) Within ninety (90) days after the close of each Expense Year, or as soon after such 90-day period as practicable, Landlord shall deliver to Tenant a statement of Tenant’s Operating Cost Share of the Operating Expenses for such Expense Year prepared by Landlord from Landlord’s books and records, which statement shall be final and binding on Landlord and Tenant (except as provided in Section 5.4(b)). If on the basis of such statement Tenant owes an amount that is more or less than the estimated payments for such Expense Year previously made by Tenant, Tenant or Landlord, as the case may be, shall pay the deficiency to the other party within thirty (30) days after delivery of the statement. Failure or inability of Landlord to deliver the annual statement within such ninety (90) day period shall not impair or constitute a waiver of Tenant’s obligation to pay Operating Expenses, or cause Landlord to incur any liability for damages.

(b) At any time within three (3) months after receipt of Landlord’s annual statement of Operating Expenses as contemplated in Section 5.4(a), Tenant shall be entitled, upon reasonable written notice to Landlord and during normal business hours at Landlord’s office or such other places as Landlord shall reasonably designate, to inspect and examine those books and records of Landlord relating to the determination of Operating Expenses for the immediately preceding Expense Year covered by such annual statement or, if Tenant so elects by written notice to Landlord, to request an independent audit of such books and records. Any such independent audit of the books and records shall be conducted by a certified public accountant reasonably acceptable to both Landlord and Tenant or, if the parties are unable to agree, by a certified public accountant appointed by the Presiding Judge of the San Mateo County Superior Court upon the application of either Landlord or Tenant (with notice to the other party). In either event, such certified public accountant shall be one who is not then employed in any capacity by Landlord or Tenant or by any of their respective affiliates. The audit shall be limited to the determination of the amount of Operating Expenses for the subject Expense Year, and shall be based on generally accepted accounting principles and tax accounting principles, consistently applied. If it is determined, by mutual agreement of Landlord and Tenant or by independent audit, that the amount of Operating Expenses billed to or paid by Tenant for the applicable Expense Year was incorrect, then the appropriate party shall pay to the other party the deficiency or overpayment, as applicable, within thirty (30) days after the final determination of such deficiency or overpayment. All costs and expenses of the audit shall be paid by Tenant unless the audit shows that Landlord overstated Operating Expenses for the subject Expense Year by more than five percent (5%), in which case Landlord shall pay all costs and expenses of the audit. Each party agrees to maintain the confidentiality of the findings of any audit in accordance with the provisions of this Section 5.4.

5.5 Proration. If the Rent Commencement Date falls on a day other than the first day of an Expense Year or if this Lease terminates on a day other than the last day of an Expense Year, then the amount of Operating Expenses payable by Tenant with respect to such first or last partial Expense Year shall be prorated on the basis which the number of days during such Expense Year in which this Lease is in effect bears to 365. The termination of this Lease shall

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not affect the obligations of Landlord and Tenant pursuant to Section 5.4 to be performed after such termination.

6. UTILITIES

6.1 Payment. Commencing with the Rent Commencement Date and thereafter throughout the term of this Lease, Tenant shall pay, before delinquency, all charges for water, gas, heat, light, electricity, power, sewer, telephone, alarm system, janitorial and other services or utilities supplied to or consumed in or with respect to the Premises (other than any costs for water, electricity or other services or utilities furnished with respect to the Common Areas, which costs shall be paid by Landlord and shall constitute Operating Expenses under Section 5.2 hereof), including any taxes on such services and utilities. It is the intention of the parties that all such services shall be separately metered to the Premises. In the event that any utilities or services supplied to the Premises are not separately metered, then the amount thereof shall be allocated in a reasonable, good faith and appropriate manner by Landlord between the Premises and the other buildings, premises or areas sharing such utilities or services, and the portion thereof allocable to the Building may, in Landlord’s discretion, either be included in Operating Expenses allocable to the Building under Section 5.1 hereof or be billed directly to Tenant and paid or reimbursed by Tenant within thirty (30) days after receipt of Landlord’s statement and request for payment, accompanied by reasonable supporting documentation evidencing the calculation or determination of the amount for which payment or reimbursement is requested. Notwithstanding the foregoing provisions, during the period from the Lease Commencement Date to the Rent Commencement Date, (a) if Tenant is neither operating its business in the Premises nor performing any material construction of improvements in the Premises, Landlord shall bear all utilities charges for the Premises, but to the extent Landlord is then performing construction of improvements in the Premises pursuant to this Lease and/or the Workletter, Landlord may, in its discretion, make a reasonable, good faith allocation of such utilities charges between (i) Landlord’s Work and (ii) the Cost of Improvements (as defined in the Workletter) for the Tenant Improvements being constructed by Landlord; and (b) if Tenant is operating its business in the Premises and/or performing any material construction of improvements in the Premises, utilities charges for the Premises shall be allocated between Landlord and Tenant on the basis of a reasonable, good faith estimate of their respective usage of such utilities.

6.2 Interruption. There shall be no abatement of rent or other charges required to be paid hereunder and Landlord shall not be liable in damages or otherwise for interruption or failure of any service or utility furnished to or used with respect to the Premises, the Building or the Center because of accident, making of repairs, alterations or improvements, severe weather, difficulty or inability in obtaining services or supplies, labor difficulties or any other cause. Notwithstanding the foregoing provisions of this Section 6.2, however, in the event of any interruption or failure of any service or utility to the Premises that (i) is caused in whole or in material part by the active negligence or willful misconduct of Landlord or its agents, employees or contractors and (ii) continues for more than three (3) business days and (iii) materially impairs Tenant’s ability to use the Premises for the intended purpose hereunder, then following such three (3) business day period, Tenant’s obligations for payment of rent and other charges under this Lease shall be abated in proportion to the degree of impairment of Tenant’s use of the

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Premises, and such abatement shall continue until Tenant’s use of the Premises is no longer materially impaired thereby. Tenant expressly waives any benefits of any applicable existing or future law (including, but not limited to, the provisions of California Civil Code Section 1932(1)) to the extent the same would permit the termination of the Lease due to any such interruption or failure of any service or utility, it being the intention of the parties that their respective rights in such circumstances shall be governed solely by the provisions of this Section 6.2.

7. ALTERATIONS; SIGNS

7.1 Right to Make Alterations. Tenant shall make no alterations, additions or improvements to the Premises, other than interior non-structural alterations in the Premises costing less than Twenty-Five Thousand Dollars ($25,000) in each instance and less than Fifty Thousand Dollars ($50,000) in the aggregate during any twelve (12) month period, without the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed. All such alterations, additions and improvements shall be completed with due diligence in a good and workmanlike manner, in compliance with plans and specifications approved in writing by Landlord and in compliance with all applicable laws, ordinances, rules and regulations, and to the extent Landlord’s consent is not otherwise required hereunder for such alterations, additions or improvements, Tenant shall give prompt written notice thereof to Landlord. Tenant shall cause any contractors engaged by Tenant for work in the Building or in the Center to maintain public liability and property damage insurance, and other customary insurance, with such terms and in such amounts as Landlord may reasonably require, naming as additional insureds Landlord and any of its partners, shareholders, property managers, project managers and lenders designated by Landlord for this purpose, and shall furnish Landlord with certificates of insurance or other evidence that such coverage is in effect. Notwithstanding any other provisions of this Section 7.1, under no circumstances shall Tenant make any structural alterations or improvements, or any changes to the roof or equipment installations on the roof, or any alterations materially affecting any building systems, without Landlord’s prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed).

7.2 Title to Alterations. All alterations, additions and improvements installed by Tenant in, on or about the Premises, the Building or the Center (including, but not limited to, lab benches, fume hoods, clean rooms, cold rooms and other similar improvements and equipment) shall become part of the Property and shall become the property of Landlord, unless Landlord elects to require Tenant to remove the same upon the termination of this Lease; provided, however, that the foregoing shall not apply to Tenant’s movable furniture, equipment and trade fixtures, except to the extent any such items are specifically described in the parenthetical in the initial portion of this sentence. Tenant shall promptly repair any damage caused by its removal of any such furniture, equipment or trade fixtures.

(a) Notwithstanding any other provisions of this Article 7, (i) under no circumstances shall Tenant have any right to remove from the Premises or the Building, at the expiration or termination of this Lease, any lab benches, fume hoods, clean rooms, cold rooms or other similar improvements and equipment installed in the Building, even if such equipment and improvements were installed by Tenant; (ii) under no circumstances shall Tenant have any right

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to remove from the Premises or the Building, at the expiration or termination of this Lease, any alterations, additions, improvements or equipment acquired, constructed or installed with the use, in whole or in part, of any funds from the Tenant Improvement Allowance; (iii) if Tenant requests Landlord’s written consent to any alterations, additions or improvements under Section 7.1 hereof and, in requesting such consent, asks that Landlord specify whether Landlord will require removal of such alterations, additions or improvements upon termination or expiration of this Lease, then Landlord shall not be entitled to require such removal unless Landlord specified its intention to do so at the time of granting of Landlord’s consent to the requested alterations, additions or improvements; and (iv) Tenant shall not be required to remove any Tenant Improvements constructed or installed pursuant to the Workletter unless Landlord specifies its intention to do so at the time of granting of Landlord’s approval of the plans and specifications for the applicable elements of such Tenant Improvements, for which purpose Landlord agrees that (A) it will not withhold its approval of specific elements of the Tenant Improvements, or condition its approval upon Tenant’s agreement to remove such elements upon termination or expiration of this Lease, unless Landlord believes reasonably and in good faith that the functionality and marketability of the Premises for purposes of re-leasing to a successor tenant would be materially and adversely affected by the presence of such specific elements, and (B) it will not require Tenant to remove upon termination or expiration of this Lease, or condition its approval upon Tenant’s agreement to remove upon termination or expiration of this Lease, any Tenant Improvements (including, but not limited to, Larc improvements) which constitute standard, non-extraordinary improvements for ordinary office, laboratory and/or Larc uses in biotech facilities.

(b) Notwithstanding any other provisions of this Article 7, (i) it is the intention of the parties that Landlord shall be entitled to claim all tax attributes associated with alterations, additions, improvements and equipment constructed or installed by Tenant or Landlord with funds provided by Landlord pursuant to the Tenant Improvement Allowance; and (ii) it is the intention of the parties that Tenant shall be entitled to claim, during the term of this Lease, all tax attributes associated with alterations, additions, improvements and equipment constructed or installed by Tenant with Tenant’s own funds (and without any payment or reimbursement by Landlord pursuant to the Tenant Improvement Allowance), despite the fact that the items described in this clause (ii) are characterized in this Section 7.2 as becoming Landlord’s property upon installation, in recognition of the fact that Tenant will have installed and paid for such items, will have the right of possession of such items during the term of this Lease (from and after the Rent Commencement Date) and will have the obligation to pay (directly or indirectly) property taxes on such items, carry insurance on such items to the extent provided in Article 10 hereof and bear the risk of loss with respect to such items to the extent provided in Article 13 hereof. If and to the extent it becomes necessary, in implementation of the foregoing intentions, to identify (either specifically or on a percentage basis, as may be required under applicable tax laws) which alterations, additions, improvements and equipment constructed as part of the Tenant Improvements have been funded through the Tenant Improvement Allowance and which (if any) have been constructed or installed with Tenant’s own funds, Landlord and Tenant agree to cooperate reasonably and in good faith to make such an identification by mutual agreement.

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7.3 Tenant Trade Fixtures. Subject to the third sentence of Section 7.2 and to Section 7.5, Tenant may install, remove and reinstall trade fixtures without Landlord’s prior written consent, except that installation and removal of any trade fixtures which are affixed to the Building or which affect the exterior or structural portions of the Building or which materially affect the Building systems shall require Landlord’s written approval, which approval shall not be unreasonably withheld, conditioned or delayed. Subject to the provisions of Section 7.5, the foregoing shall apply to Tenant’s signs, which Tenant shall have the right to place and remove and replace (a) only with Landlord’s prior written consent as to location, size and composition, which consent shall not be unreasonably withheld, conditioned or delayed, and (b) only in compliance with all restrictions and requirements of applicable law and of any covenants, conditions and restrictions or other written agreements now or hereafter applicable to the Center. Tenant shall immediately repair any damage caused by installation and removal of trade fixtures under this Section 7.3.

7.4 No Liens. Tenant shall at all times keep the Building and the Center free from all liens and claims of any contractors, subcontractors, materialmen, suppliers or any other parties employed either directly or indirectly by Tenant in construction work on the Building or the Center. Tenant may contest any claim of lien, but only if, prior to such contest, Tenant either (i) posts security in the amount of the claim, plus estimated costs and interest, or (ii) records a bond of a responsible corporate surety in such amount as may be required to release the lien from the Building and the Center. Tenant shall indemnify, defend and hold Landlord harmless against any and all liability, loss, damage, cost and other expenses, including, without limitation, reasonable attorneys’ fees, arising out of claims of any lien for work performed or materials or supplies furnished at the request of Tenant or persons claiming under Tenant; provided, however, that the foregoing indemnity shall not apply with respect to (x) any Landlord’s Work, or (y) any work (or related materials and supplies) performed by Tenant but for which Landlord is obligated to make direct payment to the contractor or supplier out of the Tenant Improvement Allowance.

7.5 Signs. Without limiting the generality of the provisions of Section 7.3 hereof, Tenant shall have the right to install building and monument signage comparable to that maintained by the preceding tenant of the Premises, subject to Landlord’s prior approval as to location, size, design and composition (which approval shall not be unreasonably withheld or delayed), subject to the established sign criteria for the Center and subject to all restrictions and requirements of applicable law and of any covenants, conditions and restrictions or other written agreements now or hereafter applicable to the Center. All costs for installation, maintenance and removal or restoration of such signage shall be at Tenant’s sole expense.

8. MAINTENANCE AND REPAIRS

8.1 Landlord’s Obligation for Maintenance.

(a) Repairs and Maintenance. Landlord shall repair and maintain or cause to be repaired and maintained the Common Areas of the Center; the roof, exterior walls and other structural portions of the Building and Service Annex; and the shared-use areas of the Service

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Annex, except to the extent Landlord enters into an alternative arrangement with Tenant and the tenant of the Adjacent Building regarding janitorial and/or other repair and maintenance services relating to such shared-use areas. The cost of all work performed by Landlord under this Section 8.1 shall be an Operating Expense hereunder, except to the extent such work (i) is required due to the negligence of Landlord; (ii) involves the repair or correction of a condition or defect that Landlord is required to correct pursuant to Section 2.3 hereof; (iii) is a capital expense not includible (or in excess of the amount includible on an amortized basis) as an Operating Expense under Section 5.2 hereof, or is otherwise expressly excluded from treatment as an Operating Expense under any other applicable provision of Section 5.2 hereof; (iv) results from an event of casualty or condemnation covered by Article 13 hereof (in which event the provisions of such Article 13 shall govern the parties’ respective rights and obligations); or (v) is required due to the negligence or willful misconduct of Tenant or its agents, employees or invitees (in which event Tenant shall bear the full cost of such work pursuant to the indemnification provided in Section 10.6 hereof, subject to the release set forth in Section 10.4 hereof). Tenant knowingly and voluntarily waives the right to make repairs at Landlord’s expense (except as specifically provided in Section 8.1(b) hereof), or to offset the cost thereof against rent, under any law, statute, regulation or ordinance now or hereafter in effect.

(b) Tenant’s Remedy. If (i) Landlord fails to perform promptly any repair, maintenance or replacement required to be performed by Landlord on the Building or Premises (including the portions of the Service Annex designated for exclusive use by the occupant of the Building, but excluding the shared use areas of the Service Annex) under Section 8.1(a) and (ii) such failure creates a material risk to health and safety or a material risk of damage to property or a material impairment of Tenant’s ability to conduct its business in the Premises and (iii) such failure continues for more than thirty (30) days after Tenant gives Landlord written notice of such failure (or, if such repairs or maintenance cannot reasonably be performed within such 30-day period, then if Landlord fails to commence performance within such 30-day period and thereafter to pursue such performance diligently to completion), then Tenant shall have the right, but not the obligation, to perform such repairs or maintenance and Landlord shall reimburse Tenant for the reasonable cost thereof within fifteen (15) days after written notice from Tenant of the completion and cost of such work, accompanied by copies of invoices or other documentation reasonably supporting the costs for which Tenant is requesting reimbursement. Under no circumstances, however, shall Tenant have any right to offset or deduct the cost of any such work against rent or other charges falling due from time to time under this Lease.

8.2 Tenant’s Obligation for Maintenance.

(a) Good Order, Condition and Repair. Except as provided in Section 8.1 hereof, and subject to the provisions of Article 13 hereof (which shall be controlling in the event of any casualty or condemnation covered by such Article 13), Tenant at its sole cost and expense shall keep and maintain in good and sanitary order, condition and repair the Premises and every part thereof, wherever located (excluding the shared-use areas of the Service Annex, subject to Section 8.1 above, but including any and all portions of the Service Annex designated for exclusive use by the occupant of the Building), including but not limited to the signs, interior,

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ceiling, electrical system, plumbing system, telephone and communications systems serving the Premises, the HVAC equipment and related mechanical systems serving the Premises (for which equipment and systems Tenant shall enter into a service contract with a person or entity reasonably approved by Landlord), all doors, door checks, windows, plate glass, door fronts, exposed plumbing and sewage and other utility facilities, fixtures, lighting, wall surfaces, floor surfaces and ceiling surfaces of the Premises and all other interior repairs, foreseen and unforeseen, with respect to the Premises, as required.

(b) Landlord’s Remedy. If Tenant, after notice from Landlord, fails to make or perform promptly (and in all events within any applicable notice and cure periods) any repairs or maintenance which are the obligation of Tenant hereunder, Landlord shall have the right, but shall not be required, to enter the Premises and make the repairs or perform the maintenance necessary to restore the Premises to good and sanitary order, condition and repair. Immediately on demand from Landlord, the cost of such repairs shall be due and payable by Tenant to Landlord.

(c) Condition Upon Surrender. At the expiration or sooner termination of this Lease, Tenant shall surrender the Premises and Building and the improvements located therein, including any additions, alterations and improvements thereto (except for items which Tenant is permitted and elects to remove, or is required to remove, pursuant to the provisions of this Lease), broom clean, in good and sanitary order, condition and repair (excluding the effects of ordinary wear and tear, casualty damage or condemnation governed by the provisions of Article 13 hereof, and hazardous substances and/or hazardous wastes, except to the extent Tenant is responsible for the same pursuant to the provisions of Section 9.6 or any other applicable provisions of this Lease), first, however, removing all goods and effects of Tenant and all and fixtures and items required to be removed or specified to be removed at Landlord’s election pursuant to this Lease (including, but not limited to, any such removal required as a result of an election duly made by Landlord to require such removal as contemplated in Section 7.2), and repairing any damage caused by such removal. Tenant expressly waives any and all interest in any personal property and trade fixtures not removed from the Center by Tenant at the expiration or termination of this Lease, agrees that any such personal property and trade fixtures may, at Landlord’s election, be deemed to have been abandoned by Tenant, and authorizes Landlord (at its election and without prejudice to any other remedies under this Lease or under applicable law) to remove and either retain, store or dispose of such property at Tenant’s cost and expense, and Tenant waives all claims against Landlord for any damages resulting from any such removal, storage, retention or disposal.

9. USE OF PROPERTY

9.1 Permitted Use. Subject to Sections 9.3, 9.4 and 9.6 hereof, Tenant shall use the Premises solely for an office, research and development, engineering, laboratory, and/or warehousing facility, and for administrative and other lawful purposes reasonably related to or incidental to such specified uses (subject in each case to receipt of all necessary approvals from the City of Redwood City and all other governmental agencies having jurisdiction over the

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Premises), and for no other purpose, unless Landlord in its sole discretion otherwise consents in writing.

9.2 [Intentionally Deleted.]

9.3 No Nuisance. Tenant shall not use the Premises for or carry on or permit within the Center or any part thereof any offensive, noisy or dangerous trade, business, manufacture, occupation, odor or fumes, or any nuisance or anything against public policy, nor interfere with the rights or business of Landlord in the Building or the Center, nor commit or allow to be committed any waste in, on or about the Center. Tenant shall not do or permit anything to be done in or about the Center, nor bring nor keep anything therein, which will in any way cause the Center or any portion thereof to be uninsurable with respect to the insurance required by this Lease or with respect to standard fire and extended coverage insurance with vandalism, malicious mischief and riot endorsements.

9.4 Compliance with Laws. Tenant shall not use the Premises, the Building or the Center or permit the Premises, the Building or the Center to be used in whole or in part for any purpose or use that is in violation of any applicable laws, ordinances, regulations or rules of any governmental agency or public authority. Tenant shall keep the Premises equipped with all safety appliances required by law, ordinance or insurance on the Center, or any order or regulation of any public authority, because of Tenant’s particular use of the Premises. Tenant shall procure all licenses and permits required for Tenant’s particular use of the Premises. Tenant shall use the Premises in strict accordance with all applicable ordinances, rules, laws and regulations and shall comply with all requirements of all governmental authorities now in force or which may hereafter be in force pertaining to the particular use of the Premises and the Center by Tenant, including, without limitation, regulations applicable to noise, water, soil and air pollution, and making such nonstructural alterations and additions thereto as may be required from time to time by such laws, ordinances, rules, regulations and requirements of governmental authorities or insurers of the Center (collectively, “Requirements”) because of Tenant’s construction of improvements in or other particular use of the Premises or the Center. Any structural alterations or additions required from time to time by applicable Requirements because of Tenant’s construction of improvements in the Premises or other particular use of the Center shall, at Landlord’s election, either (i) be made by Tenant, at Tenant’s sole cost and expense, in accordance with the procedures and standards set forth in Section 7.1 for alterations by Tenant, or (ii) be made by Landlord at Tenant’s sole cost and expense, in which event Tenant shall pay to Landlord as additional rent, within thirty (30) days after demand by Landlord, an amount equal to all reasonable costs incurred by Landlord in connection with such alterations or additions. The judgment of any court, or the admission by Tenant in any proceeding against Tenant, that Tenant has violated any law, statute, ordinance or governmental rule, regulation or requirement shall be conclusive of such violation as between Landlord and Tenant. Notwithstanding the foregoing, Tenant shall not be required to comply with or cause the Premises or the Center to comply with any Requirements except to the extent such compliance is necessitated due to Tenant’s construction of improvements in, or Tenant’s particular use of, the Premises.

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9.5 Liquidation Sales. Tenant shall not conduct or permit to be conducted any auction, bankruptcy sale, liquidation sale, or going out of business sale, in, upon or about the Center, whether said auction or sale be voluntary, involuntary or pursuant to any assignment for the benefit of creditors, or pursuant to any bankruptcy or other insolvency proceeding.

9.6 Environmental Matters.

(a) For purposes of this Section, “hazardous substance” shall mean (i) the substances included within the definitions of the term “hazardous substance” under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. §§ 9601 et seq., and the regulations promulgated thereunder, as amended, (ii) the substances included within the definition of “hazardous substance” under the California Carpenter-Presley-Tanner Hazardous Substance Account Act, California Health & Safety Code §§ 25300 et seq., and regulations promulgated thereunder, as amended, (iii) the substances included within the definition of “hazardous materials” under the Hazardous Materials Release Response Plans and Inventory Act, California Heath & Safety Code §§ 25500 et seq., and regulations promulgated thereunder, as amended, (iv) the substances included within the definition of “hazardous substance” under the Underground Storage of Hazardous Substances provisions set forth in California Health & Safety Code §§ 25280 et seq., and (v) petroleum or any fraction thereof; “hazardous waste” shall mean (i) any waste listed as or meeting the identified characteristics of a “hazardous waste” under the Resource Conservation and Recovery Act of 1976, 42 U.S.C. §§ 6901 et seq., and regulations promulgated pursuant thereto, as amended (collectively, “RCRA”), (ii) any waste meeting the identified characteristics of “hazardous waste,” “extremely hazardous waste” or “restricted hazardous waste” under the California Hazardous Waste Control Law, California Health & Safety Code §§ 25100 et seq., and regulations promulgated pursuant thereto, as amended (collectively, the “CHWCL”), and/or (iii) any waste meeting the identified characteristics of “medical waste” under California Health & Safety Code §§ 25015-25027.8, and regulations promulgated thereunder, as amended; “hazardous waste facility” shall mean a hazardous waste facility as defined under the CHWCL; and “pollutant” shall mean all substances defined as a “pollutant,” “pollution,” “waste,” “contamination” or “hazardous substance” under the Porter-Cologne Water Quality Control Act, California Water Code §§ 13000 et seq.

(b) Without limiting the generality of the obligations set forth in Section 9.4 of this Lease:

(i) Tenant shall not cause or permit any hazardous substance or hazardous waste to be brought upon, kept, stored or used in or about the Center without the prior written consent of Landlord, which consent shall not be unreasonably withheld, except that Tenant, in connection with its permitted use of the Premises and the Center as provided in Section 9.1, may keep, store and use materials that constitute hazardous substances which are customary for such permitted use, provided such hazardous substances are kept, stored and used in quantities which are customary for such permitted use and are kept, stored and used in full compliance with clauses (ii) and (iii) immediately below.

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(ii) Tenant shall comply with all applicable laws, rules, regulations, orders, permits, licenses and operating plans of any governmental authority with respect to the receipt, use, handling, generation, transportation, storage, treatment and/or disposal of hazardous substances or wastes by Tenant or its agents or employees, and Tenant will provide Landlord with copies of all permits, licenses, registrations and other similar documents that authorize Tenant to conduct any such activities in connection with its authorized use of the Premises and the Center from time to time.

(iii) Tenant shall not (A) operate on or about the Center any facility required to be permitted or licensed as a hazardous waste facility or for which interim status as such is required, nor (B) store any hazardous wastes on or about the Center for ninety (90) days or more, nor (C) conduct any other activities on or about the Center that could result in the Center or any portion thereof being deemed to be a “hazardous waste facility” (including, but not limited to, any storage or treatment of hazardous substances or hazardous wastes which could have such a result), nor (D) store any hazardous wastes on or about the Center in violation of any federal or California laws or in violation of the terms of any federal or state licenses or permits held by Tenant.

(iv) Tenant shall not install any underground storage tanks on the Property without the prior written consent of Landlord and prior approval by all applicable governmental authorities. If and to the extent that Tenant obtains all such required consents and approvals and installs any underground storage tanks on the Property, Tenant shall comply with all applicable laws, rules, regulations, orders and permits relating to such underground storage tanks (including any installation, monitoring, maintenance, closure and/or removal of such tanks) as such tanks are defined in California Health & Safety Code § 25281(x), including, without limitation, complying with California Health & Safety Code §§ 25280-25299.7 and the regulations promulgated thereunder, as amended. Tenant shall furnish to Landlord copies of all registrations and permits issued to or held by Tenant from time to time for any and all underground storage tanks located on or under the Property.

(v) If applicable, Tenant shall provide Landlord in writing the following information and/or documentation within fifteen (15) days after the Rent Commencement Date, and shall update such information at least annually, on or before each anniversary of the Rent Commencement Date, to reflect any change in or addition to the required information and/or documentation (provided, however, that in the case of the materials described in subparagraphs (B), (C) and (E) below, Tenant shall not be required to deliver copies of such materials to Landlord but shall maintain copies of such materials to such extent and for such periods as may be required by applicable law and shall permit Landlord or its representatives to inspect and copy such materials during normal business hours at any time and from time to time upon reasonable notice to Tenant; and provided further, however, that Landlord shall keep all such materials reviewed by Landlord confidential, except to the extent disclosure of such materials or of the contents thereof (x) to Landlord’s employees, counsel, managers and/or consultants is necessary or appropriate in the course of their employment or their representation of or advice to

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Landlord or in the enforcement of Landlord’s rights and Tenant’s obligations under this Lease, or (y) to any prospective lender or purchaser of the Center is necessary or appropriate in connection with any proposed sale or financing of the Center, or (z) is compelled by any governmental or quasi-governmental authority or by applicable law):

(A) A list of all hazardous substances, hazardous wastes and/or pollutants that Tenant receives, uses, handles, generates, transports, stores, treats or disposes of from time to time in connection with its operations in the Center.

(B) All Material Safety Data Sheets (“MSDS’s”), if any, required to be completed with respect to operations of Tenant at the Center from time to time in accordance with Title 26, California Code of Regulations § 8-5194 or 42 U.S.C. § 11021, or any amendments thereto, and any Hazardous Materials Inventory Sheets that detail the MSDS’s.

(C) All Hazardous Waste Manifests, if any, that Tenant is required to complete from time to time under California Health & Safety Code § 25160, any regulations promulgated thereunder, any similar successor provisions and/or any amendments to any of the foregoing, in connection with its operations in the Center.

(D) Any Hazardous Materials Management Plan required from time to time with respect to Tenant’s operations in the Center, pursuant to California Health & Safety Code §§ 25500 et seq., any regulations promulgated thereunder, any similar successor provisions and/or any amendments to any of the foregoing.

(E) Any Air Toxics Emissions Inventory Plan required from time to time with respect to Tenant’s operations in the Center, pursuant to California Health & Safety Code §§ 44340 et seq., any regulations promulgated thereunder, any similar successor provisions and/or any amendments to any of the foregoing.

(F) Any biennial Hazardous Waste Generator reports or notifications furnished by Tenant to the California Department of Toxic Substances Control or other applicable governmental authorities from time to time pursuant to California Code of Regulations Title 22, § 66262.41, any similar successor provisions and/or any amendments to any of the foregoing, in connection with Tenant’s operations in the Center.

(G) Any Hazardous Waste Generator Reports regarding source reductions, as required from time to time pursuant to California Health & Safety Code §§ 25244.20 et seq., any regulations promulgated thereunder, any similar successor provisions and/or any amendments to any of the foregoing, in connection with Tenant’s operations in the Center.

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(H) Any Hazardous Waste Generator Reports or notifications not otherwise described in the preceding subparagraphs and required from time to time pursuant to California Health & Safety Code § 25153.6, California Code of Regulations Title 22, Division 4.5, Chapter 12, §§ 66262.10 etseq.(“Standards Applicable to Generators of Hazardous Waste”), any other regulations promulgated thereunder, any similar successor provisions and/or any amendments to any of the foregoing, in connection with Tenant’s operations in the Center.

(I) All industrial wastewater discharge permits issued to or held by Tenant from time to time in connection with its operations in the Center, and all air quality management district permits issued to or held by Tenant from time to time in connection with its operations in the Center.

(J) Copies of any other lists or inventories of hazardous substances, hazardous wastes and/or pollutants on or about the Center that Tenant is otherwise required to prepare and file from time to time with any governmental or regulatory authority.

(vi) Tenant shall secure Landlord’s prior written approval for any proposed receipt, storage, possession, use, transfer or disposal of “radioactive materials” or “radiation,” as such materials are defined in Title 26, California Code of Regulations § 17-30100, and/or any other materials possessing the characteristics of the materials so defined, which approval Landlord may withhold in its sole and absolute discretion; provided, that such approval shall not be required for any radioactive materials (x) for which Tenant has secured prior written approval of the Nuclear Regulatory Commission and delivered to Landlord a copy of such approval (if applicable), or (y) which Tenant is authorized to use pursuant to the terms of any radioactive materials license issued by the State of California. Tenant, in connection with any such authorized receipt, storage, possession, use, transfer or disposal of radioactive materials or radiation, shall:

(A) Comply with all federal, state and local laws, rules, regulations, orders, licenses and permits issued to or applicable to Tenant with respect to its operations in the Center;

(B) Maintain, to such extent and for such periods as may be required by applicable law, and permit Landlord and its representatives to inspect during normal business hours at any time and from time to time upon reasonable notice to Tenant, a list of all radioactive materials or radiation received, stored, possessed, used, transferred or disposed of by Tenant or in connection with Tenant’s operations in the Center from time to time, to the extent not already disclosed through delivery of a copy of a Nuclear Regulatory Commission approval with respect thereto as contemplated above; and

(C) Maintain, to such extent and for such periods as may be required by applicable law, and permit Landlord or its representatives to inspect during normal business hours at any time and from time to time upon reasonable

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notice to Tenant, all licenses, registration materials, inspection reports, governmental orders and permits in connection with the receipt, storage, possession, use, transfer or disposal of radioactive materials or radiation by Tenant or in connection with Tenant’s operations in the Center from time to time.

(vii) Tenant shall comply with any and all applicable laws, rules, regulations and orders of any governmental authority with respect to the release into the environment of any hazardous wastes, hazardous substances, pollutants, radiation or radioactive materials by Tenant or its agents or employees. If and to the extent Tenant becomes aware of any unauthorized release of any such hazardous wastes, hazardous substances, pollutants, radiation or radioactive materials into the environment and such release (x) creates a significant risk to human health or safety, (y) creates a significant risk of contamination of any of the improvements, soil or groundwater on or under the Property, or (z) is required to be reported to any governmental authority (including, but not limited to, any release of a Reportable Quantity, under the Emergency Planning and Community Right to Know Act, of any hazardous substance, hazardous waste, pollutant, radiation or radioactive material), then in each such event, Tenant shall give Landlord verbal notice of such release as immediately as practicable, shall follow such verbal notice with written notice to Landlord of such release within one (1) business day after Tenant became aware of such release, and shall provide Landlord with a copy of any written report or disclosure filed by Tenant with any governmental authority with respect to such release, substantially concurrently with Tenant’s filing of such written report or disclosure with the applicable governmental authority.

(viii) Tenant shall indemnify, defend and hold Landlord harmless from and against any and all claims, losses (including, but not limited to, loss of rental income), damages, liabilities, costs, legal fees and expenses of any sort arising out of or relating to (A) any failure by Tenant to comply with any provisions of this Section 9.6(b), or (B) any receipt, use handling, generation, transportation, storage, treatment, release and/or disposal of any hazardous substance, hazardous waste, pollutant, radioactive material or radiation on or about the Center as a proximate result of Tenant’s use of the Center or as a result of any intentional or negligent acts or omissions of Tenant or of any agent, employee or invitee of Tenant. Notwithstanding the foregoing provisions, Landlord acknowledges and agrees that losses of rental or other income compensable under the preceding sentence do not include any actual or alleged loss of rental or other income arising from another tenant’s or prospective tenant’s or prospective purchaser’s objection to the mere fact of Tenant’s use of hazardous substances or materials on or about the Premises, absent any material violation by Tenant or its agents or employees of the provisions of this Lease or of applicable law in the course of such use.

(ix) Tenant shall cooperate with Landlord in furnishing Landlord with complete information regarding Tenant’s receipt, handling, use, storage, transportation, generation, treatment and/or disposal of any hazardous substances, hazardous wastes, pollutants, radiation or radioactive materials in or about the Center. Upon request, but subject to Tenant’s reasonable operating and security procedures, Tenant shall grant

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Landlord reasonable access at reasonable times to the Premises to inspect Tenant’s receipt, handling, use, storage, transportation, generation, treatment and/or disposal of hazardous substances, hazardous wastes, pollutants, radiation and radioactive materials, without Landlord thereby being deemed guilty of any disturbance of Tenant’s use or possession or being liable to Tenant in any manner.

(x) Notwithstanding Landlord’s rights of inspection and review under this Section 9.6(b), Landlord shall have no obligation or duty to so inspect or review, and no third party shall be entitled to rely on Landlord to conduct any sort of inspection or review by reason of the provisions of this Section 9.6(b).

(xi) Prior to, or as soon as practicable after, mutual execution of this Lease, Landlord shall obtain, at Landlord’s expense, a Phase I environmental study evaluating the presence or absence of hazardous substances, hazardous wastes, pollutants, radiation and radioactive materials in and under the Building, and shall provide a copy of that study to Tenant. The purpose of this study is to provide evidence of the “baseline” condition of the Building prior to Tenant’s occupancy and use thereof, but such evidence is not intended to be conclusive or irrebuttable. Tenant shall also have the right (but not the obligation), if it so elects and at its own expense, to conduct its own environmental study of the Premises prior to or at the time of Tenant’s occupancy, in which event Tenant shall provide a copy of such study to Landlord. If Tenant or its employees, agents, contractors, vendors, customers or guests receive, handle, use, store, transport, generate, treat and/or dispose of any hazardous substances or wastes or radiation or radioactive materials on or about the Center at any time during the term of this Lease, then within thirty (30) days after Tenant vacates the Premises upon termination or expiration of this Lease, Landlord shall obtain a further environmental study (which study shall be at least a Phase I study, and shall be a Phase II study to the extent the results of the Phase I study reasonably suggest the necessity or desirability of a Phase II level investigation in any areas), performed by GeoSyntec or Geomatrix or another reputable environmental consultant selected by Landlord, evaluating the presence or absence of hazardous substances, hazardous wastes, pollutants, radiation and radioactive materials on and about those portions of the Center affected by Tenant’s operations in the Center and attributable or potentially attributable to such operations (the “Exit Study”). Liability for any remedial actions required or recommended on the basis of the Exit Study shall be allocated in accordance with Sections 9.4, 9.6, 10.6 and other applicable provisions of this Lease. The cost of the Exit Study shall be borne by Landlord, except that if the Exit Study identifies any required or recommended remedial work that is Tenant’s responsibility under the applicable provisions of this Lease, then Tenant shall also reimburse Landlord for the cost of the Exit Study, which reimbursement shall be paid within thirty (30) days after written demand by Landlord, accompanied by a copy of the invoice(s) reflecting the cost of the Exit Study. The Exit Study is not intended to be conclusive or irrebuttable. Tenant shall also have the right (but not the obligation), if it so elects and at its own expense, to conduct its own environmental study of the Premises to verify the results of the Exit Study.

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(c) Landlord shall indemnify, defend and hold Tenant harmless from and against any and all claims, losses, damages, liabilities, costs, legal fees and expenses of any sort arising out of or relating to (i) the presence on the Center of any hazardous substances, hazardous wastes, pollutants, radiation or radioactive materials present on the Center as of the Rent Commencement Date (other than as a result of any intentional or negligent acts or omissions of Tenant or of any agent, employee or invitee of Tenant), and/or (ii) any unauthorized release into the environment (including, but not limited to, the Center) of any hazardous substances, hazardous wastes, pollutants, radiation or radioactive materials to the extent such release results from the negligence of or willful misconduct or omission by Landlord or its agents or employees.

(d) The provisions of this Section 9.6 shall survive the termination of this Lease.

10. INSURANCE AND INDEMNITY

10.1 Insurance.

(a) Tenant shall procure and maintain in full force and effect at all times during the term of this Lease, from and after the Early Access Date, at Tenant’s cost and expense, commercial general liability insurance to protect against liability arising out of or related to the use of or resulting from any accident occurring in, upon or about the Premises, with limits of liability of not less than (i) Three Million Dollars ($3,000,000.00) per occurrence for bodily injury, personal injury and death, and Five Hundred Thousand Dollars ($500,000.00) per occurrence for property damage, or (ii) a combined single limit of liability of not less than Five Million Dollars ($5,000,000.00) per occurrence for bodily injury (including personal injury and death) and property damage, which insurance may be provided in a combination of primary and excess limits (i.e., umbrella coverage). Such insurance shall name Landlord, its general partners, its property manager and any lender holding a deed of trust on the Center from time to time (as designated in writing by Landlord to Tenant from time to time) as additional insureds thereunder. The amount of such insurance shall not be construed to limit any liability or obligation of Tenant under this Lease. Tenant shall also procure and maintain in full force and effect at all times during the term of this Lease, at Tenant’s cost and expense, products/completed operations coverage on terms and in amounts (A) customary in Tenant’s industry for companies engaged in the marketing of products on a scale comparable to that in which Tenant is engaged from time to time and (B) mutually satisfactory to Landlord and Tenant in their respective reasonable discretion, provided that such coverage is reasonably available to Tenant on commercially reasonable terms.

(b) Landlord shall procure and maintain in full force and effect at all times during the term of this Lease, at Landlord’s cost and expense (but reimbursable as an Operating Expense under Section 5.2 hereof), commercial general liability insurance to protect against liability arising out of or related to the use of or resulting from any accident occurring in, upon or about the Center, with a combined single limit of liability of not less than Five Million Dollars ($5,000,000.00) per occurrence for bodily injury (including personal injury and death) and property damage.

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(c) Landlord shall procure and maintain in full force and effect at all times during the term of this Lease, at Landlord’s cost and expense (but reimbursable as an Operating Expense under Section 5.2 hereof), policies of property insurance providing protection against “all risk of direct physical loss” (as defined by and detailed in the Insurance Service Office’s Commercial Property Program “Cause of Loss—Special Form [CP 1030]” or its equivalent) for the shell of the Building and for the improvements in the Common Areas of the Center, on a full replacement cost basis (with no co-insurance or, if coverage without co-insurance is not reasonably available, then on an “agreed amount” basis or with a commercially reasonable margin clause). Such insurance may include earthquake and/or environmental coverage, as part of the same policy or as a separate policy or policies, to the extent Landlord in its sole discretion elects to carry such coverage, and shall have such commercially reasonable deductibles and other terms as Landlord in its discretion determines to be appropriate. Landlord shall have no obligation to carry property damage insurance for any alterations, additions or improvements installed by Tenant in the Building or on or about the Center.

(d) Landlord shall procure and maintain in full force and effect at all times during the term of this Lease, at Tenant’s cost and expense (chargeable, pursuant to and subject to Article 5, as an Operating Expense), policies of property insurance providing protection against “all risk of direct physical loss” (as defined by and detailed in the Insurance Service Office’s Commercial Property Program “Cause of Loss—Special Form [CP 1030]” or its equivalent) for the tenant improvements existing in the Premises on the Early Access Date and for all Tenant Improvements constructed by Landlord pursuant to this Lease and the Workletter (other than Tenant’s Property, which it shall be Tenant’s responsibility to insure pursuant to paragraph (e) below), on a full replacement cost basis (with no co-insurance or, if coverage without co-insurance is not reasonably available, then on an “agreed amount” basis or with a commercially reasonable margin clause). Such insurance may have such commercially reasonable deductibles and other terms as Landlord in its reasonable discretion determines to be appropriate. The coverage required to be maintained under this paragraph (d) may, in Landlord’s discretion, be added to or combined with Landlord’s master policy carried under paragraph (c) above. Tenant shall cooperate with Landlord in the preparation of a mutually approved initial list or schedule of such existing improvements and Tenant Improvements, for purposes of identifying the items Landlord is responsible for insuring under this paragraph (d), and Tenant shall thereafter provide to Landlord from time to time, upon request by Landlord annually or at other reasonable intervals, an updated version of such list or schedule (the intended purpose of such updating being to reflect any modification or removal of any such items that would have the effect of eliminating them from the scope of Landlord’s insurance obligation under this paragraph (d)). Landlord, in its discretion, may elect from time to time to obtain appraisals of any or all alterations, additions, improvements and Tenant Improvements which Landlord is required to insure hereunder.

(e) Tenant shall procure and maintain in full force and effect at all times during the term of this Lease, from and after the Early Access Date, at Tenant’s cost and expense, policies of property insurance providing protection against “all risk of direct physical loss” (as defined by and detailed in the Insurance Service Office’s Commercial Property Program “Cause of Loss-Special Form [CP 1030]” or its equivalent) for Tenant’s movable

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personal property, office furniture, movable equipment and trade fixtures, and all other alterations, additions and improvements placed or installed by Tenant from time to time in or about the Premises (collectively, “Tenant’s Property,” which term is not intended to imply any conclusion regarding ultimate ownership of alterations, additions and improvements that are otherwise covered by Article 7 above, but is used solely as a defined term for purposes of the specific contexts in which it is used as such in this Lease), on a full replacement cost basis (with no co-insurance or, if coverage without co-insurance is not reasonably available, then on an “agreed amount” basis or with a commercially reasonable margin clause). Such insurance may have such commercially reasonable deductibles and other terms as Tenant in its discretion determines to be appropriate, and shall name both Tenant and Landlord as insureds as their interests may appear. Without limiting the generality of the foregoing provisions, Tenant’s property insurance on Tenant’s Property shall in all events include earthquake insurance in an amount at least equal to the amount (if any) of the Tenant Improvement Allowance paid by Landlord pursuant to this Lease in connection with the construction of any Tenant Improvements constructed by Tenant pursuant to the Workletter.

(f) During the construction of the Tenant Improvements, each party constructing such Tenant Improvements or any portion thereof shall also procure and maintain in full force and effect, at Tenant’s sole cost and expense (but chargeable against the Tenant Improvement Allowance to the extent any portion of the Tenant Improvement Allowance is available for that purpose), a policy of builder’s risk insurance on the Tenant Improvements being constructed by such party, in such amounts and with such commercially reasonable deductibles as Landlord and Tenant may mutually and reasonably determine to be appropriate with respect to such insurance. Without limiting the generality of the foregoing provisions, any party’s builder’s risk insurance with respect to the Tenant Improvements shall in all events include earthquake insurance in an amount at least equal to the cumulative amount of the Tenant Improvement Allowance paid by Landlord from time to time in connection with the construction of such Tenant Improvements by the applicable party.

10.2 Quality of Policies and Certificates. All policies of insurance required hereunder shall be issued by responsible insurers and, in the case of policies carried or required to be carried by Tenant, shall be written as primary policies not contributing with and not in excess of any coverage that Landlord may carry. Tenant shall deliver to Landlord copies of policies or certificates of insurance showing that said policies are in effect. The coverage provided by such policies shall include the clause or endorsement referred to in Section 10.4. If Tenant fails to acquire, maintain or renew any insurance required to be maintained by it under this Article 10 or to pay the premium therefor, then Landlord, at its option and in addition to its other remedies, but without obligation so to do, may procure such insurance, and any sums expended by it to procure any such insurance on behalf of or in place of Tenant shall be repaid upon demand, with interest as provided in Section 3.2 hereof. Tenant shall give Landlord at least thirty (30) days prior written notice of any cancellation or nonrenewal of insurance required to be maintained under this Article 10, and shall obtain written undertakings from each insurer under policies required to be maintained by it to endeavor to notify all insureds thereunder at least thirty (30) days prior to cancellation of coverage (or ten (10) days prior to cancellation of coverage due to nonpayment of premiums).

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10.3 Workers’ Compensation; Employees. Tenant shall maintain in full force and effect during the term of this Lease workers’ compensation insurance in at least the minimum amounts required by law, covering all of Tenant’s employees working at or about the Premises. In addition, Tenant shall maintain in full force and effect during the term of this Lease employer’s liability coverage with limits of liability of not less than One Hundred Thousand Dollars ($100,000) per accident, One Hundred Thousand Dollars ($100,000) per employee for disease, and Five Hundred Thousand Dollars ($500,000) policy limit for disease.

10.4 Waiver of Subrogation. Notwithstanding anything to the contrary elsewhere in this Lease, to the extent permitted by law, Landlord and Tenant each waive any right to recover against the other with respect to (i) damage to property, (ii) damage to the Center or any part thereof, or (iii) claims arising by reason of any of the foregoing, but only to the extent that any of the foregoing damages and claims under clauses (i)-(iii) hereof are covered or would have been covered, and only to the extent of such actual or deemed coverage, by property insurance actually carried or required to be carried hereunder by either Landlord or Tenant, regardless of any negligence of the party receiving the benefit of such waiver. This provision is intended to waive fully, and for the benefit of each party, any rights and claims which might give rise to a right of subrogation in any insurance carrier. Each party shall procure a clause or endorsement on any property insurance policy denying to the insurer rights of subrogation against the other party to the extent rights have been waived by the insured prior to the occurrence of injury or loss. Coverage provided by insurance maintained by Landlord or Tenant shall not be limited, reduced or diminished by virtue of the subrogation waiver herein contained.

10.5 Increase in Premiums. Tenant shall do all acts and pay all expenses reasonably necessary to ensure that the Premises are not used for purposes prohibited by any applicable fire insurance, and that Tenant’s use of the Premises, Building and Center complies with all requirements necessary to obtain any such insurance. If Tenant uses or permits the Premises, Building or Center to be used in a manner which increases the existing rate of any insurance carried by Landlord on the Center and such use continues for longer than a reasonable period specified in any written notice from Landlord to Tenant identifying the rate increase and the factors causing the same, then Tenant shall pay the amount of the increase in premium caused thereby, and Landlord’s costs of obtaining other replacement insurance policies, including any increase in premium, within thirty (30) days after demand therefor by Landlord.

10.6 Indemnification.

(a) Except as otherwise expressly provided for in this Lease, Tenant shall indemnify, defend and hold Landlord and its members, partners, shareholders, officers, directors, agents, employees and contractors harmless from any and all liability for injury to or death of any person, or loss of or damage to the property of any person, and all actions, claims, demands, costs (including, without limitation, reasonable attorneys’ fees), damages or expenses of any kind arising therefrom which may be brought or made against Landlord or which Landlord may pay or incur by reason of the use, occupancy and enjoyment of the Center by Tenant or any invitees, sublessees, licensees, assignees, employees, agents or contractors of Tenant or holding under Tenant (including, but not limited to, any such matters arising out of or in connection with

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any early entry upon the Center by Tenant pursuant to Section 2.2 hereof) from any cause whatsoever other than (i) negligence or willful misconduct or omission by Landlord or its agents, employees or contractors or (ii) Landlord’s material breach of its obligations under this Lease. Except as otherwise expressly provided for in this Lease, Landlord and its members, partners, shareholders, officers, directors, agents, employees and contractors shall not be liable for, and Tenant hereby waives all claims against such persons for, damages to goods, wares and merchandise in or upon the Center, or for injuries to Tenant, its agents or third persons in or upon the Center, from any cause whatsoever other than (x) negligence or willful misconduct or omission by Landlord or its agents, employees or contractors or (y) Landlord’s material breach of its obligations under this Lease. Tenant shall give prompt notice to Landlord of any casualty or accident in, on or about the Center.

(b) Except as otherwise expressly provided for in this Lease, Landlord shall indemnify, defend and hold Tenant and its partners, shareholders, officers, directors, agents, employees and contractors harmless from any and all liability for injury to or death of any person, or loss of or damage to the property of any person, and all actions, claims, demands, costs (including, without limitation, reasonable attorneys’ fees), damages or expenses of any kind arising therefrom which may be brought or made against Tenant or which Tenant may pay or incur, to the extent such liabilities or other matters arise in, on or about the Center by reason of any negligence or willful misconduct or omission by Landlord or its agents, employees or contractors.

10.7 Blanket Policy. Any policy required to be maintained hereunder may be maintained under a so-called “blanket policy” insuring other parties and other locations so long as the amount of insurance required to be provided hereunder is not thereby diminished. Without limiting the generality of the requirement set forth at the end of the preceding sentence, property insurance provided under a blanket policy shall provide full replacement cost coverage and liability insurance provided under a blanket policy shall include per location aggregate limits meeting or exceeding the limits required under this Article 10.

11. SUBLEASE AND ASSIGNMENT

11.1 Assignment and Sublease of Building. Except in the case of a Permitted Transfer, Tenant shall not have the right or power to assign its interest in this Lease, or make any sublease of the Premises or any portion thereof, nor shall any interest of Tenant under this Lease be assignable involuntarily or by operation of law, without on each occasion obtaining the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed. Any purported sublease or assignment of Tenant’s interest in this Lease requiring but not having received Landlord’s consent thereto (to the extent such consent is required hereunder) shall be void. Without limiting the generality of the foregoing provisions, Landlord may withhold consent to any proposed subletting or assignment solely on the ground, if applicable, that the use by the proposed subtenant or assignee is not a permitted use hereunder and is reasonably likely to be incompatible with Landlord’s use of the balance of the Center. Except in the case of a Permitted Transfer, any dissolution, consolidation, merger or other reorganization of Tenant, or any sale or transfer of substantially all of the stock or assets of Tenant in a single

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transaction or series of related transactions, shall be deemed to be an assignment hereunder and shall be void without the prior written consent of Landlord as required above. Notwithstanding the foregoing, (i) neither an initial public offering of the common stock of Tenant nor any other sale of Tenant’s capital stock through any public securities exchange or market nor any other issuance of Tenant’s capital stock for bona fide financing purposes nor any sale or transfer of Tenant’s capital stock in connection with any merger or consolidation with, or acquisition of, Tenant, nor any consolidation, merger or reorganization in which Tenant is the surviving entity, shall be deemed to be an assignment, subletting or transfer hereunder; and (ii) Tenant shall have the right to assign this Lease or sublet the Premises, or any portion thereof, without Landlord’s consent (but with prior or concurrent written notice by Tenant to Landlord), to any Affiliate of Tenant, or to any entity which results from a merger or consolidation involving Tenant, or to any entity which acquires substantially all of the stock or assets of Tenant as a going concern (hereinafter each a “Permitted Transfer”). For purposes of the preceding sentence, an “Affiliate” of Tenant shall mean any entity in which Tenant owns at least a fifty percent (50%) equity interest, any entity which owns at least a fifty percent (50%) equity interest in Tenant, and/or any entity which is related to Tenant by a chain of ownership interests involving at least a fifty percent (50%) equity interest at each level in the chain. Landlord shall have no right to terminate this Lease in connection with, and shall have no right to any sums or other economic consideration resulting from, any Permitted Transfer. Except as expressly set forth in this Section 11.1, however, the provisions of Section 11.2 shall remain applicable to any Permitted Transfer and the transferee under such Permitted Transfer shall be and remain subject to all of the terms and provisions of this Lease.

11.2 Rights of Landlord.

(a) Consent by Landlord to one or more assignments of this Lease, or to one or more sublettings of the Premises or any portion thereof, or collection of rent by Landlord from any assignee or sublessee, shall not operate to exhaust Landlord’s rights under this Article 11, nor constitute consent to any subsequent assignment or subletting. No assignment of Tenant’s interest in this Lease and no sublease shall relieve Tenant of its obligations hereunder, notwithstanding any waiver or extension of time granted by Landlord to any assignee or sublessee, or the failure of Landlord to assert its rights against any assignee or sublessee, and regardless of whether Landlord’s consent thereto is given or required to be given hereunder. In the event of a default by any assignee, sublessee or other successor of Tenant in the performance of any of the terms or obligations of Tenant under this Lease, Landlord may proceed directly against Tenant without the necessity of exhausting remedies against any such assignee, sublessee or other successor. In addition, Tenant immediately and irrevocably assigns to Landlord, as security for Tenant’s obligations under this Lease, all rent from any subletting of all or a part of the Premises as permitted under this Lease, and Landlord, as Tenant’s assignee, or any receiver for Tenant appointed on Landlord’s application, may collect such rent and apply it toward Tenant’s obligations under this Lease; except that, until the occurrence and during the continuance of an event of default by Tenant, Tenant shall have the right to collect such rent and to retain all sublease profits (subject to the provisions of Section 11.2(c), below),

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(b) Upon any assignment of Tenant’s interest in this Lease for which Landlord’s consent is required under Section 11.1 hereof, Tenant shall pay to Landlord, within ten (10) days after receipt thereof by Tenant from time to time, one-half ( ¹/2) of all cash sums and other economic considerations received by Tenant in connection with or as a result of such assignment, after first deducting therefrom (i) any costs incurred by Tenant for leasehold improvements (including, but not limited to, third-party architectural and space planning costs) in the Premises in connection with such assignment, amortized over the remaining term of this Lease, (ii) any real estate commissions and/or reasonable attorneys’ fees actually incurred by Tenant in connection with such assignment, and (iii) the unamortized cost (assuming straight-line amortization over the entire period from the Rent Commencement Date through the remainder of the initial term of this Lease) of any alterations, additions and improvements made to the Premises at Tenant’s expense and remaining in the Premises at the time of such assignment.

(c) Upon any sublease of all or any portion of the Premises for which Landlord’s consent is required under Section 11.1 hereof, Tenant shall pay to Landlord, within ten (10) days after receipt thereof by Tenant from time to time, one-half ( ¹/2) of all cash sums and other economic considerations received by Tenant in connection with or as a result of such sublease, after first deducting therefrom (i) the minimum rental due hereunder for the corresponding period, prorated (on the basis of the average per-square-foot cost paid by Tenant for the Premises for the applicable period under this Lease) to reflect the size of the subleased portion of the Premises, (ii) any costs incurred by Tenant for leasehold improvements in the subleased portion of the Premises (including, but not limited to, third-party architectural and space planning costs) for the specific benefit of the sublessee in connection with such sublease, amortized over the remaining term of this Lease, (iii) any real estate commissions and/or reasonable attorneys’ fees actually incurred by Tenant in connection with such sublease, amortized over the term of such sublease, and (iv) amortized over the term of such sublease, the portion allocable to the sublease term of the unamortized cost (assuming straight-line amortization over the entire period from the Rent Commencement Date through the remainder of the initial term of this Lease) of any alterations, additions and improvements made to the Premises at Tenant’s expense and reasonably allocable to the subleased portion of the Premises at the time of the sublease. Notwithstanding anything to the contrary contained in this paragraph (c), in no event shall the economic considerations required to be shared by Tenant with Landlord hereunder include the reasonable, good faith value of any goods or services provided by Tenant to any sublessee in connection with any subletting, including, but not limited to, any shipping, receiving, security, reception, facilities management, laboratory, repair, maintenance, utilities and other similar goods and services provided to the sublessee in excess of the goods and services provided by Landlord to Tenant under this Lease.

12. RIGHT OF ENTRY AND QUIET ENJOYMENT

12.1 Right of Entry. Landlord and its authorized representatives shall have the right, subject to Tenant’s reasonable operating and security procedures, to enter the Premises at any time during the term of this Lease, provided that after the Rent Commencement Date, such entry shall be made only during normal business hours and upon not less than one (1) business day’s

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prior notice, except in the case of emergency (in which event no notice shall be required and entry may be made at any time), for the purpose of inspecting and determining the condition of the Premises and Building or for any other proper purpose including, without limitation, to make repairs, replacements or improvements which Landlord may deem necessary, to show the Premises and Building to prospective purchasers, to show the Premises and Building to prospective tenants (but only during the final year of the term of this Lease, except that in the case of the initial term or first extended term [if applicable] of this Lease, such period shall instead begin only on the earlier of the date nine (9) months prior to expiration of such initial term or first extended term of this Lease or the date [if any] on which Tenant informs Landlord in writing that Tenant does not intend to exercise its renewal right under Section 2.6 hereof as of the end of such initial term or first extended term of this Lease, but in no event earlier than one (1) year prior to the scheduled expiration date of such initial term or first extended term of this Lease), and to post notices of nonresponsibility. Landlord shall not be liable for inconvenience, annoyance, disturbance, loss of business, quiet enjoyment or other damage or loss to Tenant by reason of making any repairs or performing any work upon the Building or the Center or by reason of erecting or maintaining any protective barricades in connection with any such work, and the obligations of Tenant under this Lease shall not thereby be affected in any manner whatsoever, provided, however, Landlord shall use reasonable efforts to minimize the inconvenience to Tenant’s normal business operations caused thereby.

12.2 Quiet Enjoyment. Landlord covenants that Tenant, upon paying the rent and performing its obligations hereunder within any applicable notice and cure periods and subject to all the terms and conditions of this Lease, shall peacefully and quietly have, hold and enjoy the Premises and the Center throughout the term of this Lease, or until this Lease is terminated as provided by this Lease.

13. CASUALTY AND TAKING

13.1 Damage or Destruction.

(a) If the Premises or any portion of the Common Areas of the Center necessary for Tenant’s use and occupancy of the Premises is damaged or destroyed in whole or in any substantial part during the period from the Rent Commencement Date through the remaining term of this Lease, Landlord shall obtain from Landlord’s architect, as soon as practicable (and in all events within forty-five (45) days following the damage or destruction, (i) the architect’s reasonable, good faith estimate of the time within which repair and restoration of the Premises and Common Areas (if applicable) can reasonably be expected to be completed to the extent necessary to enable Tenant to resume its full business operations in the Premises without material impairment and (ii) the architect’s reasonable, good faith opinion as to whether repair and restoration to that extent will be permitted under applicable governmental laws, regulations and building codes then in effect (collectively, the “Architect’s Estimate”). If the damage or destruction materially impairs Tenant’s ability to conduct its business operations in the Premises, and if either (A) the estimated repair time specified in the Architect’s Estimate exceeds six (6) months (or, in the case of an occurrence during the final year of the term of this Lease, sixty (60) days), or (B) the Architect’s Estimate states that repair and restoration of the

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affected areas to the extent necessary to enable Tenant to resume its full business operations in the Premises without material impairment will not be permitted under applicable governmental laws, regulations and building codes then in effect, then in either such event either Landlord or Tenant may terminate this Lease as of the date of the occurrence by giving written notice to the other party within thirty (30) days after the damage has occurred or fifteen (15) days after delivery of the Architect’s Estimate, whichever is later; provided, however, that if Landlord elects to terminate this Lease under clause (A) of this sentence on the basis of an Architect’s Estimate showing an estimated repair time of more than sixty (60) days but not more than six (6) months with respect to a casualty occurring during the final year of the initial term or first extended term (if applicable) of this Lease but occurring prior to a valid exercise by Tenant of its option to extend the then-current term of this Lease, and if Tenant, within ten (10) days after receipt of written notice of Landlord’s election to terminate, validly exercises in writing any then-exercisable option of Tenant to extend the term of this Lease under Section 2.6 above, then Landlord’s election to terminate shall be void and of no force or effect and the rights and obligations of the parties shall be determined under this Article 13 without regard to such purported termination by Landlord. In addition, Landlord shall have a similar termination right if the damage or destruction arises from a risk that is not required to be insured against (and is not actually insured against) by Landlord under this Lease and if Landlord’s architect reasonably estimates that the uninsured cost to restore the portions of the Premises for which Landlord is responsible to the condition required above would exceed five percent (5%) of the then applicable replacement cost of the entire Premises, unless Tenant agrees in writing, within ten (10) days after being notified of Landlord’s exercise of its termination right, to bear the restoration costs in excess of such five percent (5%) limit and, if reasonably requested by Landlord, agrees to provide security in an amount and on terms reasonably satisfactory to Landlord for Tenant’s performance of such payment obligation. If the circumstances creating a termination right under the preceding two sentences do not exist, or if such circumstances exist but neither party timely exercises any applicable termination right, then this Lease shall remain in full force and effect and (1) Landlord, as to the Common Areas of the Center, as to the Premises as they existed prior to any construction or installation of Tenant Improvements or other fixtures or personal property by Tenant, and as to all Tenant Improvements constructed by Landlord pursuant to this Lease and the Workletter, and (2) Tenant, as to all Tenant Improvements (if any) constructed by Tenant pursuant to this Lease and the Workletter and as to all other alterations, additions, improvements, fixtures and personal property constructed or installed by Tenant, shall commence and complete, with all due diligence and as promptly as is reasonably practicable under the conditions then existing, all such repair and restoration as may be required to return the affected portions of the Premises and Center to a condition comparable to that existing immediately prior to the occurrence; provided, however, that Tenant in its discretion may elect not to repair, restore or replace any or all of the items which would otherwise be Tenant’s responsibility under clause (2) of this sentence to the extent such items were constructed or installed at Tenant’s sole expense and without any use of funds from the Tenant Improvement Allowance.

(b) If this Lease is terminated pursuant to the foregoing provisions of this Section 13.1 following an occurrence which is a peril actually insured or required to be insured against pursuant to Section 10.1(c), (d) and/or (e), Landlord and Tenant agree (and any Lender

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shall be asked to agree) that such insurance proceeds shall be allocated between Landlord and Tenant in a manner which fairly and reasonably reflects their respective ownership rights under this Lease, as of the termination or expiration of the term of this Lease, with respect to the improvements, fixtures, equipment and other items to which such insurance proceeds are attributable.

(c) From and after the date of an occurrence resulting in damage to or destruction of the Premises or of Common Areas necessary for Tenant’s use and occupancy of the Premises, and continuing until repair and restoration thereof are completed to the extent necessary to enable Tenant to resume operation of its business in the Premises without substantial impairment, there shall be an equitable abatement of minimum rental and of Tenant’s Operating Cost Share of Operating Expenses based upon the degree to which Tenant’s ability to conduct its business in the Premises is impaired.

(d) Each party expressly waives the provisions of California Civil Code Sections 1932(2), 1933(4) and any other applicable existing or future law to the extent the same would permit the termination of this Lease in the event of damage to or destruction of the leased property, it being the intention of the parties that their respective rights in such circumstances shall be governed solely by the provisions of this Article 13.

13.2 Condemnation.

(a) If during the term of this Lease the Building or any Common Areas of the Center that are necessary for Tenant’s use and occupancy of the Premises, or any substantial part of either of them, is taken by eminent domain or by reason of any public improvement or condemnation proceeding, or in any manner by exercise of the right of eminent domain (including any transfer in lieu of or in avoidance of an exercise of the power of eminent domain), or receives irreparable damage by reason of anything lawfully done under color of public or other authority, then (i) this Lease shall terminate as to the entire Premises at Landlord’s election by written notice given to Tenant within thirty (30) days after the taking has occurred, and (ii) this Lease shall terminate as to the entire Premises at Tenant’s election, by written notice given to Landlord within thirty (30) days after the nature and extent of the taking have been finally determined, if the portion of the Building or Center taken is of such extent and nature as substantially to handicap, impede or permanently impair Tenant’s use of the Premises. If Tenant elects to terminate this Lease, Tenant shall also notify Landlord of the date of termination, which date shall not be earlier than thirty (30) days nor later than ninety (90) days after Tenant has notified Landlord of Tenant’s election to terminate, except that this Lease shall terminate on the date of taking if such date falls on any date before the date of termination designated by Tenant. If neither party elects to terminate this Lease as hereinabove provided, this Lease shall continue in full force and effect (except that there shall be an equitable abatement of minimum rental and of Tenant’s Operating Cost Share of Operating Expenses based upon the degree to which Tenant’s ability to conduct its business in the Premises is impaired), Landlord shall restore the improvements for which Landlord is responsible (as provided above) to a complete architectural whole and a functional condition and as nearly as reasonably possible to the condition existing before the taking, and Tenant shall restore the improvements for which Tenant is responsible

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under clause (2) of Section 13.1(a) above to a complete architectural whole and a functional condition and as nearly as reasonably possible to the condition existing before the taking; provided, however, that Tenant in its discretion may elect not to repair, restore or replace any or all of the items which would otherwise be Tenant’s responsibility under such clause (2) to the extent such items were constructed or installed at Tenant’s sole expense and without any use of funds from the Tenant Improvement Allowance. In connection with any such restoration, each party shall use its respective reasonable efforts (including, without limitation, any necessary negotiation or intercession with its respective lender, if any) to ensure that any severance damages or other condemnation awards intended to provide compensation for rebuilding or restoration costs are promptly collected and made available to Landlord and Tenant in portions reasonably corresponding to the cost and scope of their respective restoration obligations, subject only to such payment controls as either party or its lender may reasonably require in order to ensure the proper application of such proceeds toward the restoration of the Building and the Center. Each party expressly waives the provisions of California Code of Civil Procedure Section 1265.130 and of any other existing or future law to the extent the same would allow either party to terminate (or to petition the Superior Court to terminate) this Lease in the event of a partial condemnation or taking of the leased property, it being the intention of the parties that their respective rights in such circumstances shall be governed solely by the provisions of this Article 13.

(b) If this Lease is terminated pursuant to the foregoing provisions of this Section 13.2, or if this Lease remains in effect but any condemnation awards or other proceeds become available as compensation for the loss or destruction of all or any portion of the Building or the Center, then Landlord and Tenant agree (and any Lender shall be asked to agree) that such proceeds shall be allocated between Landlord and Tenant, respectively, in the respective proportions in which Landlord and Tenant would have shared, under Section 13.1(b), the proceeds of any insurance proceeds following loss or destruction of the applicable improvements due to an insured casualty.

13.3 Reservation of Compensation. Landlord reserves, and Tenant waives and assigns to Landlord, all rights to any award or compensation for damage to the Center, the improvements located therein and the leasehold estate created hereby, accruing by reason of any taking in any public improvement, condemnation or eminent domain proceeding or in any other manner by exercise of the right of eminent domain or of anything lawfully done by public authority, except that (a) Tenant shall be entitled to pursue recovery from the applicable public authority for Tenant’s moving expenses, trade fixtures and equipment and any leasehold improvements installed by Tenant in the Premises or Building at its own sole expense, but only to the extent Tenant would have been entitled to remove such items at the expiration of the term of this Lease and then only to the extent of the then remaining unamortized value of such improvements computed on a straight-line basis over the period from the Rent Commencement Date through the remainder of the then current term of this Lease, and (b) any condemnation awards or proceeds described in Section 13.2(b) shall be allocated and disbursed in accordance with the provisions of Section 13.2(b), notwithstanding any contrary provisions of this Section 13.3.

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13.4 Restoration of Improvements. In connection with any repair or restoration of improvements by either party following a casualty or taking as hereinabove set forth, the party responsible for such repair or restoration shall, to the extent possible, return such improvements to a condition substantially equal to that which existed immediately prior to the casualty or taking. To the extent such party wishes to make material modifications to such improvements, such modifications shall be subject to the prior written approval of the other party (not to be unreasonably withheld or delayed), except that no such approval shall be required for modifications that are required by applicable governmental authorities as a condition of the repair or restoration, unless such required modifications would impair or impede Tenant’s conduct of its business in the Premises (in which case any such modifications in Landlord’s work shall require Tenant’s consent, not unreasonably withheld or delayed) or would materially and adversely affect the exterior appearance, the structural integrity or the mechanical or other operating systems of the Premises or Building (in which case any such modifications in Tenant’s work shall require Landlord’s consent, not unreasonably withheld or delayed).

14. DEFAULT

14.1 Events of Default. The occurrence of any of the following shall constitute an event of default on the part of Tenant:

(a) Abandonment. Abandonment of the Premises. “Abandonment” is hereby defined to include, but is not limited to, any absence by Tenant from the Premises for fifteen (15) consecutive days or more while Tenant is in default, beyond any applicable notice and cure periods, under any other provision of this Lease;

(b) Nonpayment. Failure to pay, when due, any amount payable to Landlord hereunder, such failure continuing for a period of five (5) business days after written notice of such failure; provided, however, that any such notice shall be in lieu of, and not in addition to, any notice required under California Code of Civil Procedure Section 1161 et seq., as amended from time to time, so long as such notice is given in the manner required by California Code of Civil Procedure Section 1162;

(c) Other Obligations. Failure to perform any obligation, agreement or covenant under this Lease other than those matters specified in subsection (b) hereof (including, but not limited to, any breach by Tenant of the Master Declaration or Association Documents (if any) as provided in Section 15.4 below), such failure continuing for thirty (30) days after written notice of such failure; provided, however, that if such failure is curable in nature but cannot reasonably be cured within such 30-day period, then Tenant shall not be in default if and so long as, Tenant promptly (and in all events within such 30-day period) commences such cure and thereafter diligently pursues such cure to completion; and provided further, however, that any such notice shall be in lieu of and not in addition to, any notice required under California Code of Civil Procedure Section 1161 et seq., as amended from time to time, so long as such notice is given in the manner required by California Code of Civil Procedure Section 1162;

(d) General Assignment. A general assignment by Tenant for the benefit of creditors;

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(e) Bankruptcy. The filing of any voluntary petition in bankruptcy by Tenant, or the filing of an involuntary petition by Tenant’s creditors, which involuntary petition remains undischarged for a period of sixty (60) days. In the event that under applicable law the trustee in bankruptcy or Tenant has the right to affirm this Lease and continue to perform the obligations of Tenant hereunder, such trustee or Tenant shall, in such time period as may be permitted by the bankruptcy court having jurisdiction, cure all defaults of Tenant hereunder outstanding as of the date of the affirmance of this Lease and provide to Landlord such adequate assurances as may be necessary to ensure Landlord of the continued performance of Tenant’s obligations under this Lease. Specifically, but without limiting the generality of the foregoing, such adequate assurances must include assurances that the Premises continue to be operated only for the use permitted hereunder. The provisions hereof are to assure that the basic understandings between Landlord and Tenant with respect to Tenant’s use of the Center and the benefits to Landlord therefrom are preserved, consistent with the purpose and intent of applicable bankruptcy laws;

(f) Receivership. The employment of a receiver appointed by court order to take possession of substantially all of Tenant’s assets or the Premises, if such receivership remains undissolved for a period of sixty (60) days;

(g) Attachment. The attachment, execution or other judicial seizure of all or substantially all of Tenant’s assets or the Premises, if such attachment or other seizure remains undismissed or undischarged for a period of sixty (60) days after the levy thereof; or

(h) Insolvency. The admission by Tenant in writing of its inability to pay its debts as they become due, the filing by Tenant of a petition seeking any reorganization or arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation, the filing by Tenant of an answer admitting or failing timely to contest a material allegation of a petition filed against Tenant in any such proceeding or, if within sixty (60) days after the commencement of any proceeding against Tenant seeking any reorganization or arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation, such proceeding shall not have been dismissed.

14.2 Remedies Upon Tenant’s Default.

(a) Upon the occurrence of any event of default described in Section 14.1 hereof, Landlord, in addition to and without prejudice to any other rights or remedies it may have, shall have the right either (i) to terminate this Lease and recover from Tenant all damages incurred by Landlord as a result of Tenant’s default, as hereinafter provided, or (ii) to continue this Lease in effect and recover rent and other charges and amounts as they become due.

(b) Even if Tenant has breached this Lease and abandoned the Premises, this Lease shall continue in effect for so long as Landlord does not terminate Tenant’s right to possession under subsection (a) hereof and Landlord may enforce all of its rights and remedies under this Lease, including the right to recover rent as it becomes due, and Landlord, without terminating this Lease, may exercise all of the rights and remedies of a lessor under California Civil Code Section 1951.4 (lessor may continue lease in effect after lessee’s breach and

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abandonment and recover rent as it becomes due, if lessee has right to sublet or assign, subject only to reasonable limitations), or any successor Code section. Acts of maintenance, preservation or efforts to relet the Premises or the appointment of a receiver upon application of Landlord to protect Landlord’s interests under this Lease shall not constitute a termination of Tenant’s right to possession.

(c) If Landlord terminates this Lease pursuant to this Section 14.2, Landlord shall have all of the rights and remedies of a landlord provided by Section 1951.2 of the Civil Code of the State of California, or any successor Code section, which remedies include Landlord’s right to recover from Tenant (i) the worth at the time of award of the unpaid rent and additional rent which had been earned at the time of termination, (ii) the worth at the time of award of the amount by which the unpaid rent and additional rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided, (iii) the worth at the time of award of the amount by which the unpaid rent and additional rent for the balance of the term after the time of award exceeds the amount of such rental loss that Tenant proves could be reasonably avoided, and (iv) any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant’s failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom, including, but not limited to, the cost of recovering possession of the Premises, expenses of reletting, including necessary repair, renovation and alteration of the Premises, reasonable attorneys’ fees, and other reasonable costs. The “worth at the time of award” of the amounts referred to in clauses (i) and (ii) above shall be computed by allowing interest at ten percent (10%) per annum from the date such amounts accrued to Landlord. The “worth at the time of award” of the amounts referred to in clause (iii) above shall be computed by discounting such amount at one percentage point above the discount rate of the Federal Reserve Bank of San Francisco at the time of award.

14.3 Remedies Cumulative. All rights, privileges and elections or remedies of Landlord contained in this Article 14 are cumulative and not alternative to the extent permitted by law and except as otherwise provided herein.

15. SUBORDINATION, ATTORNMENT AND SALE

15.1 Subordination to Mortgage. This Lease, and any sublease entered into by Tenant under the provisions of this Lease, shall be subject and subordinate to any ground lease, mortgage, deed of trust, sale/leaseback transaction or any other hypothecation for security now or hereafter placed upon the Premises, the Building, the Center, or any of them, and the rights of any assignee of Landlord or of any ground lessor, mortgagee, trustee, beneficiary or leaseback lessor under any of the foregoing, and to any and all advances made on the security thereof and to all renewals, modifications, consolidations, replacements and extensions thereof; provided, however, that such subordination in the case of any future ground lease, mortgage, deed of trust, sale/leaseback transaction or any other hypothecation for security placed upon the Premises, the Building, the Center, or any of them shall be conditioned on Tenant’s receipt from the ground lessor, mortgagee, trustee, beneficiary or leaseback lessor of a Non-Disturbance Agreement in a form reasonably acceptable to Tenant (i) confirming that so long as Tenant is not in material

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default hereunder beyond any applicable cure period (for which purpose the occurrence and continuance of any event of default under Section 14.1 hereof shall be deemed to be “material”), Tenant’s rights hereunder shall not be disturbed by such person or entity and (ii) agreeing that the benefit of such Non-Disturbance Agreement shall be transferable to any transferee under a Permitted Transfer and to any other assignee or subtenant that is acceptable to the ground lessor, mortgagee, trustee, beneficiary or leaseback lessor at the time of transfer. If any mortgagee, trustee, beneficiary, ground lessor, sale/leaseback lessor or assignee elects to have this Lease be an encumbrance upon the Center prior to the lien of its mortgage, deed of trust, ground lease or leaseback lease or other security arrangement and gives notice thereof to Tenant, this Lease shall be deemed prior thereto, whether this Lease is dated prior or subsequent to the date thereof or the date of recording thereof. Tenant, and any sublessee, shall execute such documents as may reasonably be requested by any mortgagee, trustee, beneficiary, ground lessor, sate/leaseback lessor or assignee to evidence the subordination herein set forth, subject to the conditions set forth above, or to make this Lease prior to the lien of any mortgage, deed of trust, ground lease, leaseback lease or other security arrangement, as the case may be. Upon any default by Landlord in the performance of its obligations under any mortgage, deed of trust, ground lease, leaseback lease or assignment, provided that Tenant has received such a Non-Disturbance Agreement from the applicable party, Tenant (and any sublessee) shall, notwithstanding any subordination hereunder, attorn to the mortgagee, trustee, beneficiary, ground lessor, leaseback lessor or assignee thereunder upon demand and become the tenant of the successor in interest to Landlord, at the option of such successor in interest, and shall execute and deliver any instrument or instruments confirming the attornment herein provided for. Landlord represents and warrants to Tenant that as of the date of this Lease, neither the Premises, the Building nor the Center is subject to any existing ground lease, mortgage, deed of trust, sale/leaseback transaction or any other hypothecation for security.

15.2 Sale of Landlord’s Interest. Upon sale, transfer or assignment of Landlord’s entire interest in the Building and the Center, Landlord shall be relieved of its obligations hereunder with respect to liabilities accruing from and after the date of such sale, transfer or assignment.

15.3 Estoppel Certificates. Tenant or Landlord (the “responding party”), as applicable, shall at any time and from time to time, within ten (10) business days after written request by the other party (the “requesting party”), execute, acknowledge and deliver to the requesting party a certificate in writing stating: (i) that this Lease is unmodified and in full force and effect, or if there have been any modifications, that this Lease is in full force and effect as modified and stating the date and the nature of each modification; (ii) the date to which rental and all other sums payable hereunder have been paid; (iii) that the requesting party is not in default in the performance of any of its obligations under this Lease, that the certifying party has given no notice of default to the requesting party and that no event has occurred which, but for the expiration of the applicable time period, would constitute an event of default hereunder, or if the responding party alleges that any such default, notice or event has occurred, specifying the same in reasonable detail; and (iv) such other matters as may reasonably be requested by the requesting party or by any institutional lender, mortgagee, trustee, beneficiary, ground lessor, sale/leaseback lessor or prospective purchaser of the Center, or prospective sublessee or assignee

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of this Lease. Any such certificate provided under this Section 15.3 may be relied upon by any lender, mortgagee, trustee, beneficiary, assignee or successor in interest to the requesting party, by any prospective purchaser, by any purchaser on foreclosure or sale, by any grantee under a deed in lieu of foreclosure of any mortgage or deed of trust on the Property, by any subtenant or assignee, or by any other third party. Failure to execute and return within the required time any estoppel certificate requested hereunder, if such failure continues for five (5) days after a second written request by the requesting party for such estoppel certificate, shall be deemed to be an admission of the truth of the matters set forth in the form of certificate submitted to the responding party for execution.

15.4 Subordination to CC&R’s. This Lease, and any permitted sublease entered into by Tenant under the provisions of this Lease, and the interests in real property conveyed hereby and thereby shall be subject and subordinate (a) to any declarations of covenants, conditions and restrictions or other recorded restrictions affecting the Center or any portion thereof from time to time, provided that the terms of such declarations or restrictions are reasonable (or, to the extent they are not reasonable, are mandated by applicable law), do not materially impair Tenant’s ability to conduct the uses permitted hereunder on the Premises and in the Center, and do not discriminate against Tenant relative to other similarly situated tenants occupying the portion(s) of the Center covered by such declarations or restrictions, (b) to the Master Declaration of Covenants, Conditions and Restrictions for Seaport Centre, San Mateo County, California, dated October 5, 1987 and recorded on October 6, 1987 as Instrument No. 87153374, Official Records of San Mateo County, as amended from time to time (the “Master Declaration”), the provisions of which Master Declaration are an integral part of this Lease, and (c) to the Articles, Bylaws and Association Rules (if any), as amended from time to time, of the Seaport Centre Owners’ Association created under the Master Declaration (the “Association Documents”). Any failure by Tenant to comply with the applicable terms of the Master Declaration and the Association Documents (if any) shall be a default under this Lease. Tenant agrees to execute, upon request by Landlord, any documents reasonably required from time to time to evidence the foregoing subordination.

15.5 Mortgagee Protection. If, following a default by Landlord under any mortgage, deed of trust, ground lease, leaseback lease or other security arrangement covering the Building, the Center, or any portion of them, the Building and/or the Center, as applicable, is acquired by the mortgagee, beneficiary, master lessor or other secured party, or by any other successor owner, pursuant to a foreclosure, trustee’s sale, sheriff’s sale, lease termination or other similar procedure (or deed in lieu thereof), then any such person or entity so acquiring the Building and/or the Center shall not be:

(a) liable for any act or omission of a prior landlord or owner of the Center (including, but not limited to, Landlord), except that such person or entity shall be liable for the cure or correction of any continuing defaults, such as a continuing failure to repair or maintain;

(b) subject to any offsets or defenses that Tenant may have against any prior landlord or owner of the Center (including, but not limited to, Landlord);

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(c) bound by any rent or additional rent that Tenant may have paid in advance to any prior landlord or owner of the Center (including, but not limited to, Landlord) for a period in excess of one month, or by any security deposit, cleaning deposit or other prepaid charge that Tenant may have paid in advance to any prior landlord or owner (including, but not limited to, Landlord), except to the extent such deposit or prepaid amount has been expressly turned over to or credited to the successor owner thus acquiring the Center;

(d) liable for any warranties or representations of any nature whatsoever, whether pursuant to this Lease or otherwise, by any prior landlord or owner of the Center (including, but not limited to, Landlord) with respect to the use, construction, zoning, compliance with laws, title, habitability, fitness for purpose or possession, or physical condition (including, without limitation, environmental matters) of the Building or the Center, except for any then remaining obligations of Landlord arising under Section 2.3 of the Lease or under the Workletter; or

(e) liable to Tenant in any amount beyond the interest of such mortgagee, beneficiary, master lessor or other secured party or successor owner in the Center as it exists from time to time, and in the proceeds from any disposition of such interest, it being the intent of this provision that Tenant shall look solely to the interest of any such mortgagee, beneficiary, master lessor or other secured party or successor owner in the Center for the payment and discharge of the landlord’s obligations under this Lease and that such mortgagee, beneficiary, master lessor or other secured party or successor owner shall have no separate personal liability for any such obligations.

16. SECURITY

16.1 Deposit. Tenant shall have no obligation to provide a security deposit in connection with this Lease.

17. MISCELLANEOUS

17.1 Notices. All notices, consents, waivers and other communications which this Lease requires or permits either party to give to the other shall be in writing and shall be deemed given when delivered personally (including delivery by private same-day or overnight courier or express delivery service) or by telecopier with mechanical confirmation of transmission, effective upon personal delivery to or refusal of delivery by the recipient (in the case of personal delivery by any of the means described above) or, except with respect to notices of a party’s failure to perform its obligations under this Lease, upon telecopier transmission during normal business hours at the recipient’s office (in the case of telecopier transmission, with any transmission outside of normal business hours being effective as of the beginning of the first business day commencing after the time of actual transmission) to the parties at their respective addresses as follows:

To Tenant:	(until the Rent Commencement Date)
	OncoMed Pharmaceuticals, Inc.
	265 N. Whisman Road

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	Mountain View, CA 94043 Attn: Chief Executive Officer Telecopier: (650) 938-4570
	(after the Rent Commencement Date)
	OncoMed Pharmaceuticals, Inc.
	800 Chesapeake Drive
	Redwood City, CA 94063
	Attn: Chief Executive Officer
	Telecopier: (650) 938-4570
with a copy to:	Holme, Roberts & Owen LLP
	560 Mission Street, 25th Floor
	San Francisco, CA 94105-2994
	Attn: Kenneth R. Whiting, Jr.
	Telecopier: (415) 268-1999
To Landlord:	Slough Redwood City, LLC
	c/o Slough Estates USA Inc.
	444 North Michigan Avenue, Suite 3230
	Chicago, IL 60611
	Attn: Randy Rohner
	Telecopier: (312) 755-0717
with a copy to:	Britannia Management Services, Inc.
	555 Twelfth Street, Suite 1650
	Oakland, CA 94607
	Attn: Magdalena Shushan
	Telecopier: (510) 763-6262
and a copy to:	Folger Levin & Kahn LLP
	Embarcadero Center West
	275 Battery Street, 23rd Floor
	San Francisco, CA 94111
	Attn: Donald E. Kelley, Jr.
	Telecopier: (415) 986-2827

or to such other address(es) as may be contained in a notice of address change given by either party to the other pursuant to this Section, effective no earlier than fifteen (15) days after delivery of such notice to the receiving party. Rental payments and other sums required by this Lease to be paid by Tenant shall be delivered to Landlord in care of Britannia Management Services, Inc., 555 Twelfth Street, Suite 1650, Oakland, CA 94607, or at such other address as Landlord may from time to time specify in writing to Tenant, and shall be deemed to be paid only upon actual receipt.

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17.2 Successors and Assigns. The obligations of this Lease shall run with the land, and this Lease shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that the original Landlord named herein and each successive Landlord under this Lease shall be liable only for obligations accruing during the period of its ownership of the Center, and any liability for obligations accruing after termination of such ownership shall terminate as of the date of such termination of ownership and shall pass to the successor lessor.

17.3 No Waiver. The failure of Landlord or Tenant to seek redress for violation, or to insist upon the strict performance, of any covenant or condition of this Lease shall not be deemed a waiver of such violation, or prevent a subsequent act which would originally have constituted a violation from having all the force and effect of an original violation.

17.4 Severability. If any provision of this Lease or the application thereof is held to be invalid or unenforceable, the remainder of this Lease or the application of such provision to persons or circumstances other than those as to which it is invalid or unenforceable shall not be affected thereby, and each of the provisions of this Lease shall be valid and enforceable, unless enforcement of this Lease as so invalidated would be unreasonable or grossly inequitable under all the circumstances or would materially frustrate the purposes of this Lease.

17.5 Litigation Between Parties. In the event of any litigation or other dispute resolution proceedings between the parties hereto arising out of or in connection with this Lease, the prevailing party shall be reimbursed for all reasonable costs, including, but not limited to, reasonable accountants’ fees and attorneys’ fees, incurred in connection with such proceedings (including, but not limited to, any appellate proceedings relating thereto) or in connection with the enforcement of any judgment or award rendered in such proceedings. “Prevailing party” within the meaning of this Section shall include, without limitation, a party who dismisses an action for recovery hereunder in exchange for payment of the sums allegedly due, performance of covenants allegedly breached or consideration substantially equal to the relief sought in the action.

17.6 Surrender. A voluntary or other surrender of this Lease by Tenant, or a mutual termination thereof between Landlord and Tenant, shall not result in a merger but shall, at the option of Landlord, operate either as an assignment to Landlord of any and all existing subleases and subtenancies, or a termination of all or any existing subleases and subtenancies. This provision shall be contained in any and all assignments or subleases made pursuant to this Lease.

17.7 Interpretation. The provisions of this Lease shall be construed as a whole, according to their common meaning, and not strictly for or against Landlord or Tenant. The captions preceding the text of each Section and subsection hereof are included only for convenience of reference and shall be disregarded in the construction or interpretation of this Lease.

17.8 Entire Agreement. This written Lease, together with the exhibits hereto, contains all the representations and the entire understanding between the parties hereto with respect to the subject matter hereof. Any prior correspondence, memoranda or agreements are replaced in total

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by this Lease and the exhibits hereto. This Lease may be modified only by an agreement in writing signed by each of the parties.

17.9 Governing Law. This Lease and all exhibits hereto shall be construed and interpreted in accordance with and be governed by all the provisions of the laws of the State of California.

17.10 No Partnership. The relationship between Landlord and Tenant is solely that of a lessor and lessee. Nothing contained in this Lease shall be construed as creating any type or manner of partnership, joint venture or joint enterprise with or between Landlord and Tenant.

17.11 Financial Information. From time to time Tenant shall promptly provide directly to prospective lenders and purchasers of the Center designated by Landlord such financial information pertaining to the financial status of Tenant as Landlord may reasonably request; provided, Tenant shall be permitted to provide such financial information in a manner which Tenant deems reasonably necessary to protect the confidentiality of such information. In addition, from time to time, Tenant shall provide Landlord with such financial information pertaining to the financial status of Tenant as Landlord may reasonably request. Landlord agrees that all financial information supplied to Landlord by Tenant shall be treated as confidential material, and shall not be disseminated to any party or entity (including any entity affiliated with Landlord) without Tenant’s prior written consent, except that Landlord shall be entitled to provide such information, subject to reasonable precautions to protect the confidential nature thereof, (i) to Landlord’s partners and professional advisors, solely to use in connection with Landlord’s execution and enforcement of this Lease, and (ii) to prospective lenders and/or purchasers of the Center, solely for use in connection with their bona fide consideration of a proposed financing or purchase of the Center, provided that such prospective lenders and/or purchasers are not then engaged in businesses directly competitive with the business then being conducted by Tenant. For purposes of this Section, without limiting the generality of the obligations provided herein, it shall be deemed reasonable for Landlord to request copies of Tenant’s most recent audited annual financial statements, or, if audited statements have not been prepared, unaudited financial statements for Tenant’s most recent fiscal year, accompanied by a certificate of Tenant’s chief financial officer that such financial statements fairly present Tenant’s financial condition as of the date(s) indicated. Notwithstanding any other provisions of this Section 17.11, during any period in which Tenant has outstanding a class of publicly traded securities and is filing with the Securities and Exchange Commission, on a regular basis, Forms 10Q and 10K and any other periodic filings required under the Securities Exchange Act of 1934, as amended, it shall constitute sufficient compliance under this Section 17.11 for Tenant to furnish Landlord with copies of such periodic filings substantially concurrently with the filing thereof with the Securities and Exchange Commission.

Landlord and Tenant recognize the need of Tenant to maintain the confidentiality of information regarding its financial status and the need of Landlord to be informed of, and to provide to prospective lenders and purchasers of the Center financial information pertaining to, Tenant’s financial status. Landlord and Tenant agree to cooperate with each other in achieving these needs within the context of the obligations set forth in this Section.

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17.12 Costs. If Tenant requests the consent of Landlord under any provision of this Lease for any act that Tenant proposes to do hereunder, including, without limitation, assignment or subletting of the Premises, Tenant shall, as a condition to doing any such act and the receipt of such consent, reimburse Landlord promptly for any and all reasonable costs and expenses incurred by Landlord in connection therewith, including, without limitation, reasonable attorneys’ fees.

17.13 Time. Time is of the essence of this Lease, and of every term and condition hereof.

17.14 Rules and Regulations. Tenant shall observe, comply with and obey, and shall cause its employees, agents and, to the best of Tenant’s ability, invitees to observe, comply with and obey such reasonable rules and regulations for the safety, care, cleanliness, order and use of the Building and the Center as Landlord may promulgate and deliver to Tenant from time to time, provided that such rules and regulations are reasonable (or, to the extent they are not reasonable, are mandated by applicable law), do not materially impair Tenant’s ability to conduct the uses permitted hereunder on the Premises and in the Center, and do not discriminate against Tenant relative to other similarly situated tenants occupying portions of the Center.

17.15 Brokers. Landlord agrees to pay a brokerage commission in connection with the consummation of this Lease to CB Richard Ellis, Inc., which has acted as dual representative for both Landlord and Tenant, in accordance with a separate written agreement. Each party represents and warrants that no other broker participated in the consummation of this Lease and agrees to indemnify, defend and hold the other party harmless against any liability, cost or expense, including, without limitation, reasonable attorneys’ fees, arising out of any claims for brokerage commissions or other similar compensation in connection with any conversations, prior negotiations or other dealings by the indemnifying party with any other broker.

17.16 Memorandum of Lease. At any time during the term of this Lease, either party, at its sole expense, shall be entitled to record a memorandum of this Lease and, if either party so requests, both parties agree to cooperate in the preparation, execution, acknowledgment and recordation of such document in reasonable form. If such a memorandum of lease is recorded, then upon expiration or termination of this Lease, Tenant agrees promptly to execute, acknowledge and deliver to Landlord, upon written request by Landlord, a Termination of Memorandum of Lease in such form as Landlord may reasonably request, for the purpose of terminating any continuing effect of the previously recorded memorandum of lease as a cloud upon title to the Center.

17.17 Organizational Authority. Each party to this Lease represents and warrants that the person signing this Lease on behalf of such party is fully authorized to do so and, by so doing, to bind such party.

17.18 Execution and Delivery. Submission of this Lease for examination or signature by Tenant does not constitute an agreement or reservation of or option for lease of the Premises. This instrument shall not be effective or binding upon either party, as a lease or otherwise, until executed and delivered by both Landlord and Tenant. This Lease may be executed in one or

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more counterparts and by separate parties on separate counterparts, but each such counterpart shall constitute an original and all such counterparts together shall constitute one and the same instrument.

17.19 Survival. Without limiting survival provisions which would otherwise be implied or construed under applicable law, the provisions of Sections 2.5, 5.4, 7.2, 7.3, 7.4, 8.2(b) and (c), 9.6, 10.6, 17.5, 17.11 and 17.16 hereof shall survive the termination of this Lease with respect to matters occurring prior to the expiration of this Lease.

17.20 Parking. Landlord agrees that the Common Areas, taken as a whole, shall include parking in amounts sufficient to satisfy the minimum parking requirements of the City of Redwood City applicable to the Center from time to time; that Tenant shall have the non-exclusive and non-reserved use of approximately three (3) automobile parking stalls per 1,000 rentable square feet of space in the Premises; and that there shall be no additional cost or charge to Tenant for the nonexclusive, non-reserved use of such parking by Tenant and its employees and invitees. Landlord represents to Tenant that the existing parking in the Center consists of approximately 3.0 spaces per 1,000 square feet. Landlord shall not agree with any other tenant of the Center that such tenant may have the use of parking spaces in excess of such tenant’s proportional share of the available parking spaces in the Center as it exists from time to time.

17.21 Warrant. Concurrently with the mutual execution of this Lease, Tenant shall issue and deliver to Landlord or Landlord’s designees (which may be any members, partners, shareholders or affiliates of Landlord or any affiliates of any such members, partners, shareholders or affiliates of Landlord) a warrant or warrants registered in the name of Landlord or Landlord’s designee(s) for the acquisition of an aggregate of Fifty-Five Thousand (55,000) shares of Tenant’s Series B preferred stock, which warrant(s) shall be in the form of Exhibit D attached hereto and incorporated herein by this reference. The warrant(s) shall have an exercise price per share equal to one hundred twenty-five percent (125%) of the price per share at which Tenant’s Series B preferred stock is issued in its first issuance to one or more institutional investors, and shall be exercisable for a period beginning on the date of issuance and ending on the seventh (7^th) anniversary of the date of issuance, subject to earlier termination upon certain events as specified in the form of warrant. If no Series B preferred stock has been issued by Tenant to one or more institutional investors within eighteen (18) months after the mutual execution of this Lease, then as set forth in the form of warrant attached hereto as Exhibit D, without further action by Tenant or by the holder of the warrant issued hereunder, such warrant shall automatically be deemed to entitle the holder to acquire, in lieu of such Series B preferred stock, an aggregate of Fifty-Five Thousand (55,000) shares of Tenant’s Series A preferred stock, with an exercise price per share equal to one hundred twenty-five percent (125%) of the price per share at which Tenant’s Series A preferred stock was previously issued to institutional investors. Landlord hereby designates its affiliate Kwacker Limited, a corporation organized and existing under the laws of England, as the entity to which Landlord’s warrant(s) hereunder should be issued in satisfaction of the foregoing provisions.

17.22 Approvals. Whenever this Lease requires an approval, consent, designation, determination, selection or judgment either by Landlord or Tenant, then except to the extent a

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different standard is expressly provided in the applicable provision where such requirement is set forth, such approval, consent, designation, determination, selection or judgment shall not be unreasonably withheld, conditioned or delayed.

[rest of page intentionally left blank]

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IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the day and year first set forth above.

“Landlord”			“Tenant”
SLOUGH REDWOOD CITY, LLC, a Delaware limited liability company			ONCOMED PHARMACEUTICALS, INC., a Delaware corporation
By:	Slough Estates USA Inc., a Delaware corporation, Its Manager		By:	/s/ Paul J. Hastings
			Its:	President & CEO
	By:	/s/ Jonathan M. Bergschneider	By:
		Jonathan M. Bergschneider Vice President	Its:

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EXHIBITS

EXHIBIT A-1	Site Plan (The Center)
EXHIBIT A-2	Building Plan/Service Annex
EXHIBIT B	Workletter
EXHIBIT C	Form of Acknowledgment of Rent Commencement Date
EXHIBIT D	Form of Warrant

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EXHIBIT A-1

SITE PLAN (THE CENTER)

[See attached two (2) pages.]

EXHIBIT A-2 TO LEASE

EXHIBIT A-2 TO LEASE

EXHIBIT B

WORKLETTER

[See attached.]

EXHIBIT B

WORKLETTER

This Workletter (“Workletter”) constitutes part of the Lease dated as of May 30, 2006 (the “Lease”) between SLOUGH REDWOOD CITY, LLC, a Delaware limited liability company (“Landlord”), and ONCOMED PHARMACEUTICALS, INC., a Delaware corporation (“Tenant”). The terms of this Workletter are incorporated in the Lease for all purposes.

1. Defined Terms. As used in this Workletter, the following capitalized terms have the following meanings:

(a) Approved TI Plans: As defined in Paragraph 2(a) hereof, plans and specifications prepared by the TI Architect for the Tenant Improvements and approved by the applicable parties in accordance with Paragraph 2 of this Workletter, subject to further modification from time to time to the extent provided in and in accordance with such Paragraph 2.

(b) Base Building: The existing Building shell and existing interior improvements which are to be modified and upgraded pursuant to Landlord’s Section 2.3 Work and delivered to Tenant, at Landlord’s expense, subject to such demolition (if any) of existing improvements and such construction of additional improvements as are required to be performed in connection with the construction of the Tenant Improvements. A detailed but not necessarily exhaustive description of the Base Building (including both existing elements and modifications or improvements to be constructed as part of Landlord’s Section 2.3 Work) is set forth in Schedule B-1 attached hereto and incorporated herein by this reference.

(c) Cost of Improvement: See definition in Paragraph 2(c) hereof.

(d) Final TI Working Drawings: See definition in Paragraph 2(a) hereof.

(e) Improvements: Collectively, Landlord’s Section 2.3 Work and the Tenant Improvements to be constructed pursuant to this Workletter.

(f) Landlord Delay: Any of the following types of delay in the completion of construction of Tenant’s Work (if any), but in each instance only to the extent that any of the following has actually and proximately caused substantial completion of Tenant’s Work to be delayed beyond the later of February 7, 2007 or the date by which the applicable Tenant’s Work would have been completed but for such delay:

(i) Any delay resulting from Landlord’s failure to furnish, in a timely manner, information reasonably requested by Tenant or by the TI Architect or TI General Contractor in connection with the design or construction of Tenant’s Work, or from Landlord’s failure to approve in a timely manner any matters requiring approval by Landlord; or

(ii) Any delay caused by Landlord (or Landlord’s contractors, agents or employees) materially interfering with the performance of Tenant’s Work.

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(g) Landlord’s Architect: DES Architects/Engineers, or any other architect selected by Landlord in its sole discretion, with respect to Landlord’s Section 2.3 Work.

(h) Landlord’s General Contractor: Hathaway Dinwiddie Construction Company, or any other general contractor selected by Landlord in its sole discretion, with respect to Landlord’s Section 2.3 Work.

(i) Landlord’s Section 2.3 Work: See definition in Section 2.3(a) of the Lease.

(j) Landlord’s TI Work: The Tenant Improvements to be constructed by Landlord pursuant to this Workletter.

(k) Landlord’s Work: Collectively, Landlord’s Section 2.3 Work and Landlord’s TI Work.

(l) Project Manager: Project Management Advisors, Inc., or any other project manager designated by Landlord in its sole discretion from time to time to act in an oversight, project management or other similar capacity on behalf of Landlord in connection with the design and/or construction of Landlord’s Section 2.3 Work and the Tenant Improvements.

(m) Punch List Work: Minor corrections of construction or decoration details, and minor mechanical adjustments, that are required in order to cause any applicable portion of the Tenant Improvements as constructed to conform to the Approved TI Plans in all material respects and that do not materially interfere with Tenant’s use or occupancy of the Building and the Property.

(n) Substantial Completion Certificate: See definition in Paragraph 3(a) hereof.

(o) Tenant Change Request: See definition in Paragraph 2(e)(ii) hereof.

(p) Tenant Delay: Any of the following types of delay in the completion of construction of Landlord’s Work, but in each instance, only to the extent that any of the following has actually and proximately caused substantial completion of Landlord’s Work to be delayed beyond the later of February 7, 2007 or the date by which Landlord’s Work would have been completed but for such delay:

(i) Any delay resulting from Tenant’s failure to furnish, in a timely manner, information reasonably requested by Landlord or by Project Manager in connection with the design or construction of Landlord’s Work, or from Tenant’s failure to approve in a timely manner any matters requiring approval by Tenant;

(ii) Any delay resulting from Tenant Change Requests initiated by Tenant, including any delay resulting from the need to revise any drawings or obtain further governmental approvals as a result of any such Tenant Change Request; or

(iii) Any delay of any other kind or nature caused by Tenant (or Tenant’s contractors, agents or employees) materially interfering with the performance of Landlord’s Work.

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(q) Tenant Improvements: The improvements to or within the Building (excluding the Base Building and Landlord’s Section 2.3 Work) shown on the Approved TI Plans from time to time and to be constructed by Tenant and/or Landlord, as applicable, pursuant to the Lease and this Workletter. A detailed but not necessarily exhaustive description of certain elements that the parties contemplate as being included within the Tenant Improvements is set forth in Schedule B-2 attached hereto and incorporated herein by this reference.

(r) Tenant’s Work: All of the Tenant Improvements (if any) which Landlord and Tenant mutually agree in writing shall be constructed by Tenant pursuant to this Workletter, and such other materials and improvements (if any) as Tenant deems necessary or appropriate for Tenant’s initial use and occupancy of the Building. The parties presently contemplate that substantially all of the Tenant Improvements will be constructed by Landlord and will constitute Landlord’s TI Work under this Workletter. However, in anticipation of the possibility that Tenant may perform some equipment installations or other minor improvements in the Premises during the initial construction phase, the definition of “Tenant’s Work” is retained and the provisions of this Workletter pertaining to such Tenant’s Work, as well as the provisions of Article 7 of the Lease, shall govern the performance of such work by Tenant. The parties acknowledge, nevertheless, that the foregoing allocation of responsibilities with respect to Tenant Improvements is subject to further discussion and modification by mutual agreement of the parties.

(s) TI Architect: The architect for the Landlord’s TI Work and for Tenant’s Work (if any), which architect shall be mutually selected and approved by Landlord and Tenant, such approval not to be unreasonably withheld, conditioned or delayed by either party. Upon such mutual approval, the TI Architect shall be engaged by Landlord to design the Tenant Improvements. Landlord and Tenant hereby mutually select and approve DES Architects + Engineers as the TI Architect.

(t) TI General Contractor: The general contractor for the Landlord’s TI Work and for Tenant’s Work (if any), which general contractor shall be mutually selected and approved by Landlord and Tenant, such approval not to be unreasonably withheld, conditioned or delayed by either party. Upon such mutual approval, the TI General Contractor shall be engaged by Landlord to construct the Tenant Improvements constituting Landlord’s TI Work and shall be engaged by Tenant to construct the Tenant Improvements constituting Tenant’s Work (if any). Notwithstanding Tenant’s right to approve and mutually select the TI General Contractor, the TI General Contractor with respect to Landlord’s TI Work shall be the contractor of Landlord only, and Tenant shall have no liability to such TI General Contractor. Landlord and Tenant hereby mutually select and approve Hathaway Dinwiddie Construction Company as the TI General Contractor with respect to Landlord’s TI Work. Landlord shall cause the TI General Contractor to construct Landlord’s TI Work on a cost of work plus fee basis, with a guaranteed maximum price reasonably approved by Tenant and with such fee (for overhead and profit) being limited to 2.1% of the total direct cost of construction, general conditions and insurance relating to Landlord’s TI Work.

(u) Unavoidable Delays: Delays due to acts of God, acts of public agencies, labor disputes, strikes, fires, freight embargoes, rainy or stormy weather, inability (despite the exercise of reasonable diligence) to obtain supplies, materials, fuels or permits, delays of contractors or

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subcontractors, or other causes or contingencies (excluding financial inability) beyond the reasonable control of Landlord or Tenant, as applicable.

(v) Capitalized terms not otherwise defined in this Workletter shall have the definitions set forth in the Lease.

2. Plans, Cost of Improvements and Construction. Landlord and Tenant shall comply with the procedures set forth in this Paragraph 2 in preparing, delivering and approving matters relating to the Tenant Improvements.

(a) Plans, Drawings and Specifications for Landlord’s Section 2.3 Work. Landlord shall promptly and diligently (subject to Tenant Delays and Unavoidable Delays) prepare or cause to be prepared all necessary plans, drawings and specifications for Landlord’s Section 2.3 Work. In the course thereof, Landlord shall use reasonable efforts to coordinate the design and construction of Landlord’s Section 2.3 Work with Tenant’s final interior layout and with the final plans and specifications for the Tenant Improvements, shall provide copies of the proposed plans, drawings and specifications for Landlord’s Section 2.3 Work to Tenant and shall consult reasonably and in good faith with Tenant regarding such plans, drawings and specifications, and regarding any changes therein proposed to be made by Landlord from time to time. Nevertheless, Landlord shall have the final authority with respect to the design of Landlord’s Section 2.3 Work and with respect to all plans, drawings and specifications relating thereto, and shall not be required to obtain Tenant’s consent to or approval of such plans, drawings or specifications or of any changes therein made by Landlord from time to time.

(b) Approved Plans and Working Drawings for Tenant Improvements. Tenant shall promptly and diligently (subject to Landlord Delays and Unavoidable Delays) develop with TI Architect a space plan for the Tenant Improvements and cause TI Architect to prepare proposed schematic plans for the Tenant Improvements. Tenant shall deliver copies of such proposed schematic plans to Landlord for Landlord’s approval, which shall not be unreasonably withheld, conditioned or delayed. Following mutual approval of such proposed schematic plans by Landlord and by Tenant (as so approved, the “Approved TI Plans”), Tenant shall then cause to be prepared, promptly and diligently (assuming timely delivery by Landlord of any information and decisions required to be furnished or made by Landlord in order to permit preparation of final working drawings), final detailed working drawings and specifications for the Tenant Improvements, including (without limitation) any applicable life safety, mechanical, electrical and plumbing working drawings and final architectural drawings (collectively, “Final TI Working Drawings”), which Final TI Working Drawings shall substantially conform to the Approved TI Plans. Tenant shall deliver copies of the Final TI Working Drawings to Landlord for Landlord’s approval, which shall not be unreasonably withheld, conditioned or delayed. Landlord shall promptly and diligently either approve Tenant’s proposed schematic plans or proposed Final TI Working Drawings, as applicable, or set forth in writing with particularity any changes necessary to bring the aspects of such proposed schematic plans or proposed Final TI Working Drawings into a form which will be reasonably acceptable to Landlord or, in the case of - the Final TI Working Drawings, into substantial conformity with the Approved TI Plans. Notwithstanding any other provisions of this paragraph, Landlord reserves the right to condition its approval of the proposed schematic plans and/or Final TI Working Drawings upon reasonable specific modifications to reasonably facilitate future uses of the Building. Upon approval of the

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Final TI Working Drawings by Landlord and Tenant, the Final TI Working Drawings shall be deemed to be incorporated in and considered part of the Approved TI Plans, superseding (to the extent of any inconsistencies) any inconsistent features of the previously existing Approved TI Plans.

(c) Approved Plans and Working Drawings for Any Other Tenant’s Work. To the extent Tenant wishes to perform, in the course of the initial build-out of the Premises, any alterations, additions or improvements which are not part of the Tenant Improvements, Tenant shall proceed in the same manner set forth in Paragraph 2(b) above to cause plans, specifications and working drawings for such alterations, additions and improvements to be prepared and delivered to Landlord for approval (which approval shall not be unreasonably withheld, conditioned or delayed by Landlord).

(d) Cost of Improvements. “Cost of Improvement” shall mean, with respect to any item or component for which a cost must be determined in order to allocate such cost, or an increase in such cost, to Landlord and/or Tenant pursuant to this Workletter, the sum of the following (unless otherwise agreed in writing by Landlord and Tenant with respect to any specific item or component or any category of items or components): (i) all sums paid to contractors or subcontractors for labor and materials furnished in connection with construction of such item or component; (ii) all costs, expenses, payments, fees and charges (other than penalties) paid or incurred to or at the direction of any city, county or other governmental or quasi-governmental authority or agency which are required to be paid in order to obtain all necessary governmental permits, licenses, inspections and approvals relating to construction of such item or component; (iii) engineering and architectural fees for services rendered in connection with the design and construction of such item or component (including, but not limited to, the applicable Architect for such item or component and an electrical engineer, mechanical engineer and civil engineer); (iv) sales and use taxes; (v) testing and inspection costs; (vi) the cost of power, water and other utility facilities and the cost of collection and removal of debris required in connection with construction of such item or component; (vii) all other “hard” and “soft” costs incurred in the construction of such item or component in accordance with the applicable Approved TI Plans (if applicable) and this Workletter; and (viii) a reasonable allocation of a portion of the project management fee payable to Project Manager in connection with Project Manager’s activities on behalf of Landlord as set forth in Paragraph 2(h) below.

(i) Notwithstanding anything to the contrary in this Workletter, Cost of Improvement allocable to Tenant shall not include, Landlord shall be solely responsible for, and the Tenant Improvement Allowance shall not be used for any of the following: (A) costs incurred to remove from the Premises, the Building and/or the Center any hazardous substances, hazardous wastes and pollutants existing therein prior to the Rent Commencement Date, except to the extent (if any) that such hazardous substances, hazardous wastes or pollutants were brought onto or released onto the Premises, the Building or the Center through the acts or omissions of Tenant or its employees, agents or contractors; (B) costs incurred to perform Landlord’s Section 2.3 Work (including, without limitation, any ADA or other legal compliance costs associated with or triggered by Landlord’s Section 2.3 Work, except to the extent [if any] otherwise expressly provided in Section 2.3(c) of the Lease); (C) costs for improvements which are not shown on or described in the Approved TI Plans, unless otherwise approved by Tenant; (D) attorneys’ fees incurred by Landlord in connection with the negotiation of construction

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contracts, and attorneys’ fees, experts’ fees and other costs incurred by Landlord in connection with disputes with third parties; (E) interest and other financing costs incurred by Landlord in connection with any financing of construction costs or Tenant Improvements; (F) costs of Landlord’s TI Work incurred as a consequence of any delay (other than Unavoidable Delay or Tenant Delay), construction defects, or default by any contractor or subcontractor performing any part of Landlord’s TI Work; (G) costs actually recovered by Landlord on account of warranties and insurance (for which purpose Landlord agrees to pursue, with reasonable diligence, recovery of any amounts which appear to be reasonably recoverable on account of warranties and insurance); (H) restoration costs in excess of insurance proceeds recovered with respect to any casualty occurring in the course of construction of Landlord’s TI Work; (I) penalties and late charges attributable to Landlord’s failure to pay, when due, construction costs for which Landlord is responsible under this Workletter, including (but not limited to) any failure to make timely disbursements of the Tenant Improvement Allowance following satisfaction of all applicable conditions to the making of such disbursements; (J) off-site management or other general overhead costs incurred by Landlord; (K) construction management fees and charges paid to Landlord, to any affiliate of Landlord, or to any Project Manager for Landlord, except for the Project Manager’s fee described in Paragraph 2(h) of this Workletter; and (L) wages, labor and/or overhead for overtime or premium time, except to the extent such charges can be accommodated within the approved budget and guaranteed maximum price construction contract or are expressly provided for under or included in the cost provisions of an approved Tenant Change Request as defined below.

(ii) For purposes of this Paragraph 2(d) and of Section 2.3 of the Lease, the parties wish to clarify their intention with respect to the allocation of costs of compliance with ADA or other code requirements or other legal compliance requirements (collectively, “Legal Compliance Costs”) as follows: If Legal Compliance Costs arise from legal requirements which have not previously been applicable to or enforced against the Building but which become applicable to or enforceable against the Building in connection with the permitting and construction of the Tenant Improvements solely because of the extent, cost or value of the Tenant Improvements and/or because of the mere fact that permits are being obtained for the Tenant Improvements, and not because of the particular nature or design of the Tenant Improvements, then Landlord shall bear such Legal Compliance Costs without any charge against the Tenant Improvement Allowance and without any inclusion of such Legal Compliance Costs in the Cost of Improvements for the Tenant Improvements. Landlord specifically agrees that ADA-related compliance costs for the existing toilet cores in the Premises will be part of the Legal Compliance Costs borne by Landlord pursuant to the preceding sentence. If Legal Compliance Costs arise from legal requirements which become applicable to or enforceable against the Building as a result of the particular nature or design of the Tenant Improvements (such as, but not limited to, installation of improvements or equipment which trigger seismic, vibration, firewall, sprinkler, life safety, ventilation or other requirements that would not apply in the absence of the installation and use of such specific improvements or equipment), then Tenant shall be responsible for such Legal Compliance Costs and such Legal Compliance Costs shall be part of the Cost of Improvements for the Tenant Improvements, chargeable against the Tenant Improvement Allowance to the extent they are not excluded from eligibility for payment or reimbursement from the Tenant Improvement Allowance and to the extent the Tenant Improvement Allowance has not otherwise been spent or fully committed at the time.

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(e) Budgeting. Following approval by Landlord and Tenant of the Final TI Working Drawings and the selection of subcontractors as provided in this Workletter, Landlord shall prepare an estimated budget for the Tenant Improvements. Tenant shall have five (5) business days after the receipt of such budget to approve or disapprove such estimated budget. Further, if Tenant disapproves the estimated budget and if the Approved TI Plans must be modified to change the scope of the work or to modify finishes or materials shown on the Approved TI Plans in order to reduce the cost of the Tenant Improvements as shown on the estimated budget to a level satisfactory to Tenant, then Tenant shall cause the TI Architect to modify the Approved TI Plans, at Tenant’s expense (but chargeable against the Tenant Improvement Allowance to the extent funds are available under the TI Allowance for that purpose), in order to achieve such cost reduction. Any and all revisions to the Approved TI Plans shall be subject to Landlord’s approval (which approval shall not be unreasonably withheld, conditioned or delayed) in the same manner provided in Paragraph 2(b) above. Notwithstanding anything to the contrary in this Workletter, the parties agree that if Tenant disapproves the initial estimated budget and if modifications of the Approved TI Plans are then considered or implemented on a “value engineering” basis in order to attempt to address Tenant’s objections, then on a one-time basis, any period of not more than ten (10) business days (in the aggregate) of actual delay in the completion of Landlord’s TI Work proximately caused by such consideration of or request for revisions of the Approved TI Plans shall not be considered a Tenant Delay under this Workletter.

(f) Construction of Tenant Improvements. Promptly following approval of the Final TI Working Drawings, Landlord shall apply for and use reasonable efforts to obtain the necessary permits and approvals to allow construction of Landlord’s TI Work. Upon receipt of such permits and approvals, Landlord shall, at Tenant’s expense (subject to the application of the Tenant Improvement Allowance provided in this Workletter, and subject to any other applicable provisions of the Lease or of this Workletter expressly making any specific item of expense or cost the responsibility of Landlord), diligently construct and complete Landlord’s TI Work substantially in accordance with the Approved TI Plans, subject to Unavoidable Delays and Tenant Delays (if any). Such construction shall be performed in a good and workmanlike manner and shall conform to all applicable governmental codes, laws and regulations in force at the time such work is completed. Without limiting the generality of the foregoing, Landlord shall be responsible for compliance of Landlord’s TI Work with the requirements of the Americans with Disabilities Act and all similar or related requirements pertaining to access by persons with disabilities, but nothing in this sentence shall be construed to make Landlord responsible for bearing the cost of any such compliance, to the extent the compliance work is reasonably attributable to or related to the particular nature or design of the Tenant Improvements or is for any other reason expressly made Tenant’s cost or responsibility under any applicable provision of the Lease or of this Workletter. Landlord shall have the right, in its sole discretion, to decide whether and to what extent to use union labor on or in connection with Landlord’s Work, and shall use the TI General Contractor to construct all of Landlord’s TI Work. Landlord and Tenant shall each have a right to approve all subcontractors engaged in connection with the construction of the Tenant Improvements and to review and approve all competitive bids for any elements of the Tenant Improvements, such approval in each instance not to be unreasonably withheld, conditioned or delayed by either party.

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(g) Changes.

(i) If Landlord determines at any time that changes in the Final TI Working Drawings or in any other aspect of the Approved TI Plans relating to any Landlord’s TI Work arc required as a result of applicable law or governmental requirements, or are required at the insistence of any other third party whose approval may be required with respect to the Tenant Improvements, or are required as a result of unanticipated conditions encountered in the course of construction, then Landlord shall promptly (A) advise Tenant of such circumstances and (B) cause revised Approved TI Plans and/or Final TI Working Drawings, as applicable, reflecting such changes to be prepared by the TI Architect and submitted to Tenant for Tenant’s information, review and approval, which approval shall not be unreasonably withheld, conditioned or delayed. Landlord shall concurrently notify Tenant of any estimated additional cost or delay associated with such proposed changes. Notwithstanding the foregoing provisions, Tenant shall not have the right to disapprove any such changes necessitated by applicable law or as a condition of any required governmental or other third-party approvals or consents or as a result of unanticipated conditions, but to the extent Tenant identifies to Landlord any concerns arising out of any such requirements, conditions or changes described in this sentence, Landlord and Tenant shall cooperate reasonably, diligently and in good faith to discuss possible changes in the nature or scope of the Tenant Improvements that might minimize or avoid the effects of such requirements, conditions or changes. Upon completion of any changes in the Approved TI Plans approved or deemed approved by Landlord and Tenant as a result of the circumstances and processes described in the preceding sentences, the Approved TI Plans shall be deemed to be modified accordingly. Landlord shall have no liability or responsibility for any costs or cost increases incurred by Tenant as a result of such required changes.

(ii) If Tenant at any time desires any changes, alterations or additions to the Approved TI Plans with respect to any of the Tenant Improvements, Tenant shall submit a detailed written request to Landlord specifying such changes, alterations or additions (a “Tenant Chance Request”). Upon receipt of any such request, Landlord shall promptly notify Tenant of (A) whether the matters proposed in the Tenant Change Request are approved by Landlord (which approval shall not be unreasonably withheld, conditioned or delayed by Landlord), (B) Landlord’s estimate of the number of days of delay, if any, which shall be caused by such Tenant Change Request if implemented (including, without limitation, delays due to the need to obtain any revised plans or drawings and any governmental approvals), and (C) Landlord’s estimate of the increase, if any, which shall occur in the Cost of Improvement for the items or components affected by such Tenant Change Request if such Tenant Change Request is implemented (including, but not limited to, any costs of compliance with laws or governmental regulations that become applicable because of the implementation of the Tenant Change Request). If Landlord approves the Tenant Change Request and Tenant notifies Landlord in writing, within five (5) business days after receipt of such notice of approval from Landlord, of Tenant’s approval of the Tenant Change Request (including the estimated delays and cost increases, if any, described in Landlord’s notice), then Landlord shall cause such Tenant Change Request to be implemented and Tenant shall be responsible for all actual costs or cost increases and all actual schedule delays (if any) resulting from or attributable to the implementation of the Tenant Change Request, subject to the application of the Tenant Improvement Allowance. If Tenant fails to notify Landlord in writing of Tenant’s approval of such Tenant Change Request

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within said five (5) business day period, then such Tenant Change Request shall be deemed to be withdrawn and shall be of no further effect.

(iii) If Tenant at any time desires to make any changes, alterations or additions to the approved plans for any other Tenant’s Work as described in Paragraph 2(c) above, such changes, alterations or additions shall be presented to Landlord and shall be subject to approval by Landlord in the same manner as the original plans submitted to and approved by Landlord pursuant to such Paragraph 2(c).

(h) Project Management. Unless and until revoked by Landlord by written notice delivered to Tenant, Landlord hereby (i) delegates to Project Manager the authority to oversee the design and manage the construction of the Tenant Improvements on behalf of Landlord and to exercise all approval rights, supervisory rights and other rights and powers of Landlord under this Workletter with respect to the design and construction of the Tenant Improvements, and (ii) requests that Tenant work with Project Manager with respect to any and all logistical or other coordination matters arising in the course of design and construction of the Tenant Improvements, in which regard Project Manager’s role on behalf of Landlord may include (but need not be limited to) facilitating and assisting in coordination between teams performing the Base Building portion of Landlord’s Work and teams constructing the Tenant Improvements, managing the TI General Contractor, reviewing and processing requests for disbursement of the Tenant Improvement Allowance, and monitoring Landlord’s and Tenant’s performance of their respective obligations under this Workletter and under the Lease in connection with the design and construction of the Tenant Improvements. Tenant acknowledges the foregoing delegation and request, and agrees to cooperate reasonably with Project Manager as Landlord’s representative pursuant to such delegation and request. Landlord shall be fully liable and responsible for all acts and omissions of Project Manager and for the payment and performance of all of Landlord’s obligations under the Lease and under this Workletter, notwithstanding such delegation of authority to Project Manager; however, Landlord’s engagement of Project Manager and delegation of authority to Project Manager for the management services described in this paragraph shall not cause Landlord to incur or be subject to any additional or broader obligations or responsibilities for construction and delivery of the Tenant Improvements than those obligations and responsibilities that are expressly documented or assigned to Landlord elsewhere in the Lease or in this Workletter. Project Manager’s fees for its services on behalf of Landlord in connection with the Tenant Improvements shall be charged at the rate of Three Dollars ($3.00) per square foot of space in the Premises (determined in accordance with Section 3.1(c) of the Lease) and shall be charged against the Tenant Improvement Allowance, and Landlord shall not charge Tenant or the Tenant Improvement Allowance for any other supervisory or review costs with respect to the design or construction of the Tenant Improvements, except to the extent [if any] that any increase in Project Manager’s fees is expressly provided for under or included in the cost provisions of an approved Tenant Change Request.

3. Completion.

(a) When Landlord receives written certification from the TI Architect that construction of Landlord’s TI Work has been substantially completed in accordance with the Approved TI Plans (except for Punch List Work), Landlord shall prepare and deliver to Tenant a certificate signed by both Landlord and the TI Architect (the “TI Substantial Completion

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Certificate”) certifying that the construction of Landlord’s TI Work has been substantially completed in accordance with the Approved TI Plans and this Workletter in all material respects, subject only to completion of Punch List Work, and specifying the date of that completion. To the extent the construction of Landlord’s Larc Work (as defined in the Lease) takes longer than construction of the balance of Landlord’s TI Work, the TI Substantial Completion Certificate may be submitted upon substantial completion of all of Landlord’s TI Work other than Landlord’s Larc Work, and a separate substantial completion certificate with respect to Landlord’s Larc Work (the “Larc Substantial Completion Certificate”) may be submitted at such later time as Landlord’s Larc Work is substantially completed in accordance with the Approved TI Plans and this Workletter in all material respects, subject to completion of Punch List Work.

(b) Promptly following delivery of the TI Substantial Completion Certificate and/or Larc Substantial Completion Certificate for the respective portions of Landlord’s TI Work, Project Manager or other representatives of Landlord shall conduct one or more “walkthroughs” of the Premises with Tenant and Tenant’s representatives, to identify any items of Punch List Work that may require correction and to prepare a joint punch list reflecting any such items, following which Landlord shall diligently complete the Punch List Work reflected in such joint punch list. At any time within forty-five (45) days after delivery of the applicable Substantial Completion Certificate, Tenant shall be entitled to submit one or more lists to Landlord supplementing such joint punch list by specifying any additional items of Punch List Work to be performed on the applicable Landlord’s TI Work, and upon receipt of such list(s), Landlord shall diligently complete such additional Punch List Work. All completion of Punch List Work by Landlord shall be part of the Cost of Improvement for the applicable Tenant Improvements and shall be at Tenant’s expense, subject to application of the Tenant Improvement Allowance and subject to any other applicable provisions of this Workletter making any specific item of expense or cost the responsibility of Landlord. Promptly after Landlord provides Tenant with the applicable Substantial Completion Certificates and completes all applicable Punch List Work for the Premises, Landlord shall cause the recordation of a Notice of Completion (as defined in Section 3093 of the California Civil Code) with respect to Landlord’s Work in the Premises.

(c) Effective upon delivery of the applicable Substantial Completion Certificates and delivery of the Premises by Landlord to Tenant, and subject to completion of any Punch List Work as described above, Landlord warrants to Tenant as follows: (i) Landlord’s TI Work has been constructed in a good and workmanlike manner, using new materials of good quality (except to the extent, if any, that reuse of existing materials is expressly provided for in the Approved TI Plans), and in accordance with the Approved TI Plans in all material respects (provided that except with respect to Punch List Items, which shall be governed by Paragraph 3(b) above, and except with respect to latent defects, Tenant’s failure to notify Landlord in writing regarding any alleged defects in the Landlord’s TI Work (x) in the case of elements of Landlord’s TI Work which constitute new construction with new materials, within one (1) year after delivery of the applicable Substantial Completion Certificate for such Landlord’s TI Work, and (y) in the case of elements of Landlord’s TI Work which constitute re-use of existing materials from the Premises as they existed prior to commencement of Landlord’s TI Work, within one hundred eighty (180) days after delivery of the applicable Substantial Completion Certificate for such Landlord’s TI Work, shall in each such respective case give rise to a conclusive and irrebuttable presumption that the applicable portion of Landlord’s TI Work

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complies with the warranty set forth in this clause (i) in all respects); and (ii) Landlord’s TI Work complies with all laws, rules, regulations, codes, ordinances, requirements, covenants, conditions and restrictions applicable thereto at the time of such delivery. Landlord shall cooperate with Tenant in a commercially reasonable manner to assist in enforcing, for the benefit of Tenant, all construction, product and equipment warranties and guaranties obtained by Landlord with respect to any element of Landlord’s TI Work. TENANT ACKNOWLEDGES THAT THE WARRANTIES AND OBLIGATIONS CONTAINED IN THIS PARAGRAPH 3 AND IN SECTION 2.3 OF THE LEASE (TO THE EXTENT APPLICABLE TO LANDLORD’S TI WORK) ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO LANDLORD’S TI WORK, AND THAT LANDLORD MAKES NO OTHER WARRANTIES WITH RESPECT TO LANDLORD’S TI WORK EXCEPT AS EXPRESSLY SET FORTH IN THIS PARAGRAPH 3 OR IN SECTION 2.3 OF THE LEASE (TO THE EXTENT APPLICABLE TO LANDLORD’S TI WORK). Notwithstanding anything to the contrary in the Lease, in the Acknowledgment of Rent Commencement Date attached to the Lease, or in this Workletter, Tenant’s acceptance of the Premises shall not be deemed a waiver of the Landlord warranties and obligations set forth in this Paragraph 3 or in Section 2.3 of the Lease, and subject to the provisions of Paragraph 3(b) above with respect to Punch List Work, Landlord shall promptly repair or cause to be repaired all violations of the warranties and obligations set forth in this Paragraph 3(c) at Landlord’s sole cost and expense.

(d) Notwithstanding any other provisions of this Workletter or of the Lease, if Landlord is actually delayed in substantially completing any of Landlord’s Work as a proximate result of any Tenant Delay, and if such delay results in any actual delay in the Rent Commencement Date as determined under Section 2.1(a) of the Lease, then notwithstanding any other provisions of Section 2.1(a) of the Lease to the contrary, the amount of any actual delay in substantial completion of Landlord’s TI Work directly and proximately attributable to such Tenant Delay shall be ignored in calculating the Rent Commencement Date, and the Rent Commencement Date shall instead be deemed to occur on the date it would have otherwise occurred without the period of actual delay directly and proximately attributable to such Tenant Delay.

4. Payment of Costs.

(a) Landlord’s Work. Except as otherwise expressly provided in this Workletter, in the Lease or by mutual written agreement of Landlord and Tenant, (i) the cost of design and construction of Landlord’s TI Work shall be at Tenant’s sole cost and expense, including any costs or cost increases incurred as a result of Unavoidable Delays, governmental requirements or unanticipated conditions, subject to application of the Tenant Improvement Allowance in accordance with this Workletter; and (ii) the cost of design and construction of Landlord’s Section 2.3 Work shall be at Landlord’s sole cost and expense, including any costs or cost increases incurred as a result of Unavoidable Delays, governmental requirements or unanticipated conditions. To the extent the estimated entire amount that Landlord is committed to pay (under contracts and obligations in effect from time to time) with respect to Landlord’s TI Work exceeds the net Tenant Improvement Allowance available pursuant to this Workletter, the excess Cost of Improvements for Landlord’s TI Work, over and above the Tenant Improvement Allowance, shall be payable by Tenant on a pro rata basis as illustrated in the diagram attached

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hereto as Schedule B-4 and incorporated herein by this reference (the “TI Allowance Disbursement Diagram”). To the extent the final net Cost of Improvement with respect to Landlord’s TI Work is not covered by the Tenant Improvement Allowance plus any payments made by Tenant from time to time during the course of construction, the remaining balance of the final net Cost of Improvement of Landlord’s TI Work shall be reimbursed by Tenant to Landlord in cash within thirty (30) days after final completion of Landlord’s TI Work (including any applicable Punch List Work), subject to the provisions of subparagraph (c) below.

(b) Tenant’s Work. Subject to any restrictions, conditions or limitations expressly set forth in this Workletter or in the Lease or as otherwise expressly provided by mutual written agreement of Landlord and Tenant, the cost of construction of the Tenant Improvements shall be paid or reimbursed by Landlord up to a maximum contribution by Landlord equal to One Hundred Twenty-Five Dollars ($125.00) per square foot times the square footage of the Premises as determined pursuant to Section 3.1(c) of the Lease, or approximately Five Million Seven Hundred Nine Thousand Seven Hundred Fifty Dollars ($5,709,750) in total (such maximum amount, the “Tenant Improvement Allowance”), less any reduction in or charge against such sums pursuant to any applicable provisions of the Lease or of this Workletter. Except as otherwise expressly provided in this Workletter, in the Lease or by mutual written agreement of Landlord and Tenant, Tenant shall be responsible, at its sole cost and expense, for payment of the entire Cost of Improvements of the Tenant Improvements in excess of the Tenant Improvement Allowance, including (but not limited to) any costs or cost increases incurred as a result of Unavoidable Delays, governmental requirements or unanticipated conditions, but Tenant shall be entitled to use or apply the entire Tenant Improvement Allowance for the Tenant Improvements (subject to any applicable restrictions, conditions, limitations, reductions or charges as described above) prior to being required to expend any of Tenant’s own funds on an unreimbursed basis for the Tenant Improvements. The funding of the Tenant Improvement Allowance shall be made on a monthly basis or at other convenient intervals mutually approved by Landlord and Tenant and in all other respects shall be based on such commercially reasonable disbursement conditions and procedures as Landlord, Project Manager and Landlord’s lender (if any) may reasonably prescribe (which conditions may include, without limitation, delivery of invoices and/or other evidence reasonably satisfactory to Landlord or Project Manager that Landlord or Tenant, as applicable, has expended or incurred expenses for the design and construction of Tenant Improvements for which the Tenant Improvement Allowance is eligible to be expended or applied, and delivery of conditional or unconditional lien releases from all parties performing the applicable work), which procedures shall (without limitation) be generally consistent with the TI Allowance Disbursement Diagram. Since the parties intend that Landlord will perform most (if not all) of the Tenant Improvements and will hold the contracts for the same, Landlord will generally make direct payment of amounts due to the TI General Contractor, the TI Architect and others under applicable contracts and will charge such payments against the Tenant Improvement Allowance, but prior to making any such payments, Landlord will first present Tenant with a copy of the full “draw request package” (including invoices, certifications, lien releases and similar items substantially comparable to the documentation that would be required from Tenant with respect to any funding of portions of the Tenant Improvement Allowance to be applied to Tenant’s Work, if any) and will request Tenant’s approval (not to be unreasonably withheld, conditioned or delayed) of the proposed disbursements. To the extent Tenant objects to any such proposed disbursements, Landlord shall still be entitled to make payments to the extent Landlord in its sole discretion determines that such payment is required or

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appropriate, but amounts not approved by Tenant (so long as such approval is not unreasonably withheld or conditioned) shall not be chargeable against the Tenant Improvement Allowance. Notwithstanding the foregoing provisions, (i) under no circumstances shall the Tenant Improvement Allowance or any portion thereof be used or useable for any moving or relocation expenses of Tenant, or for any Cost of Improvement (or any other cost or expense) associated with any moveable furniture, trade fixtures, personal property or any other item or element which, under the applicable provisions of the Lease, will not become Landlord’s property and remain with the Building upon expiration or termination of the Lease, and (ii) any portion of the Tenant Improvement Allowance which has not been claimed or drawn by Tenant within eighteen (18) months after the Rent Commencement Date shall expire and shall no longer be available to Tenant thereafter.

(c) Upon completion of Landlord’s TI Work, Landlord shall submit promptly to Tenant a final and detailed accounting of the Cost of Improvements for Landlord’s TI Work, and of the disbursement of the Tenant Improvement Allowance. At any time within three (3) months after receipt of such accounting, Tenant shall be entitled, upon reasonable written notice to Landlord and during normal business hours at Landlord’s office, at Project Manager’s office or at such other place or places in the Bay Area as Landlord may reasonably designate, to inspect and examine the books, records and supporting documents of Landlord and Project Manager relating to the construction of Landlord’s TI Work and the disbursement of the Tenant Improvement Allowance, to the extent reasonably necessary to determine the accuracy of such accounting. During the same period Tenant may also elect, by written notice to Landlord, to request an independent audit of such books and records. Any such independent audit shall be conducted by a certified public accountant reasonably acceptable to both Landlord and Tenant or, if the parties are unable to agree, by a certified public accountant appointed by the Presiding Judge of the San Mateo County Superior Court upon the application of either Landlord or Tenant (with notice to the other party). In either case, such certified public accountant shall be one who is not then employed in any capacity by Landlord or Tenant or any of their respective affiliates. If it is determined, by mutual agreement of Landlord and Tenant or by independent audit, that the Cost of Improvement for Landlord’s TI Work or the amount disbursed by Landlord from the Tenant Improvement Allowance was incorrect, then the appropriate party shall make an appropriate corrective payment within thirty (30) days after the final determination thereof. All costs and expenses of the audit shall be paid by Tenant unless the audit shows that Landlord overstated the Cost of Improvements for Landlord’s TI Work by more than five percent (5%), in which event Landlord shall pay all costs and expenses of the audit. Each party agrees to maintain the confidentiality of the findings of any audit in accordance with the provisions of this paragraph (c).

5. Tenant’s Work. Tenant shall construct and install Tenant’s Work (if any) substantially in accordance with the plans and specifications approved by Landlord for such work. Tenant’s Work shall be performed in accordance with, and shall in all respects be subject to, the terms and conditions of the Lease (to the extent not inconsistent with this Workletter), and shall also be subject to the following conditions:

(a) Contractor Requirements. The contractor engaged by Tenant for Tenant’s Work, and any subcontractors, shall be duly licensed in California and shall be subject to Landlord’s prior written approval (in accordance with, and to the extent provided in, Paragraph 1(t) above).

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Tenant shall engage only union contractors for the construction of Tenant’s Work and for the installation of Tenant’s fixtures and equipment in the Building, and shall require all such contractors engaged by Tenant, and all of their subcontractors, to use only union labor on or in connection with such work, except to the extent Landlord determines, in its reasonable discretion, that the use of non-union labor would not create a material risk of labor disputes, picketing or work interruptions at the Center, in which event Landlord shall, to that extent, waive such union labor requirement at Tenant’s request.

(b) Costs and Expenses of Tenant’s Work. Subject to Landlord’s payment or reimbursement obligations under this Workletter and the Lease, Tenant shall promptly pay all costs and expenses arising out of the performance of Tenant’s Work (including the costs of permits) and shall furnish Landlord with evidence of payment on request. Tenant shall provide Landlord with ten (10) days prior written notice before commencing any Tenant’s Work. On completion of Tenant’s Work, Tenant shall deliver to Landlord a release and unconditional lien waiver executed by each contractor, subcontractor and materialman involved in the design or construction of Tenant’s Work.

(c) Tenant’s Indemnification. Tenant shall indemnify, defend (with counsel reasonably satisfactory to Landlord) and hold Landlord harmless from all suits, claims, actions, losses, costs and expenses (including, but not limited to, claims for workers’ compensation, attorneys’ fees and costs) based on personal injury or property damage or contract claims (including, but not limited to, claims for breach of warranty) arising from the performance of Tenant’s Work, except to the extent (i) any such claims or matters arise from (A) negligence or willful misconduct or omission by Landlord or its agents, employees or contractors or (B) Landlord’s material breach of its obligations under this Workletter or the Lease, or (ii) any such specific items of costs or expenses are expressly made the responsibility of Landlord under any other applicable provisions of this Workletter (provided that the exception set forth in this clause (ii) shall not apply to the extent the applicable items of costs or expenses would not have arisen or been incurred except for the negligence or willful misconduct or omission of Tenant or its agents, employees or contractors). Subject to Section 10.4 of the Lease, Tenant shall repair or replace (or, at Landlord’s election, reimburse Landlord for the cost of repairing or replacing) any portion of Landlord’s Work and/or any of Landlord’s real or personal property or equipment that is damaged, lost or destroyed in the course of or in connection with the performance of Tenant’s Work.

(d) Insurance. Tenant’s contractors shall obtain and provide to Landlord certificates evidencing workers’ compensation, public liability and property damage insurance in amounts and forms and with companies reasonably satisfactory to Landlord, and Tenant shall provide to Landlord certificates evidencing Tenant’s compliance with the insurance requirements of Article 10 of the Lease (except to the extent any such requirements by their terms are clearly relevant only after Tenant’s commencement of business operations on the Premises), including, without limitation, the requirements of Section 10.1(f) of the Lease with respect to builder’s risk insurance on any Tenant Improvements being constructed by Tenant as part of Tenant’s Work. In addition, to the extent Landlord or Project Manager advises Tenant of any specific insurance requirements with respect to Tenant’s Work that are commercially reasonable and customary during a “course of construction” period (such as, but not limited to, designation of specified “additional insureds” who would not ordinarily be required to be named in that capacity during

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the Lease term under Article 10 of the Lease), Tenant shall comply and/or cause its contractors to comply, as applicable, with such additional requirements.

(e) Rules and Regulations. Tenant and Tenant’s contractors shall comply with any other rules, regulations and requirements that Landlord or Project Manager or Landlord’s General Contractor or the TI General Contractor may reasonably impose with respect to the performance of Tenant’s Work. Tenant’s agreement with Tenant’s contractors shall require each contractor to provide daily cleanup of the construction area to the extent that such cleanup is necessitated by the performance of Tenant’s Work.

(f) Risk of Loss. All materials, work, installations and decorations of any nature brought onto or installed in the Premises, by or at the direction of Tenant or in connection with the performance of Tenant’s Work, prior to the Rent Commencement Date shall be at Tenant’s risk, and neither Landlord nor any party acting on Landlord’s behalf shall be responsible for any damage, loss or destruction thereof from any cause whatsoever other than negligence or willful misconduct or omission by Landlord or its agents, employees or contractors.

(g) Condition of Tenant’s Work. All work performed by Tenant shall be performed in a good and workmanlike manner, and shall be completed in compliance with the plans approved by Landlord for such Tenant’s Work in all material respects and in compliance with all applicable governmental laws, ordinances, codes and regulations in force at the time such work is completed. Without limiting the generality of the foregoing, Tenant shall be responsible for compliance of all Improvements designed and constructed by Tenant with the requirements of the Americans with Disabilities Act and all similar or related requirements pertaining to access by persons with disabilities.

6. No Agency. Nothing contained in this Workletter shall make or constitute Tenant as the agent of Landlord.

7. Survival. Without limiting any survival provisions which would otherwise be implied or construed under applicable law, the provisions of Paragraph 5(c) of this Workletter shall survive the termination of the Lease with respect to matters occurring prior to expiration of the Lease.

8. Miscellaneous. All references in this Workletter to a number of days shall be construed to refer to calendar days, unless otherwise specified herein. In all instances where Landlord’s or Tenant’s approval is required, if no written notice of disapproval is given within the applicable time period, at the end of that period Landlord or Tenant, as applicable, shall be deemed to have given approval (unless the provision requiring Landlord’s or Tenant’s approval expressly states that non-response is deemed to be a disapproval or withdrawal of the pending action or request, in which event such express statement shall be controlling over the general statement set forth in this sentence) and the next succeeding time period shall commence. If any item requiring approval is disapproved by Landlord or Tenant (as applicable) in a timely manner, the procedure for preparation of that item and approval shall be repeated.

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IN WITNESS WHEREOF, the parties have executed this Workletter concurrently with and as of the date of the Lease.

“Landlord”			“Tenant”
SLOUGH REDWOOD CITY, LLC, a Delaware limited liability company			ONCOMED PHARMACEUTICALS, INC., a Delaware corporation
By:	Slough Estates USA Inc., a Delaware corporation, Its Manager		By:	/s/ Paul J. Hastings
			Its:	/s/ President & CEO
	By:	/s/ Jonathan M. Bergschneider
		Jonathan M. Bergschneider
		Vice President	By:
			Its:

Attachments:

Schedule B-1        800 Chesapeake Base Building

Schedule B-2        800 Chesapeake Tenant Improvements

Schedule B-3        Construction Schedule (preliminary)

Schedule B-4        TI Allowance Disbursement Diagram

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Schedule B-1 to Workletter

800 CHESAPEAKE BASE BUILDING

The “Base Building” as defined in the Workletter to which this Schedule B-1 is attached shall consist of the following:

Existing building envelope and waterproofing (the Building “shell”), except as specifically indicated as being included in Tenant Improvements under Schedule B-2, including: reinforced grade beam foundation on precast concrete piles; ground floor is a reinforced structural concrete slab supported by precast concrete piles; elevated floors consist of metal decking with concrete topping slab; roof structure consists of glulam beams and girders with plywood sheathing; visual mechanical roof screen; roof membrane to be new built-up system, flashing and sealants; building structural framing consists of open web steel joists, girders, columns with a non-bearing exterior EIFS and curtain wall; seismic system utilizing steel braced frames; roof live load is 20 PSF; floor to floor heights of 14 feet, all floors

New Service Annex including foundations, structure, enclosure and waterproofing. This includes base building life safety systems (electrical, mechanical, fire protection, and plumbing systems) required by code. The Service Annex floor is designed for 100 PSF uniform live load capacity (reducible as allowed by code) plus the weight of “normal” lab mechanical equipment. The Service Annex roof is designed for 20 PSF uniform live load capacity (reducible as allowed by code) plus the weight of “normal” lab mechanical equipment

New structural foundation and visual screen walls for emergency generator/chemical storage enclosure

Existing ground floor designed for 150 PSF uniform live load capacity (reducible as allowed by code)

Existing second floor designed for 100 PSF uniform live load capacity (reducible as allowed by code)

Existing building entrances (including modifications for ADA compliance, if any)

Existing stairs, including ADA required modifications

Existing exterior paving, hardscape and landscape, including modifications for ADA compliance, if any

Existing site underground water, fire, storm, and sanitary service

Existing building storm and overflow drainage systems

Existing site underground conduits for electrical and communication, including the existing electrical utility pad, existing PG&E pad mounted transformer (300 kva), and the existing five 5” primary service conduits terminated at the existing building switchgear (1600 amp rated)

Existing gas service up to exterior meter location at Building (including existing meter)

Schedule B-1 to Workletter

Existing wet fire protection (risers, loops, branches and heads), evenly distributed for “ordinary hazard” occupancy

Shell modification (including Service Annex) design and permitting fees, except as specifically included in Tenant Improvements under Schedule B-2

Existing underslab sanitary waste main trunk line and branch distribution

Existing toilet room cores

Schedule B-1 to Workletter

Schedule B-2 to Workletter

800 CHESAPEAKE TENANT IMPROVEMENTS

The “Tenant Improvements” as defined in the Workletter to which this Schedule B-2 is attached will include, but not necessarily be limited to, the following:

All tenant construction, design fees, fixtures, furnishings, etc. to support tenant operations, including use space, offices, lobbies, circulation, restrooms and all other features not specifically indicated as part of the Building Shell in Schedule B-1. Although included in the definition of Tenant Improvements, use of TI Allowance for furniture, fixtures or personal property is not permitted.

Additions and modifications to the new Service Annex, including emergency generator and associated conduits, chemical storage cabinets, eyewash facilities and associated utilities, cage wash equipment and utilities

Interior demolition required for TI construction

ADA modifications triggered by TI construction (subject to any specific provisions of the Workletter or the Lease providing for a different allocation of ADA compliance costs)

Exterior Building skin modifications to support TI systems (e.g., louvers for HVAC equipment)

Topical emission barriers on slabs, if required

Slab depressions for special finishes or special uses (including cage wash area)

Enhancement of structure for live loading above designed maximums or vibration control criteria

Modification of structure for openings at floors and roof

Modification or repair of structure required by TI construction

All minor support structures for ducts, conduits, pipes, etc. required by TI

Additional stairs, stair enclosures, handrails and guardrails (if required by TI design)

New exterior wall insulation, if required by TI modifications

New firesafing at floor decks, exterior walls and interior openings, if required by TI modifications

Custom doors

Security or other upgrades to existing exterior doors

Supporting structures/platforms/sleepers, etc. for rooftop equipment, ducts, plumbing, electrical, etc., related to Tenant Improvements

Schedule B-2 to Workletter

Roof patching for all penetrations relating to Tenant Improvements

Skylights, if installed, including curbs, roof patching, etc.

Additional elevators, if required by Tenant

Shaft walls or other fire separations required for vertical openings (stairs, elevators) or control zones

New distribution/laterals from sanitary waste main trunk line required by TI

New lab waste main trunk line and distribution/laterals required by TI

Upsized gas meter and piping from gas meter to Building areas, if required by TI

Modifications/enhancements to wet fire protection systems required by TI design

Modifications to fire alarm systems

Signal and security systems

Modifications or upsizing of primary electrical service (from existing 1600 amp service)

Modifications and additions to all secondary electrical service for Tenant demand loads, including main service disconnect, Tenant meter section and distribution panels

Standby electrical generator, transfer switch and conduits, if required

All communications wire and service not specifically included in Building Shell

All TI design fees and reimbursables

All other “soft” costs, including Ti permit fees, project management fees, utility company charges, temporary utilities during TI construction, etc.

All testing and inspection of TI construction

Builders risk insurance for TI construction

Schedule B-2 to Workletter

Schedule B-3 to Workletter

Construction Schedule (Preliminary)

[See attached page.]

 Schedule B-3 to Workletter

SCHEDULE B-4

* Note: To the extent Slough commitments are later increased (due to Tenant Change Requests, for example), these numbers will need to be recalibrated and the project may even move from the “LESS” to the “MORE” category.

Example 1

HDCC:	$	5,100,000
DES:	$	340,000
PMA:	$	130,000
	$	5,570,000	=	Commitments
	$	5,709,750	=	TI Allowance

Slough funds 100% of its commitments plus $139,750 of approved invoices submitted by OncoMed.

Example 2

HDCC:	$	5,500,000
DES:	$	340,000
PMA:	$	130,000
	$	5,970,000	=	Commitments
	$	5,709,750	=	TI Allowance

OncoMed pro-rata share of commitments =	$5,970,000 - $5,709,750	= 4.36%
	$5,970,000

Therefore, OncoMed would contribute 4.36% of each payment application for the commitments and would fund 100% of all expenditures incurred directly by OncoMed.

Schedule B-4 to Workletter

EXHIBIT C

ACKNOWLEDGMENT OF RENT COMMENCEMENT DATE

This Acknowledgment is executed as of                     , 200    , by SLOUGH REDWOOD CITY, LLC, a Delaware limited liability company (“Landlord”), and ONCOMED PHARMACEUTICALS, INC., a Delaware corporation (“Tenant”), pursuant to Section 2.4 of the Lease dated May 30, 2006 between Landlord and Tenant (the “Lease”) covering premises located at 800 Chesapeake Drive, Redwood City, CA 94063 (the “Premises”).

Landlord and Tenant hereby acknowledge and agree as follows:

1. The Rent Commencement Date under the Lease is                     , 20    .

2. The termination date under the Lease shall be                    , 20    , subject to any applicable provisions of the Lease for extension or early termination thereof.

3. The square footage of the Premises (including allocable portions of the Service Annex, as defined in the Lease) is              square feet.

4. Tenant accepts the Premises, subject only to Landlord’s warranties, representations and obligations expressly set forth in Section 2.3 of the Lease and in the Workletter (as defined in the Lease).

EXECUTED as of the date first set forth above.

“Landlord”			“Tenant”
SLOUGH REDWOOD CITY, LLC, a Delaware limited liability company			ONCOMED PHARMACEUTICALS, INC., a Delaware corporation
By:	Slough Estates USA Inc., a Delaware corporation, Its Manager		By:
			Its:
	By:
		Jonathan M. Bergschneider
		Vice President	By:
			Its:

EXHIBIT C TO LEASE

EXHIBIT D

FORM OF WARRANT

[See attached.]

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. SUCH SECURITIES AND ANY SECURITIES OR SHARES ISSUED HEREUNDER MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR QUALIFICATION OR AN EXEMPTION THEREFROM UNDER SAID ACT OR LAWS.

Warrant No.	Warrant to Purchase 55,000 Shares
Date of Issuance:	of Series B Preferred Stock

WARRANT TO PURCHASE PREFERRED STOCK

OF

ONCOMED PHARMACEUTICALS, INC.

This certifies that, for value received, Kwacker Limited, a corporation organized and existing under the laws of England (“Holder”) is entitled, subject to the terms and conditions set forth below, to purchase from OncoMed Pharmaceuticals, Inc., a Delaware corporation (the “Company”), in whole or in part fifty-five thousand (55,000) fully paid and nonassessable shares (the “Warrant Shares”) of Series B Preferred Stock, par value $0.001 per share, (the “Preferred Stock”) of the Company at a purchase price per share equal to the product obtained by multiplying (x) 125% by (y) the price per share at which the Company’s Series B Preferred Stock is issued in its first issuance to one or more institutional investors (the “Exercise Price”). Notwithstanding the foregoing, in the event that no Series B Preferred Stock has been issued by the Company to one or more institutional investors within eighteen (18) months after the mutual execution of the Agreement (as defined below), this Warrant shall automatically be deemed to entitle Holder, in lieu of the right to purchase shares of Series B Preferred Stock set forth in the foregoing sentence and subject to the terms and conditions set forth below, to purchase from the Company in whole or in part fifty-five thousand (55,000) fully paid and nonassessable shares of Series A Preferred Stock, par value $0.001 per share, of the Company at a purchase price per share equal to the product obtained by multiplying (x) 125% by (y) the price per share at which the Company’s Series A Preferred Stock was previously issued to institutional investors, and all references to “Warrant Shares,” “Preferred Stock” and “Exercise Price” contained in this Warrant shall be deemed to be updated accordingly. The number, character and Exercise Price of such Warrant Shares are subject to adjustment as provided below and all references to “Warrant Shares” and “Exercise Price” herein shall be deemed to include any such adjustment or series of adjustments. The term “Warrant” as used herein shall mean this Warrant, and any warrants delivered in substitution or exchange therefor as provided herein.

This Warrant is being issued in connection with services or other consideration to be provided to the Company pursuant to that certain Lease between the Company and Slough Redwood City, LLC, an affiliate of the Holder, dated as of May 30, 2006 (the “Agreement”).

1. Term of Warrant. Subject to the terms and conditions set forth herein, this Warrant shall be exercisable, in whole or in part, during the term commencing on the date hereof and ending at 5:00 p.m., Pacific time, on the earliest of the following: (i) the closing of a merger, consolidation or other reorganization of the Company pursuant to which the stockholders of the Company hold less than 50% of the voting securities of the surviving entity, or a sale of all or substantially all of

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the assets of the Company; (ii) the consummation of the initial public offering of the Company’s securities pursuant to a registration statement filed under the Act or (iii) the seventh (7^th) anniversary of the date hereof, and shall be void thereafter (the “Exercise Period”).

2. Exercise of Warrant.

(a) Cash Exercise. This Warrant may be exercised by the Holder by (i) the surrender of this Warrant to the Company, with the Notice of Exercise annexed hereto duly completed and executed on behalf of the Holder, at the office of the Company (or such other office or agency of the Company as it may designate by notice in writing to the Holder at the address of the Holder appearing on the books of the Company) during the Exercise Period and (ii) the delivery of payment to the Company, for the account of the Company, by cash, wire transfer of immediately available funds to a bank account specified by the Company, or by certified or bank cashier’s check, of the Exercise Price for the number of Warrant Shares specified in the Exercise Form in lawful money of the United States of America. The Company agrees that such Warrant Shares shall be deemed to be issued to the Holder as the record holder of such Warrant Shares as of the close of business on the date on which this Warrant shall have been surrendered and payment made for the Warrant Shares as aforesaid. A stock certificate or certificates for the Warrant Shares specified in the Exercise Form shall be delivered to the Holder as promptly as practicable, and in any event within 10 days, thereafter. If this Warrant shall have been exercised only in part, the Company shall, at the time of delivery of the stock certificate or certificates, deliver to the Holder a new Warrant evidencing the rights to purchase the remaining Warrant Shares, which new Warrant shall in all other respects be identical with this Warrant. No adjustments shall be made on Warrant Shares issuable on the exercise of this Warrant for any cash dividends paid or payable to holders of record of Common Stock prior to the date as of which the Holder shall be deemed to be the record holder of such Warrant Shares.

(b) Net Issue Exercise. In lieu of exercising this Warrant pursuant to Section 2(a), this Warrant may be exercised by the Holder by the surrender of this Warrant to the Company, with a duly executed Exercise Form marked to reflect Net Issue Exercise and specifying the number of shares of Preferred Stock to be purchased, during normal business hours on any Business Day during the Exercise Period. The Company agrees that such shares of Preferred Stock shall be deemed to be issued to the Holder as the record holder of such shares of Preferred Stock as of the close of business on the date on which this Warrant shall have been surrendered as aforesaid. Upon such exercise, the Holder shall be entitled to receive shares equal to the value of this Warrant (or the portion thereof being canceled) by surrender of this Warrant to the Company together with notice of such election in which event the Company shall issue to Holder a number of shares of Preferred Stock computed as of the date of surrender of this Warrant to the Company using the following formula:

X	= Y(A-B)
	A

Where X = the number of shares of Preferred Stock to be issued to Holder under this Section 2(b);

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Y =	the number of shares of Preferred Stock covered by this Warrant (as adjusted to the date of such calculation) in respect of which the net issue exercise election is made under this Section 2(b);
A =	the fair market value of one share of the Preferred Stock at the date of such calculation;
B =	the Exercise Price (as adjusted to the date of such calculation).

(c) Fair Market Value. For purposes of Section 2(b) and Section 3, the fair market value of one share of the Company’s Preferred Stock shall be the price per share which the Company could obtain from a willing buyer for the shares sold by the Company from authorized but unissued shares, as such price shall be determined in good faith by the Board of Directors of the Company.

(d) Effective Time of Exercise. This Warrant shall be deemed to have been exercised immediately prior to the close of business on the date of its surrender for exercise as provided above, and the person entitled to receive the shares of Preferred Stock issuable upon such exercise shall be treated for all purposes as the holder of record of such shares as of the close of business on such date. As promptly as practicable on or after such date and in any event within ten days thereafter, the Company at its expense shall issue and deliver to the person or persons entitled to receive the same a certificate or certificates for the number of shares issuable upon such exercise. In the event that this Warrant is exercised in part, the Company at its expense will execute and deliver a new Warrant of like tenor exercisable for the number of shares for which this Warrant may then be exercised.

3. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. In lieu of any fractional share to which the Holder would otherwise be entitled, the Company shall make a cash payment equal to the product of the fair market value of a share of the Company’s Preferred Stock multiplied by such fraction.

4. Replacement of Warrant. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement, with surety if reasonably required, in an amount reasonably satisfactory to the Company, or in the case of mutilation, on surrender and cancellation of this Warrant, the Company at its expense shall execute and deliver, in lieu of this Warrant, a new warrant of like tenor and amount.

5. No Rights as Stockholder. Subject to Sections 9 and 12 of this Warrant, the Holder shall not be entitled to vote or receive dividends or be deemed the holder of Preferred Stock or any other securities of the Company that may at any time be issuable on the exercise hereof for any purpose, nor shall anything contained herein be construed to confer upon the Holder, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value, or change of stock to no par value, consolidation,

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merger, conveyance, or otherwise) or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until the Warrant shall have been exercised as provided herein.

6. Transfer of Warrant.

(a) Restrictions on Transferability. This Warrant and the Warrant Shares shall not be sold, assigned, transferred or pledged except upon satisfaction of the conditions herein. Holder will cause any proposed transferee of the Warrant or the Warrant Shares, as the case may be, to agree in writing to be bound by the terms of this Warrant, including, but not limited to the restrictions on transfer and “market stand-off.” The Holder will not make any disposition of any Warrant, Warrant Shares or other Company security to any of the Company’s competitors as such is determined in good faith by the Company. The restrictions set forth in this Section 6 (other than restrictions relating to compliance with applicable securities laws) shall not apply to any disposition of Warrant Shares or other Company securities in a transaction pursuant to Rule 144 or any other transaction effected on a securities exchange or in a public securities market.

(b) Notice of Proposed Transfer. Except as otherwise provided herein, prior to any proposed transfer of this Warrant and the Warrant Shares, the Holder shall give written notice to the Company of its intention to effect such transfer. Each such notice shall identify the proposed transferee, shall describe the manner of the proposed transfer and, if requested by the Company, shall be accompanied by a written opinion of counsel, satisfactory in form and substance to the Company, to the effect that the proposed transfer may be effected without registration under the Act and any applicable state securities laws, whereupon the holder of such security shall be entitled to transfer such security in accordance with the terms of its notice, subject to compliance with all other applicable requirements of this Section 6. Each certificate for this Warrant and the Warrant Shares transferred as provided for above shall bear the legend set forth herein, except that such certificate shall not bear such legend if (i) such transfer is in accordance with the provisions of Rule 144 (or any other rule permitting public sale without registration under the Act) or (ii) the opinion of counsel referred to above is to the further effect that the transferee and any subsequent transferee (other than an affiliate of the Company) would be entitled to transfer such securities in a public sale without registration under the Act. The Company may issue stop transfer instructions to its transfer agent in connection with restrictions on transferability of this Warrant or the Warrant Shares. Notwithstanding the restrictions set forth above, no registration statement or opinion of counsel or prior notice to the Company shall be necessary, and such transfer shall be automatically effected on the stock records of the Company effective as of the date of such transfer, for a transfer (x) by a Holder to an affiliate of the Holder or (y) by a Holder which is (A) a partnership to its partners or retired partners in accordance with partnership interests, (B) a limited liability company to its members or former members in accordance with their interest in the limited liability company, (C) a corporation to its subsidiary or parent, or (D) to the Holder’s family member or trust for the benefit of an individual Holder, provided that in the case of any transfer pursuant to the foregoing clause (x) or clauses (y)(A) – (D), (i) the restrictions in the second and third sentences of Section 6(a) above shall apply to the transfer and to the transferee, (ii) the transfer shall be conducted in compliance with all applicable securities laws, and (iii) the transferring Holder shall provide the Company with a completed written notice of the transfer pursuant to this sentence no later than 30 days following the transfer to an affiliate or other permitted transferee pursuant to this sentence and, upon request by the Company, with

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evidence reasonably satisfactory to the Company that the conditions and requirements applicable to such transfer pursuant to this sentence have been satisfied.

7. Reservation of Stock. The Company covenants that during the term this Warrant is exercisable, the Company will reserve from its authorized and unissued Preferred Stock a sufficient number of shares to provide for the issuance of Preferred Stock upon the exercise of this Warrant and, from time to time, will take all steps necessary to amend its Amended and Restated Certificate of Incorporation, as it may be amended from time to time (“Restated Certificate”) to provide sufficient reserves of shares of Preferred Stock issuable upon exercise of the Warrant. The Company further covenants that all shares that may be issued upon the exercise of rights represented by this Warrant, upon exercise of the rights represented by this Warrant and payment of the Exercise Price, all as set forth herein, will be free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously or otherwise specified herein).

8. Representations and Covenants of the Holder. Holder hereby represents and warrants as follows:

(a) Experience. Holder is experienced in evaluating and investing in private placement transactions of securities of start up companies such as the Company, and has either individually or through its current officers such knowledge and experience in financial and business matters that Holder is capable of evaluating the merits and risks of Holder’s prospective investment in the Company, and has the ability to bear the economic risks of the investment. Holder has, if an entity, its principal place of business or, if an individual, its primary residence at the address provided to the Company in writing.

(b) Accredited Investor. Holder is an “accredited investor” within the meaning of Securities and Exchange Commission Rule 501 of Regulation D, as presently in effect, under the Act.

(c) Acquire Entirely for Own Account. Holder is acquiring the Warrant and Warrant Shares for investment for Holder’s own account, not as a nominee or agent, and not with the view to, or for resale in connection with, any distribution thereof. Holder further represents that it does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to any third person with respect to the Warrant or any of the Warrant Shares.

(d) Restricted Securities. Holder acknowledges that the Warrant Shares must be held indefinitely unless subsequently registered under the Act or an exemption from such registration is available. Holder is aware of the provisions of Rule 144 promulgated under the Act which permit limited resale of shares acquired in a private placement subject to the satisfaction of certain conditions; among the conditions for use of Rule 144 may be the availability of current information to the public about the Company; such information is not now available and the Company has no present plans to make such information available.

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(e) No Public Market. Holder understands that no public market now exists for any of the securities issued by the Company, and that there is no assurance that a public market will ever exist for this Warrant and the Warrant Shares.

(f) Regulation S. If Holder is not a U.S. person as defined in Rule 902 under the Act, Holder understands that this agreement is made in reliance upon Holder’s representation to the Company, and by execution of this Agreement, Holder hereby confirms, that:

(i) Holder is not a U.S. person as such term is defined in Rule 902 under the Act;

(ii) Holder is not acquiring the securities for the account or benefit of any U.S. person; and

(iii) Holder agrees to resell the Warrant and the Warrant Shares only in accordance with the provisions of Regulation S, pursuant to registration under the Act, or pursuant to an available exemption from registration, and agrees not to engage in hedging transactions with regard to the Warrant and the Warrant Shares unless in compliance with the Act.

(g) Legends. Holder acknowledges that, to the extent applicable, each certificate evidencing the Warrant Shares shall be endorsed with the legends substantially in the form set forth below, as well as any additional legend imposed or required by the Company’s Bylaws or applicable state securities laws:

“THE SECURITIES ISSUABLE HEREUNDER OR REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED (A) UNLESS AND UNTIL REGISTERED UNDER SUCH ACT, (B) UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED OR (C) IN COMPLIANCE WITH THE PROVISIONS OF REGULATION S PROMULGATED PURSUANT TO THE ACT AND, IF REQUIRED BY THE COMPANY, SUCH COMPLIANCE IS CONFIRMED BY AN OPINION OF COUNSEL. HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED HEREBY MAY NOT BE CONDUCTED EXCEPT IN COMPLIANCE WITH THE ACT.”

(h) Access to Data. Holder has received and reviewed information about the Company and has had an opportunity to discuss the Company’s business, management and financial affairs with its management and to review the Company’s facilities. Holder believes it has received all the information it considers necessary or appropriate for deciding whether to acquire the Warrant to acquire the Warrant Shares. Holder understands and acknowledges that any such discussions, as well as any written information issued by the Company, (i) were intended to describe the aspects of the Company’s business and prospects which the Company believes to be material, but were not necessarily an exhaustive description, and (ii) may have

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contained forward-looking statements involving known and unknown risks and uncertainties which may cause the Company’s actual results in future periods or plans for future periods to differ materially from what was anticipated and that no representations or warranties were or are being made with respect to any such forward-looking statements or the probability of achieving any of the results projected in any of such forward-looking statements.

(i) Authorization. Holder has full power and authority to enter into this Warrant. This Warrant when executed and delivered by Holder will constitute valid and legally binding obligations of Holder, enforceable in accordance with its terms, subject to (i) judicial principles limiting the availability of specific performance, injunctive relief, and other equitable remedies; and (ii) bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect generally relating to or affecting creditors’ rights generally.

(j) Reliance Upon Holders’ Representations. Holder understands that the Warrant and the Warrant Shares have not been registered under the Act by reason of a specific exemption from the registration provisions of the Act which depends upon, among other things, the bona fide nature of the investment intent as expressed herein. Holder understands and acknowledges that the offering of the Warrant and the Warrant Shares pursuant to this Warrant will not be registered under the Act on the ground that the sale provided for in this Warrant and the issuance of securities hereunder is exempt from the registration requirements of the Act.

9. Notices.

(a) Whenever the Exercise Price or number of shares purchasable hereunder shall be adjusted pursuant to Section 12 hereof, the Company shall issue a certificate signed by its Chief Financial Officer setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the Exercise Price and number of shares purchasable hereunder after giving effect to such adjustment, and shall cause a copy of such certificate to be transmitted by facsimile, or mailed (by first class mail, postage prepaid) to the Holder of this Warrant.

(b) In case:

(i) the Company shall take a record of the holders of its Preferred Stock (or other stock or securities at the time receivable upon the exercise of this Warrant) for the purpose of entitling them to receive any dividend or other distribution;

(ii) of any capital reorganization of the Company, any reclassification of the capital stock of the Company, any consolidation or merger of the Company with or into another corporation, or any conveyance of all or substantially all of the assets of the Company to another corporation; or

(iii) of any voluntary dissolution, liquidation or winding-up of the Company;

then, and in each such case, the Company will transmit by facsimile, or mail or cause to be mailed to the Holder or Holders a notice specifying, as the case may be, (A) the date on which a record is to be taken for the purpose of such dividend or other distribution, and stating the amount and character of such dividend or other distribution or (B) the date on which such

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reorganization, reclassification, consolidation, merger, conveyance, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of Preferred Stock shall be entitled to exchange their shares of Preferred Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, conveyance, dissolution, liquidation or winding-up. Such notice shall be delivered at least seven business days prior to the date therein specified.

(c) All such notices, advices and communications shall be deemed effectively delivered upon deposit with a nationally recognized overnight courier or upon transmission by facsimile (upon receipt of appropriate electronic confirmation of successful transmission).

10. Market Standoff Agreement.

(a) The Holder agrees in connection with any registration of the Company’s securities (other than a registration of securities in a Rule 145 transaction or with respect to an employee benefit plan), upon request of the underwriters managing any underwritten offering of the Company’s securities, not to sell, make any short sale of, loan, pledge or otherwise hypothecate or encumber, grant any option for the purchase of, or otherwise dispose of any securities of the Company (other than those included in the registration, securities acquired in the Company’s initial public offering of its Common Stock (the “IPO”) or securities acquired in market transactions following the IPO) without the prior written consent of such underwriters, as the case may be, for such period of time (not to exceed one hundred eighty (180) days from the effective date of such registration in the case of a registration for the Company’s IPO) as may be requested by such managing underwriter(s); provided that all officers and directors of the Company and holders of at least five percent (5%) of the Company’s capital stock enter into similar agreements.

(b) The Company may impose stack-transfer instructions with respect to any of its securities subject to the foregoing restriction until the end of such period.

(c) The underwriters are intended third-party beneficiaries of this Section 10 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto. To the extent that a party executes and delivers a market standoff agreement in the form requested by the Company’s underwriters in connection with the IPO, then the agreement with the underwriters will supersede the provisions of this Section 10.

11. Amendments. This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing executed by the Company and the Holder. Any amendment or waiver effected in accordance with such terms shall be binding upon the Company, the Holder and any transferee or assignee of this Warrant.

12. Adjustments. The Exercise Price and the number of shares purchasable hereunder are subject to adjustment from time to time as follows:

(a) Stock Conversion of Preferred Stock. Should all of the Company’s Series B Preferred Stock, at any time prior to the expiration of this Warrant, be converted into shares of the Company’s Common Stock in accordance with the Company’s Restated Certificate, then this Warrant shall immediately become exercisable for that number of shares of the Company’s

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Common Stock equal to the number of shares of the Common Stock that would have been received if this Warrant had been exercised in full and the Preferred Stock received thereupon had been simultaneously converted immediately prior to such event, and the Exercise Price shall be immediately adjusted to equal the quotient obtained by dividing (x) the aggregate Exercise Price of the maximum number of shares of Preferred Stock for which this Warrant was exercisable immediately prior to such conversion, by (y) the number of shares of Common Stock for which this Warrant is exercisable immediately after such conversion. For purposes of the foregoing, the “Restated Certificate” shall mean the Certificate of Incorporation of the Company as amended and/or restated and effective immediately prior to the conversion of all of the Company’s Series B Preferred Stock.

(b) Reclassification, etc. If the Company, at any time while this Warrant, or any portion thereof, remains outstanding and unexpired by reclassification of securities or otherwise, shall change any of the securities as to which purchase rights under this Warrant exist into the same or a different number of securities of any other class or classes, this Warrant shall thereafter represent the right to acquire such number and kind of securities as would have been issuable as the result of such change with respect to the securities that were subject to the purchase rights under this Warrant immediately prior to such reclassification or other change and the Exercise Price therefor shall be appropriately adjusted, all subject to further adjustment as provided in this Section 12. No adjustment shall be made pursuant to this Section 12 (b), upon any conversion of the Preferred Stock which is the subject of Section 12 (a).

(c) Split, Subdivision or Combination of Shares. If the Company at any time while this Warrant, or any portion thereof, remains outstanding and unexpired shall split, subdivide or combine the securities as to which purchase rights under this Warrant exist, into a different number of securities of the same class, then (i) in the case of a split or subdivision, the Exercise Price for such securities shall be proportionately decreased and the securities issuable upon exercise of this Warrant shall be proportionately increased, and (ii) in the case of a combination, the Exercise Price for such securities shall be proportionately increased and the securities issuable upon exercise of this Warrant shall be proportionately decreased.

(d) Adjustments for Dividends in Stock or Other Securities or Property. If while this Warrant, or any portion hereof, remains outstanding and unexpired the holders of the securities as to which purchase rights under this Warrant exist at the time shall have received, or, on or after the record date fixed for the determination of eligible stockholders, shall have become entitled to receive, without payment therefor, other or additional stock or other securities or property (other than cash) of the Company by way of dividend, then and in each case, this Warrant shall represent the right to acquire, in addition to the number of shares of the security receivable upon exercise of this Warrant, and without payment of any additional consideration therefor, the amount of such other or additional stock or other securities or property (other than cash) of the Company that such holder would hold on the date of such exercise had it been the holder of record of the security receivable upon exercise of this Warrant on the date hereof and had thereafter, during the period from the date hereof to and including the date of such exercise, retained such shares and/or all other additional stock available by it as aforesaid during such period, giving effect to all adjustments called for during such period by the provisions of this Section 12.

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(e) Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment pursuant to this Section 12, the Company at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each Holder of this Warrant a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, upon the written request, at any time, of any such Holder, furnish or cause to be furnished to such Holder a like certificate setting forth: (i) all such adjustments and readjustments cumulatively made up to the date of the certificate; (ii) the Exercise Price at the time in effect; and (iii) the number of shares and the amount, if any, of other property that at the time would be received upon the exercise of the Warrant.

(f) No Impairment. The Company will not, by any voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Section 12 and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holders of this Warrant against impairment.

13. Miscellaneous.

(a) This Warrant shall constitute a contract under the laws of the State of Delaware and for all purposes shall be construed in accordance with and governed by the laws of said state, without regard to the conflicts of law provisions thereof.

(b) In the event of a dispute with regard to the interpretation of this Warrant, the prevailing party may collect the cost of attorney’s fees, litigation expenses or such other expenses as may be incurred in the enforcement of the prevailing party’s rights hereunder.

(c) This Warrant shall be exercisable as provided for herein, except that in the event that the expiration date of this Warrant shall fall on a Saturday, Sunday and or United States federally recognized Holiday, this expiration date for this Warrant shall be extended to 5:00 p.m. Pacific time on the business day following such Saturday, Sunday or recognized Holiday.

(d) Acceptance. Receipt of this Warrant by the holder shall constitute acceptance of and agreement to all of the terms and conditions contained herein.

(e) Counterparts. This Warrant may be executed in two counterparts, each of which shall be deemed an original, but both of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, ONCOMED PHARMACEUTICALS, INC. has caused this Warrant to be executed by its officers thereunto duly authorized.

Date: 

ONCOMED PHARMACEUTICALS, INC.

By

Name:

Title:

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The undersigned hereby accepts the Warrant in accordance with Section 13(d) above.

HOLDER:	Kwacker Limited
	By:
	Name:
	Title:

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NOTICE OF EXERCISE

To: ONCOMED PHARMACEUTICALS, INC.:

(1) The undersigned hereby elects to purchase                     shares of Series B Preferred Stock of OncoMed Pharmaceuticals, Inc., pursuant to the terms of the attached Warrant, and                     tenders herewith payment of the purchase price for such shares in full or             elects to exercise such Warrant pursuant to the net issue exercise provisions provided for in Section 2(b) thereof (PLEASE CHECK THE APPROPRIATE FORM OF PAYMENT).

(2) In exercising this Warrant, the undersigned hereby confirms and acknowledges that (A) the shares of Series B Preferred Stock and/or other securities to be issued upon exercise thereof are being acquired solely for the account of the undersigned and not as a nominee for any other party, or for investment, and (B) the undersigned will not offer, sell or otherwise dispose of any such shares of Preferred Stock except under circumstances that will not result in a violation of the Securities Act of 1933, as amended, or any applicable state securities laws.

(3) Please issue a certificate or certificates representing said shares of Series B Preferred Stock in the name of the undersigned or in such other name as is specified below:

(Name)

(Name)

(4) Please issue a new Warrant for the unexercised portion of the attached Warrant in the name of the undersigned:

	(Name)
(Date)	(Signature)

EXHIBIT B

FORM OF TRANSFER

(To be signed only upon transfer of Warrant)

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto                     the right represented by the attached Warrant to purchase                     shares of                     of ONCOMED PHARMACEUTICALS, Inc. to which the attached Warrant relates, and appoints                     Attorney to transfer such right on the books of                     , with full power of substitution in the premises.

Dated: 

(Signature must conform in all respects to name of Holder as specified on the face of the Warrant)

Address:

Signed in the presence of

* Insert here the number of shares without making any adjustment for additional shares of Common Stock or any other stock or other securities or property or cash which, pursuant to the adjustment provisions of the Warrant, may be deliverable upon exercise.

FIRST AMENDMENT TO LEASE

THIS FIRST AMENDMENT TO LEASE (“First Amendment”) is dated as of November     , 2006 and is entered into between SLOUGH REDWOOD CITY, LLC, a Delaware limited liability company (“Landlord”) and ONCOMED PHARMACEUTICALS, INC., a Delaware corporation (“Tenant”), with reference to the following facts:

Recitals

A. Landlord and Tenant are parties to a Lease dated as of May 30, 2006 (the “Lease”), covering the building commonly known as 800 Chesapeake Drive (the “Building”) in the Britannia Seaport Centre in Redwood City, California.

B. Landlord and Tenant wish to modify certain provisions of the Lease and certain of their respective rights and obligations thereunder, all as more particularly set forth in this First Amendment. This First Amendment modifies and amends the Lease and supersedes any inconsistent provisions of the Lease with respect to the matters covered by this First Amendment.

C. Capitalized terms used in this First Amendment as defined terms but not specifically defined in this First Amendment shall have the meanings assigned to such terms in the Lease.

Agreement

NOW, THEREFORE, in consideration of the mutual agreements contained in this First Amendment and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant agree as follows, effective upon their mutual execution of this First Amendment:

1. Rent Adjustment. Nothing in this First Amendment shall modify or affect Tenant’s obligation for payment of Tenant’s Operating Cost Share of Operating Expenses with respect to the Building pursuant to the terms of the Lease. The minimum rental provisions set forth in Section 3.1(a) of the Lease are amended to provide that for the period commencing on the Rent Commencement Date and ending two (2) months later (the “Abatement Period”), Tenant’s minimum monthly rental obligation under Section 3.1(a) of the Lease shall be zero ($0.00) [i.e., no minimum monthly rental due for those two months]. The remaining minimum monthly rental schedule in Section 3.1(a) of the Lease remains in full force and effect, and nothing in this First Amendment shall modify or affect in any way (a) Tenant’s obligation for payment of any other amounts (such as, but not limited to, utilities, personal property taxes, and Tenant’s Operating Cost Share of Operating Expenses with respect to the Building) for any period under the Lease, with the sole exception of the minimum monthly rent adjustment for the Abatement Period as set forth above, or (b) the calculation of the duration, term or expiration date of the Lease.

2. Brokers. Each party respectively (i) represents and warrants that no broker participated in the consummation of this First Amendment and (ii) agrees to indemnify, defend and hold the other party harmless against any liability, cost or expense, including (but not limited

to) reasonable attorneys’ fees, arising out of any claims for brokerage commissions or other similar compensation in connection with any conversations, prior negotiations, agreements or other dealings by the indemnifying party with any broker in connection with this First Amendment.

3. Entire Agreement. This First Amendment constitutes the entire agreement between Landlord and Tenant regarding the subject matter hereof and supersedes all prior negotiations, discussions, terms sheets, understandings and agreements, whether oral or written, between the parties with respect to such subject matter (other than the Lease itself, as expressly amended hereby).

4. Execution and Delivery. This First Amendment may be executed in one or more counterparts and by separate parties on separate counterparts, effective when each party has executed at least one such counterpart or separate counterpart, but each such counterpart shall constitute an original and all such counterparts together shall constitute one and the same instrument.

5. Full Force and Effect. Except as expressly set forth herein, the Lease has not been modified or amended and remains in full force and effect.

IN WITNESS WHEREOF, Landlord and Tenant have executed this First Amendment as of the date first set forth above.

“Landlord”			“Tenant”
SLOUGH REDWOOD CITY, LLC, a Delaware limited liability company			ONCOMED PHARMACEUTICALS, INC., a Delaware corporation
By:	Slough Estate USA Inc., a Delaware
	corporation, Its Manager		By:	/s/ Paul Hastings
			Name:
	By:	/s/ Jonathan M. Bergschneider
			Title:
	Name:	Jonathan M. Bergschneider
	Title:	Senior Vice President
			By:
			Name:
			Title:

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EXHIBIT C

ACKNOWLEDGMENTOFRENTCOMMENCEMENTDATE

ThisAcknowledgmentisexecutedasof March 9th,2007,by SLOUGHREDWOOD CITY,LLC,aDelawarelimitedpartnership ("Landlord"),and ONCOMEDPHARMACEUTICALS, INC., aDelaware corporation ("Tenant"), pursuanttoSection2.4oftheLeasedatedMay30,2006betweenLandlordandTenant, andasamendedon November30,2006inaFirstAmendmenttotheLease(collectively, the"Lease")coveringpremiseslocatedat800ChesapeakeDrive,RedwoodCity,CA 94063  (the "Premises").

LandlordandTenantherebyacknowledgeandagreeasfollows:

1. The Rent Commencement Date under the Lease is February 7, 2007.

2. Thetermination dateundertheLeaseshallbeFebruary6,2014,subject toanyapplicableprovisionsoftheLeaseforextensionorearly terminationthereof.

3. ThesquarefootageofthePremisesis45,690squarefeet.

4. TenantacceptsthePremises,subjectonlytoLandlord'swarranties, representationsandobligationsexpresslysetforthinSection2.3ofthe LeaseandintheWorkletter(asdefinedintheLease).

EXECUTEDasofthedatefirstsetforthabove.

"Landlord"                                                             "Tenant"

SLOUGHREDWOODCITY,LLC,aONCOMED PHARMACEUTICALS

DelawarelimitedpartnershipINC., a Delaware corporation

By:      SLOUGHREDWOODCITY,By:/s/ Martin H. Goldstein

LLC,aDelawarecorporation,

ItsGeneralPartnerIts: SVP Corporate Development

By:   /s/ Jonathon M. BergschneiderBy:  /s/ John Lewicki

Jonathon M. Bergschneider

SeniorVicePresidentIts: SVP, R&D

SECOND AMENDMENT TO OFFICE LEASE

This SECOND AMENDMENT TO OFFICE LEASE (“Amendment”) is made and entered into as of December 22, 2010, by and between HCP LS REDWOOD CITY, LLC, a Delaware limited liability company (“Landlord”), and ONCOMED PHARMACEUTICALS, INC., a Delaware corporation (“Tenant”).

R E C I T A L S:

A. Landlord (as successor in interest to Slough Redwood City, LLC) and Tenant are parties to that certain Lease dated May 30, 2006 (the “Lease”), as amended by that certain First Amendment to Lease dated November, 2006 (the “First Amendment”), and that certain Acknowledgement of Rent Commencement Date dated as of March 9, 2007, pursuant to which Lease Tenant leases from Landlord approximately 45,690 rentable square feet of space (the “Premises”) consisting of the entire building (the “Building”) located at 800 Chesapeake Drive, in the Britannia Seaport Centre in Redwood City, California.

B. The parties desire to amend the Lease on the terms and conditions set forth in this Amendment.

A G R E E M E N T:

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1. Terms. All capitalized terms when used herein shall have the same respective meanings as are given such terms in the Lease unless expressly provided otherwise in this Amendment.

2. Condition of the Premises. Commencing on January 1, 2011, Landlord shall provide Tenant with an improvement allowance equal to One Million Six Hundred Thousand Dollars ($1,600,000) (the “Tenant Improvement Allowance”) to be applied toward the construction of tenant improvements and other renovations to the Premises in accordance with the terms of the Tenant Work Letter attached hereto as Exhibit A. Except as expressly provided above, Tenant shall continue to accept the Premises in their currently existing “as-is” condition, and Landlord shall not be obligated to provide or pay for any work or services related to the improvement of the Premises.

3. Extended Lease Term. Pursuant to the Lease, the Lease Term is scheduled to expire on February 6, 2014. Landlord and Tenant hereby agree to extend the Lease Term for a period of five (5) years, to February 6, 2019 (the “Extended Lease Term”), on the terms and conditions set forth in this Amendment.

4. Rent.

4.1 Base Rent. Prior to February 6, 2012. Tenant shall continue to pay monthly installments of Base Rent for the Premises in accordance with the terms of

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Section 3.1(a) the Lease. Commencing on February 7, 2012, and continuing through the Extended Lease Term, Tenant shall pay monthly installments of Base Rent for the Premises as follows:

Period During Extended Term	AnnualBase Rent		Monthly Installmentof Base Rent		MonthlyRental Rate per Square  Foot
February 7, 2012 - February 6, 2013	$	1,781,910.00	$	148,492.50	$	3.25
February 7, 2013 - February 6, 2014	$	1,836,738.00	$	153,061.50	$	3.35
February 7, 2014 - February 6, 2015	$	1,891,566.00	$	157,630.50	$	3.45
February 7, 2015 - February 6, 2016	$	1,946,394.00	$	162,199.50	$	3.55
February 7, 2016 - February 6, 2017	$	2,006,704.80	$	167,225.40	$	3.66
February 7, 2017 - February 6, 2018	$	2,067,015.60	$	172,251.30	$	3.77
February 7, 2018 - February 6, 2019	$	2,127,326.40	$	177,277.20	$	3.88

4.2 Additional Rent. Prior to and during the Extended Term, Tenant shall continue to pay Tenant’s Operating Cost Share of the Operating Expenses and all other monetary obligations of Tenant in accordance with the terms of the Lease.

5. Option to Extend Term. Tenant shall continue to have two (2) options to extend the term of the Lease as of the end of the Extended Term as provided in Section 2.6 of the Original Lease, provided that the Original Lease as it relates to such options is hereby amended as follows.

5.1 Term of Extension. The length of each such option term shall be three (3) years, and not five (5) years as provided in the Original Lease.

5.2 Rental During Option Term. The rental increases of “one hundred four percent (104%)” as provided in subsections (i) and (ii) of Section 3.1(b) of the Original Lease, are hereby amended to be rental increases of “one hundred three percent (103%)”.

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6. Notices. Landlord’s address for Notices under Section 17.1 of the Lease shall be changed to the following:

if to Landlord:	HCP LS Redwood City, LLC
	c/o HCP, Inc.
	3760 Kilroy Airport Way, Suite 300
	Long Beach, CA 90806
	Attention: Legal Department
	and
	HCP Life Science Estates
	400 Oyster Point Boulevard, Suite 409
	South San Francisco, CA 94080
	Attention: Jon Bergschneider
	and
	Allen Matkins Leck Gamble Mallory & Natsis LLP
	1901 Avenue of the Stars
	Suite 1800
	Los Angeles, California 90067
	Attention: Anton N. Natsis, Esq.

7. Broker. Landlord and Tenant hereby warrant to each other that they have had no dealings with any real estate broker or agent in connection with the negotiation of this Amendment other than CB Richard Ellis, Inc. (the “Broker”), representing both Landlord and Tenant, and that they know of no other real estate broker or agent who is entitled to a commission in connection with this Amendment. Each party agrees to indemnify and defend the other party against and hold the other party harmless from any and all claims, demands, losses, liabilities, lawsuits, judgments, costs and expenses (including without limitation reasonable attorneys’ fees) with respect to any leasing commission or equivalent compensation alleged to be owing on account of any dealings with any real estate broker or agent, other than the Broker, occurring by, through, or under the indemnifying party. Landlord shall be responsible for all leasing commissions and/or equivalent compensation payable to the Broker in connection with this Amendment. The terms of this Section 7 shall survive the expiration or earlier termination of the term of the Lease, as hereby amended.

8. No Further Modification. Except as specifically set forth in this Amendment, all of the terms and provisions of the Lease shall remain unmodified and in full force and effect.

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IN WITNESS WHEREOF, this Amendment has been executed as of the day and year first above written.

“LANDLORD”	HCP LS REDWOOD CITY, LLC,
	a Delaware limited liability company
	By:	/s/ Jonathan M. Bergschneider
		Name:	Jonathan M. Bergschneider
		Its:	SVP
“TENANT”	ONCOMED PHARMACEUTICALS, INC.,
	a Delaware corporation
	By:	/s/ Paul J. Hastings
		Its:	CEO & President
		Date:	12/22/10

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EXHIBIT A

TENANT WORK LETTER

This Tenant Work Letter shall set forth the terms and conditions relating to the initial improvement of the Premises for Tenant following the date of this Amendment. This Tenant Work Letter is essentially organized chronologically and addresses the issues of construction, in sequence, as such issues will arise during construction in the Premises.

SECTION 1

CONDITION OF PREMISES

Tenant acknowledges that Tenant has been occupying the Premises in accordance with the Lease, and shall continue to accept the Premises in their existing, “as-is” condition on the date of delivery thereof to Tenant. Except for the payment of the Tenant Improvement Allowance as provided in Section 2, below, Landlord shall have no obligation to make or pay for any improvements to the Premises.

SECTION 2

TENANT IMPROVEMENTS

2.1 Tenant Improvement Allowance. Commencing as of January 1, 2011, Tenant shall be entitled to use the “Tenant Improvement Allowance”, as defined in Section 2 of this Amendment, for the costs relating to the design and construction of Tenant’s improvements or which are otherwise “Tenant Improvement Allowance items,” as that term is defined in Section 2.2.1, below (collectively, the “Tenant Improvements”). In no event shall Landlord be obligated to make disbursements pursuant to this Tenant Work Letter or otherwise in connection with Tenant’s construction of the Tenant Improvements or any Tenant Improvement Allowance Items, as defined below, in a total amount which exceeds the sum of the Tenant Improvement Allowance. All Tenant Improvements for which the Tenant Improvement Allowance has been made available shall be deemed Landlord’s property under the terms of the Lease; provided, however, Landlord may, by written notice to Tenant given concurrently with Landlord’s approval of the “Final Working Drawings”, as that term is defined in Section 3.3, below, require Tenant, prior to the end of the Lease Term or promptly following any earlier termination of this Lease, at Tenant’s expense, to remove any Tenant Improvements and to repair any damage to the Premises and Building caused by such removal and return the affected portion of the Premises to a Building standard general office condition; provided, however, that Landlord shall not require Tenant to remove upon termination or expiration of this Lease, or condition its approval upon Tenant’s agreement to remove upon termination or expiration of this Lease, any Tenant Improvements constructed pursuant to this Tenant Work Letter (including, without limitation, Larc improvements) which constitute standard, non-extraordinary improvements for ordinary office, laboratory and/or Larc uses in biotech facilities. Any portion of the Tenant Improvement Allowance that is not disbursed or allocated for disbursement by December 31, 2013, shall revert to Landlord and Tenant shall have no further rights with respect thereto.

EXHIBIT A

1

2.2 Disbursement of the Tenant Improvement Allowance.

2.2.1 Tenant Improvement Allowance Items. Except as otherwise set forth in this Tenant Work Letter, the Tenant Improvement Allowance shall be disbursed by Landlord only for the following items and costs (collectively the “Tenant Improvement Allowance Items”):

2.2.1.1 Payment of all reasonable fees of the “Architect” and the “Engineers,” as those terms are defined in Section 3.1 of this Tenant Work Letter, project management fees, and payment of the fees incurred by, and the cost of documents and materials supplied by, Tenant and Tenant’s consultants in connection with the preparation and review of the “Construction Drawings,” as that term is defined in Section 3.2 of this Tenant Work Letter;

2.2.1.2 The payment of plan check, permit and license fees relating to construction of the Tenant Improvements;

2.2.1.3 The payment for all demolition and removal of existing improvements in the Premises;

2.2.1.4 The cost of the design and construction of the Tenant Improvements, including, without limitation, testing and inspection costs, costs incurred for removal of existing furniture, fixtures or equipment in the Premises, hoisting and trash removal costs, costs to remove wiring and cabling, costs to install wiring and cabling other than related to telecom or data uses, costs to purchase and install in the Premises equipment customarily incorporated into laboratory improvements or laboratory utility systems, including, without limitation, UPS, DI Systems, boilers, air compressors, glass/cage washers and autoclaves, painting, and contractors’ fees and general conditions;

2.2.1.5 The cost of any changes in the Base Building when such changes are required by the Construction Drawings (including if such changes are due to the fact that such work is prepared on an unoccupied basis), such cost to include all direct architectural and/or engineering fees and expenses incurred in connection therewith;

2.2.1.6 The cost of any changes to the Construction Drawings or Tenant Improvements required by all applicable building codes (the “Code”);

2.2.1.7 Sales and use taxes; and

2.2.1.8 Up to Three Hundred Twenty Thousand Dollars ($320,000) of the Tenant Improvement Allowance not otherwise used for items set forth in Section 2.2.1.4, above, may be used toward the purchase of furniture, fixtures and equipment (“FF&E”) (any FF&E purchased through the use of the Tenant Improvement Allowance in accordance with this Tenant Work Letter shall become property of the Landlord and remain in the Premises upon the expiration or earlier termination of the Lease), and for telecom and/or data wiring and cabling (provided that no more than $15,000 of such amount may be used for Such cabling purposes).

EXHIBIT A

2

2.2.3 Disbursement of Tenant Improvement Allowance. During the construction of the Tenant Improvements, Landlord shall make monthly disbursements of the Tenant Improvement Allowance for Tenant Improvement Allowance Items for the benefit of Tenant and shall authorize the release of monies for the benefit of Tenant as follows.

2.2.3.1 Monthly Disbursements. On or before the fifth (5^th) day of each calendar month, during the design and construction of the Tenant Improvements (or such other date as Landlord may designate), Tenant shall deliver to Landlord: (i) a request for reimbursement of amounts paid to the “Contractor,” as that term is defined in Section 4.1.1 of this Tenant Work Letter, approved by Tenant, in a commercially reasonable form to be provided by Landlord, showing the schedule, by trade, of percentage of completion of the Tenant Improvements in the Premises, detailing the portion of the work completed and the portion not completed; (ii) invoices from all of “Tenant’s Agents,” as that term is defined in Section 4.1.2 of this Tenant Work Letter, for labor rendered and materials for the Premises; (iii) executed mechanic’s lien releases, as applicable, from all of Tenant’s Agents which shall comply with the appropriate provisions, as reasonably determined by Landlord, of California Civil Code Section 3262(d); and (iv) all other information reasonably requested by Landlord. Tenant’s request for payment shall be deemed Tenant’s acceptance and approval of the work furnished and/or the materials supplied as set forth in Tenant’s payment request. Within forty-five (45) days thereafter, Landlord shall deliver a check to Tenant made payable to Tenant in payment of the lesser of: (A) the amounts so requested by “tenant as set forth in this Section 2.2.3.1, above (or, subject to the terms of Section 4.2.1, below, a percentage thereof), and (B) the balance of any remaining available portion of the Tenant Improvement Allowance, provided that Landlord does not dispute any request for payment based on non-compliance of any work with the “Approved Working Drawings,” as that term is defined in Section 3.5 below, or due to any substandard work. Landlord’s payment of such amounts shall not be deemed Landlord’s approval or acceptance of the work furnished or materials supplied as set forth in Tenant’s payment request.

2.2.3.2 Final Deliveries. Following the completion of construction of the Tenant Improvements, Tenant shall deliver to Landlord properly executed final mechanic’s lien releases in compliance with both California Civil Code Section 3262(d)(2) and either Section 3262(d)(3) or Section 3262(d)(4) from all of Tenant’s Agents, and a certificate certifying that the construction of the Tenant Improvements in the Premises has been substantially completed. Tenant shall record a valid Notice of Completion in accordance with the requirements of Section 4.3 of this Tenant Work Letter.

2.2.3.3 Other Terms. Landlord shall only be obligated to make disbursements from the Tenant Improvement Allowance to the extent costs are incurred by Tenant for Tenant Improvement Allowance Items. All Tenant Improvement Allowance Items for which the Tenant Improvement Allowance has been made available shall be deemed Landlord’s property under the terms of this Lease.

2.3 Building Standards. The quality of Tenant Improvements shall be in keeping with the existing improvements in the Premises.

EXHIBIT A

3

SECTION 3

CONSTRUCTION DRAWINGS

3.1 Selection of Architect. Tenant shall retain an architect/space planner (the “Architect”) approved in advance by Landlord (which approval shall not be unreasonably withheld) to prepare the Final Space Plan and Final Working Drawings as provided in Section 3.2 and 3.3, below. Landlord hereby approves of WHL Architects*Planners, Inc., as a permitted Architect hereunder. Tenant shall retain the engineering consultants or design/build subcontractors designated by Tenant and reasonably approved in advance by Landlord (the “Engineers”) to prepare all plans and engineering working drawings relating to the structural, mechanical, electrical, plumbing, HVAC, lifesafety, and sprinkler work in the Premises, which work is not part of the Base Building. All such plans and drawings shall comply with the drawing format and specifications reasonably determined by Landlord, and shall be subject to Landlord’s reasonable approval. Tenant and Architect shall verify, in the field, the dimensions and conditions as shown on the relevant portions of the Base Building plans, and Tenant and Architect shall be solely responsible for the same, and Landlord shall have no responsibility in connection therewith. Landlord’s review of any plans or drawings as set forth in this Section 3, shall be for its sole purpose and shall not imply Landlord’s review of the same, or obligate Landlord to review the same, for quality, design, Code compliance or other like matters.

3.2 Final Space Plan. Tenant shall supply Landlord with four (4) copies signed by Tenant of its final space plan for the Premises before any architectural working drawings or engineering drawings have been commenced. The final space plan (the “Final Space Plan”) shall include a layout and designation of all offices, labs, rooms and other partitioning, their intended use, and equipment to be contained therein. Landlord may request clarification or more specific drawings for special use items not included in the Final Space Plan. Landlord shall not unreasonably withhold, condition, or delay its approval of the Final Space Plan. Landlord shall approve or reasonably disapprove of the Final Space Plan within five (5) business days after Landlord’s receipt thereof. If Landlord reasonably withholds its approval, Landlord shall provide Tenant with the specific reasons therefor.

3.3 Final Working Drawings. After the Final Space Plan has been approved by Landlord, Tenant shall supply the Engineers with a complete listing of standard and non-standard equipment and specifications, including, without limitation, Title 24 calculations, electrical requirements and special electrical receptacle requirements for the Premises, to enable the Engineers and the Architect to complete the “Final Working Drawings” (as that term is defined below) in the manner as set forth below. Upon the approval of the Final Space Plan by Landlord and Tenant, Tenant shall promptly cause the Architect and the Engineers to complete the architectural and engineering drawings for the Premises, and Architect shall compile a fully coordinated set of architectural, structural, mechanical, electrical and plumbing working drawings in a form which is sufficiently complete to allow all of Tenant’s Agents to bid on the work and to obtain all applicable permits (collectively, the ‘‘Final Working Drawings”) and shall submit the same to Landlord for Landlord’s approval, which shall not be unreasonably withheld, conditioned, or delayed. Tenant shall supply Landlord with four (4) copies signed by Tenant of such Final Working Drawings, Landlord shall not unreasonably withhold, condition, or delay its approval of the Final Working Drawings. Landlord shall approve or reasonably

EXHIBIT A

4

disapprove of the Final Working Drawings within ten (10) business days after Landlord’s receipt thereof. If Landlord reasonably withholds its approval, Landlord shall provide Tenant with the specific reasons therefor.

3.4 Approved Working Drawings. The Final Working Drawings shall be approved by Landlord (the “Approved Working Drawings”) prior to the commencement of construction of the Premises by Tenant. Concurrently with Tenant’s delivery of the Final Working Drawings to Landlord for Landlord’s approval, Tenant may submit the same to the appropriate municipal authorities for all applicable building permits. Tenant hereby agrees that neither Landlord nor Landlord’s consultants shall be responsible for obtaining any building permit or certificate of occupancy for the Premises and that obtaining the same shall be Tenant’s responsibility; provided, however, that Landlord shall cooperate with Tenant in executing permit applications and performing other ministerial acts reasonably necessary to enable Tenant to obtain any such permit or certificate of occupancy. No changes, modifications or alterations in the Approved Working Drawings may be made without the prior written consent of Landlord, which shall not be unreasonably withheld, conditioned, or delayed, except that Tenant shall be entitled to make minor changes customarily made in the field without Landlords consent, provided that Tenant shall provide notice to Landlord thereof and any documentation received in connection with any such changes.

SECTION 4

CONSTRUCTION OF THE TENANT IMPROVEMENTS

4.1 Tenant’s Selection of Contractors.

4.1.1 The Contractor; Landlord’s Project Manager. Tenant shall retain a licensed general contractor, approved in advance by Landlord, to construct the Tenant Improvements (“Contractor”). Landlord’s approval of the Contractor shall not be unreasonably withheld. Landlord hereby approves of Landmark Builders Incorporated as a permitted Contractor hereunder. Landlord shall retain Project Management Advisors, Inc. (“PMA”) as a third party project manager for construction oversight of the Tenant Improvements on behalf of Landlord. Landlord shall be solely responsible for any fee associated with such services.

4.1.2 Tenant’s Agents. All subcontractors, laborers, materialmen, and suppliers used by Tenant (such subcontractors, laborers, materialmen, and suppliers, and the Contractor to be known collectively as “Tenant’s Agents”). The subcontractors used by Tenant, but not any laborers, materialmen, and suppliers, must be approved in writing by Landlord, which approval shall not be unreasonably withheld, conditioned, or delayed; provided, however, Landlord may nevertheless reasonably designate and reasonably require the use of particular mechanical, engineering, plumbing, fire life-safety and other Base Building subcontractors. If Landlord does not approve any of Tenant’s proposed subcontractors, Tenant shall submit other proposed subcontractors for Landlord’s written approval.

EXHIBIT A

5

4.2 Construction of Tenant Improvements by Tenant’s Agents.

4.2.1 Construction Contract; Cost Budget. Tenant shall engage the Contractor under a commercially reasonable and customary construction contract, reasonably approved by Landlord (collectively, the “Contract”). Prior to the commencement of the construction of the Tenant Improvements, and after Tenant has accepted all bids for the Tenant Improvements, Tenant shall provide Landlord with a detailed breakdown, by trade, of the final costs to be incurred or which have been incurred, as set forth more particularly in Sections 2.2.1.1 through 2.2.1.9, above, in connection with the design and construction of the Tenant Improvements to be performed by or at the direction of Tenant or the Contractor, which costs form a basis for the estimated total costs of the work of the Tenant Improvement project (the “Final Budget”). Prior to the commencement of construction of the Tenant Improvements, Tenant shall inform Landlord of the amount (the “Over-Allowance Amount”), if any, by which the amount of the Final Budget exceeds the amount of the Tenant Improvement Allowance (less any portion thereof already disbursed by Landlord, or in the process of being disbursed by Landlord, on or before the commencement of construction of the Tenant Improvements). Tenant shall be responsible to pay any Over-Allowance Amount in progress payments on a pro rata basis based on the total Over-Allowance Amount as compared to the Tenant Improvement Allowance.

4.2.2 Tenant’s Agents.

4.2.2.1 Compliance with Drawings and Schedule. Tenant’s and Tenant’s Agent’s construction of the Tenant Improvements shall comply with the following: (i) the Tenant Improvements shall be constructed in substantial accordance with the Approved Working Drawings; and (ii) Tenant’s Agents shall endeavor to submit schedules of all work relating to the Tenant’s Improvements to Contractor and Contractor shall endeavor, within five (5) business days of receipt thereof, to inform Tenant’s Agents of any changes which are necessary thereto, and Tenant’s Agents shall endeavor to adhere to such corrected schedule.

4.2.2.2 Indemnity. Tenant’s indemnity of Landlord as set forth in this Lease shall also apply with respect to any and all costs, losses, damages, injuries and liabilities related in any way to any act or omission of Tenant or Tenant’s Agents, or anyone directly or indirectly employed by any of them, or in connection with Tenant’s non-payment of any amount arising out of the Tenant improvements and/or Tenant’s disapproval of all or any portion of any request for payment. Such indemnity by Tenant, as set forth in this Lease, shall also apply with respect to any and all costs, losses, damages, injuries and liabilities related in any way to Landlord’s performance of any ministerial acts reasonably necessary (i) to permit Tenant to complete the Tenant Improvements, and (ii) to enable Tenant to obtain any building permit or certificate of occupancy for the Premises. The foregoing indemnities shall not apply to claims caused by the negligence or willful misconduct of Landlord, its member partners, shareholders, officers, directors, agents, employees, and/or contractors.

4.2.2.3 Requirements of Tenant’s Agents. Each of Tenant’s Agents shall provide to Tenant and for the benefit of Landlord a commercially reasonable and customary warranty covering the portion of the Tenant Improvements for which it is responsible, which warranty shall be for a period of not less than one (1) year from the date of substantial

EXHIBIT A

6

completion of the work under the Contract (“Substantial Completion”). All such warranties as to materials or workmanship of or with respect to the Tenant Improvements shall be contained in the Contract or subcontract and shall be written such that such warranties shall inure to the benefit of both Landlord and Tenant, as their respective interests may appear, and can be directly enforced by either.

4.2.2.4 Insurance Requirements.

4.2.2.4.1 General Coverages. All of Tenant’s Agents shall carry worker’s compensation insurance covering all of their respective employees, and shall also carry public liability insurance, including property damage, all with limits, in form and with companies as are required to be carried by Tenant’s contractors as set forth in Section 7.1 of the Lease.

4.2.2.4.2 Special Coverages. Tenant shall carry “Builder’s All Risk” insurance in an amount approved by Landlord covering the construction of the Tenant Improvements, and such other insurance as Landlord may require, but Landlord shall insure the Tenant Improvements pursuant to the Lease immediately upon completion thereof in the same manner as Landlord is required to insure the “Tenant Improvements constructed by Landlord” pursuant to Section 10.1(d) of the Lease. Such insurance shall be in amounts and shall include such extended coverage endorsements as may be reasonably required by Landlord including, but not limited to, the requirement that all of Tenant’s Agents, including all contractors, shall carry general liability, including Products and Completed Operation Coverage insurance, each in amounts not less than (i) for the Contractor, $5,000,000 per incident, $5,000,000 in aggregate, and (ii) for subcontractors, $2,000,000 per incident, $2,000,000 in aggregate (or such lesser amounts as are reasonably approved in advance by Landlord), as well as workers compensation insurance and in form and with companies as are required to be carried by Tenant’s contractors as set forth in the Lease.

4.2.2.4.3 General Terms. Certificates for all insurance carried pursuant to this Section 4.2.2.4 Shall be delivered to Landlord before the commencement of construction of the Tenant Improvements and before any equipment of Tenant’s Agents is moved onto the site. All such policies of insurance must contain a provision that the company writing said policy will endeavor to give Landlord thirty (30) days prior written notice of any cancellation or lapse of the effective date or any reduction in the amounts of such insurance. Tenant shall provide Landlord notice of any cancellation or lapse of the effective date or reduction in the amounts of such insurance promptly following Tenant’s receipt of such notice from its insurer. In the event that the Tenant Improvements are damaged by any cause during the course of the construction thereof, Tenant shall immediately repair the same at Tenant’s sole cost and expense. Tenant’s Agents shall maintain all of the foregoing insurance coverage in force until the Tenant Improvements are fully completed and accepted by Landlord, except for Products and Completed Operations Coverage insurance required by Landlord, which is to be maintained for a commercially reasonable period following completion of the Tenant Improvements and acceptance by Landlord and Tenant. The builders risk policy carried under thisSection 4.2.2.4 shall name Tenant’s agents and Landlord as Additional Insureds. All insurance maintained by Tenant’s Agents shall preclude subrogation claims by the insurer against anyone insured thereunder, and the public liability insurance shall name Landlord, HCP, Inc., Project Management Advisors, Inc., CB Richard Ellis, or other manager of the Project, as

EXHIBIT A

7

an additional insured or loss payee, as applicable. Such insurance shall provide that it is primary insurance and that any other insurance maintained by Landlord is excess and noncontributing with the insurance required hereunder, The requirements for the foregoing insurance shall not serve to limit the indemnification of Landlord by Tenant under Section 4.2.2.2 of this Tenant Work Letter. If the Over-Allowance Amount is more than fifty percent of the total amount of the Tenant Improvement Allowance, then Landlord may, in its reasonable discretion, require Tenant to obtain a lien and completion bond or some alternate form of security satisfactory to Landlord in an amount sufficient to ensure the lien-free completion of the Tenant Improvements and naming Landlord as a co-obligee.

4.2.3 Governmental Compliance. The Tenant Improvements shall comply in all respects with the following: (i) all state, federal, city or quasi-governmental laws, codes, ordinances and regulations, as each may apply according to the rulings of the controlling public official, agent or other person; (ii) applicable standards of the American Insurance Association (formerly, the National Board of Fire Underwriters) and the National Electrical Code; and (iii) building material manufacturer’s specifications.

4.2.4 Inspection by Landlord. Landlord shall have the right to reasonably inspect the Tenant Improvements at all times, provided however, that Landlord’s failure to inspect the Tenant Improvements shall in no event constitute a waiver of any of Landlord’s rights hereunder nor shall Landlord’s inspection of the Tenant Improvements constitute Landlord’s approval of the same. Should Landlord reasonably disapprove any portion of the Tenant Improvements, on the grounds that the construction is defective or fails to comply with the Approved Working Drawings, Landlord shall notify Tenant in writing of such disapproval and shall specify the items disapproved. Any such defects or deviations shall be rectified by Tenant at no expense to Landlord, provided however, that in the event Landlord determines that a defect or deviation exists that might adversely affect the mechanical, electrical, plumbing, heating, ventilating and air conditioning or life-safety systems of the Building, the structure or exterior appearance of the Building or any other tenant’s use of such other tenant’s leased premises, Landlord may, take such action as Landlord reasonably deems necessary, at Tenant’s expense and without incurring any liability on Landlord’s part, to correct any such defect and/or deviation, including, without limitation, causing the cessation of performance of the construction of the Tenant Improvements until such time as the defect and/or deviation is corrected to Landlord’s reasonable satisfaction.

4.2.5 Meetings. Commencing upon the execution of this Lease, Tenant shall hold weekly meetings at a reasonable time, as reasonably required, with the Architect and the Contractor regarding the progress of the preparation of Construction Drawings and the construction of the Tenant Improvements, and Landlord and/or its agents shall receive prior notice of, and shall have the right to attend, all such meetings, and, upon Landlord’s request, certain of Tenant’s Agents shall attend such meetings. In addition, minutes shall be taken at all such meetings, a copy of which minutes shall be promptly delivered to Landlord. One such meeting each month shall include the review of Contractor’s current request for payment.

4.3 Notice of Completion; Copy of Record Set of Plans. Within ten (10) days after completion of construction of The Tenant Improvements, Tenant shall cause a valid Notice of Completion to be recorded in the office of the Recorder of the county in which the Building is

EXHIBIT A

8

located in accordance with Section 3093 of the Civil Code of the State of California or any successor statute, and shall furnish a copy thereof to Landlord upon such recordation. If Tenant fails to do so, Landlord may execute and file the same on behalf of Tenant as Tenant’s agent for such purpose, at Tenant’s sole cost and expense. At the conclusion of construction, (i) Tenant shall cause the Architect and Contractor (x) to update the Approved Working Drawings as necessary to reflect all changes made to the Approved Working Drawings during the course of construction, (y) to certify to the best of their knowledge that the “record-set” of as-built drawings are true and correct, which certification shall survive the expiration or termination of this Lease, and (z) to deliver to Landlord two (2) sets of copies of such record set of drawings (hard copy and CAD files) within ninety (90) days following issuance of a certificate of occupancy for the Premises, and (ii) Tenant shall deliver to Landlord a copy of all warranties and operating manuals and information relating to the Tenant Improvements. Within fifteen (15) days after request by Tenant following the Substantial Completion of the Tenant Improvements, Landlord will acknowledge its approval of the Tenant Improvements (provided that such approval has been granted) by placing its signature on a Contractor’s Certificate of Substantial Completion fully executed by the Architect, Contractor and Tenant. Landlord’s approval shall not create any contingent liabilities for Landlord with respect to any latent quality, design, Code compliance or other like matters that may arise subsequent to Landlord’s approval.

SECTION 5

MISCELLANEOUS

5.1 Tenant’s Representative. Tenant has designated Chuck Alaimo as its sole representatives with respect to the matters set forth in this Tenant Work Letter, who shall each have full authority and responsibility to act on behalf of the Tenant as required in this Tenant Work Letter.

5.2 Landlord’s Representative. Landlord has designated Bernie Baker and/or Jeff Marcowitz with PMA, as its sole representatives with respect to the matters set forth in this Tenant Work Letter, who, until further notice to Tenant, shall have full authority and responsibility to act on behalf of the Landlord as required in this Tenant Work Letter.

5.3 Time is of the Essence in This Tenant Work Letter. Unless otherwise indicated, all references herein to a “number of days” shall mean and refer to calendar days. If any item requiring approval is timely disapproved by Landlord, the procedure for preparation of the document and approval thereof shall be repeated until the document is approved by Landlord.

5.4 Tenant’s Lease Default. Notwithstanding any provision to the contrary contained in the Lease or this Tenant Work Letter, if any default by Tenant under the Lease or this Tenant Work Letter (including, without limitation, any failure by Tenant to fund any portion of the Over-Allowance Amount) occurs at any time on or before the substantial completion of the Tenant Improvements and such default remains uncured ten (10) days following Landlord’s notice of such default to Tenant, then in addition to all other rights and remedies granted to Landlord pursuant to the Lease, Landlord shall have the right, during the continuation of such default, to withhold payment of all or any portion of the Tenant Improvement Allowance and/or, without any liability whatsoever, to cause the cessation of construction of the Tenant

EXHIBIT A

9

Improvements (in which case, Tenant shall be responsible for any delay in the substantial completion of the Tenant Improvements and any costs occasioned thereby).

EXHIBIT A

10

THIRD AMENDMENT TO LEASE

This THIRD AMENDMENT TO LEASE (this "Third Amendment") is made and entered into as of the 11 day of November, 2016, by and between HCP LS REDWOOD CITY, LLC, a Delaware limited liability company ("Landlord"), and ONCOMED PHARMACEUTICALS, INC., a Delaware corporation("Tenant").

R E C I T A L S :

A.Landlord (as successor in interest to Slough Redwood City, LLC) and Tenant are parties to that certain Lease dated May 30, 2006 (the "Original Lease"), as amended by that certain First Amendment to Lease dated November, 2006 (the "First Amendment"), that certain Acknowledgement of Rent Commencement Date dated as of March 9, 2007 ("Commencement Letter"), and that certain Second Amendment to Office Lease dated December 22, 2010 (the "Second Amendment") pursuant to which Lease Tenant leases from Landlord approximately 45,690 rentable square feet of space (the "Existing Premises") consisting of the entire building (the " 800 Building") located at 800 Chesapeake Drive, in the Britannia Seaport Centre in Redwood City, California.  The Original Lease, the First Amendment, the Commencement Letter and the Second Amendment are, collectively, the "Lease."

B.Landlord and Tenant desire (i) to extend the Lease Term of the Lease, (ii) to expand the Existing Premises to include that certain space consisting of approximately 22,750 rentable square feet of space consisting of space on the first (1^st) floor of the building (the "900 Building") located at 900 Chesapeake Drive, in the Britannia Seaport Centre in Redwood City, California (the "Expansion Premises"), as delineated on Exhibit A attached hereto and made a part hereof, and (iii) to make other modifications to the Lease, and in connection therewith, Landlord and Tenant desire to amend the Lease as hereinafter provided.

A G R E E M E N T :

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1.Capitalized Terms.  All capitalized terms when used herein shall have the same meaning as is given such terms in the Lease unless expressly superseded by the terms of this Third Amendment.

2.Modification of Premises.  Effective as of the date (the "Expansion Commencement Date") which is the earlier to occur of (i) the date upon which Tenant first commences to conduct business in the Expansion Premises and (ii) the Target Commencement Date (as defined below), Tenant shall lease from Landlord and Landlord shall lease to Tenant the Expansion Premises.  The “Target Commencement Date” shall mean June 1, 2018; provided, however, if Landlord fails to deliver possession of the Expansion Premises to Tenant on or before the Target Delivery Date (as defined below), then the Target Commencement Date shall be extended beyond June 1, 2018, by one (1) day for each day delivery of possession of the

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Expansion Premises to Tenant is delayed beyond the Target Delivery Date.  Landlord and Tenant hereby acknowledge that the Expansion Premises shall be occupied by a third-party tenant (the "Third Party") pursuant to a lease to be entered into between Landlord and such Third Party (the "Third-Party Lease").  Such Third-Party Lease shall contain an unconditional right of Landlord to terminate the Third-Party Lease.  In the event Tenant shall lease the Expansion Premises (either via delivery of the "Expansion Confirmation Notice" (as that term is defined in Section 7 below) or if Tenant fails to deliver the "Expansion Termination Notice" (as that term is defined in Section 7 below)) Landlord shall cause the Third-Party Lease to terminate on or prior to the Target Delivery Date (by exercise of the right to terminate or otherwise), but Landlord's ability to deliver the Expansion Premises to Tenant is expressly conditioned upon the full vacation and surrender of the Expansion Premises by the Third Party to Landlord.  Provided that Landlord has caused the Third-Party Lease to terminate on or before the Target Delivery Date (by exercise of the right to terminate or otherwise), if Landlord is unable for any reason to deliver possession of the Expansion Premises to Tenant on or before the Target Delivery Date, then Landlord shall not be subject to any liability for its failure to do so, and such failure shall not affect the validity of this Third Amendment or the obligations of Tenant hereunder.  In connection with the foregoing, Landlord agrees to utilize commercially reasonable efforts to deliver the Expansion Premises on or before the Target Delivery Date.  The “Target Delivery Date” shall mean the later of (a) six (6) months following the earlier to occur of (i) Landlord's receipt of the Expansion Confirmation Notice, and (ii) the last day upon which Tenant may deliver the "Expansion Termination Notice" (as that term is defined in Section 7 below) (i.e., September 15, 2017), or (b) January 1, 2018.  Effective upon the Expansion Commencement Date, the Existing Premises shall be increased to include the Expansion Premises.  Landlord and Tenant hereby acknowledge that such addition of the Expansion Premises to the Existing Premises shall, effective as of the Expansion Commencement Date, increase the size of the Premises to approximately 68,440 rentable square feet.  The Existing Premises and the Expansion Premises may hereinafter collectively be referred to as the "Premises".  Notwithstanding the foregoing, in the event Landlord is not able to deliver the Expansion Premises to Tenant on or before June 1, 2018 (subject to extension by virtue of delays resulting from events of "Force Majeure" (as that term is defined below), then commencing on the Expansion Commencement Date, Tenant shall receive one (1) day of abatement of Base Rent with respect to the Expansion Premises for each day delivery of the Expansion Premises is delayed beyond June 1, 2018.  For purposes of this Third Amendment, Force Majeure shall mean any prevention, delay or stoppage due to strikes, lockouts, labor disputes, acts of God, inability to obtain services, labor, or materials or reasonable substitutes therefor, governmental actions, civil commotions, fire or other casualty, and other causes beyond the reasonable control of the party obligated to perform (collectively, a "Force Majeure").  Force Majeure shall not include a holdover of the Expansion Premises by the Third Party.

3.Lease Term.  

3.1.Expansion Term.  Landlord and Tenant acknowledge that Tenant's lease of the Existing Premises is scheduled to expire on February 6, 2019, pursuant to the terms of the Lease.  Notwithstanding anything to the contrary in the Lease, the term of Tenant's lease of the Existing Premises is hereby extended and shall expire coterminously with the term of Tenant's lease of the Expansion Premises on May 31, 2028 (the "Expansion Expiration Date"), unless sooner terminated as provided in the Lease, as hereby amended, provided that in the event

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Tenant timely exercises the Expansion Termination Right, then the Lease Term with respect to the Existing Premises shall still be extended to and shall expire on May 31, 2028.  The period of time commencing on the Expansion Commencement Date and terminating on the Expansion Expiration Date, shall be referred to herein as the "Expansion Term."  

3.2.Option Term.  Landlord and Tenant acknowledge and agree that notwithstanding the extension of the Lease Term set forth in Section 3.1 above, Tenant shall retain one (1) option to extend the Expansion Term (with respect to the Expansion Premises) and to further extend the Lease Term (with respect to the Existing Premises) as set forth in Section 2.6 of the Original Lease (as amended pursuant to Section 5 of the Second Amendment), provided that all references to the "Premises" therein shall be deemed to be references to both the Existing Premises and the Expansion Premises.

4.Base Rent.  

4.1.Existing Premises.  Prior to September 1, 2016, Tenant continued to pay Base Rent (also referred to as “minimum rental” under the Lease) for the Existing Premises in accordance with the terms of the Lease.  Commencing retroactively on September 1, 2016, and continuing throughout the remainder of the Lease Term, Tenant shall pay to Landlord monthly installments of Base Rent for the Existing Premises as follows:

Period During Expansion Term	Annualized Base Rent		MonthlyInstallment of Base Rent		Approximate Monthly Rental Rate per Rentable Square Foot
September 1, 2016 –  May 31, 2018	$2,275,362.00		$189,613.50		$4.15
June 1, 2018 –  May 31, 2019	$2,357,604.00		$196,467.00		$4.30
June 1, 2019 –  May 31, 2020	$2,440,120.14		$203,343.35		$4.45
June 1, 2020 –  May 31, 2021	$2,525,524.34		$210,460.36		$4.61
June 1, 2021 –  May 31, 2022	$2,613,917.70		$217,826.47		$4.77
June 1, 2022 –  May 31, 2023	$2,705,404.82		$225,450.40		$4.93
June 1, 2023 –  May 31, 2024	$2,800,093.98		$233,341.17		$5.11
June 1, 2024 –  May 31, 2025	$2,898,097.27		$241,508.11		$5.29
761257.05/WLA 183305-00010/3-9-17/gjn/gjn		-3-		HCP LS Redwood City, LLC [Third Amendment] [Oncomed Pharmaceuticals, Inc.]

June 1, 2025 –  May 31, 2026	$2,999,530.68	$249,960.89	$5.47
June 1, 2026 –  May 31, 2027	$3,104,514.25	$258,709.52	$5.66
June 1, 2027 –  May 31, 2028	$3,213,172.25	$267,764.35	$5.86

4.2.Existing Premises Abated Base Rent.  Provided that Tenant is not then in default of the Lease (as hereby amended) beyond the applicable notice and cure periods set forth in the Lease, as amended, then during the period commencing on September 1, 2016 and ending on March 31, 2017 (the "Existing Premises Rent Abatement Period"), Tenant shall not be obligated to pay any Base Rent otherwise attributable to the Existing Premises during such Existing Premises Rent Abatement Period (the "Existing Premises Rent Abatement").  Landlord and Tenant acknowledge that the aggregate amount of the Existing Premises Rent Abatement equals $1,327,294.50 (i.e., $189,613.50 per month).  Tenant acknowledges and agrees that the foregoing Existing Premises Rent Abatement has been granted to Tenant as additional consideration for entering into this Third Amendment, and for agreeing to pay the rent and performing the terms and conditions otherwise required under the Lease (as hereby amended).  

4.3.Expansion Premises.  Commencing on the Expansion Commencement Date and continuing throughout the Expansion Term, Tenant shall pay to Landlord monthly installments of Base Rent (also referred to as “minimum rental” under the Lease) for the Expansion Premises as follows:

Period During Expansion Term	Annual Base Rent		MonthlyInstallment of Base Rent		Approximate Monthly Rental Rate per Rentable Square Foot
Expansion Commencement Date –  May 31, 2019	$1,173,900.00		$97,825.00		$4.30
June 1, 2019 –  May 31, 2020	$1,214,986.50		$101,248.88		$4.45
June 1, 2020 –  May 31, 2021	$1,257,511.03		$104,792.59		$4.61
June 1, 2021 –  May 31, 2022	$1,301,523.91		$108,460.33		$4.77
June 1, 2022 –  May 31, 2023	$1,347,077.25		$112,256.44		$4.93
June 1, 2023 –  May 31, 2024	$1,394,224.95		$116,185.41		$5.11
761257.05/WLA 183305-00010/3-9-17/gjn/gjn		-4-		HCP LS Redwood City, LLC [Third Amendment] [Oncomed Pharmaceuticals, Inc.]

June 1, 2024 –  May 31, 2025	$1,443,022.83	$120,251.90	$5.29
June 1, 2025 –  May 31, 2026	$1,493,528.63	$124,460.72	$5.47
June 1, 2026 –  May 31, 2027	$1,545,802.13	$128,816.84	$5.66
June 1, 2027 –  May 31, 2028	$1,599,905.20	$133,325.43	$5.86

On or before the Expansion Commencement Date, Tenant shall pay to Landlord the Base Rent payable for the Expansion Premises for the first full month of the Expansion Term.

5.Tenant's Operating Cost Share of Operating Expenses.  

5.1.Existing Premises.  Notwithstanding the extension of the Lease Term as provided herein, Tenant shall continue to be obligated to pay Tenant's Operating Cost Share of the Operating Expenses in connection with the Existing Premises in accordance with the terms of the Lease; provided that Landlord and Tenant hereby acknowledge and agree that Tenant shall not be obligated to pay Tenant's Operating Cost Share of the Operating Expenses during the period commencing retroactively on September 1, 2016 through December 31, 2016.  In connection with the foregoing, Landlord and Tenant acknowledge and agree that Tenant has paid minimum rental and Tenant's Operating Cost Share of the Operating Expenses for September 2016, October 2016 and November 2016, and accordingly, within forty-five (45) days following the full execution and delivery of this Third Amendment by Landlord and Tenant, Landlord shall deliver a check to Tenant reimbursing Tenant for such payments previously received by Landlord.

5.2.Expansion Premises.  Except as specifically set forth in this Section 5.2, commencing on the Expansion Commencement Date, Tenant shall pay Tenant's Share of Direct Expenses in connection with the Expansion Premises in accordance with the terms of the Lease, provided that with respect to the calculation of Tenant's Operating Cost Share of the Operating Expenses in connection with the Expansion Premises, Tenant's Operating Cost Share shall equal 50% of the 900 Building.

6.Improvements.  Except as specifically set forth in the Tenant Work Letter attached to this Third Amendment as Exhibit B (the "Tenant Work Letter"), Landlord shall not be obligated to provide or pay for any improvement work or services related to the improvement of the Expansion Premises.  Landlord shall deliver the Expansion Premises to Tenant in good, vacant, broom clean condition, in compliance with all laws (to the extent required to obtain or maintain a certificate of occupancy for the Expansion Premises), with the roof water-tight and shall cause the plumbing, electrical systems, fire sprinkler system, lighting, and all other building systems serving the Expansion Premises to be in good operating condition and repair on or before the Expansion Commencement Date.  Tenant shall otherwise accept the Expansion Premises and continue to accept the Existing Premises in their presently existing, "as-is" condition.  For purposes of Section 1938 of the California Civil Code, Landlord hereby discloses

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to Tenant, and Tenant hereby acknowledges that the Common Areas and the Premises have not undergone inspection by a Certified Access Specialist (CASp).

7.Expansion Premises Termination Right.  Notwithstanding any provision to the contrary contained in the Lease (as amended), Tenant shall have the right (the "Expansion Termination Right"), upon written notice to Landlord (the "Expansion Termination Notice") delivered no later than September 15, 2017, to terminate Tenant's lease of the Expansion Premises only.  Provided that Tenant timely delivers the Expansion Termination Notice as set forth above, then (i) the Lease with respect to the Expansion Premises only shall automatically terminate and be of no further force or effect, (ii) Landlord and Tenant shall be relieved of their respective obligations under the Lease, as amended, solely with respect to the Expansion Premises, (iii) the Premises shall be decreased to exclude the Expansion Premises and thereafter, all references in the Lease and this Third Amendment to the term "Premises" shall be deemed to refer to only the Existing Premises, (iv) the applicable portions of this Third Amendment which relate solely to the Expansion Premises (specifically including, without limitation, Sections 2, 4.3, 5.2 and 9) shall be deemed null and void and of no further force or effect, and the portions of this Amendment which relate solely to the Existing Premises shall remain unmodified and of full force and effect, and (v) Tenant shall only be entitled to receive the "Existing Premises Improvement Allowance" (as defined in the Tenant Work Letter) and Tenant would forfeit any and all right to the "Expansion Premises Improvement Allowance" (as defined in the Tenant Work Letter). In connection with the foregoing, Tenant hereby agrees that if prior to September 15, 2017, Tenant determines that Tenant shall lease the Expansion Premises pursuant to the terms of this Third Amendment, Tenant shall provide written notice of the same to Landlord (the "Expansion Confirmation Notice"), in which event Landlord and Tenant shall promptly thereafter execute an amendment (substantially in the form of Exhibit C attached hereto) to the Lease deleting the Expansion Premises Termination Right and confirming Tenant's lease of the Expansion Premises pursuant to the terms of this Third Amendment.  Notwithstanding the foregoing documentation obligation, Landlord and Tenant hereby acknowledge and agree that Tenant's delivery of the Expansion Confirmation Notice (or Tenant's failure to timely deliver the Expansion Termination Notice) shall, in and of itself, conclusively establish Tenant's obligation to lease the Expansion Premises and Landlord’s obligation to lease to Tenant the Expansion Premises) on the express terms, covenants and conditions set forth in this Third Amendment.  

8.Broker.  Landlord and Tenant hereby warrant to each other that they have had no dealings with any real estate broker or agent in connection with the negotiation of this Third Amendment other than CBRE, Inc. (the "Broker"), and that they know of no other real estate broker or agent who is entitled to a commission in connection with this Third Amendment.  Landlord shall pay the Brokers the commissions payable in connection with this Third Amendment pursuant to a separate agreement.  Each party agrees to indemnify and defend the other party against and hold the other party harmless from any and all claims, demands, losses, liabilities, lawsuits, judgments, and costs and expenses (including, without limitation, reasonable attorneys' fees) with respect to any leasing commission or equivalent compensation alleged to be owing on account of the indemnifying party's dealings with any real estate broker or agent, other than the Broker.  The terms of this Section 8 shall survive the expiration or earlier termination of the term of the Lease, as hereby amended.

761257.05/WLA 183305-00010/3-9-17/gjn/gjn -6-   HCP LS Redwood City, LLC [Third Amendment] [Oncomed Pharmaceuticals, Inc.]

9.Insurance / Restoration.  Landlord and Tenant agree that the Tenant Improvements under the Tenant Work Letter (and the Tenant Improvements under the Second Amendment) shall be deemed to be “Tenant Improvements constructed by Landlord” for purposes of Sections 10.1(c), 10.1(d) and 13.1(a) of the Lease.  

10.No Mortgage.  Landlord represents and warrants to Tenant that as of the date of this Third Amendment, neither the Premises, the 800 Building, the 900 Building nor the Center is subject to any existing ground lease, mortgage, deed of trust, sale/leaseback transaction or any other hypothecation for security.

11.No Further Modification.  Except as set forth in this Third Amendment, all of the terms and provisions of the Lease shall remain unmodified and in full force and effect.  The terms of that certain letter of intent dated September 19, 2016 executed by the parties hereto shall be deemed null and void and of no force or effect.

[signatures contained on following page]

761257.05/WLA 183305-00010/3-9-17/gjn/gjn -7-   HCP LS Redwood City, LLC [Third Amendment] [Oncomed Pharmaceuticals, Inc.]

IN WITNESS WHEREOF, this Third Amendment has been executed as of the day and year first above written.  

LANDLORD:		TENANT:
HCP LS REDWOOD CITY, LLC, a Delaware limited liability company		ONCOMED PHARMACEUTICALS, INC., a Delaware corporation
By:	/s/ Jonathan Bergschneider
	Jonathan Bergschneider	By:	/s/ Paul J. Hastings
	Executive Vice President
		Paul J. Hastings
		Print Name
		Its:	Chairman & CEO

761257.05/WLA 183305-00010/3-9-17/gjn/gjn -8-   HCP LS Redwood City, LLC [Third Amendment] [Oncomed Pharmaceuticals, Inc.]

EXHIBIT A

OUTLINE OF EXPANSION PREMISES

761257.05/WLA 183305-00010/3-9-17/gjn/gjn EXHIBIT A -1-   HCP LS Redwood City, LLC [Third Amendment] [Oncomed Pharmaceuticals, Inc.]

EXHIBIT B

TENANT WORK LETTER

This Tenant Work Letter shall set forth the terms and conditions relating to the initial improvement of the Premises for Tenant following the date of this Third Amendment.  This Tenant Work Letter is essentially organized chronologically and addresses the issues of construction, in sequence, as such issues will arise during construction in the Premises.    

SECTION 1

CONDITION OF PREMISES

Landlord shall deliver the Expansion Premises to Tenant in good, vacant, broom clean condition, in compliance with all laws (to the extent required to obtain or maintain a certificate of occupancy for the Expansion Premises), with the roof water-tight and shall cause the plumbing, electrical systems, fire sprinkler system, lighting, and all other building systems serving the Expansion Premises to be in good operating condition and repair on or before the Expansion Commencement Date.  Further, Landlord at its sole cost (and at no cost to Tenant through Operating Expenses or otherwise) shall be responsible to cause the exterior of the 900 Building and the structural portions of the 900  Building to be in compliance with applicable ADA requirements to the extent required to allow the legal occupancy of the Expansion Premises for the permitted use (subject to Tenant's interior design and utilization of existing entrances for required egress from the 900 Building).  Tenant acknowledges that except as provided in this Section, Tenant shall accept the Premises in their existing, "as-is" condition on the date of delivery thereof to Tenant.  Except for the payment of the Tenant Improvement Allowance as provided in Section 2, below, Landlord shall have no obligation to make or pay for any improvements to the Premises.  Further, any hazardous materials (as defined by applicable laws) existing in the Expansion Premises as of the date of delivery of the Expansion Premises to Tenant, if any, shall be removed or remediated by Landlord as required by applicable laws, at Landlord's sole cost and expense (i.e., the cost of the Tenant Improvements shall not include such costs, and the Tenant Improvement Allowance shall not be used for such costs), except to the extent (if any) that such hazardous materials were brought onto or released onto the Expansion Premises, the Building or the Center through the acts or omissions of Tenant or its employees, agents or contractors.    

SECTION 2

TENANT IMPROVEMENTS

2.1Tenant Improvement Allowance.  Commencing as of the Lease Commencement Date, Tenant shall be entitled to use a one-time improvement allowance in the aggregate amount of $2,400,000.00 which is comprised of (i) $1,600,000 (the "Existing Premises Improvement Allowance"), for the costs relating to the design and construction of Tenant's improvements, which are permanently affixed to the Existing Premises only (the "Existing Premises Improvements") or which are "Tenant Improvement Allowance Items," as that term is defined in Section 2.2.1, below, and (ii) $800,000.00 (the "Expansion Premises Improvement Allowance") for the costs relating to the design and construction of Tenant's improvements

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which are permanently affixed to the Expansion Premises only (the "Expansion Premises Improvements") or which are Tenant Improvement Allowance Items.   Collectively, the Expansion Premises Improvements and the Existing Premises Improvements are the "Tenant Improvements" and collectively the Existing Premises Improvement Allowance and the Expansion Premises Improvement Allowance are the "Tenant Improvement Allowance".  Tenant hereby acknowledges and agrees that (A) Tenant shall not be entitled to receive more than $500,000.00 of the Existing Improvement Allowance during the calendar year 2016, and (B) Tenant shall not be entitled to receive any portion of the Expansion Premises Improvement Allowance until the earlier to occur of (a) the date upon which the Expansion Confirmation Notice is delivered to Landlord or (b) September 16, 2017 (assuming the Expansion Termination Notice has not been timely delivered by Tenant, as Tenant shall forfeit any and all rights to the Expansion Premises Improvement Allowance in the event the Expansion Termination Notice is timely delivered to Landlord).  In no event shall Landlord be obligated to make disbursements pursuant to this Tenant Work Letter or otherwise in connection with Tenant's construction of the Tenant Improvements or any Tenant Improvement Allowance Items, as defined below, in a total amount which exceeds the sum of the Tenant Improvement Allowance.  All Tenant Improvements for which the Tenant Improvement Allowance has been made available shall be deemed Landlord's property under the terms of the Lease; provided, however, Landlord may, by written notice to Tenant given concurrently with Landlord's approval of the "Final Working Drawings", as that term is defined in Section 3.3, below, require Tenant, prior to the end of the Lease Term, or promptly following any earlier termination of the Lease, at Tenant's expense, to remove any Tenant Improvements and to repair any damage to the Premises and Building caused by such removal and return the affected portion of the Premises to a Building standard general office condition; provided, however, that Landlord shall not require Tenant to remove upon termination or expiration of the Lease, or condition its approval upon Tenant’s agreement to remove upon termination or expiration of the Lease, any Tenant Improvements constructed pursuant to this Tenant Work Letter which constitute standard, non-extraordinary improvements for ordinary office use.  Any portion of the Existing Premises Improvement Allowance that is not disbursed or requested for disbursement by the end of the first twelve (12) months following the Expansion Commencement Date (or, in the event that Tenant timely exercises the Expansion Termination Notice, by September 15, 2018), shall revert to Landlord and Tenant shall have no further rights with respect thereto, and any portion of the Expansion Premises Improvement Allowance that is not disbursed or allocated for disbursement by the end of the first twelve (12) months following the Expansion Commencement Date, shall revert to Landlord and Tenant shall have no further rights with respect thereto.

2.2Disbursement of the Tenant Improvement Allowance.

2.2.1Tenant Improvement Allowance Items.  Except as otherwise set forth in this Tenant Work Letter, the Tenant Improvement Allowance shall be disbursed by Landlord only for the following items and costs (collectively the "Tenant Improvement Allowance Items"):

2.2.1.1Payment of all reasonable fees of the "Architect" and the "Engineers," as those terms are defined in Section 3.1 of this Tenant Work Letter, project management fees payable to Project Management Advisors, Inc. ("PMA"), as provided below, and payment of the reasonable fees incurred by, and the reasonable cost of documents and

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materials supplied by, Landlord and Landlord's consultants in connection with third-party review of the "Construction Drawings," as that term is defined in Section 3.2 of this Tenant Work Letter, which consultants are reasonably deemed necessary by Landlord to review and oversee the Tenant Improvements and whose services are not the same as the services provided by PMA (e.g., structural engineers);

2.2.1.2The payment of plan check, permit and license fees relating to construction of the Tenant Improvements;

2.2.1.3The payment for all demolition and removal of existing improvements in the Premises;

2.2.1.4The cost of construction of the Tenant Improvements, including, without limitation, testing and inspection costs, costs incurred for removal of existing furniture, fixtures or equipment in the Premises, hoisting and trash removal costs, costs to purchase and install in the Premises equipment customarily incorporated into laboratory improvements or laboratory utility systems, including, without limitation, UPS, DI Systems, boilers, air compressors, glass/cage washers and autoclaves, painting, and contractors' fees and general conditions;

2.2.1.5The cost of any changes in the Base Building when such changes are required by the Construction Drawings (including if such changes are due to the fact that such work is prepared on an unoccupied basis), such cost to include all direct architectural and/or engineering fees and expenses incurred in connection therewith;

2.2.1.6The cost of any changes to the Construction Drawings or Tenant Improvements required by all applicable building codes (the "Code");

2.2.1.7Sales and use taxes;

2.2.1.8Costs expended by Landlord pursuant to Section 4.1.1 of this Tenant Work Letter, below.

2.2.2Disbursement of Tenant Improvement Allowance.  During the construction of the Tenant Improvements, Landlord shall make monthly disbursements of the Tenant Improvement Allowance for Tenant Improvement Allowance Items for the benefit of Tenant and shall authorize the release of monies for the benefit of Tenant as follows.

2.2.2.1Monthly Disbursements.  On or before the fifth (5^th) day of each calendar month, during the design and construction of the Tenant Improvements (or such other date as Landlord may designate), Tenant shall deliver to Landlord:  (i) a request for reimbursement of amounts paid to the "Contractor," as that term is defined in Section 4.1.1 of this Tenant Work Letter, approved by Tenant, in a form to be provided by Landlord, showing the schedule, by trade, of percentage of completion of the Tenant Improvements in the Premises, detailing the portion of the work completed and the portion not completed; (ii) invoices from all of "Tenant's Agents," as that term is defined in Section 4.1.2 of this Tenant Work Letter, for labor rendered and materials for the Premises; (iii) executed mechanic's lien releases, as applicable, from all of Tenant's Agents which shall comply with the appropriate provisions, as

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reasonably determined by Landlord, of California Civil Code Sections 8132, 8134, 8136 and 8138; and (iv) all other information reasonably requested by Landlord.  As between Landlord and Tenant only, Tenant's request for payment shall be deemed Tenant's acceptance and approval of the work furnished and/or the materials supplied as set forth in Tenant's payment request.  Within forty-five (45) days thereafter, Landlord shall deliver a check to Tenant made payable to Tenant in payment of the lesser of:  (A) the amounts so requested by Tenant as set forth in this Section 2.2.3.1, above (or, subject to the terms of Section 4.2.1, below, the applicable percentage thereof), and (B) the balance of any remaining available portion of the Tenant Improvement Allowance provided that Landlord does not dispute any request for payment based on non-compliance of any work with the "Approved Working Drawings," as that term is defined in Section 3.5 below, or due to any substandard work.  Landlord's payment of such amounts shall not be deemed Landlord's approval or acceptance of the work furnished or materials supplied as set forth in Tenant's payment request.

2.2.2.2Final Deliveries.  Following the completion of construction of the Tenant Improvements, Tenant shall deliver to Landlord properly executed final mechanic's lien releases in compliance with both California Civil Code Section 8134 and either Section 8136 or Section 8138 from all of Tenant's Agents, and a certificate certifying that the construction of the Tenant Improvements in the Premises has been substantially completed.  Tenant shall record a valid Notice of Completion in accordance with the requirements of Section 4.3 of this Tenant Work Letter.

2.2.2.3Other Terms.  Landlord shall only be obligated to make disbursements from the Tenant Improvement Allowance to the extent costs are incurred by Tenant for Tenant Improvement Allowance Items.  All Tenant Improvement Allowance Items for which the Tenant Improvement Allowance have been made available shall be deemed Landlord's property under the terms of the Lease.

2.4Building Standards.  The quality of Tenant Improvements shall be in keeping with the existing improvements in the Existing Premises.

SECTION 3

CONSTRUCTION DRAWINGS

3.1Selection of Architect.  Tenant shall retain an architect/space planner (the "Architect") approved in advance by Landlord (which approval shall not be unreasonably withheld) to prepare the Final Space Plan and Final Working Drawings as provided in Section 3.2 and 3.3, below.  Tenant shall retain the engineering consultants or design/build subcontractors designated by Tenant and reasonably approved in advance by Landlord (the "Engineers") to prepare all plans and engineering working drawings relating to the structural, mechanical, electrical, plumbing, HVAC, lifesafety, and sprinkler work in the Premises, which work is not part of the Base Building.  All such plans and drawings shall comply with industry standard drawing format and specifications, and shall be subject to Landlord's reasonable approval.  Tenant and Architect shall verify, in the field, the dimensions and conditions as shown on the relevant portions of the Base Building plans, and Tenant and Architect shall be solely responsible for the same, and Landlord shall have no responsibility in connection therewith.  

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Landlord's review of any plans or drawings as set forth in this Section 3, shall be for its sole purpose and shall not imply Landlord's review of the same, or obligate Landlord to review the same, for quality, design, Code compliance or other like matters.  

3.2Final Space Plan.  Tenant shall supply Landlord with four (4) copies signed by Tenant of its final space plan for the Premises before any architectural working drawings or engineering drawings have been commenced.  The final space plan (the "Final Space Plan") shall include a layout and designation of all offices, labs, rooms and other partitioning, their intended use, and equipment to be contained therein.  Landlord may request clarification or more specific drawings for special use items not included in the Final Space Plan.  Landlord shall advise Tenant within five (5) business days after Landlord's receipt of the Final Space Plan for the Premises if the same is unsatisfactory or incomplete in any respect.  If Tenant is so advised, Tenant shall promptly cause the Final Space Plan to be revised to correct any deficiencies or other matters Landlord may reasonably require.  Notwithstanding the foregoing, Landlord's approval of the Final Space Plan shall not be unreasonably withheld, provided that Landlord and Tenant hereby agree it shall be deemed reasonably for Landlord to withhold its approval of the Final Space Plan if a "Design Problem" exists.  A "Design Problem" shall mean and refer to any design criteria which would (a) adversely affect the Building structure or Building systems; (b) be in non-compliance with codes or other applicable laws; (c) be seen from the exterior of the Premises; (d) cause material interference with Landlord or other tenants of the Building (other than as typical for construction of improvements), or (e) affect the certificate of occupancy or its legal equivalent for the Building or any portion thereof.

3.3Final Working Drawings.  After the Final Space Plan has been approved by Landlord, Tenant shall supply the Engineers with a complete listing of standard and non-standard equipment and specifications, including, without limitation, Title 24 calculations, electrical requirements and special electrical receptacle requirements for the Premises, to enable the Engineers and the Architect to complete the "Final Working Drawings" (as that term is defined below) in the manner as set forth below.  Upon the approval of the Final Space Plan by Landlord and Tenant, Tenant shall promptly cause the Architect and the Engineers to complete the architectural and engineering drawings for the Premises, and Architect shall compile a fully coordinated set of architectural, structural, mechanical, electrical and plumbing working drawings, to the extent applicable to the Tenant Improvements, in a form which is sufficiently complete to allow all of Tenant's Agents to bid on the work and to obtain all applicable permits (collectively, the "Final Working Drawings") and shall submit the same to Landlord for Landlord's approval, which shall not be unreasonably withheld, conditioned, or delayed.  Tenant shall supply Landlord with four (4) copies signed by Tenant of such Final Working Drawings.  Landlord shall advise Tenant within ten (10) business days after Landlord's receipt of the Final Working Drawings for the Premises if the same is unsatisfactory or incomplete in any respect.  If Tenant is so advised, Tenant shall promptly cause the Final Working Drawings to be revised in accordance with such review and any disapproval of Landlord in connection therewith.  Notwithstanding the foregoing, Landlord's approval of the Final Working Drawings shall not be unreasonably withheld; provided that Landlord and Tenant hereby agree that it shall be deemed reasonable for Landlord to withhold its approval of the Final Working Drawings if a Design Problem exists or if the Final Working Drawings are inconsistent with the Final Space Plan.  

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3.5Approved Working Drawings.  The Final Working Drawings shall be approved by Landlord (the "Approved Working Drawings," and collectively with the Final Space Plan and the Final Working Drawings, the “Construction Drawings”) prior to the commencement of construction of the Premises by Tenant.  Concurrently with Tenant's delivery of the Final Working Drawings to Landlord for Landlord's approval, Tenant may submit the same to the appropriate municipal authorities for all applicable building permits.  Tenant hereby agrees that neither Landlord nor Landlord's consultants shall be responsible for obtaining any building permit or certificate of occupancy for the Premises and that obtaining the same shall be Tenant's responsibility; provided, however, that Landlord shall cooperate with Tenant in executing permit applications and performing other ministerial acts reasonably necessary to enable Tenant to obtain any such permit or certificate of occupancy.  No changes, modifications or alterations in the Approved Working Drawings may be made without the prior written consent of Landlord, which shall not be unreasonably withheld, conditioned, or delayed; provided, however, Tenant shall be permitted, without Landlord’s prior written consent, to make minor changes in the Tenant Improvements that are customarily made in the field.  

SECTION 4

CONSTRUCTION OF THE TENANT IMPROVEMENTS

4.1Tenant's Selection of Contractors.

4.1.1The Contractor; Landlord's Project Manager.  Tenant shall retain a licensed general contractor, approved in advance by Landlord, to construct the Tenant Improvements ("Contractor").  Landlord's approval of the Contractor shall not be unreasonably withheld.  Landlord shall retain Project Management Advisors, Inc. ("PMA") as a third party project manager for construction oversight of the Tenant Improvements on behalf of Landlord, and Tenant shall pay a fee to Landlord with respect to the PMA services in the amount of $1.53/sf of the Expansion Premises ($34,808), but not less than $4,068 per month in which design and construction activity is occurring in the Existing Premises and/or Expansion Premises.  Said fee is to be deducted from the Tenant Improvement Allowance.

4.1.2Tenant's Agents.  All subcontractors, laborers, materialmen, and suppliers used by Tenant shall be known collectively as "Tenant's Agents".  The subcontractors used by Tenant, but not any laborers, materialmen, and suppliers, must be approved in writing by Landlord, which approval shall not be unreasonably withheld, conditioned, or delayed; provided, however, Landlord may nevertheless designate and require the use of particular mechanical, engineering, plumbing, fire life-safety and other Base Building subcontractors.  If Landlord does not approve any of Tenant's proposed subcontractors, Tenant shall submit other proposed subcontractors for Landlord's written approval.

4.2Construction of Tenant Improvements by Tenant's Agents.

4.2.1Construction Contract; Cost Budget.  Tenant shall engage the Contractor under a commercially reasonable and customary construction contract, reasonably approved by Landlord (collectively, the "Contract").  Prior to the commencement of the construction of the Tenant Improvements (or a phase thereof, as the case may be), and after

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Tenant has accepted all bids for the Tenant Improvements (or a phase thereof, as the case may be), Tenant shall provide Landlord with a detailed breakdown, by trade, of the good faith estimated costs to be incurred or which have been incurred, as set forth more particularly in Sections 2.2.1.1 through 2.2.1.10, above, in connection with the design and construction of the applicable phase of the Tenant Improvements to be performed by or at the direction of Tenant or the Contractor, which costs form a basis for the estimated total costs of the work of the applicable phase of the Tenant Improvement project (the "Estimated Budget").  The difference between the amount of the Estimated Budget and the amount of the Tenant Improvement Allowance (less any portion thereof already disbursed by Landlord, or in the process of being disbursed by Landlord, on or before the commencement of construction of the Tenant Improvements) is referred to herein as the "Over-Allowance Amount".  In the event that an Over-Allowance Amount exists in connection with any particular construction project involving the construction of the Improvements, then Tenant shall pay a percentage of each amount requested by Contractor or otherwise disbursed under this Work Letter, which percentage shall be equal to the Over-Allowance Amount divided by the amount of the Estimated Budget (after deducting from the Estimated Budget any amounts expended in connection with the preparation of the Construction Drawings, and the cost of other Tenant Improvement Allowance Items incurred prior to the commencement of construction of the Tenant Improvements) and such payments by Tenant (the “Over-Allowance Payments”) shall be a condition to Landlord’s obligation to pay any amounts from the Tenant Improvement Allowance.  In the event that, after the Estimated Budget has been delivered by Tenant to Landlord, the costs relating to the design and construction of the Tenant Improvements shall change, any additional costs necessary to such design and construction in excess of the Estimated Budget, shall be in accordance with the terms of the immediately preceding sentence and the amounts to be disbursed by Landlord pursuant to the terms of this Work Letter thereafter shall be accordingly adjusted so that Landlord’s disbursements in the aggregate pursuant to the terms of this Work Letter and Tenant’s Over-Allowance Payments are each proportionate to the adjusted Estimated Budget.  All Tenant Improvements paid for by the Over-Allowance Amount shall be deemed Landlord's property under the terms of the Lease.

4.2.2Tenant's Agents.

4.2.2.1Compliance with Drawings and Schedule.  Tenant's and Tenant's Agent's construction of the Tenant Improvements shall comply with the following:  (i) the Tenant Improvements shall be constructed in substantial accordance with the Approved Working Drawings; and (ii) Tenant's Agents shall submit schedules of all work relating to the Tenant's Improvements to Contractor and Contractor shall, within five (5) business days of receipt thereof, inform Tenant's Agents of any changes which are necessary thereto, and Tenant's Agents shall adhere to such corrected schedule.  

4.2.2.2Indemnity.  Tenant's indemnity of Landlord as set forth in the Lease shall also apply with respect to any and all costs, losses, damages, injuries and liabilities related in any way to any act or omission of Tenant or Tenant's Agents, or anyone directly or indirectly employed by any of them, or in connection with Tenant's non-payment of any amount arising out of the Tenant Improvements and/or Tenant's disapproval of all or any portion of any request for payment.  Such indemnity by Tenant, as set forth in the Lease, shall also apply with respect to any and all costs, losses, damages, injuries and liabilities related in any way to

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Landlord's performance of any ministerial acts reasonably necessary (i) to permit Tenant to complete the Tenant Improvements, and (ii) to enable Tenant to obtain any building permit or certificate of occupancy for the Premises.  The foregoing indemnity shall not apply to claims caused by the negligence or willful misconduct of Landlord, its member partners, shareholders, officers, directors, agents, employees, and/or contractors, or Landlord’s breach of the Lease.

4.2.2.2Requirements of Tenant's Agents.  Each of Tenant's Agents shall guarantee to Tenant and for the benefit of Landlord that the portion of the Tenant Improvements for which it is responsible shall be free from any defects in workmanship and materials for a period of not less than one (1) year from the date of substantial completion of the work under the Contract ("Substantial Completion").  Each of Tenant's Agents shall be responsible for the replacement or repair, without additional charge, of all work done or furnished in accordance with its contract that shall become defective within one (1) year after Substantial Completion.  The correction of such work shall include, without additional charge, all additional expenses and damages incurred in connection with such removal or replacement of all or any part of the Tenant Improvements, and/or the Building and/or common areas that may be damaged or disturbed thereby.  All such warranties or guarantees as to materials or workmanship of or with respect to the Tenant Improvements shall be contained in the Contract or subcontract and shall be written such that such guarantees or warranties shall inure to the benefit of both Landlord and Tenant, as their respective interests may appear, and can be directly enforced by either.  Tenant covenants to give to Landlord any assignment or other assurances which may be necessary to effect such right of direct enforcement.

4.2.2.4Insurance Requirements.

4.2.2.4.1General Coverages.  All of Tenant's Agents shall carry the following insurance with insurers having a  minimum A.M. best rating of A- VII or better (i) worker's compensation insurance covering all of Tenant's Agents' respective employees with a waiver of subrogation in favor of Landlord and the property manager, (ii) general liability insurance with a limit of not less than $1,000,000 per occurrence and $2,000,000 general aggregate, including products/completed operations and contractual coverage, and including Landlord and its property manager as additional insureds, and (ii) if the cost of such Tenant Improvements exceeds $100,000 in the aggregate, then Builders Risk insurance covering the construction of the Tenant Improvements (it being understood and agreed that the Tenant Improvements shall be insured by Landlord pursuant to the Lease immediately upon completion thereof in the same manner as Landlord is required to insure the “Tenant Improvements constructed by Landlord” pursuant to Section 10.1(d) of the Lease), and such policy shall include Landlord as an additional insured.

4.2.2.4.2Intentionally Omitted.  

4.2.2.4.3General Terms.  Certificates for all insurance carried pursuant to this Section 4.2.2.4 shall be delivered to Landlord before the commencement of construction of the Expansion Tenant Improvements and before the Contractor's equipment is moved onto the site.  All such policies of insurance must contain a provision that the company writing said policy will endeavor to give Landlord thirty (30) days prior written notice of any cancellation or lapse of the effective date or any reduction in the amounts of such insurance.  In

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the event that the Expansion Tenant Improvements are damaged by any cause during the course of the construction thereof, Tenant shall immediately repair the same at Tenant's sole cost and expense.  Tenant's Agents shall maintain all of the foregoing insurance coverage in force until the Expansion Tenant Improvements are fully completed, except for any Products and Completed Operation Coverage insurance required by Landlord, which is to be maintained for a commercially reasonable period following completion of the work.  Such insurance shall provide that it is primary insurance as respects the owner and that any other insurance maintained by owner is excess and noncontributing with the insurance required hereunder.  The requirements for the foregoing insurance shall not derogate from the provisions for indemnification of Landlord by Tenant under Section 4.2.2.2 of this Tenant Work Letter.

4.2.3Governmental Compliance.  The Tenant Improvements shall comply in all respects with the following:  (i) all state, federal, city or quasi-governmental laws, codes, ordinances and regulations, as each may apply according to the rulings of the controlling public official, agent or other person; (ii) applicable standards of the American Insurance Association (formerly, the National Board of Fire Underwriters) and the National Electrical Code; and (iii) building material manufacturer's specifications.

4.2.4Inspection by Landlord.  Landlord shall have the right to inspect the Tenant Improvements at all times, provided however, that Landlord's failure to inspect the Tenant Improvements shall in no event constitute a waiver of any of Landlord's rights hereunder nor shall Landlord's inspection of the Tenant Improvements constitute Landlord's approval of the same.  Should Landlord reasonably disapprove any portion of the Tenant Improvements, on the grounds that the construction is defective or fails to comply with the Approved Working Drawings, Landlord shall notify Tenant in writing of such disapproval and shall specify the items disapproved.  Any such defects or deviations shall be rectified by Tenant at no expense to Landlord, provided however, that in the event Landlord determines that a defect or deviation exists that might adversely affect the mechanical, electrical, plumbing, heating, ventilating and air conditioning or life-safety systems of the Building, the structure or exterior appearance of the Building or any other tenant's use of such other tenant's leased premises, Landlord may, take such action as Landlord reasonably deems necessary, at Tenant's expense and without incurring any liability on Landlord's part, to correct any such defect, deviation and/or matter, including, without limitation, causing the cessation of performance of the construction of the Tenant Improvements until such time as the defect, deviation and/or matter is corrected to Landlord's reasonable satisfaction.

4.2.5Meetings.  Commencing upon the date Tenant begins to plan the Existing Improvements or the Expansion Improvements, Tenant shall hold weekly meetings at a reasonable time, with the Architect and the Contractor regarding the progress of the preparation of Construction Drawings and the construction of the Existing Improvements or the Expansion Improvements as the case may be, and Landlord and/or its agents shall receive prior notice of, and shall have the right to attend, all such meetings, and, upon Landlord's request, certain of Tenant's Agents shall attend such meetings.  In addition, minutes shall be taken at all such meetings, a copy of which minutes shall be promptly delivered to Landlord.  One such meeting each month shall include the review of Contractor's current request for payment.

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4.3Notice of Completion; Copy of Record Set of Plans.  Within ten (10) days after completion of construction of the Tenant Improvements, Tenant shall cause a valid Notice of Completion to be recorded in the office of the Recorder of the county in which the Building is located in accordance with Section 3093 of the Civil Code of the State of California or any successor statute, and shall furnish a copy thereof to Landlord upon such recordation.  If Tenant fails to do so, Landlord may execute and file the same on behalf of Tenant as Tenant's agent for such purpose, at Tenant's sole cost and expense.  At the conclusion of construction, (i) Tenant shall cause the Architect and Contractor (x) to update the Approved Working Drawings as necessary to reflect all changes made to the Approved Working Drawings during the course of construction, (y) to certify to the best of their knowledge that the "record-set" of as-built drawings are true and correct, which certification shall survive the expiration or termination of the Lease, and (z) to deliver to Landlord two (2) sets of copies of such record set of drawings (hard copy and CAD files) within ninety (90) days following issuance of a certificate of occupancy for the Premises, and (ii) Tenant shall deliver to Landlord a copy of all warranties, guaranties, and operating manuals and information relating to the improvements, equipment, and systems in the Premises.  Within fifteen (15) days after request by Tenant following the Substantial Completion of the Tenant Improvements, Landlord will acknowledge its approval of the Tenant Improvements (provided that such approval has been granted) by placing its signature on a Contractor’s Certificate of Substantial Completion fully executed by the Architect, Contractor and Tenant.  Landlord’s approval shall not create any contingent liabilities for Landlord with respect to any latent quality, design, Code compliance or other like matters that may arise subsequent to Landlord’s approval.

SECTION 5

MISCELLANEOUS

5.1Tenant's Representative.  Tenant has designated Chuck Alaimo as its sole representative with respect to the matters set forth in this Tenant Work Letter, who, until further notice to Landlord, shall have full authority and responsibility to act on behalf of the Tenant as required in this Tenant Work Letter.

5.2Landlord's Representative.  Landlord has designated Jeff Marcowitz with PMA, as its sole representative with respect to the matters set forth in this Tenant Work Letter, who, until further notice to Tenant, shall have full authority and responsibility to act on behalf of the Landlord as required in this Tenant Work Letter.

5.3Time is of the Essence in This Tenant Work Letter.  Unless otherwise indicated, all references herein to a "number of days" shall mean and refer to calendar days.  If any item requiring approval is timely disapproved by Landlord, the procedure for preparation of the document and approval thereof shall be repeated until the document is approved by Landlord.

5.5Tenant's Lease Default.  Notwithstanding any provision to the contrary contained in the Lease or this Tenant Work Letter, if any default by Tenant under the Lease or this Tenant Work Letter (including, without limitation, any failure by Tenant to fund any portion of the Over-Allowance Amount) occurs at any time on or before the substantial completion of the Tenant Improvements and such default remains uncured ten (10) days following Landlord's

761257.05/WLA 183305-00010/3-9-17/gjn/gjn EXHIBIT B -10-   HCP LS Redwood City, LLC [Third Amendment] [Oncomed Pharmaceuticals, Inc.]

notice of such default to Tenant, then in addition to all other rights and remedies granted to Landlord pursuant to the Lease, Landlord shall have the right, during the continuation of such default, to withhold payment of all or any portion of the Tenant Improvement Allowance and/or Landlord may, without any liability whatsoever, cause the cessation of construction of the Tenant Improvements (in which case, Tenant shall be responsible for any delay in the substantial completion of the Tenant Improvements and any costs occasioned thereby).

5.6Phased Construction.  Tenant may construct the Tenant Improvements (and submit the Final Space Plan and Working Drawings therefor) in phases at Tenant’s discretion.  

5.7Landlord Caused Delays.  The Expansion Commencement Date shall occur as provided in this Third Amendment, provided that the same shall be extended by the number of days of actual delay of the substantial completion of the Expansion Premises Improvements to the extent caused by a "Landlord Caused Delay," as that term is defined, below, but only to the extent such Landlord Caused Delay causes the substantial completion of the Expansion Premises Improvements to occur after the date which is five (5) months following the date upon which the Expansion Premises is delivered to Tenant.  As used herein, "Landlord Caused Delay" shall mean actual delays in the substantial completion of the Expansion Premises Improvements to the extent resulting from interference (when judged in accordance with industry custom and practice) with Tenant's construction of the Expansion Premises Improvements to the extent caused by (i) Landlord's failure to timely approve or disapprove any matter requiring Landlord's pertaining to the Expansion Premises Improvements within the time periods set forth above or if not specified, within a reasonable period of time; (iii) Landlord's failure to timely disburse the Expansion Premises Improvement Allowance; (ii) material and unreasonable interference by Landlord with substantial completion of the Expansion Premises if such interference (A) objectively precludes or delays the construction of tenant improvements in the Building or any portion thereof, and (B) relates to access by Tenant to the Expansion Premises or any of the Building's facilities (including loading docks and freight elevators) or services and utilities (including temporary power and parking areas as provided herein) during normal construction hours, or the use thereof during normal construction hours; or (iii) the negligence or willful misconduct of Landlord or the Landlord Parties pertaining to the Premises.  If Tenant contends that a Landlord Caused Delay has occurred, Tenant shall notify Landlord in writing of the event which constitutes such Landlord Caused Delay.  Tenant will additionally use reasonable efforts to mitigate the effects of any Landlord Caused Delay through the re-sequencing or re-scheduling of work, if feasible, but this sentence will not be deemed to require Tenant to incur overtime or after-hours costs unless Landlord agrees in writing to bear such costs.  In addition, Tenant shall endeavor to provide notice to Landlord when Tenant becomes aware of any expected or potential Landlord Caused Delays prior to any such delay actually occurring, in order to allow Landlord to attempt to mitigate such potential delay.  If such actions, inaction or circumstance described in the notice (the "Landlord Delay Notice") are not cured by Landlord within one (1) business day of Landlord’s receipt of the Landlord Delay Notice and if such action, inaction or circumstance otherwise qualify as a Landlord Caused Delay, then a Landlord Caused Delay shall be deemed to have occurred commencing as of the date of Landlord’s receipt of the Landlord Delay Notice and ending as of the date such delay ends.

761257.05/WLA 183305-00010/3-9-17/gjn/gjn EXHIBIT B -11-   HCP LS Redwood City, LLC [Third Amendment] [Oncomed Pharmaceuticals, Inc.]

EXHIBIT C

This FOURTH AMENDMENT TO LEASE (this "Third Amendment") is made and entered into as of the _____ day of ________, 20__, by and between HCP LS REDWOOD CITY, LLC, a Delaware limited liability company ("Landlord"), and ONCOMED PHARMACEUTICALS, INC., a Delaware corporation("Tenant").

R E C I T A L S :

A.Landlord (as successor in interest to Slough Redwood City, LLC) and Tenant are parties to that certain Lease dated May 30, 2006 (the "Original Lease"), as amended by that certain First Amendment to Lease dated November, 2006 (the "First Amendment"), that certain Acknowledgement of Rent Commencement Date dated as of March 9, 2007 ("Commencement Letter"), that certain Second Amendment to Office Lease dated December 22, 2010 (the "Second Amendment") and that certain Third Amendment to Lease dated ________, 2016 (the "Third Amendment") pursuant to which Lease Tenant leases from Landlord approximately 68,440 rentable square feet of space (the "Premises") consisting of the entire building (the " 800 Building") located at 800 Chesapeake Drive, in the Britannia Seaport Centre in Redwood City, California, and a portion of the building located at 900 Chesapeake Drive, in the Britannia Seaport Centre in Redwood City, California.  The Original Lease, the First Amendment, the Commencement Letter, the Second Amendment and the Third Amendment are, collectively, the "Lease."

B.Landlord and Tenant to amend the Lease as hereinafter provided.

A G R E E M E N T :

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1.Capitalized Terms.  All capitalized terms when used herein shall have the same meaning as is given such terms in the Lease unless expressly superseded by the terms of this Third Amendment.

2.Deletion of Expansion Termination Right.  Effective as of the date of this Fourth Amendment, Section 7 of the Third Amendment is hereby deleted in its entirety and of no further force or effect, and Tenant shall lease the Expansion Premises from Landlord pursuant to the terms set forth in the Third Amendment.

3.California Accessibility Disclosure. For purposes of Section 1938 of the California Civil Code, Landlord hereby discloses to Tenant, and Tenant hereby acknowledges that the Common Areas and the Premises have not undergone inspection by a Certified Access Specialist (CASp).

761257.05/WLA 183305-00010/3-9-17/gjn/gjn EXHIBIT C -1-   HCP LS Redwood City, LLC [Third Amendment] [Oncomed Pharmaceuticals, Inc.]

4.No Further Modification.  Except as set forth in this Third Amendment, all of the terms and provisions of the Lease shall apply with respect to the Expansion Premises and shall remain unmodified and in full force and effect.

IN WITNESS WHEREOF, this Fourth Amendment has been executed as of the day and year first above written.  

LANDLORD:			TENANT:
HCP LS REDWOOD CITY, LLC, a Delaware limited liability company			ONCOMED PHARMACEUTICALS, INC., a Delaware corporation
By:
	Jonathan Bergschneider	By:
	Executive Vice President
		Print Name
		Its:

761257.05/WLA 183305-00010/3-9-17/gjn/gjn EXHIBIT C -2-   HCP LS Redwood City, LLC [Third Amendment] [Oncomed Pharmaceuticals, Inc.]

EXHIBIT B

SUBLEASED PREMISES AND SHARED AREAS

(attached)

EXHIBIT C

ANIMAL CARE AGREEMENT

(attached)

ANIMAL CARE AGREEMENT

This ANIMAL CARE AGREEMENT (this “Agreement”) is dated as of January 16, 2019 (the

“Effective Date”) and is made by and between ONCOMED PHARMACEUTICALS, INC., with offices at

800 Chesapeake Drive, Redwood City, CA 94063 (“OncoMed”), and REVOLUTION MEDICINES

INC., with offices at 700 Saginaw Dr., Redwood City, CA 94063 (“Company”). OncoMed and

Company are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”

WHEREAS, the Parties have entered into that certain Sublease Agreement, dated as of January 16,

2019 (the “Sublease Agreement”) pursuant to which Company is subletting certain facilities on

OncoMed’s premises (the “Facilities”); and

WHEREAS, the Parties wish to allocate responsibilities between themselves for the care of animals in the

Facilities, including certain services and supplies to be provided by OncoMed to the Company.

NOW, THEREFORE, in reliance upon and in consideration of the following undertaking, and for other

good and valuable consideration, the Parties agree as follows:

1. Responsibilities of Each Party.

1.1. Each of the Parties shall be responsible for and perform the duties assigned to such

Party in Exhibit A (the “Duties”). Each Party shall perform its assigned Duties in a professional manner

in accordance with the terms of this Agreement and all applicable law and regulations. Company may not

conduct any studies or procedures involving any animals in the Facilities unless and until the applicable

protocols for such studies or procedures have been approved by OncoMed’s Institutional Animal Care

and Use Committee (the “IACUC”). Company shall conduct all studies and procedures involving animals

in accordance with such IACUC-approved protocols and shall otherwise comply with all requirements

and instructions of the IACUC.

1.2. No Company employee, consultant, contractor, agent, or other representative

(“Company Personnel”) shall access the Facilities prior to completing OncoMed’s orientation process

relating to the Facilities, provided such orientation shall be made available to Company Personnel within

five (5) business days of the Sublease Agreement date. If Company adds Company Personnel at any time

during the Term, OncoMed shall promptly provide such orientation or train Company to conduct same.

1.3. Company shall not introduce any animals into the Facilities other than new animals

arriving directly from vendors. Without limiting the foregoing, no animals that are already involved in

studies as of the Effective Date may be introduced into the Facilities.

1.4. Company will develop and conduct a “sentinel” animal health surveillance program

(the “Company Sentinel Program”) in accordance with applicable law and regulations and the

requirements of the IACUC. Company will pay for the animals for the Company Sentinel Program and

OncoMed shall perform the Company Sentinel Program pursuant to its standard protocols and cover all

other costs associated therewith, including RADIL testing.

2. Supplies and Equipment. OncoMed will provide Company with the supplies reasonably

necessary to operate the Subleased Premises, including but not limited to those supplies listed on

Exhibit B (the “Supplies”), but excluding disposable cages and associated setup supplies (e.g., water

bottles), animals for use by the Company, surgical tools, computers, scales, and calipers. Company may

also make reasonable use of the OncoMed equipment listed in Exhibit B (the “Equipment”). Without

OncoMed’s prior consent, Company may not use any OncoMed equipment other than the Equipment,

1

including without limitation OncoMed’s autoclave and cage washers. If any of the Equipment reasonably

requires maintenance or repairs as a result of Company’s use thereof, such maintenance or repairs shall be

at Company’s cost.

3. [Intentionally omitted]

4. IACUC Fees. Company shall reimburse OncoMed for all amounts invoiced by the IACUC

(and/or its members) relating to any activities of Company, including without limitation in connection

with the review and approval of the Company Sentinel Program, Company protocols, and the Company’s

standard operating procedures for humane endpoints (the “Company IACUC Fees”). OncoMed shall

invoice Company for all Company IACUC Fees upon OncoMed’s receipt of the applicable invoice(s)

from the IACUC. Company shall pay all such invoices within thirty (30) days after its receipt thereof.

Company shall have the right to have one Company Personnel designated as a member of the IACUC.

5. Service Fee. In consideration for OncoMed’s performance of its Duties, the provision of the

Supplies, access to the Equipment, Company’s use of the IACUC, and other services provided by

OncoMed hereunder, Company shall pay to OncoMed, within fifteen (15) days after the Effective Date, a

one-time fee in an amount equal to fifteen thousand US dollars ($15,000).

6. Audits.

6.1. OncoMed and/or its representatives may, at mutually convenient times, audit

Company’s conduct of its Duties and other activities in the Facilities, including Company’s

documentation thereof and relevant standard operating procedures (including without limitation those

relating to humane endpoints), to ensure Company is in compliance with IACUC requirements, applicable

law and regulations, and all OncoMed policies and procedures reasonably imposed on Company’s use of

the Subleased Premises.

6.2. If Company receives notice that any governmental or regulatory authority, including

without limitation the U.S. Department of Agriculture, will conduct an investigation or audit relating to

any Company activities conducted in the Facilities, Company shall notify OncoMed in writing

immediately, but no later than twenty-four (24) hours after receiving such notice. If Company does not

receive prior notice of such investigation or audit, Company shall notify OncoMed as soon as practicable

after receiving knowledge of such investigation or audit. Company shall promptly, but in any event within

one (1) business day of issuance, provide OncoMed with copies of all materials, statements, forms,

records, reports, analyses and correspondences, including warning letters, relating to any such inspection

or audit.

7. Confidential Information.

7.1. The term “Confidential Information” shall refer to all information provided by

either Party (the “Disclosing Party”) to the other Party (the “Receiving Party”) or otherwise learned by

or exposed to the Receiving Party as a result of the Parties’ conducting their respective Duties and/or

sharing space, either directly or indirectly, intentionally or inadvertently, in writing, orally, electronically,

or by inspection of tangible objects, and regardless of whether any such information is marked as

“confidential” or “proprietary.” Any such disclosure of, learning of, or exposure to a Disclosing Party’s

Confidential Information may be referred to herein as an “Exposure” to such Confidential Information.

Confidential Information may include, without limitation, information relating to: testing/analysis

methods or processes; products (whether investigational or not), samples, specimens, and other materials

or compounds; analyses conducted on such products, samples, specimens, or other materials or

compounds; information on research and development antibodies, products, and processes; technical

2

know-how; formulas; studies; regulatory submissions and records; research data and information;

financial information, business forecasts, business plans, and employee and/or personnel matters; sales

and marketing information; inventions; patent applications and other trade secrets.

7.2. The Receiving Party shall (a) hold the Confidential Information in confidence and

take all reasonable measures to protect the secrecy of and avoid disclosure and unauthorized use of

Confidential Information (including, without limitation, all measures the Receiving Party takes to protect

its own confidential information), (b) not divulge any such Confidential Information or any information

derived therefrom to any third person, (c) not make any use whatsoever at any time of such Confidential

Information except as necessary to carry out its obligations under this Agreement, (d) not derive any

commercial benefit (whether direct or indirect) from such Confidential Information, and (e) not copy

(except as may be necessary to carry out its obligations under this Agreement) or reverse engineer any

such Confidential Information.

7.3. The Receiving Party’s obligation of confidentiality and restrictions on use shall not

apply to Confidential Information that the Receiving Party can demonstrate by reasonable documentary

evidence: (a) was in its possession prior to the Receiving Party’s Exposure thereto; (b) was in the public

domain at the time of the Receiving Party’s Exposure thereto; (c) becomes part of the public domain

without breach of the Receiving Party’s obligations of confidentiality under this Agreement; (d) is

received by the Receiving Party from a third party not under confidentiality obligations and without a

breach of any obligations of confidentiality, (e) is developed independently by employees of the

Receiving Party without access to or knowledge of such Confidential Information, or (f) was permitted to

be disclosed by written authorization of the Disclosing Party. The foregoing exceptions shall not apply to

Confidential Information merely because such Confidential Information is embraced by more general

information in the public domain or in the possession of the Receiving Party.

7.4. The Receiving Party may disclose Confidential Information to the extent required

pursuant to an order of a court or administrative agency or other governmental body with valid

jurisdiction; provided that the Receiving Party shall, to the extent permitted, provide the Disclosing Party

with reasonable advance written notice thereof and provide reasonable cooperation to the Disclosing

Party in its efforts to limit such disclosure, whether by protective order or otherwise. Disclosure of any

Confidential Information in accordance with the foregoing shall not cause any such information to cease

to be Confidential Information except to the extent that such disclosure results in a public disclosure of

such information.

7.5. The Receiving Party shall limit the disclosure of Confidential Information to its

directors, employees, or agents with a legitimate “need to know” in order to carry out the Receiving

Party’s obligations under this Agreement and who, prior to disclosure, are bound by obligations of

confidentiality and non-use no less restrictive than the obligations set forth in this Agreement. The

Receiving Party shall remain responsible for any failure by any such person or entity who receives

Confidential Information pursuant to this Section 6.5 to protect such Confidential Information as required

under this Agreement.

7.6. Except as otherwise specified in this Agreement, the Receiving Party shall, upon the

request of the Disclosing Party, return to the Disclosing Party all Confidential Information in the

Receiving Party’s possession or control (including any copies or extracts thereof) or destroy such tangible

Confidential Information and certify the destruction thereof, except for any copy legally required to be

retained for archive purposes.

7.7. The Receiving Party acknowledges and agrees that due to the unique nature of the

Confidential Information there may be no adequate remedy at law for any breach of its obligations

3

hereunder, and that upon any such breach or any threat thereof, the Disclosing Party shall be entitled to

seek appropriate equitable relief in addition to whatever remedies it might have at law. The Receiving

Party shall notify the Disclosing Party in writing immediately upon the occurrence of any unauthorized

release of Confidential Information or other breach of which the Receiving Party becomes aware.

7.8. Each Party’s obligations with respect to Confidential Information shall remain in

effect during the Term and shall survive any expiration or termination of this Agreement for a period of

five (5) years thereafter.

8. Intellectual Property. All intellectual property of each Party (a) in existence as of the

Effective Date, or (b) developed, conceived, or made after the Effective Date and independently of this

Agreement, is and shall remain the exclusive property of such Party. Nothing in this Agreement is

intended to grant any option, license, or other rights to either Party under any intellectual property rights

of the other Party.

9. Limitations of Warranties and Remedies.

9.1. Except as expressly set forth in Section 1.1, NEITHER PARTY PROVIDES ANY

WARRANTIES HEREUNDER, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION

WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

9.2. With the exception of breaches of Section 7, in no event shall either Party be

responsible or liable to the other Party under this Agreement for any special, incidental, indirect,

exemplary or consequential damages (including, without limitation, lost business or lost profits).

9.3. OncoMed shall not be required to provide any service, Supplies or Equipment to the

extent the performance of the same becomes impracticable as a result of a cause or causes outside the

reasonable control of OncoMed or to the extent the performance would require OncoMed to violate any

applicable laws, rules or regulations or would result in the breach of any contract. In providing any

services, OncoMed shall not be obligated to hire any additional employees or maintain the employment of

any specific employee; provided that, if OncoMed does not provide sufficient staffing to perform its

Duties hereunder and Company is required to incur costs to hire additional staff or contractors to perform

such Duties, Company may reduce the Base Rent owed under the Sublease Agreement by an amount

equal to the amount actually paid by Company to such additional staff or contractors to perform such

Duties, up to a maximum of eight thousand dollars ($8,000) per month.

10. Indemnification.

10.1. Company shall indemnify, defend and hold harmless OncoMed and its officers,

directors, employees, consultants, representatives, and agents (collectively, the “OncoMed

Indemnitees”), from any and all losses, injuries, harms, costs or expenses, including without limitation,

reasonable attorney’s fees (collectively, “Losses”), incurred by any OncoMed Indemnitee in connection

with any claim, suit or action brought by a third party arising from (a) the performance or nonperformance of Company’s Duties hereunder, (b) Company’s use of the Supplies and/or the Equipment, (c) Company’s material breach of this Agreement, and (d) the gross negligence or intentional misconduct of any Company Indemnitee (as defined in Section 10.2).

10.2. OncoMed shall indemnify, defend and hold harmless Company and its officers,

directors, employees, consultants, representatives, and agents (collectively, the “Company

Indemnitees”), from any and all Losses incurred by any Company Indemnitee in connection with any

claim, suit or action brought by a third party arising from (a) the performance or non-performance of

OncoMed’s Duties hereunder, (b) OncoMed’s material breach of this Agreement, and (c) the gross

negligence or intentional misconduct of any OncoMed Indemnitee.

4

10.3. Any Party seeking indemnity hereunder shall (a) give prompt written notice to the

indemnifying Party of any Claim for which indemnification is sought, (b) permit the indemnifying Party

to assume full responsibility to investigate, prepare for and defend against such claim, (c) reasonably

assist the indemnifying Party, at the indemnifying Party’s reasonable expense, in the investigation of,

preparation for and defense of such claim, and (d) not compromise or settle such claim without the

indemnifying Party’s prior written consent. Notwithstanding the foregoing, an indemnifying Party will

not settle a claim in such a way as to require an admission of wrongdoing or negligence on the part of any

other Party, or incur a financial obligation on behalf of any other Party, without such other Party’s written

approval, which approval will not be unreasonably withheld, delayed, or conditioned.

11. Term and Termination.

11.1. This Agreement shall be effective from the Effective Date and shall remain in effect

until the expiration or earlier termination of the Sublease Agreement (the “Term”). This Agreement may

only be terminated prior to such date in a written agreement signed by both Parties.

11.2. The termination of this Agreement for any reason shall not relieve the Parties of any

obligation accruing prior to such termination, including without limitation any payment obligation. In no

way limiting the generality of the foregoing, Sections 4 (to the extent any Company IACUC Fees remain

unpaid), 7, 8, 9, 10, 11.2, and 12 shall survive the termination of this Agreement.

12. Miscellaneous.

12.1. Independent Contractors. It is expressly agreed that the relationship between

OncoMed and Company shall not constitute a partnership, joint venture or agency. Neither OncoMed nor

Company shall have the authority to make any statements, representations or commitments of any kind,

or to take any action, which shall be binding on the other Party, without the prior written consent of the

other Party to do so.

12.2. Governing Law. This Agreement and all claims or causes of action (whether in

contract, tort, or otherwise) that may be based upon, arise out of, or relate to this Agreement, or the

negotiation, execution, or performance of this Agreement, shall be governed by the laws of the State of

California without giving effect to any conflict of laws principle that would result in the application of the

laws of any other jurisdiction.

12.3. Use of Names. Except as required by law or the rules of any stock exchange or

market on which securities of a Party are listed, neither Party shall use the name of the other Party or the

names of the employees of the other Party in any advertising or sales promotional material or in any

publication without prior written permission of such Party.

12.4. Assignment. Neither Party may assign, or transfer any rights or obligations under,

this Agreement without the other Party's prior written consent, except that no such consent shall be

required for either Party to assign its rights or transfer its obligations to its affiliate or in connection with

the sale or transfer of all or substantially all of its equity, assets or business to which this Agreement

relates, whether as part of a merger, acquisition, asset sale or otherwise. Any assignment in violation of

this Agreement will be null and void from the beginning. This Agreement benefits and binds the Parties

and their respective successors and permitted assigns.

5

12.5. Severability. If any provision of this Agreement is held to be illegal, invalid, or

unenforceable under present or future state or federal laws or rules and regulations promulgated

thereunder, such provision shall be fully severable, and this Agreement shall be construed and enforced as

if such illegal, invalid or unenforceable provision had never comprised a part hereof, and the remaining

provisions hereof shall remain in full force and effect and shall not be affected by the illegal, invalid or

unenforceable provision or by its severance herefrom.

12.6. Notices. Other than payments and routine communications, any notice to be given to

a party under or in connection with this Agreement shall be in writing and shall be delivered

(a) personally, (b) by a nationally recognized overnight courier or by certified mail, postage prepaid,

return receipt requested, (c) via facsimile, with receipt confirmed, or (d) if actually received, by U.S. mail,

addressed to such party at its address indicated below, or to such other address as the addressee shall have

last furnished in writing to the addressor and shall be effective upon receipt by the addressee:

If to Company:If to OncoMed:

Revolution Medicines, Inc.OncoMed Pharmaceuticals, Inc.

700 Saginaw Dr.800 Chesapeake Avenue

Redwood City, CA 94063Redwood City, CA 94063

Attn: LegalAttn: Legal

legal@revolutionmedicines.comlegal@oncomed.com

12.7. Waiver. No waiver of any provision of this Agreement, whether by conduct or

otherwise, in any one or more instances shall be deemed to be or be construed as a further or continuing

waiver of any such provision in any other instance, or of any other provision or condition of this

Agreement. No waiver of this Agreement shall be binding upon either Party unless made in writing and

signed by a duly authorized representative of such Party and no failure or delay in enforcing any right

shall be deemed a waiver.

12.8. Entire Agreement; Amendment. This Agreement (including all Exhibits hereto)

supersedes all prior discussions and writings and constitutes the entire agreement between the Parties with

respect to the subject matter hereof. This Agreement may only be amended by a written document signed

by duly authorized representatives of both Parties.

12.9. Counterparts. This Agreement may be executed in multiple counterparts, each of

which shall be deemed an original but all of which together shall constitute one and the same instrument.

A facsimile or other digital transmission of this signed Agreement bearing a signature on behalf of a Party

shall be legal and binding on such Party. Each Party agrees that electronic signatures may be used in lieu

of hand signatures in the execution of this Agreement.

[Signature Page Follows]

6

IN WITNESS WHEREOF, the Parties have caused their duly authorized officers to execute and deliver this Animal Care Agreement as of the Effective Date.

ONCOMED PHARMACEUTICALS, INC.REVOLUTION MEDICINES INC.

By: /s/ John A. LewickiBy: /s/ Mark A. Goldsmith

Name: John A. Lewicki, PhDName: Mark A. Goldsmith

Title: President & CEOTitle: Chief Executive Officer

[Signature Page to Animal Care Agreement]

Exhibit A

Duties

Duties of OncoMed

• Conduct basic animal health-related tasks, consisting of daily health checks, record-keeping related to animal health, cage changing, and house cleaning.

• Receive new Company animals from vendors, including printing out cage cards and moving the

animals to the animal holding rooms. Excludes shaving, ear tagging, and weighing animals.

• Receive and put away Company lab supplies, cages, water bottles, bedding, and rodent diets.

• Box dirty cages.

• Report ill animals through OncoMed’s Animal Treatment Requirement (ATR) system.

• Review, approve, and conduct the Company Sentinel Program pursuant to OncoMed’s standard

protocols.

• Permit Company to use the IACUC as necessary for activities conducted in the Facilities.

• Provide bio-waste (including carcass) disposal.

Duties of Company

• Notify OncoMed promptly of new orders of animals and supplies.

• Shave, ear tag, and weigh new animals as necessary.

• Provide all necessary supplies other than the Supplies (as described in Section 2)

• Respond to all ATR reports received from OncoMed in a timely manner and in accordance with

OncoMed’s ATR process and applicable law and regulations.

• Draft, maintain, and receive IACUC approval of standard operating procedures for humane endpoints.

• Develop the Company Sentinel Program under the oversight of OncoMed and the IACUC.

• Clean and maintain all supplies and equipment used by Company.

• Keep all portions of the Facilities clean and organized.

Exhibit B

Supplies; Equipment

Supplies

• Shoe covers

• Disposable lab coats

• Spor-Klenz

• Alcohol (70%)

• Ice

• Dry ice

• Food and bedding

• Liquid nitrogen

• Disposables required for surgical procedures (i.e., diapers, kimwipes and biohazard bags)

• Reasonable amounts of controlled substances for infrequent use, provided that Company shall access and log any use through the OncoMed controlled substances protocols, but OncoMed shall retain control over such controlled substances and shall be accountable for reconciling stocks and usage records.

Equipment Useable by Company

• Isoflurane vaporizers (2)

• Biosafety cabinets (3)

• Cage changing stations (4)

• Personnel lockers

• Sharps disposal containers

• Refrigerators

• Freezers

EXHIBIT D

ENVIRONMENTAL QUESTIONNAIRE

(attached)

EXHIBIT E

BRITANNIAPOINTEGRAND BUSINESS PARK

ENVIRONMENTALQUESTIONNAIRE

FOR COMMERCIAL AND INDUSTRIAL PROPERTIES

RevolutionMedicines

TenantName:  

800 Chesapeake Dr, Redwood City, CA 94063

Lease Address:

Oncomed Pharmaceuticals

Lease Type (check correct box – right click to properties):  ☐ Primary Lease/Lessee    

☒ Sublease from:

Instructions:Thefollowing questionnaire is to be completed by theLessee representativewithknowledgeof theplanned operations for thespecified building/location.Pleaseprintclearly andattachadditionalsheetsas necessary.

1.0 PROCESS INFORMATION

Animalresearchincludingtumorinjection,treatment,necropsies,take‐downs.

Describe planned site use, including a brief description of manufacturing processes and/or pilot plants planned for this site, if any.

2.0 HAZARDOUS MATERIALS – OTHER THAN WASTE

Will (or are) non-waste hazardous materials be/being usedor stored at this site? If so, continue with the nextquestion.If not, go to Section 3.0.

2.1 Are anyof thefollowing materials handled on the Property?       ☒ Yes   ☐ No

[Amaterial ishandledifitisused,generated, processed, produced, packaged,treated,stored,emitted,discharged, ordisposed.]If YES, check (right click to properties) the applicable correct Fire Code hazard categories below.

☐	Combustible dusts/fibers	☐	Explosives		Flammable liquids
☐	Combustible liquids (e.g., oils)	☐	Compressed gas - inert	☐	Flammable solids/pyrophorics
	Cryogenic liquids - inert	☐	Compressed gas - flammable/pyrophoric	☐	Organic peroxides
☐	Cryogenic liquids - flammable		Compressed gas - oxidizing	☐	Oxidizers - solid or liquid
☐	Cryogenic liquids - oxidizing	☐	Compressed gas - toxic	☐	Reactives - unstable or water reactive
☐	Corrosives - solid or liquid	☐	Compressed gas - corrosive		Toxics - solid or liquid

2-2. For all materials checked in Section 2.1 above, please list the specific material(s), use(s), and quantities of each used or stored on the site in thetable below; or attach a separate inventory.NOTE: If proprietary, the constituents need not be named but the hazard information and volumes are required.

Material/ Chemical	PhysicalState(Solid,Liquid,orGas)	ContainerSize	NumberofContainers Used & Stored	TotalQuantity	Units (pounds for solids, gallons or liters for liquids, & cubic feet for gases)
Nitrogen	Liquid	N/A	Provided as part of OncoMed’s infrastructure
Oxygen	Gas	660Liters	2	1320	Liters

Material/ Chemical	PhysicalState(Solid,Liquid,orGas)	ContainerSize	NumberofContainers Used & Stored	TotalQuantity	Units (pounds for solids, gallons or liters for liquids, & cubic feet for gases)
Ethanol	Liquid	1Pint	Unknown	< 1	Gallon
Isoflurane	Liquid	200 ml	Unknown	< 1	Gallon
Carbon dioxide	Gas	N/A	Provided as part of OncoMed’s infrastructure

2-3. Describe the planned storage area location(s) for the materials in Section 2-2 above.Include site maps and drawings as appropriate.

Storage of hazardous materials will be in OncoMed’s designated storage areas. Inert gases Aare delivered through building plumbing, while the other materials are stored in

Aappropriate storage cabinets in the Vivarium.

 

2-4. Other hazardous materials. Check below (right click to properties) if applicable. NOTE: If either of the latter two are checked (BSL-3 and/or radioisotope/radiation), be advised that not all lease locations/cities or lease agreements allow these hazards; and if either of these hazards are planned, additional information will be required with copies of oversight agency authorizations/licenses as they become available.

☒ Risk Group 2/Biosafety Level-2 Biohazards ☐ Risk Group 3/Biosafety Level-3 Biohazards ☐ Radioisotopes/Radiation

3.0 HAZARDOUSWASTE (i.e., REGULATED CHEMICAL WASTE)

Are (or will) hazardous wastes (be) generated?       ☒ Yes   ☐ No

If YES, continue withthenext question.If not, skip this sectionand goto section 4.0.

3.1 Are or will anyof the following hazardous (CHEMICAL) wastes generated, handled, or disposed of (where applicable and allowed) on the property?

☐	Liquids	☐	Process sludges	☐	PCBs
☒	Solids	☐	Metals	☐	wastewater

3-2. List and estimate the quantities of hazardous waste identified in Question 3-1 above.

HAZRDOUS (CHEMICAL) WASTE GENERATED	SOURCE	WASTE TYPE		APPROX.MONTHLYQUANTITY with units	DISPOSITION [e.g., off-site landfill, incineration, fuel blending scrap metal; wastewater neutralization (onsite or off-site)]
		RCRA listed (federal)	Non-RCRA (Calif-ornia ONLY or recycle)
Charcoal filters	Anesthesia Machine	☐	☒	3 canisters	Hazardous waste landfill

3-3. Waste characterization by:        Process knowledge ☒       EPA lab analysis ☐      Both ☐

3-4.   Please includename, location, and permit number (e.g.EPA IDNo.) for transporter and disposalfacility ifapplicable.Attach separate pages as necessary. If not yet known, write “TBD.”

Hazardous Waste Transporter/DisposalFacilityName	FacilityLocation	Transporter(T)orDisposal(D)Facility	PermitNumber
Advanced Chemical Transport	967 Marbury Rd. San Jose, CA 95133	T	CAR000070540

Clean Harbors 11600 Aptus Rd. Aragonite, UT 84029 D UTD981552177

3-5. Are pollution controls or monitoringemployed in the process to preventor minimize the release of wastesinto the environment? NOTE: This does NOT mean fume hoods; examples include air scrubbers, cyclones, carbon or HEPA filters at building exhaust fans, sedimentation tanks, pH neutralization systems for wastewater, etc.

☐ Yes   ☒ No

If YES, please list/describe:    

4.0 OTHER REGULATED WASTE (i.e., REGULATED BIOLOGICAL WASTE, referred to as “Medical Waste” in California)

4-1. Will (or do) you generate medical waste?   ☒ Yes   ☐ No   If NO, skip to Section 5.0.

4-2. Check the types of waste that will be generated, all of which fall under the California Medical Waste Act:

☒	Contaminated sharps (i.e., if contaminated with  ≥ Risk Group 2 materials)	☒	Animal carcasses	☐	Pathology waste known or suspected to be contaminated with ≥ Risk Group 2 pathogens)
☒	Red bag  biohazardous waste (i.e., with  ≥ Risk Group 2 materials) for autoclaving	☒	Human or non-human primate blood, tissues, etc. (e.g., clinical specimens)	☒	Trace Chemotherapeutic Waste and/or Pharmaceutical waste NOT otherwise regulated as RCRA chemical waste

4-3. What vendor will be used for off-site autoclaving and/or incineration?

Advanced Chemical Transport

 

4-5. Do you have a Medical Waste Permit for this site?    ☐ Yes   ☒ No, not required.  

☐ No, but an application will be submitted.

5.0 UNDERGROUND STORAGE TANKS (USTS) & ABOVEGROUND STORAGE TANKS (ASTS)

5-1. Are underground storagetanks (USTs), aboveground storage tanks (ASTs), or associatedpipelines used for

the storage of petroleumproducts, chemicals, or liquidwastes present on site (lease renewals) or required for planned operations (new tenants)?     ☐ Yes   ☒ No  

NOTE: If you will have your own diesel emergency power generator, then you will have at least one AST! [NOTE: If a backup generator services multiple tenants, then the landlord usually handles the permits.]

IfNO,skip tosection6.0.IfYES,pleasedescribecapacity,contents,age,typeoftheUSTsorASTs,aswellanyassociatedleakdetection/spillpreventionmeasures.Pleaseattachadditionalpagesifnecessary.

UST or AST Capacity (gallons)   Contents Year Installed Type(Steel, Fiberglass,etc.) Associated Leak Detection / Spill PreventionMeasures*

*NOTE: Thefollowing are examples of leak detection/ spill preventionmeasures:integrity testing, inventoryreconciliation, leak detection system, overfill spill protection, secondary containment, cathodic protection.

5-2. Please providecopies ofwritten tank integrity testresults and/or monitoring documentation, if available.

5-3. Is the UST/AST registered and permitted withthe appropriate regulatory agencies?     ☐ Yes   ☐ No, not yet  

If YES, please attach a copy of the required permit(s). See Section 7-1 for the oversight agencies that issue permits, with the exception of those for diesel emergency power generators which are permitted by the local Air Quality District (Bay Area Air Quality Management District = BAAQMD; or San Diego Air Pollution Control District = San Diego APCD).

5-4. If thisQuestionnaire isbeing completed fora lease renewal, and if any of the USTs/ASTs have leaked,please state the substance released, the media(s) impacted (e.g., soil, water, asphalt, etc.), the actions taken,and all remedial responses to the incident.

     

5-5. If this Questionnaire is being completed for a lease renewal, have USTs/ASTs been removed fromtheProperty?

☐ Yes   ☐ No

IfYES,pleaseprovideanyofficialclosurelettersorreportsandsupportingdocumentation(e.g.,analyticaltestresults,remediation reportresults,etc.).

5-6. For Leaserenewals, are there any above or below ground pipelineson site used to transfer chemicals or wastes?

☐ Yes   ☐ No

Fornewtenants,areinstallationsofthistyperequiredfortheplannedoperations?   ☐ Yes   ☐ No

IfYEStoeitherquestion in this section 5-6, pleasedescribe.

 

6.0 ASBESTOSCONTAININGBUILDING MATERIALS

PleasebeadvisedthatanasbestossurveymayhavebeenperformedattheProperty.Ifprovided,pleasereviewtheinformationthatidentifiesthelocationsofknownasbestoscontainingmaterialorpresumedasbestoscontainingmaterial.Allpersonnelandappropriatesubcontractorsshouldbenotifiedofthepresenceofthesematerials,andinformednottodisturbthesematerials.Anyactivitythatinvolvesthedisturbanceorremovalofthesematerialsmust be done by an appropriately trained individual/contractor.

7.0 OTHER REGULATORY PERMITS/REQUIREMENTS

7-1. Does the operation have or require an industrial wastewater permit to discharge into the local National Pollutant Discharge Elimination System (NPDES)? [Example: This applies when wastewater from equipment cleaning is routed through a pH neutralization system prior to discharge into the sanitary or lab sewer for certain pharmaceutical manufacturing wastewater; etc.] Permits are obtained from the regional sanitation district that is treating wastewater.

☐ Yes   ☒ No   ☐ No, but one will be prepared and submitted to the Landlord property management company.

If so, please attach a copy of this permit or provide it later when it has been prepared.

7-2. Has a HazardousMaterialsBusiness Plan (HMBP) been developed for thesite and submitted via the State of California Electronic Reporting System (CERS)? [NOTE: The trigger limits for having to do this are ≥ 200 cubic feet if any one type of compressed gas(except for carbon dioxide and inert simple asphyxiant gases, which have a higher trigger limit of  ≥ 1,000 cubic feet); ≥ 55 gallons if any one type of hazardous chemical liquid; and ≥500 pounds of any one type of hazardous chemical solid. So a full-sixe gas cylinder and a 260-liter of liquid nitrogen are triggers! Don’t forget the diesel fuel in a backup emergency generator if  the diesel tank size is ≥ 55 gallons and it is permitted under the tenant (rather than  under the landlord).] NOTE: Each local Certified Unified Program Agency (CUPA) in California governs the HMBP process so start there. Examples: the CUPA for cities in San Mateo County is the County Environmental Health Department; the CUPA for the City of Hayward, CA is the Hayward Fire Department; the CUPA for Mountain View is the Mountain View Fire Department; and, the CUPA for San Diego is the County of San Diego Hazardous Materials Division (HMD),

☒ Yes   ☐ No, not required.  ☐ No, but one will be prepared and submitted, and a copy will be provided to the landlord property management company.

If one has been completed, please attach a copy.  Continue to provide updated versions as they are completed. This is a legal requirement in that State law requires that the owner/operator of a business located on leased or rented real property shall notify, in writing, the owner of the property that the business is subject to and is in compliance with the Hazardous Materials Business Plan requirements (Health and Safety Code Chapter 6.95 Section 25505.1).

7-3. NOTE: Please be advised that if you are involved in any tenant improvements that require a construction permit, you will be asked to provide the local city with a Hazardous Materials Inventory Statement (HMIS) to ensure that your hazardous chemicals fall within the applicable Fire Code fire control area limits for the applicable construction occupancy of the particular building.  The HMIS will include much of the information listed in Section 2-2.  Neither the landlord nor the landlord’s property management company expressly warrants that the inventory provided in Section 2-2 will necessarily meet the applicable California Fire Code fire control area limits for building occupancy, especially in shared tenant occupancy situations. It is the responsibility of the tenant to ensure that a facility and site can legally handle the intended operations and hazardous materials desired/ needed for its operations, but the landlord is happy to assist in this determination when possible.

CERTIFICATION

Iamfamiliarwiththerealpropertydescribedinthisquestionnaire.Bysigningbelow,Irepresentandwarrantthattheanswerstotheabovequestionsarecompleteandaccuratetothebestofmyknowledge.IalsounderstandthatLessorwillrelyonthecompletenessandaccuracyofmyanswersinassessinganyenvironmentalliabilityrisksassociatedwith the property.

/s/ Randy Cook

 

Signature:    

Randy Cook

Name:

EH&S Consultant

Title:

November 30, 2018

Date:

[telephone number]

 

Telephone:

EX-10.9(E)

Exhibit 10.9(E)

ONCOMED LETTERHEAD

December 5, 2018

Austin Gurney, Ph.D.

### ###### ##

### #########, ## #####

Dear Austin:

This letter confirms the offer made to you by OncoMed Pharmaceuticals, Inc. (the “Company”) in conjunction with your continued employment and separation from the Company as of December 21, 2018, or such earlier date as either you or the Company terminates your employment (the “Separation Date”).  If you sign and return this letter to us by December 12, 2018, it shall become a binding agreement between you and the Company (the “Agreement”), and you will become eligible for the payments and benefits of Paragraphs 2, 3 and 4 of this Agreement.  If you do not timely sign and return this Agreement, your employment shall terminate effective December 13, 2018, and you shall receive only those payments and benefits set forth in Paragraph 1.

1. Accrued Wages and Expenses.  You shall receive, regardless of whether you sign this Agreement, the following payments and benefits.  All payments made pursuant to this Paragraph 1 shall be reduced by the amount of applicable taxes and other authorized withholding.

a) On or before the Separation Date, you will receive payment in an amount equal to all wages owed to you through the Separation Date, including accrued, unused paid time off (“PTO”).  

b) Please promptly submit all unreimbursed business expenses incurred through the Separation Date to Accounts Payable at AP@oncomed.com, so that the Company may reimburse you.

2.Retention Period.

a) During the period beginning December 5, 2018 and ending on the Separation Date (the “Retention Period”), you will continue to be an employee of the Company and to receive your base salary or wages at the

800 Chesapeake Drive   Redwood City, CA 94063   Phone: 650-995-8200   Fax: 650-298-8600   www.oncomed.com

level in effect as of December 5, 2018, PTO accrual, and all your other Company benefits that are in effect as of December 5, 2018.

b) During the Retention Period, your employment will be terminable on an at-will basis, without Cause (as defined herein) or notice, by either you or the Company, subject to the terms of this Paragraph 2.  

i) In the event that your employment is terminated during the Retention Period by the Company other than for Cause, you will receive all salary or wages owed to you as of the Separation Date and, provided you execute and allow to become effective the General Release of Claims (the “General Release”) attached as Exhibit A hereto no earlier than the final date of your employment, the Separation Benefits set forth in Paragraph 4, below.

ii) In the event that your employment is terminated by the Company for Cause during the Retention Period, you will receive all salary or wages owed to you as of the Separation Date, but will not be eligible for the Separation Benefits set forth in Paragraph 4, below.  “Cause” for purposes of this Agreement shall mean and refer to your failure or refusal to reasonably discharge your employment duties; your violation of the PIIA (defined in Paragraph 7); or your engaging in any act of commercial bribery, any criminal act, or your perpetration of fraud.

3.Retention Bonus.  Unless you terminate your employment prior to December 21, 2018, you will receive a retention bonus of $79,000.00 as set forth in the Retention Bonus Agreement between you and the Company, dated January 25, 2018, in accordance with the terms of such agreement and the timing therein, if you execute and allow to become effective the General Release no earlier than the final date of your employment, or if you otherwise comply with all of your obligations thereunder.

4. Separation Benefits.  In consideration for your signing this Agreement, you will receive (a) unless you terminate your employment prior to December 21, 2018, an amount equal to $75,316.00 representing your pro-rated annual discretionary bonus for the 2018 fiscal year, less applicable taxes and other authorized withholding, and (b) the benefits set forth in Paragraph 4 of the Amended and Restated Change in Control and Severance Agreement between you and the Company, dated October 14, 2015 (in lieu of the benefits set forth in Paragraph 3 of such agreement), in accordance with the terms of such agreement and the timing therein (the “Separation Benefits”), in each case provided that you execute and allow to become effective the General Release no earlier than the final date of your employment.

5. Benefits Coverage.  If youare enrolled in Company-sponsored healthcare coverage, such coverage will terminate as of December 31, 2018.  Thereafter, provided that you are eligible, you may continue healthcare coverage pursuant to COBRA at your own expense, except as provided in Paragraph 4 of this Agreement.  All other Company-sponsored benefits will terminate effective as of the Separation Date.

6. Return of Company Property.  On or before the Separation Date, you shall return to the Company all Company documents, files and property in your possession, including but not limited to all keys, computer equipment, credit cards, original and copies of documents or data, and all office equipment.  Your receipt of the benefits of Paragraphs 2 and 4 of this Agreement is contingent upon your compliance with this Paragraph 6.

7. Maintaining Confidential Information.  You will not disclose any confidential information you acquired while an employee of the Company to any other person or use such information in any manner that is detrimental to the Company’s interests.  By your signature, you confirm your continuing obligations toward the Company under the Proprietary Information and Inventions Assignment Agreement (“PIIA”) signed by you in conjunction with your employment. Notwithstanding the foregoing, or anything contained in the PIIA, you acknowledge that you will not be held criminally or civilly liable for (a) the disclosure of confidential or proprietary information that is made in confidence to a government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, or (b) the disclosure of confidential or proprietary information that is made in a complaint or other document filed in a lawsuit or other proceeding under seal or pursuant to court order.

8. Cooperation With the Company.  You will cooperate fully with the Company in its defense of or other participation in any administrative, judicial or other proceeding arising from any investigation, charge, complaint or other action which has been or may be filed.

9. General Release of the Company.  You understand that by agreeing to this release you are agreeing not to sue, or otherwise file any claim against, the Company or any of its directors, officers, managers, employees or agents for any reason whatsoever based on anything that has occurred as of the date you sign this agreement.

a) On behalf of yourself and your heirs and assigns, you hereby release and forever discharge the “Releasees” hereunder, consisting of the Company, and each of its directors, officers, managers, employees, agents (including but not limited to Execustaff HR, Inc.) and insurers, and all persons acting by,

through, under or in concert with them, or any of them, of and from any and all manner of action or actions, cause or causes of action, in law or in equity, suits, debts, liens, contracts, agreements, promises, liability, claims, demands, damages, loss, cost or expense, of any nature whatsoever, known or unknown, fixed or contingent (hereinafter called “Claims”), which you now have or may hereafter have against the Releasees, or any of them, by reason of any matter, cause, or thing whatsoever from the beginning of time to the date hereof, including, without limiting the generality of the foregoing, any Claims arising out of, based upon, or relating to your recruitment, hire, employment, remuneration or separation from employment by the Releasees, including any Claims arising under Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1866; the Equal Pay Act; the Americans with Disabilities Act; the Fair Labor Standards Act; the Employee Retirement Income Security Act; the Family Medical Leave Act; the Worker Adjustment and Retraining Notification Act; the California Fair Employment and Housing Act; the California Family Rights Act; the California Reductions, Mass Terminations and Layoffs  law; the California Labor Code; the California Occupational Safety and Health Act; Section 17200 of the California Business and Professions Code; Claims arising under any other local, state or federal law governing employment; Claims for breach of contract; Claims arising in tort, including, without limitation, Claims of wrongful dismissal or discharge, discrimination, harassment, retaliation, fraud, misrepresentation, defamation, libel, infliction of emotional distress, violation of public policy, and/or breach of the implied covenant of good faith and fair dealing; and Claims for damages or other remedies of any sort, including, without limitation, compensatory damages, punitive damages, injunctive relief and attorney’s fees.

b) Notwithstanding the generality of the foregoing, you do not release (i) your rights under this agreement; (ii) Claims for unemployment compensation or any state disability insurance benefits pursuant to the terms of applicable state law; (iii) Claims to continued participation in certain of the Company's group benefit plans pursuant to the terms and conditions of the federal law known as COBRA or applicable state law; (iv) your  right to bring to the attention of the Equal Employment Opportunity Commission or California Department of Fair Employment and Housing claims of

discrimination, harassment, retaliation or interference with leave rights; provided, however, that you do release your right to secure any damages for all such alleged treatment; (v) your right to communicate directly with, cooperate with, or provide information to, any federal, state or local government regulator; and (vi) any other Claims that cannot be released as a matter of law.

c) YOU ACKNOWLEDGE THAT YOU ARE FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.

BEING AWARE OF SAID CODE SECTION, YOU HEREBY EXPRESSLY WAIVE ANY RIGHTS YOU MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT.

8.Severability.  The provisions of this agreement are severable.  If any provision is held to be invalid or unenforceable, it shall not affect the validity or enforceability of any other provision.

9.Voluntary and Knowing Agreement.  You represent that you have thoroughly read and considered all aspects of this agreement, that you understand all its provisions and that you are voluntarily entering into said agreement.

10.Entire Agreement; Amendment.  This agreement sets forth the entire agreement between you and the Company and supersedes any and all prior oral or written agreements or understanding between you and the Company concerning the subject matter.  This agreement may not be altered, amended or modified, except by a further written document signed by you and the Company.

If the above accurately reflects your understanding, please date and sign the enclosed copy of this letter in the places indicated below and return that copy to Cindy Hernandez, HR Manager at Execustaff HR, Inc., at chernandez@execustaffhr.com no later than December 12, 2018.

Respectfully,

/s/ John Lewicki

John Lewicki, Ph.D.

President and CEO

Accepted and agreed:

/s/ Austin Gurney12/05/2018

Austin GurneyDATE

EXHIBIT A

GENERAL RELEASE OF CLAIMS

This General Release of Claims (“Release”) is entered into as of this ___ day of _________________, 201__, between you, and OncoMed Pharmaceuticals, Inc. (the “Company”) (collectively referred to herein as the “Parties”), effective on the 8^th day after your signature (the “Effective Date”), unless you revoke your acceptance as provided in Paragraph 1(d), below.

1.General Release of the Company.  You understand that by agreeing to this release you are agreeing not to sue, or otherwise file any claim against, the Company or any of its employees or other agents for any reason whatsoever based on anything that has occurred as of the date you sign this agreement.

a. On behalf of yourself and your heirs and assigns, you hereby release and forever discharge the “Releasees” hereunder, consisting of the Company, and each of its directors, officers, managers, employees, agents (including but not limited to Execustaff HR, Inc.) and insurers, and all persons acting by, through, under or in concert with them, or any of them, of and from any and all manner of action or actions, cause or causes of action, in law or in equity, suits, debts, liens, contracts, agreements, promises, liability, claims, demands, damages, loss, cost or expense, of any nature whatsoever, known or unknown, fixed or contingent (hereinafter called “Claims”), which you now have or may hereafter have against the Releasees, or any of them, by reason of any matter, cause, or thing whatsoever from the beginning of time to the date hereof, including, without limiting the generality of the foregoing, any Claims arising out of, based upon, or relating to your recruitment, hire, employment, remuneration or separation from employment by the Releasees, including any Claims arising under Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1866; the Age Discrimination in Employment Act (“ADEA”); the Equal Pay Act; the Americans with Disabilities Act; the Fair Labor Standards Act; the Employee Retirement Income Security Act; the Family Medical Leave Act; the Worker Adjustment and Retraining Notification Act; the California Fair Employment and Housing Act; the California Family Rights Act; the California Reductions, Mass Terminations and Layoffs  law; the California Labor Code; the California Occupational Safety and Health Act; Section 17200 of the California Business and Professions Code; Claims arising under any other local, state or federal law governing employment; Claims for breach of contract; Claims arising in tort, including, without limitation, Claims of wrongful dismissal or discharge, discrimination, harassment, retaliation, fraud, misrepresentation, defamation, libel, infliction of emotional distress, violation of public policy, and/or breach of the implied covenant of good faith and fair dealing; and Claims for damages or other remedies of any sort, including, without limitation, compensatory damages, punitive damages, injunctive relief and attorney’s fees.

b. Notwithstanding the generality of the foregoing, you do not release (i) your rights under this agreement; (ii) Claims for unemployment compensation or any state

A-1

disability insurance benefits pursuant to the terms of applicable state law; (iii) Claims to continued participation in certain of the Company's group benefit plans pursuant to the terms and conditions of the federal law known as COBRA or applicable state law; (iv) your  right to bring to the attention of the Equal Employment Opportunity Commission or California Department of Fair Employment and Housing claims of discrimination, harassment, retaliation or interference with leave rights; provided, however, that you do release your right to secure any damages for all such alleged treatment; (v) your right to communicate directly with, cooperate with, or provide information to, any federal, state or local government regulator, including; and (vi) any other Claims that cannot be released as a matter of law.

c. YOU ACKNOWLEDGE THAT YOU ARE FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.

BEING AWARE OF SAID CODE SECTION, YOU HEREBY EXPRESSLY WAIVE ANY RIGHTS YOU MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT.

d. In accordance with the Older Workers Benefit Protection Act of 1990, you should be aware of the following:

i) You have the right to consult with an attorney before signing this agreement;

ii) You have at least forty-five (45) days, from December 5, 2018 (through January 19, 2019), to consider this agreement;

iii) You have seven (7) days after signing this agreement to revoke this agreement, and this agreement will not be effective, and you will not receive any of the separation benefits, until that revocation period has expired; and

iv) The job titles and ages of all individuals eligible or selected for the separation package and the ages of all individuals in the same job classification or organizational unit who are not eligible for the separation package are listed on the form attached as Appendix 1.

If you wish to revoke your acceptance of this Agreement, you must deliver written notice stating your intent to revoke by email to Cindy Hernandez, HR Manager at

A-2

Execustaff HR, Inc., at chernandez@execustaffhr.com, on or before 5:00 p.m. Pacific Time on the seventh (7^th) day after the date on which you sign this Agreement.  

2.Choice of Law.  This Release shall in all respects be governed and construed in accordance with the laws of the State of California, including all matters of construction, validity and performance, without regard to conflicts of law principles.

3.Integration Clause.  This Release, together with the letter agreement dated December 5, 2018, contains our entire agreement with regard to the separation of your employment, and supersedes and replace any prior agreements as to those matters, whether oral or written. This Release may not be changed or modified, in whole or in part, except by an instrument in writing signed by you and the Chief Executive Officer of the Company or his/her successor.

4.Execution in Counterparts.  This Release may be executed in counterparts with the same force and effectiveness as though executed in a single document.  Facsimile and pdf signatures shall have the same force and effectiveness as original signatures.

The Parties have carefully read this Release in its entirety; fully understand and agree to its terms and provisions; and intend and agree that it is final and binding on all Parties.

IN WITNESS WHEREOF, and intending to be legally bound, the Parties have executed the foregoing on the dates shown below.

EMPLOYEEONCOMED PHARMACEUTICALS, INC.

NAMEBy:

Title:

DateDate

A-3

APPENDIX A

DISCLOSURE CONCERNING SEVERANCE OFFER

CLASS, UNIT OR GROUP COVERED BY SEVERANCE OFFER

All employees of OncoMed Pharmaceuticals, Inc. (the “Company”) who were included in the layoff announced internally to the Company’s employees on December 5, 2018 are covered by this severance offer.

ELIGIBILITY FACTORS FOR THE PROGRAM

Employees who are covered by the severance offer are eligible to receive the benefits of the offer if they:

• Are provided with a Release Agreement (the “Agreement”) to which this Disclosure is Appendix A;

• Timely sign and deliver the Agreement to the Company;

• Do not revoke the Agreement, as permitted by the Agreement; and

• Comply with the terms and conditions of the Agreement.

TIME LIMITS APPLICABLE TO THE PROGRAM

The following time limits apply to the program:

• Employees age 40 and over must sign and deliver the Agreement no later than the forty-fifth (45^th) day after that employee’s receipt of the Agreement.

• Employees age 40 and over may revoke their acceptance of the Agreement for a period of seven (7) days after signing it.

JOB TITLES AND AGES OF EMPLOYEES SELECTED FOR AND NOT SELECTED FOR THE PROGRAM:

Job Title	Department	Age	Selected or Not Selected
Senior Director	Bioinfomatics	55	Selected
Accounting Manager	Finance	60	Selected
Senior Patent Counsel	Legal	47	Selected
Long Term Intern	Manufacturing	28	Selected
Director	Manufacturing	43	Selected
Scientist	Manufacturing	44	Selected
Associate Director	Manufacturing	53	Selected

A-4

Senior Scientist	Manufacturing	38	Selected
Associate Director	Manufacturing	58	Selected
Senior Scientist	Manufacturing	36	Selected
Associate Director	Research	59	Selected
Senior Scientist	Research	38	Selected
Associate Scientist	Research	37	Selected
Senior Vice President, Chief Scientific Officer	Research	55	Selected
Scientist	Research	55	Selected
Scientist	Research	61	Selected
Senior Scientist	Research	33	Selected
Associate Director	Research	42	Selected
Senior Director	Research	55	Selected
Scientist	Research	33	Selected
Associate Director	Research	58	Selected
Associate Scientist	Research	51	Selected
Director	TransMed	49	Selected
Senior Scientist	TransMed	37	Selected
Associate Director	TransMed	43	Selected
Senior Director	TransMed	47	Selected
Associate Director	TransMed	47	Selected
Research Associate	TransMed	27	Selected
Associate Director	TransMed	44	Selected
Senior Vice President	TransMed	52	Selected
Scientist	TransMed	38	Selected
Associate Director	TransMed	48	Selected
Animal Care Technician	Vivarium	27	Not Selected
Research Associate	Vivarium	55	Selected
CEO & President	Administration	67	Not Selected
Executive Assistant	Administration	61	Not Selected
IT Network Administrator	Bioinfomatics	58	Not Selected
Vice President	Clinical	41	Not Selected
Director	Clinical	51	Not Selected
Senior Vice President	Clinical	60	Not Selected

A-5

Facility Manager	Facilities	40	Not Selected
Senior Accountant	Finance	50	Not Selected
Associate Director	Finance	42	Not Selected
Vice President	Finance	59	Not Selected
Senior Corporate Counsel	Legal	33	Not Selected
Senior Vice President, General Counsel	Legal	49	Not Selected
Senior Manager	Manufacturing	43	Not Selected
Executive Director	Manufacturing	48	Not Selected
Regulatory Affairs Manager	Regulatory	35	Not Selected
Executive Director	Regulatory	49	Not Selected
Senior Vice President	Regulatory	56	Not Selected
Long Term Intern	Research	21	Not Selected
Short Term Intern	TransMed	23	Not Selected
Senior Scientist	TransMed	34	Not Selected
Associate Director	Vivarium	46	Not Selected

A-6

EX-10.17

Exhibit 10.17

ONCOMED LETTERHEAD

October 17, 2018

John Lewicki

### ####### ###

### #####, ## #####

Re:Amended and Restated Change in Control and Severance Agreement

Dear John:

You and OncoMed Pharmaceuticals, Inc. (the “Company”) are parties to an Amended and Restated Change in Control and Severance Agreement dated October 14, 2015 (the “Change in Control Agreement”), which sets forth, among other things, the terms and conditions of certain severance benefits payable to you in the event of a qualifying termination of your employment.  This letter (this “Agreement”) amends and restates the Change in Control Agreement to provide you with additional benefits in the event of certain terminations of your employment.  This Agreement supersedes the Change in Control Agreement and any other agreement or policy to which the Company is a party with respect to the cessation of your employment with the Company.  

1.Definitions.  For purposes of the Agreement, the following terms shall have their respective meanings set forth below:

(a)“Cause” shall mean any of the following:  (i) your intentional unauthorized use or disclosure of the Company’s confidential information or trade secrets, which use or disclosure causes material harm to the Company, (ii) your material breach of any agreement between you and the Company, (iii) your material failure to comply with the Company’s written policies or rules, (iv) your conviction of, or plea of “guilty” or “no contest” to, a felony under the laws of the United States or any state thereof, or (v) your gross negligence or willful misconduct in the performance of duties to the Company that is not cured within thirty (30) days after you are provided with written notice thereof.

(b)“Change in Control” shall mean any of the following types of transactions:    (i) the direct or indirect sale or exchange in a single or series of related transactions by the stockholders of the Company of more than fifty percent (50%) of the voting stock of the Company; (ii) a merger or consolidation in which the Company is a party; or (iii) the sale, exchange, or transfer of all or substantially all of the assets of the Company (each, a “Transaction”), wherein the stockholders of the Company immediately before the Transaction do not retain immediately after the Transaction, in substantially the same proportions as their ownership of shares of the Company’s voting stock immediately before the Transaction, direct or

indirect beneficial ownership of more than fifty percent (50%) of the total combined voting power of the outstanding voting securities of the Company or the successor entity, or, in the case of a Transaction described in (iii), the corporation or other entity to which the assets of the Company were transferred, as the case may be.

Notwithstanding the foregoing, a transaction shall not constitute a Change in Control if:  (i) its sole purpose is to change the state of the Company’s incorporation; (ii) its sole purpose is to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction; (iii) it constitutes the Company’s initial public offering of its securities; or (iv) it is a transaction effected primarily for the purpose of financing the Company with cash (as determined by the Board in its discretion).

(c)“Code” shall mean the Internal Revenue Code of 1986, as amended.

(d)“Covered Termination” shall mean either (i) an involuntary termination of your employment by the Company other than for Cause, or (ii) your voluntary termination of employment with the Company for Good Reason, provided that the termination constitutes a Separation from Service.

(e)“Good Reason” shall mean your resignation due to any of the following events which occurs without your written consent, provided that the requirements regarding advance notice and an opportunity to cure set forth below are satisfied:  (i) a material diminution of your title, authority, responsibilities, duties, base pay or bonus, (ii) a material change in the geographic location at which you must perform services for the Company of at least 35 miles, (iii) a material reduction in the right to participate in the benefit programs in which you were previously participating, (iv) a material breach by the Company of an employment agreement between you and the Company or (v) a failure of the Company to have a successor assume its obligations under an employment agreement between you and the Company (each of (i), (ii), (iii), (iv) and (v) a “Good Reason Condition”).  In order for you to resign for Good Reason, you must provide written notice to the Company of the existence of the Good Reason Condition within 90 days of the initial existence of such Good Reason Condition.  Upon receipt of such notice of the Good Reason Condition, the Company will be provided with a period of 30 days during which it may remedy the Good Reason Condition and not be required to provide for the payments and benefits described herein as a result of such proposed resignation due to the Good Reason Condition specified in the notice.  If the Good Reason Condition is not remedied within the period specified in the preceding sentence, you may resign based on the Good Reason Condition specified in the notice of termination effective no later than 180 days following the initial existence of such Good Reason Condition.

(f)“Separation from Service” shall mean your termination of employment or service which constitutes a “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h).

2.Acceleration of Vesting Upon a Change in Control.   In the event of a Change in Control which occurs prior to your termination of employment with the Company, you shall become vested (immediately prior to the Change in Control) with respect to twenty-five percent

(25%) of the unvested portion of any options to purchase the Company’s common stock that you then hold and/or the immediate lapsing of restrictions with respect to twenty-five percent (25%) of any Company restricted stock or other equity-based awards that you then hold.  Such options, restricted stock and other equity-based awards shall then continue to vest, up to 100%, in accordance with the vesting schedule applicable to such award prior to the Change in Control without regard to the acceleration provided by the preceding sentence.

3.Termination Prior to a Change in Control or More than 18 Months Following a Change in Control.  If there is a Covered Termination which occurs prior to a Change in Control or more than eighteen (18) months following a Change in Control, and you execute and do not revoke a Release as described in Section 5 below, then you shall be entitled to:

(a)severance payments of twelve (12) months of your then-current annual base salary (commencing as of the termination date), which payments shall be paid in accordance with the Company’s normal payroll procedures, except that any payments that would otherwise have been made before the first normal payroll payment date falling on or after the date on which the Release becomes irrevocable (the “First Payment Date”) shall be made on the First Payment Date;

(b)an amount equal to twelve (12) months of your then-current target annual bonus for the fiscal year during which the Covered Termination occurs, which payment shall be paid in cash in a lump sum as soon as practicable following the First Payment Date; and

(c)if you elect to receive continued healthcare coverage, including group medical, dental and vision plan coverage, pursuant to the provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), the Company shall directly pay, or reimburse you for, the premium for you and your covered dependents through the earlier of (i) the twelve (12) month anniversary of the date of your termination of employment and (ii) the date you and your covered dependents, if any, become eligible for healthcare coverage under another employer’s plan(s).  Notwithstanding the foregoing, (i) if any plan pursuant to which such benefits are provided is not, or ceases prior to the expiration of the period of continuation coverage to be, exempt from the application of Section 409A of the Code under Treasury Regulation Section 1.409A-1(a)(5), or (ii) the Company is otherwise unable to continue to cover you under its group health plans without penalty under applicable law (including without limitation, Section 2716 of the Public Health Service Act), then, in either case, an amount equal to each remaining Company subsidy shall thereafter be paid to you in substantially equal monthly installments. After the Company ceases to pay premiums pursuant to this subsection (c), you may, if eligible, elect to continue healthcare coverage at your expense in accordance with the provisions of COBRA.

4.Termination Within 18 Months After a Change in Control.  If there is a Covered Termination which occurs within eighteen (18) months after a Change in Control, and you execute and do not revoke a Release as described in Section 5 below, then the Company shall provide you with the following benefits:  

(a)severance payments of twenty-four (24) months of your then-current annual base salary (commencing as of the termination date), which payments shall be paid in accordance with the Company’s normal payroll procedures, except that any payments that would otherwise have been made before the First Payment Date shall be made on the First Payment Date;

(b)an amount equal to twenty-four (24) months of your then-current target annual bonus for the fiscal year during which the Covered Termination occurs, which shall be paid in cash in a lump sum as soon as practicable following the First Payment Date;

(c)if you elect to receive continued healthcare coverage, including group medical, dental and vision plan coverage, pursuant to COBRA, the Company shall directly pay, or reimburse you for, the premium for you and your covered dependents through the earlier of (i) the twenty-four (24) month anniversary of the date of your termination of employment and (ii) the date you and your covered dependents, if any, become eligible for healthcare coverage under another employer’s plan(s).  Notwithstanding the foregoing, (i) if any plan pursuant to which such benefits are provided is not, or ceases prior to the expiration of the period of continuation coverage to be, exempt from the application of Section 409A of the Code under Treasury Regulation Section 1.409A-1(a)(5), or (ii) the Company is otherwise unable to continue to cover you under its group health plans without penalty under applicable law (including without limitation, Section 2716 of the Public Health Service Act), then, in either case, an amount equal to each remaining Company subsidy shall thereafter be paid to you in substantially equal monthly installments. After the Company ceases to pay premiums pursuant to this subsection (c), you may, if eligible, elect to continue healthcare coverage at your expense in accordance with the provisions of COBRA.

(d)immediate vesting of all of the unvested shares subject to your outstanding options to purchase the Company’s common stock and the immediate lapsing of any restrictions on any Company restricted stock or other equity-based awards that you hold as of the date of such Covered Termination (the acceleration of vesting of stock options and restricted stock described in this section shall be effective as of the date of the Covered Termination).

5.Release.  As a condition to your receipt of any benefits described in Section 3 or Section 4, you will be required to execute a release of all claims arising out of your employment with the Company or the termination thereof, in a form reasonably acceptable to the Company (the “Release”) within fifty (50) days following your termination date and not revoke such Release within any period permitted under applicable law.  Such Release shall specifically relate to all of your rights and claims in existence at the time of such execution but shall exclude any continuing obligations the Company may have to you following the date of termination under this Agreement or any other agreement providing for obligations to survive your termination of employment.

6.Section 409A.  Notwithstanding any provision to the contrary in this Agreement, if you are deemed at the time of your Separation from Service to be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, to the extent delayed commencement of any portion of the benefits to which you are entitled under this Agreement is required in order to

avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, such portion of your benefits shall not be provided to you prior to the earlier of (a) the expiration of the six-month period measured from the date of your Separation from Service or (b) the date of your death.  Upon the expiration of the applicable Code Section 409A(a)(2)(B)(i) period, all payments deferred pursuant to this Section 6 shall be paid in a lump sum to you, and any remaining payments due under the Agreement shall be paid as otherwise provided herein.For purposes of Section 409A of the Code (including, without limitation, for purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii)), your right to receive the installment payments payable pursuant to Section 3 or Section 4 (the “Installment Payments”) shall be treated as a right to receive a series of separate payments and, accordingly, each Installment Payment shall at all times be considered a separate and distinct payment.

7.Withholding.  Any amounts payable pursuant to this Agreement shall be subject to any federal, state, local, or other income or employment taxes that the Company is required to withhold pursuant to any law or government regulation or ruling.

8.Binding Agreement.

(a)The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.  Unless expressly provided otherwise, “Company” as used herein shall mean the Company as defined in this Agreement and any successor to its business and/or assets.

(b)This Agreement shall inure to the benefit of and be enforceable by you and your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.  If you should die while any amount would still be payable to you hereunder had you continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee or, if there is no such designee, to your estate.

9.Entire Agreement.  This Agreement sets forth the entire agreement of the parties hereto in respect of the subject matter contained herein and supersedes all prior agreements, arrangements and understandings of the parties hereto with respect to the subject matter contained herein, including, without limitation, any prior change in control agreements, including the Change in Control Agreement.

10.At-Will Employment.  Nothing contained in this Agreement shall (a) confer upon you any right to continue in the employ of the Company, (b) constitute any contract or agreement of employment, or (c) interfere in any way with the at-will nature of your employment with the Company.

11.Miscellaneous.  No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by

you and such officer as may be specifically designated by the Board.  No waiver by either party hereto at any time of any breach by the other party hereto of or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of California without regard to its conflicts of law principles.  The section headings contained in this Agreement are for convenience only, and shall not affect the interpretation of this Agreement.  This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

(Signature Page Follows)

If this letter sets forth our agreement on the subject matter hereof, kindly sign and return to the Company the enclosed copy of this letter, which shall then constitute our agreement on this subject.

Sincerely,

ONCOMED PHARMACEUTICALS, INC.

BY:/s/ Perry Karsen

Perry Karsen

Executive Chairman of the Board

Agreed and accepted this 17th day of October, 2018.

/s/ John Lewicki

John Lewicki, Ph.D.

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the following Registration Statements:

(1) Registration Statements (Form S-3 Nos. 333-204914 and 333-225225) of OncoMed Pharmaceuticals, Inc. and

(2) Registration Statements (Form S-8 Nos. 333-190932, 333-194867, 333-201707, 333-210081, 333-215409 and 333-222411) pertaining to the 2013 Equity Incentive Award Plan, the 2013 Employee Stock Purchase Plan, and the 2004 Stock Incentive Plan of OncoMed Pharmaceuticals, Inc.

of our reports dated March 7, 2019, with respect to the financial statements of OncoMed Pharmaceuticals, Inc. and the effectiveness of internal control over financial reporting of OncoMed Pharmaceuticals, Inc. included in this Annual Report (Form 10-K) of OncoMed Pharmaceuticals, Inc. for the year ended December 31, 2018.

/s/ Ernst & Young LLP

Redwood City, California

March 7, 2019

EX-31.1

Exhibit 31.1

CERTIFICATION

I, John Lewicki, certify that:

1. I have reviewed this Annual Report on Form 10-K of OncoMed Pharmaceuticals, Inc. for the year ended December 31, 2018;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 7, 2019

/s/ John Lewicki

John Lewicki, Ph.D.

President

(principal executive officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Yvonne Li, certify that:

1. I have reviewed this Annual Report on Form 10-K of OncoMed Pharmaceuticals, Inc. for the year ended December 31, 2018;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 7, 2019

/s/ Yvonne Li

Yvonne Li

Vice President of Finance, Controller and Administration

(principal financial and accounting officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of OncoMed Pharmaceuticals, Inc. (the “Company”) on Form 10-K for the fiscal year ended December 31, 2018, as filed with the Securities and Exchange Commission (the “Report”), John Lewicki, President of the Company, and Yvonne Li, Vice President of Finance, Controller and Administration of the Company, do each hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

• The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

• The information in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the period covered by the Report.

Date: March 7, 2019

/s/ John Lewicki

John Lewicki, Ph.D.

President

(principal executive officer)

/s/ Yvonne Li

Yvonne Li

Vice President of Finance, Controller and Administration

(principal financial and accounting officer)

This certification is being furnished to accompany the Report pursuant to 18 U.S.C. § 1350 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

XML

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2018	Mar. 05, 2019	Jun. 30, 2018
Document And Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	FY
Trading Symbol	OMED
Entity Registrant Name	OncoMed Pharmaceuticals Inc
Entity Central Index Key	0001302573
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		38,690,089
Entity Public Float			$ 74,821,990

XML

Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 9,686	$ 13,277
Short-term investments	47,659	89,814
Accounts receivable and other receivables	3,026	405
Prepaid and other current assets	1,913	1,709
Assets held for sale	1,443
Total current assets	63,727	105,205
Property and equipment, net	623	3,275
Other assets	728	1,842
Total assets	65,078	110,322
Current liabilities:
Accounts payable	1,787	2,565
Accrued liabilities	4,368	3,940
Accrued clinical liabilities	2,736	4,434
Current portion of deferred revenue	3,697	82,193
Current portion of deferred rent	56
Total current liabilities	12,644	93,132
Deferred revenue, less current portion		61,645
Deferred rent, less current potion	4,103	3,765
Noncurrent income tax payable		383
Other liabilities	100
Total liabilities	16,847	158,925
Commitments and contingencies (Note 7)
Stockholders’ equity (deficit):
Preferred stock, $0.001 par value; 5,000,000 shares authorized at December 31, 2018 and 2017; no shares issued and outstanding at December 31, 2018 and 2017
Common stock, $0.001 par value; 145,000,000 shares authorized at December 31, 2018 and 2017; 38,660,146 and 38,212,505 shares issued and outstanding at December 31, 2018 and 2017, respectively	38	38
Additional paid-in capital	410,008	403,077
Accumulated other comprehensive (loss) income	(29)	289
Accumulated deficit	(361,786)	(452,007)
Total stockholders’ equity (deficit)	48,231	(48,603)
Total liabilities and stockholders’ equity (deficit)	$ 65,078	$ 110,322

XML

Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2018	Dec. 31, 2017
Statement Of Financial Position [Abstract]
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	145,000,000	145,000,000
Common stock, shares issued	38,660,146	38,212,505
Common stock, shares outstanding	38,660,146	38,212,505

XML

Statements of Operations - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Revenue:
Revenue	$ 44,421	$ 38,154	$ 25,153
Operating expenses:
Research and development	34,443	59,839	109,713
General and administrative	18,172	16,761	18,827
Restructuring charges	1,851	2,527
Total operating expenses	54,466	79,127	128,540
Loss from operations	(10,045)	(40,973)	(103,387)
Interest and other income, net	1,562	828	299
Loss before income taxes	(8,483)	(40,145)	(103,088)
Income tax provision (benefit)	(382)	(1,083)	14
Net loss	$ (8,101)	$ (39,062)	$ (103,102)
Net loss per common share, basic and diluted	$ (0.21)	$ (1.04)	$ (3.14)
Shares used to compute net loss per common share, basic and diluted	38,442,994	37,631,348	32,859,554
Collaboration Revenue [Member]
Revenue:
Revenue	$ 44,421	$ 36,016	$ 21,277
Other Revenue [Member]
Revenue:
Revenue		$ 2,138	$ 3,876

XML

Statements of Comprehensive Loss - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Statement Of Income And Comprehensive Income [Abstract]
Net loss	$ (8,101)	$ (39,062)	$ (103,102)
Other comprehensive income (loss):
Unrealized gain (loss) on available-for-sale securities, net of tax	(318)	29	240
Total comprehensive loss	$ (8,419)	$ (39,033)	$ (102,862)

XML

Statements of Stockholders' Equity (Deficit) - USD ($) $ in Thousands	Total	Public Offering [Member]	At-the-Market Offering [Member]	Common Stock [Member]	Common Stock [Member] Public Offering [Member]	Common Stock [Member] At-the-Market Offering [Member]	Additional Paid-In Capital [Member]	Additional Paid-In Capital [Member] Public Offering [Member]	Additional Paid-In Capital [Member] At-the-Market Offering [Member]	Accumulated Other Comprehensive (Loss) Income [Member]	Accumulated Deficit [Member]
Beginning balance at Dec. 31, 2015	$ 3,551			$ 30			$ 313,344			$ 20	$ (309,843)
Beginning balance, shares at Dec. 31, 2015				30,116,633
Issuance of common stock, net of offering costs		$ 59,170	$ 4,739		$ 7			$ 59,163	$ 4,739
Issuance of common stock, net of offering costs, shares					6,325,000	388,166
Issuance of common stock related to stock incentive plans	1,243						1,243
Issuance of common stock related to stock incentive plans, shares				284,790
Stock-based compensation	11,131						11,131
Net unrealized gain (loss) on available-for-sale securities	240									240
Net loss	(103,102)										(103,102)
Ending balance at Dec. 31, 2016	(23,028)			$ 37			389,620			260	(412,945)
Ending balance, shares at Dec. 31, 2016				37,114,589
Issuance of common stock, net of offering costs			$ 1,701						$ 1,701
Issuance of common stock, net of offering costs, shares						355,821
Issuance of common stock related to stock incentive plans	2,343			$ 1			2,342
Issuance of common stock related to stock incentive plans, shares				742,095
Stock-based compensation	9,414						9,414
Net unrealized gain (loss) on available-for-sale securities	29									29
Net loss	(39,062)										(39,062)
Ending balance at Dec. 31, 2017	(48,603)			$ 38			403,077			289	(452,007)
Ending balance, shares at Dec. 31, 2017				38,212,505
Adoption of ASU 2014-09,Revenue from Contracts with Customers (Topic 606) | ASU 2014-09 [Member]	98,322										98,322
Issuance of common stock related to stock incentive plans	89						89
Issuance of common stock related to stock incentive plans, shares				447,641
Stock-based compensation	6,842						6,842
Net unrealized gain (loss) on available-for-sale securities	(318)									(318)
Net loss	(8,101)										(8,101)
Ending balance at Dec. 31, 2018	$ 48,231			$ 38			$ 410,008			$ (29)	$ (361,786)
Ending balance, shares at Dec. 31, 2018				38,660,146

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Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Operating activities
Net loss	$ (8,101)	$ (39,062)	$ (103,102)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	1,691	1,710	1,764
Stock-based compensation	6,842	9,414	11,131
Changes in operating assets and liabilities:
Accounts receivable and other receivables	(19)	2,110	68,184
Income tax refund receivable		(1,098)
Prepaid and other current assets	(204)	786	782
Other assets	1,114	684	379
Accounts payable	(778)	(2,325)	(1,770)
Accrued liabilities, income tax payable and other liabilities	318	(4,572)	(3,115)
Accrued clinical liabilities	(1,698)	(17,420)	9,633
Deferred revenue	(44,421)	(36,045)	(21,272)
Deferred rent	394	848	450
Net cash used in operating activities	(44,862)	(84,970)	(36,936)
Investing activities
Purchases of property and equipment	(655)	(585)	(1,158)
Purchases of short-term investments	(82,305)	(127,376)	(207,283)
Maturities of short-term investments	124,142	185,211	178,738
Net cash provided by (used in) investing activities	41,182	57,250	(29,703)
Financing activities
Proceeds from issuance of common stock related to the exercise of options and employee stock plan purchases	89	2,343	1,239
Net cash provided by financing activities	89	4,044	65,148
Net decrease in cash and cash equivalents	(3,591)	(23,676)	(1,491)
Cash and cash equivalents at beginning of year	13,277	36,953	38,444
Cash and cash equivalents at end of year	$ 9,686	13,277	36,953
Supplemental cash flow information:
Accrued liabilities for purchase of property and equipment		173	244
At-the-Market Offering [Member]
Financing activities
Net proceeds from issuance of common stock		$ 1,701	4,739
Public Offering [Member]
Financing activities
Net proceeds from issuance of common stock			$ 59,170

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Organization

12 Months Ended

Dec. 31, 2018

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Organization

1. Organization

OncoMed Pharmaceuticals, Inc. (“OncoMed”, the “Company”, “us”, “we”, or “our”) is a clinical-stage biopharmaceutical company focused on developing novel therapeutics that address the fundamental biology driving cancer’s growth, resistance, recurrence and metastasis. The Company currently has two therapeutic candidates in active clinical development targeting pathways regulating cancer, including cancer stem cell, or CSC, pathways or immuno-oncology. The Company’s operations are based in Redwood City, California and it operates in one segment.  

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Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation

The Company’s financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, preclinical study and clinical trial accruals, fair value of assets and liabilities, stock-based compensation, restructuring charges and income taxes. Management bases its estimates on historical experience and on various other market-specific and relevant assumptions that management believes to be reasonable under the circumstances. Actual results may differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of 90 days or less at the date of purchase to be cash and cash equivalents.

Short-Term Investments

Short-term investments consist of debt securities classified as available-for-sale and have maturities greater than 90 days, but less than 365 days from the date of acquisition. Short-term investments are carried at fair value based upon quoted market prices. Unrealized gains and losses on available-for-sale securities are excluded from earnings and were reported as a component of accumulated other comprehensive income. The cost of available-for-sale securities sold is based on the specific-identification method.

Other Comprehensive (Loss) Income

Other comprehensive (loss) income includes certain changes in equity from non-owner sources that are excluded from net loss, specifically, unrealized gains and losses on available-for-sale investments and the related tax impact.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and short-term investments. Cash and short-term investments are invested through banks and other financial institutions in the United States. Such deposits may be in excess of insured limits. The Company maintains cash and investments with various high credit quality and capitalized financial institutions.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization is calculated using the straight-line method over the estimated useful lives of the assets, which range from three to five years. Leasehold improvements are amortized over the shorter of their estimated useful lives or the remaining life of the lease at the time the asset is placed into service. In December 2018, the Company changed the estimated useful life of its leasehold improvements to better reflect the period during which these assets are expected to remain in service. The change in estimated useful life has been accounted for as a change in accounting estimate. The remaining carrying amounts of the leasehold improvements as of December 31, 2018 will be amortized prospectively over one year up to December 31, 2019. The change in estimated useful life increased loss from operations and net loss by approximately $26,000, or less than $0.01 per share, as reported in the Statement of Operations for the year ended December 31, 2018.

For assets held for sale, the property and equipment (the “disposal group”) are measured at the lower of their carrying amount or fair value less cost to sell. Losses are recognized for any initial or subsequent write-down to fair value less cost to sell, while gains are recognized for any subsequent increase in fair value less cost to sell, but not in excess of the cumulative loss previously recognized. Any gains or losses not previously recognized that result from the sale of the disposal group shall be recognized at the date of sale. Property and equipment are not depreciated while classified as held for sale. During the fourth quarter of 2018, certain property and equipment qualified as held for sale treatment. See Note 5 Property and Equipment, net to the Notes to Financial Statements.

Impairment of Long-Lived Assets

The carrying value of long-lived assets, including property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the asset may not be recoverable. An impairment loss is recognized when the total of estimated future undiscounted cash flows, expected to result from the use of the asset and its eventual disposition, are less than its carrying amount. Impairment, if any, would be assessed using discounted cash flows or other appropriate measures of fair value. Through December 31, 2018, there have been no such impairment losses.

Revenue Recognition

Effective January 1, 2018, the Company adopted Accounting Standards Codification, or ASC, Topic 606, Revenue from Contracts with Customers, using the modified retrospective transition method. Under this method, the Company recorded a cumulative adjustment to the opening balance of accumulated deficit and to deferred revenue. Under Topic 606, the Company recognizes revenue when it transfers control of promised goods or services to its customers in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of Topic 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once a contract is determined to be within the scope of Topic 606, the Company assesses the goods or services promised within the contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

The Company evaluated its existing contracts and only applied Topic 606 to those contracts that were not completed at January 1, 2018.  As a result of this evaluation, the Company determined that only its collaboration with Celgene Corporation (“Celgene”) is within the scope of Topic 606. The terms of this arrangement include payment to the Company of a non-refundable, upfront fee; potential development, regulatory and sales milestones; program opt-in payments; and royalties on net product sales. Each of these payments results in collaboration revenue, except for revenues from royalties on net product sales, which would be classified as royalty revenues. In determining the appropriate amount of revenue to be recognized as it fulfills its obligations under its collaboration agreement with Celgene, the Company applies the five-step model. As part of the accounting for this arrangement, the Company must develop assumptions that require judgment to determine the stand-alone selling price for each performance obligation identified in the contract. The Company also must develop assumptions that require judgment in determining the measure of progress used to recognize revenue.

Milestone Payments

At the inception of each arrangement that includes development, regulatory or commercial milestone payments, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant reversal of cumulative revenue would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the control of the Company or partner, such as regulatory approvals, are not considered probable of being achieved until those approvalsare received or the underlying activity has been completed. The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied. At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of such development milestones and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect collaboration revenues and earnings in the period of adjustment. 

Customer Concentration

Customers whose collaboration revenue accounted for 10% or more of total revenues were as follows:

	Year Ended December 31,
	2018	2017	2016
GlaxoSmithKline LLC (“GSK”)	—	*	*
Bayer Pharma AG (“Bayer”)	—	*	*
Celgene Corporation (“Celgene”)	100%	94%	87%

* less than 10%

Research and Development Expenses

Research and development costs are expensed as incurred. Research and development costs consist of salaries and other personnel-related expenses, including associated stock-based compensation, consulting fees, lab supplies, and facility costs, as well as fees paid to other entities that conduct certain research, development and manufacturing activities on behalf of the Company.

Clinical Trial Accruals

Clinical trial costs are a component of research and development expenses. The Company accrues and expenses clinical trial activities performed by third parties based upon actual work completed in accordance with agreements established with clinical research organizations and clinical sites. The Company determines the actual costs through discussions with internal personnel and external service providers as to the progress or stage of completion of trials or services and the agreed-upon fee to be paid for such services.

Nonrefundable advance payments for goods and services that will be used or rendered in future research and development activities, are deferred and recognized as expense in the period that the related goods are delivered or services are performed.

Stock-Based Compensation

The Company recognizes compensation expense for all share-based payment awards made to employees and directors based on estimated fair values. For employee stock options, the Company determines the grant date fair value of the awards using the Black-Scholes option-pricing model and generally recognizes the fair value as stock-based compensation expense on a straight-line basis over the vesting period of the respective awards. Stock-based compensation expense is based on the value of the portion of stock-based payment awards that is ultimately expected to vest. As such, the Company’s stock-based compensation is reduced for the estimated forfeitures at the date of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. For restricted stock, the compensation cost for these awards is based on the closing price of the Company’s common stock on the date of grant and recognized as compensation expense on a straight-line basis over the requisite service period.

In the second quarter of 2018, the Company early adopted ASU 2018-07, Stock Compensation. ASU 2018-07 clarifies the accounting for share-based payment transactions for acquiring goods and services from non-employees. Specifically, the standard aligns the accounting for payments to non-employees to match the accounting for payments to employees, and no longer accounting for these transactions differently. The adoption of the standard did not have material impact on the Company’s financial statements.

Leases

The Company rents its office space and facilities under cancelable and non-cancelable operating lease agreements and recognizes related rent expense on a straight-line basis over the term of the lease. The Company’s lease agreements contain rent holidays, scheduled rent increases, lease incentives and renewal options. Rent holidays and scheduled rent increases are included in the determination of rent expense to be recorded over the lease term. Lease incentives are recognized as a reduction of rent expense on a straight-line basis over the term of the lease. The Company does not assume renewals in its determination of the lease term unless they are deemed to be reasonably assured at the inception of the lease. The Company begins recognizing rent expense on the date that the Company obtains the legal right to use and control the leased space.

The Company entered into a sublease agreement during the fourth quarter of 2018. The Company records sublease income as a reduction of rent expense.

Restructuring Charges

Restructuring charges consist of severance, other one-time benefits and other employee related charges. Liabilities for costs associated with a restructuring activity are measured at fair value and are recognized when the liability is incurred. One-time termination benefits are expensed at the date the Company notifies the employee, unless the employee will continue to provide future services, in which case the benefits are expensed ratably over the future service period.

The Company continually evaluates the adequacy of the remaining liabilities under its restructuring initiatives. Although the Company believes that these estimates accurately reflect the costs of the Company’s restructuring plan, actual results may differ and thereby require the Company to record an additional provision or reverse a portion of such a provision.

Income Taxes

The Company accounts for income taxes using the liability method under which deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount which is more likely than not to be realizable.

The recognition, derecognition and measurement of a tax position is based on management’s best judgment given the facts, circumstances and information available at each reporting date. The Company’s policy is to recognize interest and penalties related to the underpayment of income taxes as a component of income tax expense. To date, there have been no interest or penalties charged in relation to the unrecognized tax benefits.

Net Loss per Common Share

Basic net loss per common share is calculated by dividing the net loss by the weighted-average number of common shares outstanding during the period, without consideration for common stock equivalents. Diluted net loss per common share is computed by dividing the net loss by the weighted-average number of common shares and common share equivalents outstanding for the period determined using the treasury-stock method. For purposes of this calculation, potentially dilutive securities consisting of stock options and restricted stock units are considered to be common stock equivalents and were excluded in the calculation of diluted net loss per common share because their effect would be anti-dilutive for all periods presented.

Newly Adopted and Recent Accounting Pronouncements

Accounting Standard Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition.

In May 2014, the Financial Accounting Standards Board (“FASB”) issued a comprehensive new standard on revenue from contracts with customers, ASU No. 2014-09, Revenue from Contracts with Customers, or Topic 606.  The standard’s core principle is that a reporting entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Entities have the option of using either a full retrospective or a modified retrospective approach to adopt this new guidance. In 2016, the FASB updated the guidance for reporting revenue gross versus net to improve the implementation guidance on principal versus agent considerations, and for identifying performance obligations and the accounting of intellectual property licenses. In addition, the FASB introduced practical expedients and made narrow scope improvements to the new accounting guidance.

Collaboration with Celgene

The Company adopted the accounting standard update on January 1, 2018 using the modified retrospective approach, for its collaboration agreement with Celgene. Therefore, comparative historical information will not be adjusted and will continue to be reported under ASC 605 with the impact of the transition reflected in the opening balance of accumulated deficit as of January 1, 2018. The consideration the Company is eligible to receive under this agreement includes upfront payments, milestone payments and program opt-in payments. The new revenue recognition standard differs from ASC 605 in many respects, such as in the accounting for variable consideration and the measurement of progress toward completion of performance obligations. The most significant impact of the standard relates to the Company’s method of revenue recognition for performance obligations that are delivered over time. Under the new standard, milestone payments are included in the transaction price as variable consideration, subject to a constraint, and are allocated to the performance obligations in the contract when recognized. Through December 31, 2017, the Company also received payments from Celgene to reimburse the costs of research and development services performed by the Company; these payments were historically recorded as other revenue. As the performance of these research and development services was at the Company’s discretion and are not reflective of a commitment or performance obligation pursuant to the Celgene agreement, the reimbursement paid to the Company has been excluded from the transaction price.

The Company’s deferred revenue associated with its Celgene collaboration agreement as of December 31, 2017 under Topic 605 was $143.8 million. As a result of adopting Topic 606, the Company recorded a $98.3 million reduction to its deferred revenue and opening accumulated deficit on January 1, 2018 as a result of the cumulative impact of the change in the recognition of the upfront and milestone payments using the input method (described further in Note 5, “Collaborations”) under Topic 606, rather than on a ratable basis which was applied in prior periods. Under Topic 606, collaboration revenue under the Company’s collaboration agreement with Celgene from inception of the agreement through January 1, 2018 was $186.2 million and deferred revenue was $45.5 million as of January 1, 2018. At adoption date, the remaining performance obligation under the contract was estimated to be substantially complete by the third quarter of 2019. At December 31, 2018, the Company evaluated the development program status of the remaining product candidate under the collaboration agreement with Celgene, etigilimab, and estimated that the remaining performance obligation under the contract will be completed by the first quarter of 2019.

Collaborations with Bayer and GSK

As the GSK collaboration was terminated in its entirety on October 28, 2017, this arrangement was outside the scope of Topic 606 as of the adoption date. For the Bayer collaboration, Bayer terminated all biologic therapeutic programs under the collaboration effective June 16, 2017, while the small molecule therapeutics program remained active. Refer to Note 5, “Collaborations,” for further details. The Company has determined that the small molecule therapeutic program remaining as of December 31, 2017 is immaterial in the context of the collaboration agreement relative to the biologics therapeutic programs that was terminated during 2017. The Company’s performance obligations under the small molecule therapeutic program with respect to Bayer were substantially complete at December 31, 2017, and any future receipts in the form of milestones or royalties are contingent upon the achievement of specified development, commercial and/or sales targets. The Company has concluded that there was no transition adjustment to be recognized on January 1, 2018 for these two agreements.

Impact of Adoption

The following table summarizes the impact of adopting Topic 606 on select balance sheets and statement of operations line items:

(In thousands)	Balance at December 31, 2017			Adjustment			Balance at January 1, 2018
Balance Sheets:
Deferred revenue, current portion	$	82,193		$	(51,299	)	$	30,894
Deferred revenue, non-current portion		61,645			(47,023	)		14,622
Accumulated deficit		(452,007	)		98,322			(353,685	)

	For the year ended December 31, 2018
(In thousands, except per share data)	As reported under Topic 606			Adjustment		Balances without the adoption of Topic 606
Statements of Operations:
Collaboration revenue	$	44,421		$	58,321	$	102,742
Income (loss) from operations		(10,045	)		58,321		48,276
Net income (loss)		(8,101	)		58,321		50,220
Net income (loss) per common shares, basic		(0.21	)		1.52		1.31
Net income (loss) per common shares, diluted		(0.21	)		1.51		1.30

Contract Balances

Upfront payments and fees may be required to be recorded as deferred revenue upon receipt or when due, and recognized in a future period when or as the Company performs its obligations under these arrangements. Amounts payable to the Company are recorded as accounts receivable when the Company’s right to consideration is unconditional.

As of December 31, 2018, theCompany’s contract liabilities, which consisted of deferred revenue, decreased by a total of $142.7 million from December 31, 2017, of which $98.3 million was related to the cumulative adjustment to the opening balance of accumulated deficit upon the adoption of Topic 606 on January 1, 2018 and $44.4 million related to revenue recognized for the year ended December 31, 2018. Upon adoption of the standard as of January 1, 2018, the Company had a $45.5 million contract liability. As of December 31, 2018, the Company had a $1.1 million contract liability. The remaining performance obligation under the contract is expected to be substantially complete by the first quarter of 2019.

ASU No. 2016-02, Leases (Topic 842)

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which amends the existing accounting standards for leases. The new standard requires lessees to record a right-of-use asset and a corresponding lease liability on the balance sheet (with the exception of short-term leases). For lessees, leases will continue to be classified as either operating or financing in the income statement. This ASU becomes effective in the first quarter of fiscal year 2019 and early adoption is permitted. This ASU is required to be applied with a modified retrospective approach and requires application of the new standard at the beginning of the earliest comparative period presented. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements. In issuing ASU No. 2018-11, the FASB decided to provide another transition method in addition to the existing transition method by allowing entities to initially apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company is currently evaluating our population of leases and are continuing to assess all potential impacts of ASU 2016-02 and ASU 2018-11, but currently believe that the most significant impact relates to the Company’s accounting for office building operating leases. The Company anticipates recognition of additional assets and corresponding liabilities related to leases upon adoption, but have not yet quantified these at this time. The Company will adopt the standard effective January 1, 2019 and plan to utilize the transition method stated in ASU 2018-11.

ASU No. 2018-07, Improvement to Nonemployees Share-based Payment Accounting (Topic 718)

In June 2018, the FASB issued ASU No. 2018-07, Stock Compensation. ASU No. 2018-07 simplifies the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. The guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, but not earlier than the Company’s adoption of Topic 606. The Company chose to adopt the guidance early, in the second quarter of 2018. The adoption of the standard did not have material impact on the Company’s financial statements.

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Cash and Investments

12 Months Ended

Dec. 31, 2018

Cash And Cash Equivalents [Abstract]

Cash and Investments

3. Cash and Investments

The fair value of securities, not including cash at December 31, 2018 and 2017 were as follows:

	December 31, 2018
	Amortized		Gross Unrealized					Fair
(In thousands)	Cost		Gains		Losses			Value
Money market funds	$	275	$	—	$	—		$	275
U.S. treasury bills		47,688		—		(29	)		47,659
Total	$	47,963	$	—	$	(29	)	$	47,934
Classified as:
Cash equivalents								$	275
Short-term investments									47,659
Total								$	47,934

As of December 31, 2018, the Company had a total of $57.3 million in cash, cash equivalents and short-term investments, which includes $9.7 million in cash and cash equivalents and $47.6 million in short-term investments.

	December 31, 2017
	Amortized		Gross Unrealized				Fair
(In thousands)	Cost		Gains		Losses		Value
Money market funds	$	99	$	—	$	—	$	99
U.S. treasury bills		89,525		289		—		89,814
Total	$	89,624	$	289	$	—	$	89,913
Classified as:
Cash equivalents							$	99
Short-term investments								89,814
Total							$	89,913

As of December 31, 2017, the Company had a total of $103.1 million in cash, cash equivalents and short-term investments, which includes $13.3 million in cash and cash equivalents and $89.8 million in and short-term investments.

All available-for-sale securities held as of December 31, 2018 had contractual maturities of less than one year. There have been no significant realized gains or losses on available-for-sale securities for the periods presented.

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Fair Value Measurements

12 Months Ended

Dec. 31, 2018

Fair Value Disclosures [Abstract]

Fair Value Measurements

4. Fair Value Measurements

The Company records its financial assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as follows:

• Level 1: Inputs which include quoted prices in active markets for identical assets and liabilities.

• Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company’s financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used in such measurements were as follows:

	December 31, 2018
(In thousands)	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	275	$	—	$	—	$	275
U.S. treasury bills		—		47,659		—		47,659
Total	$	275	$	47,659	$	—	$	47,934

	December 31, 2017
(In thousands)	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	99	$	—	$	—	$	99
U.S. treasury bills		—		89,814		—		89,814
Total	$	99	$	89,814	$	—	$	89,913

Where quoted prices are available in an active market, securities are classified as Level 1. When quoted market prices are not available for the specific security, then the Company estimates fair value by using benchmark yields, reported trades, broker/dealer quotes, and issuer spreads. The Company classifies U.S. Treasury securities as Level 2. There were no transfers between Level 1 and Level 2 during the periods presented.

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Property and Equipment, net

12 Months Ended

Dec. 31, 2018

Property Plant And Equipment [Abstract]

Property and Equipment, net

5. Property and Equipment, net

Property and equipment, net consist of the following:

	December 31,
(In thousands)	2018			2017
Computer equipment and software	$	1,440		$	1,935
Furniture and fixtures		415			547
Laboratory equipment		—			11,720
Leasehold improvements		9,598			9,250
		11,453			23,452
Less accumulated depreciation and amortization		(10,830	)		(20,177	)
Property and equipment, net	$	623		$	3,275

Depreciation expense for the years ended December 31, 2018, 2017 and 2016 was $1.7 million, $1.7 million and $1.8 million, respectively

The Company reviews the estimated useful lives of its property and equipment on an ongoing basis. Effective December 1, 2018, the Company changed its estimated useful life of leasehold improvements and this change has been accounted for as a change in accounting estimate. The remaining carrying amounts of the leasehold improvements as of December 31, 2018 will be amortized prospectively over one year up to December 31, 2019. The change in estimated useful life increased net loss by approximately $26,000, or less than $0.01 per share, as reported in the Statement of Operations for the year ended December 31, 2018.

In the fourth quarter of 2018, property and equipment with net book value of $1.4 million qualified as held for sale treatment. Assets held for sale are measured at the lower of their carrying amount or fair value less cost to sell. The property and equipment are not depreciated while classified as held for sale. As of December 31, 2018, assets held for sale were composed mainly of laboratory equipment and were recorded at $1.4 million. Subsequently, in January 2019, the Company sold the property and equipment classified as held for sale for net sale proceeds of approximately $1.4 million. No impairment loss was recorded for such assets held for sale as of December 31, 2018.

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Accrued Liabilities

12 Months Ended

Dec. 31, 2018

Payables And Accruals [Abstract]

Accrued Liabilities

6. Accrued Liabilities

Accrued liabilities consist of the following:

	December 31,
(In thousands)	2018		2017
Research and development related	$	988	$	670
Compensation related		1,809		2,733
Other		1,571		537
Total accrued liabilities	$	4,368	$	3,940

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2018

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

7. Commitments and Contingencies

Operating Leases

The Company leases an office and laboratory facility in Redwood City, California under a lease agreement that was originally set to expire in January 2019 and included a lease extension option for two additional three-year terms. During the fourth quarter of 2016, the Company signed an amendment to the lease agreement to extend the lease term through May 2028 with an option to extend the lease for an additional three-year term.  

The amendment to the lease agreement includes a 10-year cancelable lease agreement for additional office and laboratory space that expires in May 2028, subject to the Company’s three-year lease extension option described above.  The Company exercised its right to terminate the lease agreement for this additional space prior to September 2017. The exercise of such cancelation did not result in an economic penalty to the Company.

As of December 31, 2018, future minimum annual rental payments under the Company’s non-cancelable operating lease agreement are as follows (in thousands):

Year ending December 31,	Operating Leases, net of Sublease Income
2019	$	776
2020		1,640
2021		2,577
2022		2,667
2023		2,761
2024 and thereafter		13,382
Total minimum payments	$	23,803

Through December 31, 2018, the landlord provided the Company a tenant improvement allowance for a total of $8.0 million for its office and laboratory expansion in prior years and office improvements. The Company recorded the tenant improvement allowance received as leasehold improvements under the property and equipment account and deferred rent liability on the accompanying balance sheets.

In October 2018 and January 2019, the Company subleased a specified portion of the Company’s office facility located in Redwood City, California. These subleases have terms of 12 to 24 months and will expire in 2020. The aggregate sublease proceeds of $1.6 million and $0.8 million for the years ending December 31, 2019 and 2020, respectively, are included in the table above.

The operating lease agreement contains rent escalation provisions and tenant improvement allowances. The total rent obligation is being expensed ratably over the term of the agreement. Rent expense for year ended December 31, 2018 was $2.3 million, net of sublease income of $0.1 million. Rent expense for years ended December 31 2017 and 2016 was $2.4 million and $1.6 million, respectively.

Guarantees and Indemnifications

The Company, as permitted under Delaware law and in accordance with its certificate of incorporation and bylaws, and pursuant to indemnification agreements with certain of its officers and directors, indemnifies its officers and directors for certain events or occurrences, subject to certain limits, while the officer or director is or was serving at the Company’s request in such capacity. The term of the indemnification period lasts as long as an officer or director may be subject to any proceeding arising out of acts or omissions of such officer or director in such capacity.

The maximum amount of potential future indemnification is unlimited; however, the Company currently holds director and officer liability insurance. This insurance limits the Company’s exposure and may enable it to recover a portion of any future amounts paid. The Company believes that the fair value of these indemnification obligations is minimal. Accordingly, the Company has not recognized any liabilities relating to these obligations for any period presented.

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License Agreement

12 Months Ended

Dec. 31, 2018

Research And Development [Abstract]

License Agreement

8. License Agreement

In 2004, the Company assumed an exclusive, worldwide license agreement with the University of Michigan relating to the use of certain patents and technology relating to its cancer stem cell (“CSC”) technology for which an up-front fee of $10,000 had been paid and the Company issued 7,796 shares of its common stock. Pursuant to the agreement, the Company is obligated to make low single-digit royalty payments to the University of Michigan on net sales of its or its licensees’ products and processes covered under the agreement, pay an annual license maintenance fee, and reimburse the University of Michigan for costs of prosecution and maintenance of the licensed patents which reduces future royalty obligations. With respect to one family of licensed patent applications that does not relate to any of the Company’s lead therapeutic programs, the Company is also required to pay a tiered, single-digit percentage of any sublicense revenues, including any upfront or milestone payments, received from any sublicensees under such family of patents. Once the University of Michigan has received $10.0 million in royalties, the Company may at its option convert the license to a fully paid-up license provided the Company transfers additional shares of nonvoting common stock equal to 0.25% of the fully diluted shares then outstanding to the University of Michigan. The amounts incurred for patent legal costs amounted to $27,000, $32,000 and $69,000 for the years ended December 31, 2018, 2017 and 2016, respectively, all of which has been recorded as general and administrative expense in the statements of operations.

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Collaborations

12 Months Ended

Dec. 31, 2018

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Collaborations

9. Collaborations

The Company has entered into three collaboration arrangements, each having multiple deliverables under which the Company received non-refundable upfront payments. For collaborations where the Company has determined that there is a single unit of accounting the Company recognizes revenue related to the upfront payments ratably over its estimated period of performance for each collaboration. Two of these collaboration agreements have since been entirely or substantially terminated.

The Company’s prior and current collaboration arrangements include contractual milestones, which relate to the achievement of pre-specified research, development, regulatory and commercialization events. The milestone events contained in the Company’s alliances coincide with the progression of the Company’s product candidates from research and development, to regulatory approval and through to commercialization. The process of successfully discovering a new product candidate, having it selected by the alliance partner for development, having it approved and ultimately sold for a profit is highly uncertain. As such, the milestone payments that the Company may earn from its collaborators involve a significant degree of risk to achieve.

Research and development milestones in the Company’s strategic alliances may include the following types of events:

• Completion of pre-clinical research and development work leading to selection of product clinical candidates.

• Advancement of candidates into clinical development, which may include filing of investigational new drug (“IND”) applications.

• Initiation of Phase I, Phase II or Phase III clinical trials.

• Achievement of certain scientific or development events.

Regulatory milestones may include the following types of events:

• Filing of regulatory applications for marketing approval such as a New Drug Application in the United States, or a Marketing Authorization Application in Europe.

• Marketing approval in a major market, such as the United States, Europe or Japan.

Commercialization milestones may include the following types of events:

• Product sales in excess of pre-specified thresholds.

Summary of Collaboration Related Revenue

The Company has recognized the following revenues from its prior and current collaboration agreements during the years ended December 31, 2018, 2017 and 2016:

	Year Ended December 31,
(In thousands)	2018		2017		2016
Celgene:
Recognition of upfront payment	$	44,421	$	35,588	$	20,053
Other revenue		—		409		1,780
Celgene total		44,421		35,997		21,833
Bayer:
Recognition of upfront payments		—		278		648
Other revenue		—		1,726		1,457
Bayer total		—		2,004		2,105
GSK:
Recognition of upfront payment		—		150		576
Other revenue		—		3		639
GSK total		—		153		1,215
Total collaboration related revenue	$	44,421	$	38,154	$	25,153

Adoption of ASU No. 2014-09

On January 1, 2018, the Company adopted ASU No. 2014-09 using the modified retrospective method. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with Topic 605.

Celgene Strategic Alliance

In December 2013, the Company entered into a Master Research and Collaboration Agreement (the “Agreement”) with Celgene pursuant to which the Company and Celgene were to collaborate on research and development programs directed to the discovery and development of novel biologic therapeutic programs, and, if Celgene exercised its option to do so, the discovery, development and commercialization of novel small molecule therapeutics.

The etigilimab program is the last remaining biologic therapeutic program that is currently active under the collaboration agreement with Celgene. Celgene has an option to obtain an exclusive license to develop further and commercialize biologic therapeutics in the etigilimab program, which may be exercised during time periods specified in the collaboration agreement through the earlier of completion of a certain clinical trial or the twelfth anniversary of the date of the collaboration agreement. Pursuant to the agreement, the Company will lead the development of etigilimab prior to Celgene’s exercise of its option for the etigilimab program. The Company is responsible for funding all research and development activities that we choose to undertake for therapeutics in the etigilimab program prior to Celgene’s exercise of the option for the program. Upon option exercise by Celgene, the Company will be required to enter into an agreed form of a license agreement with Celgene, pursuant to which Celgene retains all rights to develop further and commercialize biologic therapeutic products in the etigilimab program on a worldwide basis, with certain support for development from the Company.  

The Company is eligible to receive a $35.0 million opt-in payment upon Celgene’s exercise of the option for the etigilimab program. The collaboration also includes milestone payments for achievement of specified development, regulatory and commercial milestones, paid on a per-product and per-program basis. The option exercise payments and payments for achievement of development, regulatory and commercial milestones under the agreement may total up to $440.0 million, for products in the etigilimab program, including the $35.0 million opt-in payment. The Company previously received a $2.5 million milestone payment for the etigilimab program. Accordingly, the future potential milestone payments for products in the etigilimab program under the collaboration total up to $437.5 million, including the $35.0 million opt-in payment. For the etigilimab program, if the option is exercised and the program is successfully commercialized by Celgene, the Company is eligible to receive tiered royalties equal to a percentage of net product sales worldwide in the high-single digits to the mid-teens. The Company is not eligible to receive any further research or development milestone payments for etigilimab prior to Celgene’s decision regarding option exercise with respect to etigilimab.

The collaboration agreement with Celgene will terminate upon the expiration of all of Celgene’s payment obligations under the license agreement entered into with respect to the etigilimab program following Celgene’s exercise of an option for such program, or if Celgene’s option on the etigilimab program expires without Celgene exercising its option. The collaboration agreement may be terminated by either party for the insolvency of, or an uncured material breach of the collaboration agreement by the other party. In addition, Celgene may terminate the collaboration agreement in its entirety or with respect to the etigilimab program, for any reason, upon 120 days’ prior written notice to us and upon 60 days’ prior written notice in the event that Celgene reasonably believes that such termination is necessary in order to comply with any antitrust laws. The Company may also terminate the collaboration agreement with respect to the etigilimab program in the event that Celgene challenges the licensed patents with respect to such program.

If Celgene does not exercise its option with respect to the etigilimab program before the option for that program expires, the Company will retain worldwide rights to such program. In addition, under certain termination circumstances, the Company would also have worldwide rights to the etigilimab program.

The collaboration agreement with Celgene previously included the demcizumab, navicixizumab, and rosmantuzumab biologic therapeutic programs. Celgene, however, terminated the collaboration agreement with respect to both demcizumab and navicixizumab, effective January 23, 2019, and terminated the collaboration agreement with respect to rosmantuzumab, effective February 12, 2019. Prior to such terminations, Celgene had options to obtain an exclusive license to develop further and commercialize biologic therapeutics in these programs under the agreement. As a result of these terminations, the Company now has worldwide rights to each of these programs, including navicixizumab. Under certain circumstances, the Company may owe Celgene single-digit percentage royalties on therapeutic products in these programs if we elect to continue to commercialize them and they are successfully commercialized, subject to a cap.

Celgene previously had the right to designate up to two additional biologic therapeutic programs targeting the RSPO-LGR signaling pathway or an undisclosed pathway for inclusion in the collaboration, but this right expired on the fourth anniversary of the date of the collaboration agreement. Celgene also had an additional option, which expired unexercised on the fourth anniversary of the date of the collaboration agreement, that would have permitted Celgene to discover, develop and commercialize small molecule therapeutics directed to targets in an undisclosed pathway under the collaboration.

Under the terms of the collaboration agreement with Celgene, the Company received an upfront cash payment of $155.0 million in December 2013. In addition, Celgene purchased 1,470,588 shares of the Company’s common stock at a price of $15.13 per share, resulting in gross proceeds of $22.2 million. The price paid by Celgene for the common stock represented a premium over the closing price of the Company’s common stock on the date of the collaboration. The Company accounted for the $1.7 million premium as additional consideration under the Agreement and the common stock was recorded at its fair market value of $20.5 million. As of December 31, 2018, the Company is not eligible to receive any milestone payments under its collaboration with Celgene prior to the point that Celgene exercises its remaining option. The Company is eligible to receive up to approximately $35.0 million of contingent consideration if Celgene exercises its options for the etigilimab program. Following Celgene’s exercise of its option for the etigilimab program, Celgene will have exclusive development and commercialization rights worldwide, with the Company eligible to receive milestones and tiered royalties equal to a percentage of net product sales worldwide in the high-single digits to the mid-teens. If Celgene successfully develops and commercializes product candidates in the etigilimab program, the Company could receive additional contingent consideration of up to $402.5 million for the achievement of post-option exercise development, regulatory events and sales milestones.

The Company assessed its collaboration agreement with Celgene in accordance with Topic 606 and concluded that Celgene is a customer. The Company determined that its performance obligation under the arrangement with Celgene is research and development services. As part of the promised research and development services, the Company may provide the resultant data to Celgene to assist Celgene in determining whether or not to exercise its options. Under the arrangement, Celgene has options to further develop and commercialize biologic therapeutics in each program under the collaboration, which may be exercised during time periods specified in the agreement. Upon Celgene’s exercise of its option for certain programs, the Company may, at its discretion, gain co-development and co-commercialization rights and corresponding obligations. The Company determined that the exclusive option(s) provided to Celgene is not a material right under Topic 606 and thus it is not a performance obligation. Based on its assessment, the Company has identified the research and development services as the only performance obligation at the inception of the collaboration agreement.

Prior to recognizing revenue, the Company estimates the transaction price, including variable consideration that is subject to a constraint. Amounts of variable consideration are included in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. Variable consideration includes payments based upon the achievement of specified milestones, and royalty payments based on product sales derived from the collaboration. Under the collaboration agreement, the Company determined that the non-refundable upfront cash payment of $155.0 million and stock premium of $1.7 million received in December 2013 constitute consideration to be included in the transaction price. The Company also included in the transaction price the $70.0 million demcizumab (anti-DLL4, OMP-21M18) safety milestone that was achieved in December 2015 and the two designation milestone payments of $2.5 million each for the designation of rosmantuzumab and etigilimab as clinical candidates in 2014 and 2015, respectively. The total consideration received of $231.7 million constitutes the transaction price at the transition date for Topic 606. Through December 31, 2017, the Company also received a total of $2.5 million in the aggregate from Celgene to reimburse the costs of research and development services performed by the Company; these reimbursements have historically been recorded as other revenue. As the performance of these research and development services was at the Company’s discretion and is not a commitment or performance obligation pursuant to the Celgene collaboration agreement, the reimbursement paid to the Company has been excluded from the transaction price. None of the remaining development and regulatory milestone amounts have been included in the transaction price, as all milestone amounts were fully constrained as of January 1, 2018 and December 31, 2018. As part of the Company’s evaluation of the constraint, the Company considered numerous factors, including that receipt of the milestone amounts is outside the control of the Company and contingent upon success in future clinical trials. Any consideration related to sales milestones and royalties on net product sales will be recognized at the later of when the related sales occur or the performance obligation to which some or all of the sales milestone or royalty has been allocated is satisfied (in whole or in part) and therefore have also been excluded from the transaction price. The Company will re-evaluate the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur.

The impact of adopting Topic 606 on the accounting treatment of the Company’s collaboration agreement with Celgene primarily relates to the change in the timing of revenue recognition of the transaction price. The Company’s deferred revenue associated with its Celgene collaboration agreement as of December 31, 2017 under Topic 605 was $143.8 million. Upon adoption of Topic 606 as of January 1, 2018, the Company recognized a cumulative catch up adjustment of $98.3 million, which was recorded as a decrease to the opening balance of accumulated deficit, and a corresponding decrease in the deferred revenue balance from the Company’s collaboration with Celgene.

Following the adoption of Topic 606, the Company recognizes collaboration revenue by measuring the progress toward complete satisfaction of the performance obligation using an input measure. The Company concluded the method that best correlates with progress of the services provided to Celgene is the input method, based on actual costs incurred to date compared to the overall total expected costs to satisfy the performance obligation. The Company will evaluate the estimate of expected costs to satisfy the performance obligation each reporting period and make adjustments for any significant changes. Under Topic 606, collaboration revenue under the Company’s collaboration agreement with Celgene was $44.4 million for the year ended December 31, 2018 and deferred revenue balance was $1.1 million as of December 31, 2018. Upon adoption of Topic 606, the Company initially estimated that the performance obligation under the contract would be substantially completed by the third quarter of 2019. At December 31, 2018, the Company evaluated the development program status of the etigilimab program, the only program remaining under the collaboration agreement with Celgene, and determined that the performance obligation will be completed by the first quarter of 2019. The change in the timing of revenue recognition resulted in an increase in revenue and corresponding decreases in net loss of $7.7 million and net loss per common share, basic and diluted, of $0.20 per share for the year ended December 31, 2018.

As of December 31, 2018, the Company was eligible to receive in its collaboration with Celgene up to approximately $35.0 million of contingent consideration if Celgene exercises its options on the etigilimab program. If Celgene successfully develops and commercializes the etigilimab program, the Company could receive additional contingent consideration of up to approximately $402.5 million for the achievement of post-option exercise development, regulatory events and sales milestones. As all contingent consideration is based solely on the performance of Celgene, the Company would recognize the contingent payments upon receipt immediately as collaboration revenue if the Company had no further performance obligations under the agreement with Celgene.

In the fourth quarter of 2018, the Company recorded a receivable and a deferred revenue of $2.6 million for the sale of a tumor bank to Celgene. The Company recognized the receivable as of December 31, 2018 because the right to the consideration is considered unconditional. Subsequently, in January 2019, the Company recognized the revenue upon delivery of the tumor bank to Celgene. The sale is not considered a commitment or performance obligation pursuant to the Celgene collaboration agreement, hence is excluded from the collaboration transaction price.

Bayer Strategic Alliance

On June 15, 2010, the Company entered into a Collaboration and Option Agreement with Bayer. The agreement sets forth an alliance to discover, develop and market novel biologic and small molecule therapeutics affecting targets within the Wnt signaling pathway. The Company received an upfront payment of $40.0 million upon execution of the collaboration agreement in 2010 and a $5.0 million milestone payment in 2012. The Company initially recognized the payments as deferred revenue and amortized to revenue on a ratable basis through the second quarter of 2017, as permitted by the legacy revenue recognition guidance.

Effective June 16, 2017, Bayer terminated all biologic therapeutic programs under the collaboration. The Company is no longer eligible to receive any payments under its collaboration with Bayer with respect to biologic therapeutic candidates.

With respect to the Wnt pathway small molecule program, the Company and Bayer under the collaboration agreement agreed to jointly conduct research to discover potential new small molecule therapeutics targeting the Wnt pathway.  Bayer may, within a specified time period, elect to advance such small molecule therapeutics into further development, and obtain an exclusive license to commercialize such therapeutics.  Bayer leads discovery, development, and commercialization of such small molecule therapeutics. As of December 31, 2018, the Company remains eligible to receive up to $27.0 million in development milestone payments for each small molecule candidates. If Bayer successfully develops and commercializes small molecule candidates for more than one indication, the Company could receive contingent consideration payments for each small molecule candidate of up to $15.0 million for the achievement of certain regulatory events and up to $70.0 million upon the achievement of specified future product sales. As all such contingent consideration is based solely on the performance of Bayer, the Company would recognize the contingent payments upon receipt immediately as collaboration revenue.

The Company evaluated the agreement under Topic 606, and determined that the small molecule therapeutic program remaining as of December 31, 2017 is immaterial in the context of the collaboration agreement relative to the biologics therapeutic programs that was terminated during 2017. Further, the Company’s performance obligations under the small molecule therapeutic program were substantially complete at December 31, 2017, and any future receipts in the form of milestones or royalties are contingent upon the achievement of specified development, commercial and/or sales targets by Bayer.

GSK Strategic Alliance

On December 7, 2007, the Company entered into a Collaboration and Option Agreement with GSK. The agreement was formed to discover, develop and market novel antibody therapeutics to target CSCs. The agreement gave GSK the option to obtain an exclusive license for certain product candidates targeting the Notch signaling pathway.

In 2007, the Company received an initial payment of $35.0 million, with half in the form of an equity investment by GSK in the Company’s Series B-2 convertible preferred stock and the other half as an up-front cash payment which was initially recorded as deferred revenue. The 1,441,396 shares of Series B-2 convertible preferred stock sold by the Company to GSK were issued at a premium of $4.3 million above the estimated fair value of convertible preferred stock at the time of issuance. This premium was considered an additional up-front payment and was added to the $17.5 million deferred revenue and was amortized to revenue on a ratable basis through the first quarter of 2017, as permitted by the legacy revenue recognition guidance.

Effective October 28, 2017, GSK terminated the agreement in its entirety. As a result of such termination, the Company is no longer eligible to receive any payments under the collaboration agreement with GSK and the Company has no remaining performance obligations. As the GSK collaboration was terminated in its entirety on October 28, 2017, this arrangement is outside the scope of Topic 606 as of the adoption date.

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Lonza Sales AG Agreement

12 Months Ended

Dec. 31, 2018

Research And Development [Abstract]

Lonza Sales AG Agreement

10. Lonza Sales AG Agreement

In August 2012, the Company entered into a multi-product license agreement with Lonza Sales AG (“Lonza”). This agreement relates to the process development and manufacturing of the Company’s biologics portfolio with Lonza. Under the multi-product license agreement, the Company receives licenses to utilize Lonza’s glutamine synthetase gene expression system and related technologies for commercial production of the Company’s product candidates. Under this license agreement, the Company paid an upfront payment of $488,000 which was recorded to research and development expense during 2012 and is obligated to pay Lonza certain payments up to £200,000 (approximately $254,000) per licensed product on achievement of specified milestones, and royalties up to the very low single digits on sales of its licensed products. There has been no further payment made by the Company to Lonza pursuant to the license agreement for the years ended December 31, 2018, 2017 and 2016.

The multi-product license agreement shall remain in force on a product by product and country by country basis until expiration of the Company’s obligation to make payments to Lonza with respect to such product in such country. The agreement can otherwise be terminated by the Company for any reason or no reason upon advance written notice to Lonza, or by either the Company or Lonza upon the other party’s material breach of the agreement, or if the other party ceases to carry on business. Lonza may also terminate the licenses granted under the agreement if the Company challenges any of the Lonza patent rights.  

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Stockholder's Equity

12 Months Ended

Dec. 31, 2018

Equity [Abstract]

Stockholder's Equity

11. Stockholder’s Equity

Stock Incentive Plans

2004 Plan

The Company granted options under its 2004 Stock Incentive Plan (the “2004 Plan”) until July 2013 when it was terminated as to future awards, although it continues to govern the terms of options that remain outstanding under the 2004 Plan. The 2004 Plan provided for the award of restricted shares, grants of incentive and nonstatutory stock options, and sales of shares of the Company’s common stock. Awards can be made to employees, outside directors, and consultants of the Company. Stock options granted generally vest over a period of five years from the date of grant, with 20% of the total grant vesting on the first anniversary of the option vesting commencement date and 1/48 of the remaining grant vesting each month thereafter. Restricted stock issuances and early exercise of stock options were subject to the Company’s right of repurchase at the original issuance price, which right lapses over the vesting period of the stock. In connection with the Board of Directors’ and stockholders’ approval of the 2013 Plan, all remaining shares available for future award under the 2004 Plan were transferred to 2013 Plan, and the 2004 Plan was terminated as to future awards.

2013 Plan

In July 2013, the Company’s Board of Directors and stockholders approved the 2013 Equity Incentive Award Plan (the “2013 Plan”). Under the 2013 Plan, the Company initially reserved 500,000 shares of common stock for issuance as of its effective date of July 17, 2013, plus 90,125 shares which were then available for issuance under the Company’s 2004 Plan. The number of shares reserved for issuance under the 2013 Plan will increase by the number of shares represented by awards outstanding under the 2004 Plan that are forfeited or lapse unexercised and which following July 17, 2013 are not issued under the 2004 Plan. Additionally, on the first day of each calendar year, beginning in 2014 and ending in 2023, the number of shares in the reserve will increase by the least of 1,500,000 shares, 4% of the shares of the Company’s common stock outstanding (on an as-converted basis) on the last day of the immediately preceding fiscal year or such smaller number of shares of stock as determined by the Company’s Board of Directors. The 2013 Plan authorizes discretionary grants of incentive stock options, nonqualified stock options, restricted stock, restricted stock units, performance awards, dividend equivalents, stock payments, deferred stock, deferred stock units, and stock appreciation rights to employees and consultants of the Company, or any of its qualifying affiliates, and to members of the Board of Directors. The exercise price per share subject to each option shall not be less than 100% of the fair value of the common stock on the date of grant. In addition, in the case of incentive stock options granted to a greater than 10% stockholder, such price shall not be less than 110% of the fair value on the date the option is granted. The term of the options shall not be more than 10 years from the grant date, or 5 years from the date an incentive stock option is granted to a greater than 10% stockholder. Stock options granted generally vest over a period of four years from the date of grant, with 25% of the total grant vesting on the first anniversary of the option vesting commencement date and 1/48th of the original grant vesting each month thereafter for stock options granted upon hiring, and with 1/48th of the total grant vesting each month after the option vesting commencement date for any stock options granted after the hiring date.

As of December 31, 2018, a total of 8,217,239 shares of common stock have been authorized under the 2013 Plan. As of December 31, 2018, a total of 4,140,554 shares are subject to options and restricted stock units (“RSUs”) outstanding under the 2013 Plan. There are 310,453 shares subject to options outstanding under the 2004 Plan as of December 31, 2018, which will become available for issuance under the 2013 Plan to the extent the options are forfeited or lapse unexercised without issuance of such shares under the 2004 Plan. On January 1, 2018, an additional 1,500,000 shares of the Company’s common stock became available for future issuance as a result of the annual increase provision in the 2013 Plan.

Shares Reserved for Future Issuances

The following table summarizes the Company’s common stock reserved for future issuance:

(In thousands)	December 31, 2018
Outstanding stock options and RSUs		4,451
Reserved for future equity award grants		3,350
Reserved for future ESPP issuances		1,510
Total common stock reserved for future issuances		9,311

Stock Options

The following table summarizes the stock option activity for the year ended December 31, 2018:

	Stock Option Outstanding
(In thousands, except exercise price and    contractual life)	Number of shares			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Balances at December 31, 2017		5,217			10.70		5.6	$	913
Granted		1,744			3.34
Exercised		—			—
Forfeited		(2,816	)		8.69
Balances at December 31, 2018		4,145			8.96		6.4		—
Options vested and expected to vest—    December 31, 2018		3,945		$	8.88		7.0		—
Options exercisable—    December 31, 2018		2,542		$	11.44		5.2		—

The total fair value of options vested were $5.5 million, $7.1 million and $9.2 million for the years ended December 31, 2018, 2017 and 2016, respectively. There were no options exercised during the year ended December 31, 2018. The aggregate intrinsic value of options exercised were $1.4 million and $0.8 million for the years ended December 31, 2017, and 2016, respectively. The stock options outstanding have no intrinsic value as of December 31, 2018.

The weighted-average grant date estimated fair value of options granted during the years ended December 31, 2018, 2017 and 2016 were $2.32, $3.66 and $8.23 per share, respectively.

Restricted Stock Units

The following table summarizes the RSU activity for the year ended December 31, 2018:

	Restricted Stock Units Outstanding
(In thousands, except grant date fair value    and contractual life)	Number of shares			Weighted Average Grant Date Fair Value per Share		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Balances at December 31, 2017		880			5.33		1.3	$	3,606
Awarded		70			2.29
Released		(402	)		4.57
Forfeited		(242	)		5.60
Balances at December 31, 2018		306			5.41		1.0	$	229

The total fair value of RSUs vested was $1.8 million, $6.4 million and $2.2 million for the years ended December 31, 2018, 2017 and 2016, respectively. The aggregate intrinsic value of the non-vested RSUs was $0.2 million as of December 31, 2018.

Employee Stock Purchase Plan

The Company’s Employee Stock Purchase Plan (the “ESPP”) allows eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions of up to 15% of their eligible compensation, subject to any plan limitations. The ESPP provides for six-month offering periods, and at the end of each offering period, employees are able to purchase shares at 85% of the lower of the fair market value of the Company’s common stock on the first trading day of the offering period or on the last day of the offering period.

On January 1, 2018, as a result of the annual increase provision in the ESPP plan, an additional 350,000 shares of the Company’s common stock became available for future issuance. As of December 31, 2018, a total of 1,893,620 shares of common stock have been authorized and 1,510,518 shares of common stock are available for future issuance under the Company’s ESPP.

In accordance with the terms of the Merger Agreement (see Note 16 Potential Business Combination with Mereo BioPharma), on February 23, 2019, the Board of Directors determined that the offering period ending on February 28, 2019 would be the final offering period under the ESPP and that, contingent upon the consummation of the Merger, the ESPP would terminate immediately prior to the effective time of the Merger.

During the years ended December 31, 2018, 2017 and 2016, employees purchased an aggregate of 45,352 shares, 88,982 shares and 111,633 shares under the Company’s ESPP, respectively, at a weighted-average price per share of $1.97, $7.16 and $8.21, respectively.  During the years ended December 31, 2018, 2017 and 2016, the weighted-average fair value per share granted under the Company’s ESPP were $1.54, $3.39 and $5.06, respectively.

Stock-Based Compensation

Employee stock-based compensation expense was calculated based on awards expected to vest and has been reduced for estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Stock-based compensation expense recognized was as follows:

	Year Ended December 31,
(In thousands)	2018		2017		2016
Research and development	$	3,380	$	4,886	$	5,892
General and administrative		3,397		4,522		5,239
Restructuring charges		65		6		—
Total	$	6,842	$	9,414	$	11,131

As of December 31, 2018, the Company had $4.3 million, $0.8 million and $2,000 of unrecognized compensation expense related to unvested stock options, RSUs and ESPP, respectively, which are expected to be recognized over an estimated weighted-average period of 2.5 years, 1.0 years and 0.2 years, respectively.

Fair Value Disclosures

The fair value of stock options granted and purchases under the Company’s ESPP is estimated using the Black-Scholes option pricing model.

The fair value of stock options granted was estimated as of the grant date using the following assumptions:

	Year Ended December 31,
	2018		2017		2016
Weighted-average volatility	78.1%		75.8%		71.9%
Weighted-average expected term (years)		6.2		6.2		5.8
Risk-free interest rate	2.6%		2.2%		1.5%
Expected dividend yield		—		—		—

The fair value of stock purchase rights granted under the Company’s ESPP was estimated using the following assumptions:

	Year Ended December 31,
	2018		2017		2016
Weighted-average volatility	66.5%–93.7%		54.0%–93.7%		45.4%–104.5%
Weighted-average expected term (years)		0.5		0.5		0.5
Risk-free interest rate	1.10%–2.28%		0.47%–1.10%		0.26%–0.50%
Expected dividend yield		—		—		—

Volatility

Since the Company has limited information on the volatility of its common stock due to no significant trading history, the expected stock price volatility was calculated based on a blend of the historical volatilities of the Company’s own stock and of the common stock of comparable publicly traded biopharmaceutical companies over a period equal to the expected term of the stock option grants. The comparable companies were chosen based on their similar size, stage in the life cycle, and financial leverage to the Company.

Expected Term

The Company has very limited historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior for its stock-option grants. As such, the expected term was estimated using the simplified method.

Risk-Free Rate

The risk-free interest rate assumption is based on the zero-coupon U.S. Treasury instruments on the date of grant with a maturity date consistent with the expected term of the Company’s stock option grants.

Expected Dividend Yield

To date, the Company has not declared or paid any cash dividends and does not have any plans to do so in the future. Therefore, the Company used an expected dividend yield of zero.

Common Stock Issuance under At-the-Market Agreement

Pursuant to a sales agreement (the “ATM Agreement”) with Cantor Fitzgerald & Co. (“Cantor Fitzgerald”), the Company sold 355,821 and 388,166 shares for the years ended December 31, 2017 and 2016, respectively, at a weighted average price per share of $4.93 and $12.59, respectively. The Company received net proceeds of $1.7 million and $4.7 million, net of offering costs, for the years ended December 31, 2017 and 2016, respectively. The shares were issued under the Company’s shelf registration statement on Form S-3 (File No. 333-204914) filed with the SEC in June 2015.

In May 2018, the Company filed a new shelf registration statement on Form S-3 (File No. 333-225225) which permits the issuance and sale of up to a maximum aggregate offering price of $30.0 million of the Company’s common stock that may be issued and sold under the ATM Agreement with Cantor Fitzgerald in one or more at-the-market offerings. Following the effectiveness of the new shelf registration statement on Form S-3 (File No. 333-225225) in June 2018, no additional securities covered by the prior shelf registration statement on Form S-3 (File No. 333-204914) shall be offered or sold. For the year ended December 31, 2018, the Company has not sold any securities under the new shelf registration statement.

Public Offering of Common Stock

On August 23, 2016, the Company closed the sale of an aggregate of 6,325,000 shares of its common stock, at a public offering price of $10.00 per share. The shares were issued pursuant to a prospectus supplement filed with the SEC on August 17, 2016, and related prospectus, pursuant to the Company’s shelf registration statement on Form S-3 filed on June 12, 2015. The Company received net offering proceeds of approximately $59.2 million, net of underwriting discounts and commissions and offering costs.

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Restructuring Charges

12 Months Ended

Dec. 31, 2018

Restructuring And Related Activities [Abstract]

Restructuring Charges

12. Restructuring Charges

2018 Restructuring

In connection with the proposed Merger, on December 1, 2018, the Company’s Board of Directors approved a restructuring plan to reduce the Company’s workforce by 75%. Under the 2018 restructuring plan, the Company recorded $1.9 million of restructuring charges consisting of one-time severance payments and other employee related costs, and other charges during the fourth quarter of 2018. Restructuring charges are included in operating expenses in the statement of operations. The restructuring plan is ongoing and the Company expects to complete the actions associated with the restructuring in the first quarter of 2019.

The following table provides a summary of restructuring activity during the fourth quarter of 2018 and the related liabilities recorded in the accrued liabilities in the balance sheet. The Company expects to pay out its restructuring liability by the first quarter of 2019.

(In thousands)	Employee Severance and Other Costs
Balance as of December 31, 2017	$	6
Costs incurred		1,851
Less cash payments		(572	)
Less non-cash settlements		(65	)
Balance as of December 31, 2018	$	1,220

2017 Restructuring

On April 24, 2017, the Company’s Board of Directors approved a restructuring plan to reduce operating costs and better align its workforce with the needs of its business following the Company’s announcements that its Phase II “YOSEMITE” clinical trial of demcizumab did not meet its primary endpoint and would be discontinued, its Phase II “PINNACLE” clinical trial of tarextumab did not meet its endpoints, its partner Bayer had decided not to exercise its option to license vantictumab and ipafricept, and enrollment would be discontinued in the Phase Ib clinical trial of brontictuzumab. The restructuring plan provided for a 48% reduction in the Company’s workforce. Under the 2017 restructuring plan, the Company recorded $2.5 million in restructuring charges consisting of one-time severance payments and other employee related costs, and other charges during the year ended December 31, 2017. Restructuring charges are included in operating expenses in the statement of operations. The Company has substantially completed this plan and paid the restructuring cost at the end of the fourth quarter of 2017. No charges were recorded in the periods after December 31, 2017.

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Income Taxes

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Income Taxes

13. Income Taxes

For the year ended December 31, 2018, the Company recorded an income tax benefit of $0.4 million in the statement of operations as a result of a lapse of statute of limitations on uncertain tax positions. For the year ended December 31, 2017, the Company recorded an income tax benefit of $1.1 million due to an Alternative Minimum Tax (“AMT”) refundable credit as a result of the Tax Cuts and Jobs Act (“Tax Act”), enacted on December 22, 2017. For the year ended December 31, 2016, the Company recorded an income tax provision of $14,000 due to interest on uncertain tax positions.

Loss before income taxes for the years ended December 31, 2018, 2017 and 2016 was from the United States.

The components of the income tax provision (benefit) are as follows:

	Year Ended December 31,
(In thousands)	2018			2017			2016
Current:
Federal	$	(383	)	$	(1,084	)	$	13
State		1			1			1
Total		(382	)		(1,083	)		14
Deferred:
Federal		—			—			—
State		—			—			—
Total		—			—			—
Income tax provision (benefit)	$	(382	)	$	(1,083	)	$	14

The reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows:

	Year Ended December 31,
	2018			2017			2016
Tax at statutory federal rate		21	%		35	%		35	%
State tax—net of federal benefit		9	%		1	%		1	%
Tax credits		18	%		12	%		8	%
Stock compensation		(25	)%		(7	)%		(2	)%
Change in valuation allowance		(13	)%		90	%		(42	%)
Transaction costs		(4	)%		—			—
Impact of corporate rate change on deferred taxes		—			(129	)%		—
Other		(1	)%		1	%		—
Income tax (provision) benefit		5	%		3	%		—	%

Net deferred tax assets as of December 31, 2018 and 2017 consist of the following:

	Year Ended December 31,
(In thousands)	2018			2017
Deferred tax assets:
Net operating loss carryforwards	$	63,011		$	54,931
Accruals		733			643
Tax credit carryovers		65,719			63,406
Deferred revenue		778			30,259
Other		3,049			3,643
Gross deferred tax assets		133,290			152,882
Deferred tax liability		—			—
Valuation allowance		(133,290	)		(152,882	)
Net deferred tax assets	$	—		$	—

The valuation allowance decreased by $19.6 million and $32.1 million for the years ended December 31, 2018 and 2017, respectively. The tax benefit of deductible temporary differences or carryforwards is recorded as a deferred tax asset to the extent that management assesses the realization is “more likely than not.” Future realization of the tax benefit ultimately depends on the existence of sufficient taxable income within the period available under the tax law. At December 31, 2018 and 2017, the Company has set up valuation allowances against all federal and state deferred tax assets because based on all available evidence, these deferred tax assets are not more likely than not to be realizable.

On December 22, 2017, the Tax Act was signed into law making significant changes to the Internal Revenue Code. Changes included the reduction of the federal corporate income tax rate from 35% to 21% and the repeal of corporate AMT. The Company recorded $1.1 million as income tax benefit in the fourth quarter of 2017, the period in which the legislation was enacted. The company expects a portion of the AMT to be refunded in the following 12 months.  

On December 22, 2017, SEC Staff Accounting Bulletin No. 118 (SAB 118) was issued to address the application of US GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Act. The impact of the Act was finalized during the year ended December 31, 2018, and no change was made from the previously reported provisional amount.

At December 31, 2018, the Company had federal net operating loss carryforwards related to the 2018 tax year, amounting to $39.1 million which carryforward indefinitely and $228.6 million which begin to expire in 2023. At December 31, 2018, the Company had state net operating loss carryforwards of $97.2 million, which begin to expire in 2028, if not utilized. At December 31, 2018, the Company also had federal and California research and development credit carryforwards aggregating approximately $25.4 million and $19.8 million, respectively. The federal credits will expire in 2025, if not utilized. California research and development credits have no expiration date. At December 31, 2018, the Company also had federal orphan drug credit and AMT carryforwards of approximately $39.3 million and $1.5 million, respectively. The federal orphan drug credits will begin to expire in 2034, if not utilized.  

Under Sections 382 and 383 of Internal Revenue Code of 1986, as amended (Code), if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes, such as research tax credits, to offset its post-change income and taxes may be limited. In general, an “ownership change” occurs if there is a cumulative change in our ownership by “5% shareholders” that exceeds 50 percentage points over a rolling three-year period. Similar rules may apply under state tax laws. The Company in the past experienced an ownership change which has impacted its ability to fully realize the benefit of these net operating loss carryforwards. If the Company experiences additional ownership changes as a result of future transactions in its stock, then the Company may be further limited in its ability to use its net operating loss carryforwards and other tax assets to reduce taxes owed on the net taxable income that the Company earns. Any such limitations on the ability to use its net operating loss carryforwards and other tax assets could adversely impact our business, financial condition and operating results. 

The Company recognizes the financial statements effects of a tax position when it is more likely than not, based on technical merits, that the position will be sustained upon examination.

A reconciliation of the Company’s unrecognized tax benefits is as follows:

	December 31,
(In thousands)	2018			2017		2016
Balance at beginning of year	$	16,658		$	14,260	$	10,022
Increase related to current year tax provision		628			2,398		4,238
Increase related to prior year tax provision		—			—		—
Decrease related to prior year tax provision		(297	)		—		—
Balance at end of year	$	16,989		$	16,658	$	14,260

The unrecognized tax benefits, if recognized and in absence of full valuation allowance, would impact the income tax provision by $16.2 million and $15.9 million as of December 31, 2018 and 2017, respectively. As of December 31, 2018, the Company does not believe that it is reasonably possible that its unrecognized tax benefits would significantly change in the following 12 months.

The Company has elected to include interest and penalties as a component of tax expense. The Company recorded $15,000 and $14,000 of interest and penalties for the years ended December 31, 2017 and 2016, respectively. The Company recorded an income tax benefit of $86,000 as a result of lapse of statute of limitations for the year ended December 31, 2018. The Company recorded a liability for interest and penalties of $86,000 as of December 31, 2017. There is no liability recorded for interest and penalties as of December 31, 2018.

The Company files federal and state income tax returns in the U.S. and California. Tax years from 2004 forward remain open to examination due to the carryover of net operating losses and other tax attributes.

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Net Loss per Common Share

12 Months Ended

Dec. 31, 2018

Earnings Per Share [Abstract]

Net Loss per Common Share

14. Net Loss per Common Share

The following outstanding common stock equivalents were excluded from the computation of diluted net loss per common share for the periods presented because including them would have been antidilutive:

	Year Ended December 31,
(In thousands)	2018		2017		2016
Options to purchase common stock		4,145		5,217		4,325
RSUs		306		880		576
		4,451		6,097		4,901

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Selected Quarterly Financial Data

12 Months Ended

Dec. 31, 2018

Quarterly Financial Information Disclosure [Abstract]

Selected Quarterly Financial Data

15. Selected Quarterly Financial Data (Unaudited)

Selected quarterly results from operations for the years ended December 31, 2018 and 2017 are as follows:

	2018 Quarter Ended
(In thousands, except per share amounts)	March 31			June 30			September 30		December 31
Total revenue	$	7,849		$	6,870		$	19,518	$	10,184
Operating expenses		13,781			11,758			13,727		15,200
Net income (loss)		(5,574	)		(3,976	)		6,115		(4,666	)
Basic and diluted net income (loss) per    common share	$	(0.15	)	$	(0.10	)	$	0.16	$	(0.12	)

	2017 Quarter Ended
(In thousands, except per share amounts)	March 31			June 30			September 30			December 31
Total revenue	$	6,213		$	6,195		$	5,106		$	20,640
Operating expenses		28,971			21,630			16,131			12,395
Net loss		(22,608	)		(15,225	)		(10,692	)		9,463
Basic and diluted net income (loss) per    common share	$	(0.61	)	$	(0.40	)	$	(0.28	)	$	0.25

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Potential Business Combination with Mereo BioPharma

12 Months Ended

Dec. 31, 2018

Business Combinations [Abstract]

Potential Business Combination with Mereo BioPharma

16. Potential Business Combination with Mereo BioPharma

On December 5, 2018, the Company entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) with Mereo BioPharma Group plc, a public limited company incorporated under the laws of England and Wales (“Mereo”), Mereo US Holdings Inc., a Delaware corporation and a wholly-owned subsidiary of Mereo (“HoldCo”), and Mereo MergerCo One Inc., a Delaware corporation and an indirect wholly-owned subsidiary of Mereo (“Merger Sub”), pursuant to which, among other matters, and subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, Merger Sub will merge with and into OncoMed, with OncoMed surviving the merger as a wholly owned subsidiary of HoldCo, and an indirect wholly-owned subsidiary of Mereo (the “Merger”). The respective boards of directors of OncoMed and Mereo have each unanimously approved the Merger Agreement. The parties expect the Merger will be completed in the second quarter of 2019.

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Subsequent Events

12 Months Ended

Dec. 31, 2018

Subsequent Events [Abstract]

Subsequent Events

17. Subsequent Events

In January 2019, the Company signed an agreement to sublease a specified portion of the Company’s office facility located in Redwood City, California. The sublease has a term of 12 months through the end of 2019. The aggregate sublease proceeds for the term of the lease are approximately $0.8 million.

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The Company’s financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, preclinical study and clinical trial accruals, fair value of assets and liabilities, stock-based compensation, restructuring charges and income taxes. Management bases its estimates on historical experience and on various other market-specific and relevant assumptions that management believes to be reasonable under the circumstances. Actual results may differ from those estimates.

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of 90 days or less at the date of purchase to be cash and cash equivalents.

Short-Term Investments

Short-Term Investments

Short-term investments consist of debt securities classified as available-for-sale and have maturities greater than 90 days, but less than 365 days from the date of acquisition. Short-term investments are carried at fair value based upon quoted market prices. Unrealized gains and losses on available-for-sale securities are excluded from earnings and were reported as a component of accumulated other comprehensive income. The cost of available-for-sale securities sold is based on the specific-identification method.

Other Comprehensive (Loss) Income

Other Comprehensive (Loss) Income

Other comprehensive (loss) income includes certain changes in equity from non-owner sources that are excluded from net loss, specifically, unrealized gains and losses on available-for-sale investments and the related tax impact.

Concentrations of Credit Risk

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and short-term investments. Cash and short-term investments are invested through banks and other financial institutions in the United States. Such deposits may be in excess of insured limits. The Company maintains cash and investments with various high credit quality and capitalized financial institutions.

Property and Equipment

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization is calculated using the straight-line method over the estimated useful lives of the assets, which range from three to five years. Leasehold improvements are amortized over the shorter of their estimated useful lives or the remaining life of the lease at the time the asset is placed into service. In December 2018, the Company changed the estimated useful life of its leasehold improvements to better reflect the period during which these assets are expected to remain in service. The change in estimated useful life has been accounted for as a change in accounting estimate. The remaining carrying amounts of the leasehold improvements as of December 31, 2018 will be amortized prospectively over one year up to December 31, 2019. The change in estimated useful life increased loss from operations and net loss by approximately $26,000, or less than $0.01 per share, as reported in the Statement of Operations for the year ended December 31, 2018.

For assets held for sale, the property and equipment (the “disposal group”) are measured at the lower of their carrying amount or fair value less cost to sell. Losses are recognized for any initial or subsequent write-down to fair value less cost to sell, while gains are recognized for any subsequent increase in fair value less cost to sell, but not in excess of the cumulative loss previously recognized. Any gains or losses not previously recognized that result from the sale of the disposal group shall be recognized at the date of sale. Property and equipment are not depreciated while classified as held for sale. During the fourth quarter of 2018, certain property and equipment qualified as held for sale treatment. See Note 5 Property and Equipment, net to the Notes to Financial Statements.

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

The carrying value of long-lived assets, including property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the asset may not be recoverable. An impairment loss is recognized when the total of estimated future undiscounted cash flows, expected to result from the use of the asset and its eventual disposition, are less than its carrying amount. Impairment, if any, would be assessed using discounted cash flows or other appropriate measures of fair value. Through December 31, 2018, there have been no such impairment losses.

Revenue Recognition

Revenue Recognition

Effective January 1, 2018, the Company adopted Accounting Standards Codification, or ASC, Topic 606, Revenue from Contracts with Customers, using the modified retrospective transition method. Under this method, the Company recorded a cumulative adjustment to the opening balance of accumulated deficit and to deferred revenue. Under Topic 606, the Company recognizes revenue when it transfers control of promised goods or services to its customers in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that the Company determines are within the scope of Topic 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once a contract is determined to be within the scope of Topic 606, the Company assesses the goods or services promised within the contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

The Company evaluated its existing contracts and only applied Topic 606 to those contracts that were not completed at January 1, 2018.  As a result of this evaluation, the Company determined that only its collaboration with Celgene Corporation (“Celgene”) is within the scope of Topic 606. The terms of this arrangement include payment to the Company of a non-refundable, upfront fee; potential development, regulatory and sales milestones; program opt-in payments; and royalties on net product sales. Each of these payments results in collaboration revenue, except for revenues from royalties on net product sales, which would be classified as royalty revenues. In determining the appropriate amount of revenue to be recognized as it fulfills its obligations under its collaboration agreement with Celgene, the Company applies the five-step model. As part of the accounting for this arrangement, the Company must develop assumptions that require judgment to determine the stand-alone selling price for each performance obligation identified in the contract. The Company also must develop assumptions that require judgment in determining the measure of progress used to recognize revenue.

Milestone Payments

At the inception of each arrangement that includes development, regulatory or commercial milestone payments, the Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant reversal of cumulative revenue would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the control of the Company or partner, such as regulatory approvals, are not considered probable of being achieved until those approvalsare received or the underlying activity has been completed. The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis, for which the Company recognizes revenue as or when the performance obligations under the contract are satisfied. At the end of each subsequent reporting period, the Company re-evaluates the probability of achievement of such development milestones and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect collaboration revenues and earnings in the period of adjustment. 

Customer Concentration

Customer Concentration

Customers whose collaboration revenue accounted for 10% or more of total revenues were as follows:

	Year Ended December 31,
	2018	2017	2016
GlaxoSmithKline LLC (“GSK”)	—	*	*
Bayer Pharma AG (“Bayer”)	—	*	*
Celgene Corporation (“Celgene”)	100%	94%	87%

* less than 10%

Research and Development Expenses

Research and Development Expenses

Research and development costs are expensed as incurred. Research and development costs consist of salaries and other personnel-related expenses, including associated stock-based compensation, consulting fees, lab supplies, and facility costs, as well as fees paid to other entities that conduct certain research, development and manufacturing activities on behalf of the Company.

Clinical Trial Accruals

Clinical Trial Accruals

Clinical trial costs are a component of research and development expenses. The Company accrues and expenses clinical trial activities performed by third parties based upon actual work completed in accordance with agreements established with clinical research organizations and clinical sites. The Company determines the actual costs through discussions with internal personnel and external service providers as to the progress or stage of completion of trials or services and the agreed-upon fee to be paid for such services.

Nonrefundable advance payments for goods and services that will be used or rendered in future research and development activities, are deferred and recognized as expense in the period that the related goods are delivered or services are performed.

Stock-Based Compensation

Stock-Based Compensation

The Company recognizes compensation expense for all share-based payment awards made to employees and directors based on estimated fair values. For employee stock options, the Company determines the grant date fair value of the awards using the Black-Scholes option-pricing model and generally recognizes the fair value as stock-based compensation expense on a straight-line basis over the vesting period of the respective awards. Stock-based compensation expense is based on the value of the portion of stock-based payment awards that is ultimately expected to vest. As such, the Company’s stock-based compensation is reduced for the estimated forfeitures at the date of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. For restricted stock, the compensation cost for these awards is based on the closing price of the Company’s common stock on the date of grant and recognized as compensation expense on a straight-line basis over the requisite service period.

In the second quarter of 2018, the Company early adopted ASU 2018-07, Stock Compensation. ASU 2018-07 clarifies the accounting for share-based payment transactions for acquiring goods and services from non-employees. Specifically, the standard aligns the accounting for payments to non-employees to match the accounting for payments to employees, and no longer accounting for these transactions differently. The adoption of the standard did not have material impact on the Company’s financial statements.

Leases

Leases

The Company rents its office space and facilities under cancelable and non-cancelable operating lease agreements and recognizes related rent expense on a straight-line basis over the term of the lease. The Company’s lease agreements contain rent holidays, scheduled rent increases, lease incentives and renewal options. Rent holidays and scheduled rent increases are included in the determination of rent expense to be recorded over the lease term. Lease incentives are recognized as a reduction of rent expense on a straight-line basis over the term of the lease. The Company does not assume renewals in its determination of the lease term unless they are deemed to be reasonably assured at the inception of the lease. The Company begins recognizing rent expense on the date that the Company obtains the legal right to use and control the leased space.

The Company entered into a sublease agreement during the fourth quarter of 2018. The Company records sublease income as a reduction of rent expense.

Restructuring Charges

Restructuring Charges

Restructuring charges consist of severance, other one-time benefits and other employee related charges. Liabilities for costs associated with a restructuring activity are measured at fair value and are recognized when the liability is incurred. One-time termination benefits are expensed at the date the Company notifies the employee, unless the employee will continue to provide future services, in which case the benefits are expensed ratably over the future service period.

The Company continually evaluates the adequacy of the remaining liabilities under its restructuring initiatives. Although the Company believes that these estimates accurately reflect the costs of the Company’s restructuring plan, actual results may differ and thereby require the Company to record an additional provision or reverse a portion of such a provision.

Income Taxes

Income Taxes

The Company accounts for income taxes using the liability method under which deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred tax assets to the amount which is more likely than not to be realizable.

The recognition, derecognition and measurement of a tax position is based on management’s best judgment given the facts, circumstances and information available at each reporting date. The Company’s policy is to recognize interest and penalties related to the underpayment of income taxes as a component of income tax expense. To date, there have been no interest or penalties charged in relation to the unrecognized tax benefits.

Net Loss per Common Share

Net Loss per Common Share

Basic net loss per common share is calculated by dividing the net loss by the weighted-average number of common shares outstanding during the period, without consideration for common stock equivalents. Diluted net loss per common share is computed by dividing the net loss by the weighted-average number of common shares and common share equivalents outstanding for the period determined using the treasury-stock method. For purposes of this calculation, potentially dilutive securities consisting of stock options and restricted stock units are considered to be common stock equivalents and were excluded in the calculation of diluted net loss per common share because their effect would be anti-dilutive for all periods presented.

Newly Adopted and Recent Accounting Pronouncements

Newly Adopted and Recent Accounting Pronouncements

Accounting Standard Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition.

In May 2014, the Financial Accounting Standards Board (“FASB”) issued a comprehensive new standard on revenue from contracts with customers, ASU No. 2014-09, Revenue from Contracts with Customers, or Topic 606.  The standard’s core principle is that a reporting entity will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Entities have the option of using either a full retrospective or a modified retrospective approach to adopt this new guidance. In 2016, the FASB updated the guidance for reporting revenue gross versus net to improve the implementation guidance on principal versus agent considerations, and for identifying performance obligations and the accounting of intellectual property licenses. In addition, the FASB introduced practical expedients and made narrow scope improvements to the new accounting guidance.

Collaboration with Celgene

The Company adopted the accounting standard update on January 1, 2018 using the modified retrospective approach, for its collaboration agreement with Celgene. Therefore, comparative historical information will not be adjusted and will continue to be reported under ASC 605 with the impact of the transition reflected in the opening balance of accumulated deficit as of January 1, 2018. The consideration the Company is eligible to receive under this agreement includes upfront payments, milestone payments and program opt-in payments. The new revenue recognition standard differs from ASC 605 in many respects, such as in the accounting for variable consideration and the measurement of progress toward completion of performance obligations. The most significant impact of the standard relates to the Company’s method of revenue recognition for performance obligations that are delivered over time. Under the new standard, milestone payments are included in the transaction price as variable consideration, subject to a constraint, and are allocated to the performance obligations in the contract when recognized. Through December 31, 2017, the Company also received payments from Celgene to reimburse the costs of research and development services performed by the Company; these payments were historically recorded as other revenue. As the performance of these research and development services was at the Company’s discretion and are not reflective of a commitment or performance obligation pursuant to the Celgene agreement, the reimbursement paid to the Company has been excluded from the transaction price.

The Company’s deferred revenue associated with its Celgene collaboration agreement as of December 31, 2017 under Topic 605 was $143.8 million. As a result of adopting Topic 606, the Company recorded a $98.3 million reduction to its deferred revenue and opening accumulated deficit on January 1, 2018 as a result of the cumulative impact of the change in the recognition of the upfront and milestone payments using the input method (described further in Note 5, “Collaborations”) under Topic 606, rather than on a ratable basis which was applied in prior periods. Under Topic 606, collaboration revenue under the Company’s collaboration agreement with Celgene from inception of the agreement through January 1, 2018 was $186.2 million and deferred revenue was $45.5 million as of January 1, 2018. At adoption date, the remaining performance obligation under the contract was estimated to be substantially complete by the third quarter of 2019. At December 31, 2018, the Company evaluated the development program status of the remaining product candidate under the collaboration agreement with Celgene, etigilimab, and estimated that the remaining performance obligation under the contract will be completed by the first quarter of 2019.

Collaborations with Bayer and GSK

As the GSK collaboration was terminated in its entirety on October 28, 2017, this arrangement was outside the scope of Topic 606 as of the adoption date. For the Bayer collaboration, Bayer terminated all biologic therapeutic programs under the collaboration effective June 16, 2017, while the small molecule therapeutics program remained active. Refer to Note 5, “Collaborations,” for further details. The Company has determined that the small molecule therapeutic program remaining as of December 31, 2017 is immaterial in the context of the collaboration agreement relative to the biologics therapeutic programs that was terminated during 2017. The Company’s performance obligations under the small molecule therapeutic program with respect to Bayer were substantially complete at December 31, 2017, and any future receipts in the form of milestones or royalties are contingent upon the achievement of specified development, commercial and/or sales targets. The Company has concluded that there was no transition adjustment to be recognized on January 1, 2018 for these two agreements.

Impact of Adoption

The following table summarizes the impact of adopting Topic 606 on select balance sheets and statement of operations line items:

(In thousands)	Balance at December 31, 2017			Adjustment			Balance at January 1, 2018
Balance Sheets:
Deferred revenue, current portion	$	82,193		$	(51,299	)	$	30,894
Deferred revenue, non-current portion		61,645			(47,023	)		14,622
Accumulated deficit		(452,007	)		98,322			(353,685	)

	For the year ended December 31, 2018
(In thousands, except per share data)	As reported under Topic 606			Adjustment		Balances without the adoption of Topic 606
Statements of Operations:
Collaboration revenue	$	44,421		$	58,321	$	102,742
Income (loss) from operations		(10,045	)		58,321		48,276
Net income (loss)		(8,101	)		58,321		50,220
Net income (loss) per common shares, basic		(0.21	)		1.52		1.31
Net income (loss) per common shares, diluted		(0.21	)		1.51		1.30

Contract Balances

Upfront payments and fees may be required to be recorded as deferred revenue upon receipt or when due, and recognized in a future period when or as the Company performs its obligations under these arrangements. Amounts payable to the Company are recorded as accounts receivable when the Company’s right to consideration is unconditional.

As of December 31, 2018, theCompany’s contract liabilities, which consisted of deferred revenue, decreased by a total of $142.7 million from December 31, 2017, of which $98.3 million was related to the cumulative adjustment to the opening balance of accumulated deficit upon the adoption of Topic 606 on January 1, 2018 and $44.4 million related to revenue recognized for the year ended December 31, 2018. Upon adoption of the standard as of January 1, 2018, the Company had a $45.5 million contract liability. As of December 31, 2018, the Company had a $1.1 million contract liability. The remaining performance obligation under the contract is expected to be substantially complete by the first quarter of 2019.

ASU No. 2016-02, Leases (Topic 842)

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which amends the existing accounting standards for leases. The new standard requires lessees to record a right-of-use asset and a corresponding lease liability on the balance sheet (with the exception of short-term leases). For lessees, leases will continue to be classified as either operating or financing in the income statement. This ASU becomes effective in the first quarter of fiscal year 2019 and early adoption is permitted. This ASU is required to be applied with a modified retrospective approach and requires application of the new standard at the beginning of the earliest comparative period presented. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements. In issuing ASU No. 2018-11, the FASB decided to provide another transition method in addition to the existing transition method by allowing entities to initially apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company is currently evaluating our population of leases and are continuing to assess all potential impacts of ASU 2016-02 and ASU 2018-11, but currently believe that the most significant impact relates to the Company’s accounting for office building operating leases. The Company anticipates recognition of additional assets and corresponding liabilities related to leases upon adoption, but have not yet quantified these at this time. The Company will adopt the standard effective January 1, 2019 and plan to utilize the transition method stated in ASU 2018-11.

ASU No. 2018-07, Improvement to Nonemployees Share-based Payment Accounting (Topic 718)

In June 2018, the FASB issued ASU No. 2018-07, Stock Compensation. ASU No. 2018-07 simplifies the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. The guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, but not earlier than the Company’s adoption of Topic 606. The Company chose to adopt the guidance early, in the second quarter of 2018. The adoption of the standard did not have material impact on the Company’s financial statements.

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2018

ASU 2014-09 [Member]

Summary Of Significant Accounting Policies [Line Items]

Impact of Adopting Topic 606 on Select Balance Sheets and Statement of Operations

Impact of Adoption

The following table summarizes the impact of adopting Topic 606 on select balance sheets and statement of operations line items:

(In thousands)	Balance at December 31, 2017			Adjustment			Balance at January 1, 2018
Balance Sheets:
Deferred revenue, current portion	$	82,193		$	(51,299	)	$	30,894
Deferred revenue, non-current portion		61,645			(47,023	)		14,622
Accumulated deficit		(452,007	)		98,322			(353,685	)

	For the year ended December 31, 2018
(In thousands, except per share data)	As reported under Topic 606			Adjustment		Balances without the adoption of Topic 606
Statements of Operations:
Collaboration revenue	$	44,421		$	58,321	$	102,742
Income (loss) from operations		(10,045	)		58,321		48,276
Net income (loss)		(8,101	)		58,321		50,220
Net income (loss) per common shares, basic		(0.21	)		1.52		1.31
Net income (loss) per common shares, diluted		(0.21	)		1.51		1.30

Revenue [Member] | Customer Concentration [Member]

Summary Of Significant Accounting Policies [Line Items]

Schedule of Customer Concentration of Collaboration Revenue

Customers whose collaboration revenue accounted for 10% or more of total revenues were as follows:

	Year Ended December 31,
	2018	2017	2016
GlaxoSmithKline LLC (“GSK”)	—	*	*
Bayer Pharma AG (“Bayer”)	—	*	*
Celgene Corporation (“Celgene”)	100%	94%	87%

* less than 10%

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Cash and Investments (Tables)

12 Months Ended

Dec. 31, 2018

Cash And Cash Equivalents [Abstract]

Schedule of Fair Value of Securities, Not Including Cash

The fair value of securities, not including cash at December 31, 2018 and 2017 were as follows:

	December 31, 2018
	Amortized		Gross Unrealized					Fair
(In thousands)	Cost		Gains		Losses			Value
Money market funds	$	275	$	—	$	—		$	275
U.S. treasury bills		47,688		—		(29	)		47,659
Total	$	47,963	$	—	$	(29	)	$	47,934
Classified as:
Cash equivalents								$	275
Short-term investments									47,659
Total								$	47,934

As of December 31, 2018, the Company had a total of $57.3 million in cash, cash equivalents and short-term investments, which includes $9.7 million in cash and cash equivalents and $47.6 million in short-term investments.

	December 31, 2017
	Amortized		Gross Unrealized				Fair
(In thousands)	Cost		Gains		Losses		Value
Money market funds	$	99	$	—	$	—	$	99
U.S. treasury bills		89,525		289		—		89,814
Total	$	89,624	$	289	$	—	$	89,913
Classified as:
Cash equivalents							$	99
Short-term investments								89,814
Total							$	89,913

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Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2018

Fair Value Disclosures [Abstract]

Summary of Company's Financial Assets and Liabilities Subject to Fair Value Measurements on Recurring Basis

The Company’s financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used in such measurements were as follows:

	December 31, 2018
(In thousands)	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	275	$	—	$	—	$	275
U.S. treasury bills		—		47,659		—		47,659
Total	$	275	$	47,659	$	—	$	47,934

	December 31, 2017
(In thousands)	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	99	$	—	$	—	$	99
U.S. treasury bills		—		89,814		—		89,814
Total	$	99	$	89,814	$	—	$	89,913

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Property and Equipment, net (Tables)

12 Months Ended

Dec. 31, 2018

Property Plant And Equipment [Abstract]

Schedule of Property and Equipment, net

Property and equipment, net consist of the following:

	December 31,
(In thousands)	2018			2017
Computer equipment and software	$	1,440		$	1,935
Furniture and fixtures		415			547
Laboratory equipment		—			11,720
Leasehold improvements		9,598			9,250
		11,453			23,452
Less accumulated depreciation and amortization		(10,830	)		(20,177	)
Property and equipment, net	$	623		$	3,275

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Accrued Liabilities (Tables)

12 Months Ended

Dec. 31, 2018

Payables And Accruals [Abstract]

Schedule of Accrued Liabilities

Accrued liabilities consist of the following:

	December 31,
(In thousands)	2018		2017
Research and development related	$	988	$	670
Compensation related		1,809		2,733
Other		1,571		537
Total accrued liabilities	$	4,368	$	3,940

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2018

Commitments And Contingencies Disclosure [Abstract]

Summary of Minimum Annual Rental Payments under the Company's Non-cancelable Operating Lease Agreement

As of December 31, 2018, future minimum annual rental payments under the Company’s non-cancelable operating lease agreement are as follows (in thousands):

Year ending December 31,	Operating Leases, net of Sublease Income
2019	$	776
2020		1,640
2021		2,577
2022		2,667
2023		2,761
2024 and thereafter		13,382
Total minimum payments	$	23,803

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Collaborations (Tables)

12 Months Ended

Dec. 31, 2018

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Company Recognized Revenues from Collaboration Agreements

The Company has recognized the following revenues from its prior and current collaboration agreements during the years ended December 31, 2018, 2017 and 2016:

	Year Ended December 31,
(In thousands)	2018		2017		2016
Celgene:
Recognition of upfront payment	$	44,421	$	35,588	$	20,053
Other revenue		—		409		1,780
Celgene total		44,421		35,997		21,833
Bayer:
Recognition of upfront payments		—		278		648
Other revenue		—		1,726		1,457
Bayer total		—		2,004		2,105
GSK:
Recognition of upfront payment		—		150		576
Other revenue		—		3		639
GSK total		—		153		1,215
Total collaboration related revenue	$	44,421	$	38,154	$	25,153

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Stockholder's Equity (Tables)

12 Months Ended

Dec. 31, 2018

Equity [Abstract]

Summary of Common Stock Reserved for Future Issuance

The following table summarizes the Company’s common stock reserved for future issuance:

(In thousands)	December 31, 2018
Outstanding stock options and RSUs		4,451
Reserved for future equity award grants		3,350
Reserved for future ESPP issuances		1,510
Total common stock reserved for future issuances		9,311

Summary of Stock Option Activity

The following table summarizes the stock option activity for the year ended December 31, 2018:

	Stock Option Outstanding
(In thousands, except exercise price and    contractual life)	Number of shares			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Balances at December 31, 2017		5,217			10.70		5.6	$	913
Granted		1,744			3.34
Exercised		—			—
Forfeited		(2,816	)		8.69
Balances at December 31, 2018		4,145			8.96		6.4		—
Options vested and expected to vest—    December 31, 2018		3,945		$	8.88		7.0		—
Options exercisable—    December 31, 2018		2,542		$	11.44		5.2		—

Summary of RSU Activity

The following table summarizes the RSU activity for the year ended December 31, 2018:

	Restricted Stock Units Outstanding
(In thousands, except grant date fair value    and contractual life)	Number of shares			Weighted Average Grant Date Fair Value per Share		Weighted Average Remaining Contractual Life		Aggregate Intrinsic Value
Balances at December 31, 2017		880			5.33		1.3	$	3,606
Awarded		70			2.29
Released		(402	)		4.57
Forfeited		(242	)		5.60
Balances at December 31, 2018		306			5.41		1.0	$	229

Schedule of Stock-Based Compensation Expense

Stock-based compensation expense recognized was as follows:

	Year Ended December 31,
(In thousands)	2018		2017		2016
Research and development	$	3,380	$	4,886	$	5,892
General and administrative		3,397		4,522		5,239
Restructuring charges		65		6		—
Total	$	6,842	$	9,414	$	11,131

Assumptions Used for Determining Fair Value of Stock Options Using Black-Scholes Valuation Model

The fair value of stock options granted was estimated as of the grant date using the following assumptions:

	Year Ended December 31,
	2018		2017		2016
Weighted-average volatility	78.1%		75.8%		71.9%
Weighted-average expected term (years)		6.2		6.2		5.8
Risk-free interest rate	2.6%		2.2%		1.5%
Expected dividend yield		—		—		—

Assumptions Used for Determining Fair Value of Stock Purchase Rights Granted Under Company's ESPP Using Black-Scholes Valuation Model

The fair value of stock purchase rights granted under the Company’s ESPP was estimated using the following assumptions:

	Year Ended December 31,
	2018		2017		2016
Weighted-average volatility	66.5%–93.7%		54.0%–93.7%		45.4%–104.5%
Weighted-average expected term (years)		0.5		0.5		0.5
Risk-free interest rate	1.10%–2.28%		0.47%–1.10%		0.26%–0.50%
Expected dividend yield		—		—		—

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Restructuring Charges (Tables)

12 Months Ended

Dec. 31, 2018

Restructuring And Related Activities [Abstract]

Summary of Restructuring Activity

The following table provides a summary of restructuring activity during the fourth quarter of 2018 and the related liabilities recorded in the accrued liabilities in the balance sheet. The Company expects to pay out its restructuring liability by the first quarter of 2019.

(In thousands)	Employee Severance and Other Costs
Balance as of December 31, 2017	$	6
Costs incurred		1,851
Less cash payments		(572	)
Less non-cash settlements		(65	)
Balance as of December 31, 2018	$	1,220

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Components of Income Tax Provision (Benefit)

The components of the income tax provision (benefit) are as follows:

	Year Ended December 31,
(In thousands)	2018			2017			2016
Current:
Federal	$	(383	)	$	(1,084	)	$	13
State		1			1			1
Total		(382	)		(1,083	)		14
Deferred:
Federal		—			—			—
State		—			—			—
Total		—			—			—
Income tax provision (benefit)	$	(382	)	$	(1,083	)	$	14

Schedule of Reconciliation of Statutory Federal Income Tax Rate to Company's Effective Tax Rate

The reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows:

	Year Ended December 31,
	2018			2017			2016
Tax at statutory federal rate		21	%		35	%		35	%
State tax—net of federal benefit		9	%		1	%		1	%
Tax credits		18	%		12	%		8	%
Stock compensation		(25	)%		(7	)%		(2	)%
Change in valuation allowance		(13	)%		90	%		(42	%)
Transaction costs		(4	)%		—			—
Impact of corporate rate change on deferred taxes		—			(129	)%		—
Other		(1	)%		1	%		—
Income tax (provision) benefit		5	%		3	%		—	%

Schedule of Net Deferred Tax Assets

Net deferred tax assets as of December 31, 2018 and 2017 consist of the following:

	Year Ended December 31,
(In thousands)	2018			2017
Deferred tax assets:
Net operating loss carryforwards	$	63,011		$	54,931
Accruals		733			643
Tax credit carryovers		65,719			63,406
Deferred revenue		778			30,259
Other		3,049			3,643
Gross deferred tax assets		133,290			152,882
Deferred tax liability		—			—
Valuation allowance		(133,290	)		(152,882	)
Net deferred tax assets	$	—		$	—

Reconciliation of Unrecognized Tax Benefits

A reconciliation of the Company’s unrecognized tax benefits is as follows:

	December 31,
(In thousands)	2018			2017		2016
Balance at beginning of year	$	16,658		$	14,260	$	10,022
Increase related to current year tax provision		628			2,398		4,238
Increase related to prior year tax provision		—			—		—
Decrease related to prior year tax provision		(297	)		—		—
Balance at end of year	$	16,989		$	16,658	$	14,260

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Net Loss per Common Share (Tables)

12 Months Ended

Dec. 31, 2018

Earnings Per Share [Abstract]

Outstanding Common Stock Equivalents Excluded from Computation of Diluted Net Loss per Common Share

The following outstanding common stock equivalents were excluded from the computation of diluted net loss per common share for the periods presented because including them would have been antidilutive:

	Year Ended December 31,
(In thousands)	2018		2017		2016
Options to purchase common stock		4,145		5,217		4,325
RSUs		306		880		576
		4,451		6,097		4,901

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Selected Quarterly Financial Data (Tables)

12 Months Ended

Dec. 31, 2018

Quarterly Financial Information Disclosure [Abstract]

Summary of Selected Quarterly Results from Operations

Selected quarterly results from operations for the years ended December 31, 2018 and 2017 are as follows:

	2018 Quarter Ended
(In thousands, except per share amounts)	March 31			June 30			September 30		December 31
Total revenue	$	7,849		$	6,870		$	19,518	$	10,184
Operating expenses		13,781			11,758			13,727		15,200
Net income (loss)		(5,574	)		(3,976	)		6,115		(4,666	)
Basic and diluted net income (loss) per    common share	$	(0.15	)	$	(0.10	)	$	0.16	$	(0.12	)

	2017 Quarter Ended
(In thousands, except per share amounts)	March 31			June 30			September 30			December 31
Total revenue	$	6,213		$	6,195		$	5,106		$	20,640
Operating expenses		28,971			21,630			16,131			12,395
Net loss		(22,608	)		(15,225	)		(10,692	)		9,463
Basic and diluted net income (loss) per    common share	$	(0.61	)	$	(0.40	)	$	(0.28	)	$	0.25

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Organization - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2018 Segment
Organization Consolidation And Presentation Of Financial Statements [Abstract]
Number of operating segment	1

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Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($)		3 Months Ended								12 Months Ended			61 Months Ended
	Jan. 01, 2018	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2018
Summary Of Significant Accounting Policies [Line Items]
Net loss		$ (4,666,000)	$ 6,115,000	$ (3,976,000)	$ (5,574,000)	$ 9,463,000	$ (10,692,000)	$ (15,225,000)	$ (22,608,000)	$ (8,101,000)	$ (39,062,000)	$ (103,102,000)
Net loss per common share, basic and diluted		$ (0.12)	$ 0.16	$ (0.10)	$ (0.15)	$ 0.25	$ (0.28)	$ (0.40)	$ (0.61)	$ (0.21)	$ (1.04)	$ (3.14)
Impairment of long-lived assets										$ 0
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued		$ 0				$ 86,000				0	$ 86,000		$ 0
Contract liability		1,100,000								1,100,000			1,100,000
Decrease in deferred revenue										44,421,000	36,045,000	$ 21,272,000
Collaboration revenue		10,184,000	$ 19,518,000	$ 6,870,000	$ 7,849,000	20,640,000	$ 5,106,000	$ 6,195,000	$ 6,213,000	44,421,000	38,154,000	25,153,000
ASU 2014-09 [Member]
Summary Of Significant Accounting Policies [Line Items]
Decrease in accumulated deficit	$ 98,300,000
Decrease in deferred revenue										142,700,000
ASU 2014-09 [Member] | Topic 605 [Member]
Summary Of Significant Accounting Policies [Line Items]
Net loss										50,220,000
ASU 2014-09 [Member] | Adjustment [Member]
Summary Of Significant Accounting Policies [Line Items]
Net loss										58,321,000
Contract liability	45,500,000
Decrease in accumulated deficit	98,300,000
Decrease in deferred revenue	98,300,000
Collaboration Revenue [Member]
Summary Of Significant Accounting Policies [Line Items]
Collaboration revenue										44,421,000	36,016,000	21,277,000
Collaboration Revenue [Member] | ASU 2014-09 [Member] | Topic 605 [Member]
Summary Of Significant Accounting Policies [Line Items]
Collaboration revenue										102,742,000
Collaboration Revenue [Member] | ASU 2014-09 [Member] | Adjustment [Member]
Summary Of Significant Accounting Policies [Line Items]
Collaboration revenue										58,321,000
Collaborative Arrangement [Member] | Collaboration Revenue [Member]
Summary Of Significant Accounting Policies [Line Items]
Collaboration revenue										44,421,000	38,154,000	25,153,000
Celgene [Member] | Collaborative Arrangement [Member]
Summary Of Significant Accounting Policies [Line Items]
Contract liability		$ 1,100,000				143,800,000				1,100,000	143,800,000		1,100,000
Celgene [Member] | Collaborative Arrangement [Member] | Topic 605 [Member]
Summary Of Significant Accounting Policies [Line Items]
Contract liability						$ 143,800,000					143,800,000
Celgene [Member] | Collaborative Arrangement [Member] | ASU 2014-09 [Member] | Adjustment [Member]
Summary Of Significant Accounting Policies [Line Items]
Net loss										$ 7,700,000
Net loss per common share, basic and diluted										$ 0.20
Contract liability	45,500,000
Decrease in accumulated deficit	$ 98,300,000
Celgene [Member] | Collaborative Arrangement [Member] | Collaboration Revenue [Member]
Summary Of Significant Accounting Policies [Line Items]
Collaboration revenue										$ 44,421,000	$ 35,997,000	$ 21,833,000
Celgene [Member] | Collaborative Arrangement [Member] | Collaboration Revenue [Member] | ASU 2014-09 [Member] | Adjustment [Member]
Summary Of Significant Accounting Policies [Line Items]
Collaboration revenue													$ 186,200,000
Revenue [Member] | Customer Concentration [Member] | Celgene [Member] | Collaborative Arrangement [Member]
Summary Of Significant Accounting Policies [Line Items]
Concentration risk percentage of revenue represented by major customers										100.00%	94.00%	87.00%
Leasehold Improvements [Member]
Summary Of Significant Accounting Policies [Line Items]
Description of property and equipment over estimated useful lives										shorter of their estimated useful lives or the remaining life of the lease at the time the asset is placed into service
Leasehold Improvements [Member] | Change in Estimated Useful Life of Property and Equipment Accounted for as Change in Accounting Estimate [Member]
Summary Of Significant Accounting Policies [Line Items]
Change in accounting estimate										Company changed the estimated useful life of its leasehold improvements to better reflect the period during which these assets are expected to remain in service. The change in estimated useful life has been accounted for as a change in accounting estimate. The remaining carrying amounts of the leasehold improvements as of December 31, 2018 will be amortized prospectively over one year up to December 31, 2019.
Leasehold Improvements [Member] | Change in Estimated Useful Life of Property and Equipment Accounted for as Change in Accounting Estimate [Member] | Restatement Adjustment [Member]
Summary Of Significant Accounting Policies [Line Items]
Property and equipment, Estimated useful life										1 year
Net loss										$ 26,000
Maximum [Member] | Property and Equipment [Member]
Summary Of Significant Accounting Policies [Line Items]
Property and equipment, Estimated useful life										5 years
Maximum [Member] | Leasehold Improvements [Member] | Change in Estimated Useful Life of Property and Equipment Accounted for as Change in Accounting Estimate [Member] | Restatement Adjustment [Member]
Summary Of Significant Accounting Policies [Line Items]
Net loss per common share, basic and diluted										$ 0.01
Minimum [Member] | Revenue [Member] | Customer Concentration [Member]
Summary Of Significant Accounting Policies [Line Items]
Concentration risk percentage of revenue represented by major customers										10.00%
Minimum [Member] | Property and Equipment [Member]
Summary Of Significant Accounting Policies [Line Items]
Property and equipment, Estimated useful life										3 years

XML

Summary of Significant Accounting Policies - Schedule of Customer Concentration of Collaboration Revenue (Detail)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Revenue [Member] | Customer Concentration [Member] | Celgene [Member] | Collaborative Arrangement [Member]
Concentration Risk [Line Items]
Collaborative research and development revenue, Percentage	100.00%	94.00%	87.00%

XML

Summary of Significant Accounting Policies - Schedule of Customer Concentration of Collaboration Revenue (Parenthetical) (Detail)	12 Months Ended
	Dec. 31, 2018
Minimum [Member] | Revenue [Member] | Customer Concentration [Member]
Concentration Risk [Line Items]
Concentration risk percentage of revenue represented by major customers	10.00%

XML

Summary of Significant Accounting Policies - Impact of Adopting Topic 606 on Select Balance Sheets and Statement of Operations (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Jan. 01, 2018
Balance Sheets:
Deferred revenue, current portion	$ 3,697				$ 82,193				$ 3,697	$ 82,193
Deferred revenue, non-current portion					61,645					61,645
Accumulated deficit	(361,786)				(452,007)				(361,786)	(452,007)
Statements of Operations:
Collaboration revenue	10,184	$ 19,518	$ 6,870	$ 7,849	20,640	$ 5,106	$ 6,195	$ 6,213	44,421	38,154	$ 25,153
Income (loss) from operations									(10,045)	(40,973)	(103,387)
Net income (loss)	$ (4,666)	$ 6,115	$ (3,976)	$ (5,574)	$ 9,463	$ (10,692)	$ (15,225)	$ (22,608)	$ (8,101)	(39,062)	(103,102)
Net income (loss) per common shares, basic									$ (0.21)
Net income (loss) per common shares, diluted									$ (0.21)
Collaboration Revenue [Member]
Statements of Operations:
Collaboration revenue									$ 44,421	$ 36,016	$ 21,277
ASU 2014-09 [Member]
Balance Sheets:
Deferred revenue, current portion												$ 30,894
Deferred revenue, non-current portion												14,622
Accumulated deficit												(353,685)
ASU 2014-09 [Member] | Adjustment [Member]
Balance Sheets:
Deferred revenue, current portion												(51,299)
Deferred revenue, non-current portion												(47,023)
Accumulated deficit												$ 98,322
Statements of Operations:
Income (loss) from operations									58,321
Net income (loss)									$ 58,321
Net income (loss) per common shares, basic									$ 1.52
Net income (loss) per common shares, diluted									$ 1.51
ASU 2014-09 [Member] | Adjustment [Member] | Collaboration Revenue [Member]
Statements of Operations:
Collaboration revenue									$ 58,321
ASU 2014-09 [Member] | Balances without the adoption of Topic 606 [Member]
Statements of Operations:
Income (loss) from operations									48,276
Net income (loss)									$ 50,220
Net income (loss) per common shares, basic									$ 1.31
Net income (loss) per common shares, diluted									$ 1.30
ASU 2014-09 [Member] | Balances without the adoption of Topic 606 [Member] | Collaboration Revenue [Member]
Statements of Operations:
Collaboration revenue									$ 102,742

XML

Cash and Investments - Schedule of Fair Value of Securities, Not Including Cash (Detail) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Cash equivalents, Amortized Cost	$ 9,686	$ 13,277	$ 36,953	$ 38,444
Total, Amortized Cost	47,963	89,624
Total, Gross Unrealized Gains		289
Total, Gross Unrealized Losses	(29)
Total, Fair Value	47,934	89,913
Short-term investments, Fair Value	47,659	89,814
Total, Fair Value	47,934	89,913
Cash Equivalents [Member]
Schedule of Available-for-sale Securities [Line Items]
Cash equivalents, Fair Value	275	99
Money Market Funds [Member]
Schedule of Available-for-sale Securities [Line Items]
Cash equivalents, Amortized Cost	275	99
Cash equivalents, Fair Value	275	99
U.S. Treasury Bills [Member]
Schedule of Available-for-sale Securities [Line Items]
Short-term investments, Amortized Cost	47,688	89,525
Short-term investments, Gross Unrealized Gains		289
Short-term investments, Gross Unrealized Losses	(29)
Short-term investments, Fair Value	$ 47,659	$ 89,814

XML

Cash and Investments - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Total cash, cash equivalents and short-term investments	$ 57,300,000	$ 103,100,000
Cash and cash equivalents	9,686,000	13,277,000	$ 36,953,000	$ 38,444,000
Short-term investments	47,659,000	$ 89,814,000
Realized gains or losses on available-for-sale securities	$ 0
Maximum [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for sale securities, contractual maturity period	1 year

XML

Fair Value Measurements - Summary of Company's Financial Assets and Liabilities Subject to Fair Value Measurements on Recurring Basis (Detail) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Assets:
Assets fair value disclosure	$ 47,934	$ 89,913
Level 1 [Member]
Assets:
Assets fair value disclosure	275	99
Level 2 [Member]
Assets:
Assets fair value disclosure	47,659	89,814
Money Market Funds [Member]
Assets:
Assets fair value disclosure	275	99
Money Market Funds [Member] | Level 1 [Member]
Assets:
Assets fair value disclosure	275	99
U.S. Treasury Bills [Member]
Assets:
Assets fair value disclosure	47,659	89,814
U.S. Treasury Bills [Member] | Level 2 [Member]
Assets:
Assets fair value disclosure	$ 47,659	$ 89,814

XML

Fair Value Measurements - Additional Information (Detail)	Dec. 31, 2018 USD ($)
Fair Value Disclosures [Abstract]
Fair Value, Assets, Level 1 to Level 2 Transfers, Amount	$ 0
Fair Value, Assets, Level 2 to Level 1 Transfers, Amount	0
Fair Value, Liabilities, Level 1 to Level 2 Transfers, Amount	0
Fair Value, Liabilities, Level 2 to Level 1 Transfers, Amount	$ 0

XML

Property and Equipment, net - Schedule of Property and Equipment, net (Detail) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 11,453	$ 23,452
Less accumulated depreciation and amortization	(10,830)	(20,177)
Property and equipment, net	623	3,275
Computer Equipment and Software [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	1,440	1,935
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	415	547
Laboratory Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross		11,720
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 9,598	$ 9,250

XML

Property and Equipment, net - Additional Information (Detail) - USD ($)	1 Months Ended	3 Months Ended								12 Months Ended
	Jan. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Property, Plant and Equipment [Line Items]
Depreciation expense										$ 1,691,000	$ 1,710,000	$ 1,764,000
Net loss		$ (4,666,000)	$ 6,115,000	$ (3,976,000)	$ (5,574,000)	$ 9,463,000	$ (10,692,000)	$ (15,225,000)	$ (22,608,000)	$ (8,101,000)	$ (39,062,000)	$ (103,102,000)
Net loss per common share, basic and diluted		$ (0.12)	$ 0.16	$ (0.10)	$ (0.15)	$ 0.25	$ (0.28)	$ (0.40)	$ (0.61)	$ (0.21)	$ (1.04)	$ (3.14)
Property and equipment net book value qualified as held for sale		$ 1,443,000								$ 1,443,000
Impairment of long-lived assets held for sale										0
Subsequent Event [Member]
Property, Plant and Equipment [Line Items]
Net proceeds from sale of property and equipment classified as held for sale	$ 1,400,000
Laboratory Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment net book value qualified as held for sale		$ 1,400,000								1,400,000
Leasehold Improvements [Member] | Change in Estimated Useful Life of Property and Equipment Accounted for as Change in Accounting Estimate [Member] | Restatement Adjustment [Member]
Property, Plant and Equipment [Line Items]
Net loss										$ 26,000
Property and equipment estimated useful life										1 year
Leasehold Improvements [Member] | Maximum [Member] | Change in Estimated Useful Life of Property and Equipment Accounted for as Change in Accounting Estimate [Member] | Restatement Adjustment [Member]
Property, Plant and Equipment [Line Items]
Net loss per common share, basic and diluted										$ 0.01

XML

Accrued Liabilities - Schedule of Accrued Liabilities (Detail) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Payables And Accruals [Abstract]
Research and development related	$ 988	$ 670
Compensation related	1,809	2,733
Other	1,571	537
Total accrued liabilities	$ 4,368	$ 3,940

XML

Commitments and Contingencies - Additional Information (Detail) - USD ($) $ in Millions	1 Months Ended	3 Months Ended	12 Months Ended
	Oct. 31, 2018	Dec. 31, 2016	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Operating Leased Assets [Line Items]
Operating lease, expiration date		2028-05			2019-01
Operating lease, additional period		3 years			3 years
Lease agreement for additional space termination date					Sep. 30, 2017
Tenant improvement allowance, total					$ 8.0
Rental expense					2.3	$ 2.4	$ 1.6
Rental expense, net of sublease income					$ 0.1
Redwood City, California
Operating Leased Assets [Line Items]
Sub lease rentals expiration year	2020
Scenario, Forecast
Operating Leased Assets [Line Items]
Aggregate sublease proceeds			$ 0.8	$ 1.6
Maximum | Redwood City, California
Operating Leased Assets [Line Items]
Sublease rentals term	24 months
Minimum | Redwood City, California
Operating Leased Assets [Line Items]
Sublease rentals term	12 months
Additional Office and Laboratory Space
Operating Leased Assets [Line Items]
Operating lease, additional period		10 years

XML

Commitments and Contingencies - Summary of Minimum Annual Rental Payments under the Company's Non-cancelable Operating Lease Agreement (Detail) $ in Thousands	Dec. 31, 2018 USD ($)
Commitments And Contingencies Disclosure [Abstract]
2019	$ 776
2020	1,640
2021	2,577
2022	2,667
2023	2,761
2024 and thereafter	13,382
Total minimum payments	$ 23,803

XML

License Agreement - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2004
License Agreements [Line Items]
Up-front fee				$ 10,000
Common shares	38,660,146	38,212,505
Royalties payments to licensor				$ 10,000,000
Legal costs	$ 27,000	$ 32,000	$ 69,000
Common Stock [Member]
License Agreements [Line Items]
Common shares				7,796
Nonvoting Common Stock [Member]
License Agreements [Line Items]
Additional common stock				0.25%

XML

Collaborations - GSK Strategic Alliance - Additional Information (Detail) $ in Millions		12 Months Ended
	Dec. 07, 2007 USD ($) shares	Dec. 31, 2018 Agreement
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Number Of Collaboration Agreements | Agreement		3
Number of collaboration agreements terminated | Agreement		2
GlaxoSmithKline [Member] | Collaborative Arrangement [Member]
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Effective date of termination	Oct. 28, 2017
GlaxoSmithKline [Member] | Series B-2 Convertible Preferred Stock [Member]
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Initial payment received from collaboration arrangement	$ 35.0
Number of shares issued | shares	1,441,396
Premium received on number of shares issued	$ 4.3
Deferred revenue	$ 17.5

XML

Collaborations - Company Recognized Revenues from Collaboration Agreements (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Collaboration revenue	$ 10,184	$ 19,518	$ 6,870	$ 7,849	$ 20,640	$ 5,106	$ 6,195	$ 6,213	$ 44,421	$ 38,154	$ 25,153
Collaboration Revenue [Member]
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Collaboration revenue									44,421	36,016	21,277
Collaboration Revenue [Member] | Collaborative Arrangement [Member]
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Collaboration revenue									44,421	38,154	25,153
Collaboration Revenue [Member] | Collaborative Arrangement [Member] | Celgene [Member]
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Collaboration revenue									44,421	35,588	20,053
Collaboration revenue										409	1,780
Collaboration revenue									$ 44,421	35,997	21,833
Collaboration Revenue [Member] | Collaborative Arrangement [Member] | GlaxoSmithKline [Member]
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Collaboration revenue										150	576
Collaboration revenue										3	639
Collaboration revenue										153	1,215
Collaboration Revenue [Member] | Collaborative Arrangement [Member] | Bayer [Member]
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Collaboration revenue										278	648
Collaboration revenue										1,726	1,457
Collaboration revenue										$ 2,004	$ 2,105

XML

Collaborations - Celgene Strategic Alliance - Additional Information (Detail) $ / shares in Units, $ in Thousands		1 Months Ended	3 Months Ended								12 Months Ended			49 Months Ended	61 Months Ended
	Jan. 01, 2018 USD ($)	Dec. 31, 2013 USD ($) $ / shares shares	Dec. 31, 2018 USD ($) $ / shares	Sep. 30, 2018 USD ($) $ / shares	Jun. 30, 2018 USD ($) $ / shares	Mar. 31, 2018 USD ($) $ / shares	Dec. 31, 2017 USD ($) $ / shares	Sep. 30, 2017 USD ($) $ / shares	Jun. 30, 2017 USD ($) $ / shares	Mar. 31, 2017 USD ($) $ / shares	Dec. 31, 2018 USD ($) Program $ / shares	Dec. 31, 2017 USD ($) $ / shares	Dec. 31, 2016 USD ($) $ / shares	Dec. 31, 2017 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Contract liability			$ 1,100								$ 1,100				$ 1,100
Collaboration revenue			10,184	$ 19,518	$ 6,870	$ 7,849	$ 20,640	$ 5,106	$ 6,195	$ 6,213	44,421	$ 38,154	$ 25,153
Decrease in net loss			$ (4,666)	$ 6,115	$ (3,976)	$ (5,574)	$ 9,463	$ (10,692)	$ (15,225)	$ (22,608)	$ (8,101)	$ (39,062)	$ (103,102)
Decrease in net loss per common share, basic and diluted | $ / shares			$ (0.12)	$ 0.16	$ (0.10)	$ (0.15)	$ 0.25	$ (0.28)	$ (0.40)	$ (0.61)	$ (0.21)	$ (1.04)	$ (3.14)
Collaboration Revenue [Member]
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Collaboration revenue											$ 44,421	$ 36,016	$ 21,277
ASU 2014-09 [Member]
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Decrease in accumulated deficit	$ 98,300
Adjustment [Member] | ASU 2014-09 [Member]
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Contract liability	45,500
Decrease in accumulated deficit	98,300
Decrease in net loss											58,321
Adjustment [Member] | ASU 2014-09 [Member] | Collaboration Revenue [Member]
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Collaboration revenue											58,321
Collaborative Arrangement [Member] | Collaboration Revenue [Member]
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Collaboration revenue											44,421	38,154	25,153
Celgene [Member]
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Deferred revenue			$ 2,600								$ 2,600				2,600
Celgene [Member] | Collaborative Arrangement [Member]
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Collaboration and Option Agreement date											Dec. 31, 2013
Number of additional biologic program | Program											2
Upfront cash payment received		$ 155,000
Issuance of common stock in connection with research and collaboration agreement | shares		1,470,588
Common stock price per share | $ / shares		$ 15.13
Proceeds from issuance of common stock		$ 22,200
Premium on closing price of common stock value		1,700
Common stock, fair market value		20,500
Non-refundable upfront cash payment received		$ 155,000
Contract liability			1,100				$ 143,800				$ 1,100	143,800		$ 143,800	1,100
Reimbursement of research and development services costs														$ 2,500
Celgene [Member] | Collaborative Arrangement [Member] | Collaboration Revenue [Member]
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Milestone payment previously received											44,421	35,588	20,053
Collaboration revenue											44,421	$ 35,997	$ 21,833
Celgene [Member] | Collaborative Arrangement [Member] | Adjustment [Member] | ASU 2014-09 [Member]
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Contract liability	45,500
Total consideration											231,700
Decrease in accumulated deficit	$ 98,300
Decrease in net loss											$ 7,700
Decrease in net loss per common share, basic and diluted | $ / shares											$ 0.20
Celgene [Member] | Collaborative Arrangement [Member] | Adjustment [Member] | ASU 2014-09 [Member] | Collaboration Revenue [Member]
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Collaboration revenue															186,200
Celgene [Member] | Collaborative Arrangement [Member] | Etigilimab [Member]
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Future development milestone payments			35,000								$ 35,000				35,000
Additional contingent consideration for regulatory events											402,500
Milestone payment previously received											2,500
Payment receivable under agreement																$ 2,500
Additional contingent consideration for post-option exercise development, regulatory events and sales milestones											402,500
Celgene [Member] | Collaborative Arrangement [Member] | Demcizumab [Member]
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Contract liability																$ 70,000
Celgene [Member] | Collaborative Arrangement [Member] | Rosmantuzumab [Member]
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Payment receivable under agreement																	$ 2,500
Celgene [Member] | Collaborative Arrangement [Member] | Maximum [Member] | Etigilimab [Member]
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Additional contingent consideration for regulatory events											440,000
Future potential milestone payments			$ 437,500								$ 437,500				$ 437,500

XML

Collaborations - Bayer Strategic Alliance - Additional Information (Detail) - Bayer [Member] - USD ($) $ in Millions		12 Months Ended
	Jun. 15, 2010	Dec. 31, 2018	Dec. 31, 2012	Dec. 31, 2010
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Collaboration and Option Agreement date	Jun. 15, 2010
Collaborative Arrangement [Member]
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Milestone payments earned			$ 5.0	$ 40.0
Effective date of termination	Jun. 16, 2017
Collaborative Arrangement [Member] | Small Molecules [Member]
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Future development milestone payments		$ 27.0
Contingent consideration payments for regulatory events		15.0
Collaborative Arrangement [Member] | Small Molecules [Member] | Achievement of Specified Future Product Sales [Member]
Collaborative Arrangements And Noncollaborative Arrangement Transactions [Line Items]
Contingent consideration payments for regulatory events		$ 70.0

XML

Lonza Sales AG Agreement - Additional Information (Detail) - Lonza Sales AG [Member]	12 Months Ended
	Dec. 31, 2012 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2012 GBP (£)
Research and Development Arrangement, Contract to Perform for Others [Line Items]
License agreement, upfront payment recorded in research and development expense	$ 488,000
Obligation to pay certain payments	$ 254,000	$ 0	$ 0	$ 0	£ 200,000

XML

Stockholder's Equity - Additional Information (Detail) - USD ($)			1 Months Ended	12 Months Ended
	Aug. 23, 2016	Jul. 17, 2013	Jul. 31, 2013	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	May 31, 2018	Jan. 01, 2018
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock options vesting original months				7 years
Common stock available for future issuance under plan				9,311,000
Common stock subject to options outstanding				4,145,000	5,217,000
Total fair value of options vested				$ 5,500,000	$ 7,100,000	$ 9,200,000
Intrinsic value of options exercised					1,400,000	$ 800,000
Intrinsic value of options outstanding				$ 0	$ 913,000
Options exercised, shares				0
Weighted-average grant-date fair value, granted				$ 2.32	$ 3.66	$ 8.23
At-the-Market Offering [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Net proceeds from sale of common stock					$ 1,701,000	$ 4,739,000
At-the-Market Offering [Member] | Common Stock [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of shares sold					355,821	388,166
At-the-Market Offering [Member] | Cantor Fitzgerald & Co [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Weighted average price per share					$ 4.93	$ 12.59
Net proceeds from sale of common stock					$ 1,700,000	$ 4,700,000
At-the-Market Offering [Member] | Cantor Fitzgerald & Co [Member] | Common Stock [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of shares sold					355,821	388,166
Public Offering [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of shares sold	6,325,000
Net proceeds from sale of common stock	$ 59,200,000					$ 59,170,000
Public offering price per share	$ 10.00
Public Offering [Member] | Common Stock [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of shares sold						6,325,000
Employees Stock Purchase Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock available for future issuance under plan				1,510,518				350,000
Common stock shares authorized				1,893,620
Common stock purchased at discount through payroll deductions				15.00%
Employee stock purchase plan, offering period				6 months
Shares purchased lower of the fair market value				85.00%
Common stock issued to employees under ESPP				45,352	88,982	111,633
Weighted-average price per share				$ 1.97	$ 7.16	$ 8.21
Weighted-average grant-date fair value, granted				$ 1.54	$ 3.39	$ 5.06
Unrecognized stock-based compensation expense				$ 2,000
Estimated weighted-average period				2 months 12 days
Restricted Stock Units [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total fair value of RSUs vested				$ 1,800,000	$ 6,400,000	$ 2,200,000
Intrinsic value of non-vested RSUs				$ 200,000
Weighted-average grant-date fair value, granted				$ 2.29
Unrecognized stock-based compensation expense				$ 800,000
Estimated weighted-average period				1 year
Unvested Stock Options [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unrecognized stock-based compensation expense				$ 4,300,000
Estimated weighted-average period				2 years 6 months
Maximum [Member] | At-the-Market Offering [Member] | Cantor Fitzgerald & Co [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Issuance of common stock value under sales agreement							$ 30,000,000
2004 Stock Incentive Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted stock units vesting period			5 years
Stock options vesting description				Stock options granted generally vest over a period of five years from the date of grant, with 20% of the total grant vesting on the first anniversary of the option vesting commencement date and 1/48 of the remaining grant vesting each month thereafter.
Stock options vesting original months			48 months
Common stock available for future issuance under plan		90,125
Common stock subject to options outstanding				310,453
2004 Stock Incentive Plan [Member] | First Anniversary [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock options vesting, percentage			20.00%
2013 Equity Incentive Award Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted stock units vesting period		4 years
Stock options vesting description				Stock options granted generally vest over a period of four years from the date of grant, with 25% of the total grant vesting on the first anniversary of the option vesting commencement date and 1/48th of the original grant vesting each month thereafter for stock options granted upon hiring, and with 1/48th of the total grant vesting each month after the option vesting commencement date for any stock options granted after the hiring date.
Stock options vesting original months		48 months
Common stock available for future issuance under plan		500,000						1,500,000
Exercise price of option, percentage		100.00%
Common stock shares authorized				8,217,239
Common stock subject to options and restricted stock units outstanding				4,140,554
2013 Equity Incentive Award Plan [Member] | Stock Plan, Annual Increase of Shares 2014 to 2023 [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Increase in common stock		1,500,000
Percentage of common stock outstanding as-converted basis		4.00%
2013 Equity Incentive Award Plan [Member] | Maximum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Term of options from the grant date		10 years
2013 Equity Incentive Award Plan [Member] | Greater than 10% Stockholder [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted stock units vesting period		5 years
Exercise price of option, percentage		110.00%
Percentage of incentive stock option granted		10.00%
2013 Equity Incentive Award Plan [Member] | First Anniversary [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock options vesting, percentage		25.00%

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Stockholder's Equity - Summary of Common Stock Reserved for Future Issuance (Detail) - shares	Dec. 31, 2018	Jan. 01, 2018
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total common stock reserved for future issuances	9,311,000
Stock Options And RSUs [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total common stock reserved for future issuances	4,451,000
Equity Award Grants [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total common stock reserved for future issuances	3,350,000
Employees Stock Purchase Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total common stock reserved for future issuances	1,510,518	350,000

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Stockholder's Equity - Summary of Stock Option Activity (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Stock Option Outstanding, Number of shares, Beginning Balance	5,217,000
Stock Option Outstanding, Number of shares, Granted	1,744,000
Stock Option Outstanding, Number of shares, Exercised	0
Stock Option Outstanding, Number of shares, Forfeited	(2,816,000)
Stock Option Outstanding, Number of shares, Ending Balance	4,145,000	5,217,000
Stock Option Outstanding, Number of shares, Options vested and expected to vest—December 31, 2018	3,945,000
Stock Option Outstanding, Number of shares, Options exercisable—December 31, 2018	2,542,000
Stock Option Outstanding, Weighted Average Exercise Price per Share, Beginning Balance	$ 10.70
Stock Option Outstanding, Weighted Average Exercise Price per Share, Granted	3.34
Stock Option Outstanding, Weighted Average Exercise Price per Share, Exercised	0
Stock Option Outstanding, Weighted Average Exercise Price per Share, Forfeited	8.69
Stock Option Outstanding, Weighted Average Exercise Price per Share, Ending Balance	8.96	$ 10.70
Stock Option Outstanding, Weighted Average Exercise Price per Share, Options vested and expected to vest—December 31, 2018	8.88
Stock Option Outstanding, Weighted Average Exercise Price per Share, Options exercisable—December 31, 2018	$ 11.44
Stock Option Outstanding, Weighted Average Remaining Contractual Life, Outstanding	6 years 4 months 24 days	5 years 7 months 6 days
Stock Option Outstanding, Weighted Average Remaining Contractual Life, Options vested and expected to vest—December 31, 2018	7 years
Stock Option Outstanding, Weighted Average Remaining Contractual Life, Options exercisable—December 31, 2018	5 years 2 months 12 days
Stock Option Outstanding, Aggregate Intrinsic Value	$ 0	$ 913,000

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Stockholder's Equity - Summary of RSU Activity (Detail) - Restricted Stock Units [Member] - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Restricted Stock Units Outstanding, Number of shares, Beginning Balance	880
Restricted Stock Units Outstanding, Number of shares, Awarded	70
Restricted Stock Units Outstanding, Number of shares, Released	(402)
Restricted Stock Units Outstanding, Number of shares, Forfeited	(242)
Restricted Stock Units Outstanding, Number of shares, Ending Balance	306	880
Restricted Stock Units Outstanding, Weighted Average Grant Date Fair Value per Share, Beginning Balance	$ 5.33
Restricted Stock Units Outstanding, Weighted Average Grant Date Fair Value per Share, Awarded	2.29
Restricted Stock Units Outstanding, Weighted Average Grant Date Fair Value per Share, Released	4.57
Restricted Stock Units Outstanding, Weighted Average Grant Date Fair Value per Share, Forfeited	5.60
Restricted Stock Units Outstanding, Weighted Average Grant Date Fair Value per Share, Ending Balance	$ 5.41	$ 5.33
Restricted Stock Units Outstanding, Weighted Average Remaining Contractual Life	1 year	1 year 3 months 18 days
Restricted Stock Units Outstanding, Aggregate Intrinsic Value	$ 229	$ 3,606

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Stockholder's Equity - Schedule of Stock-Based Compensation Expense (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation	$ 6,842	$ 9,414	$ 11,131
Research and Development [Member]
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation	3,380	4,886	5,892
General and Administrative [Member]
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation	3,397	4,522	$ 5,239
Restructuring Charges [Member]
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation	$ 65	$ 6

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Stockholder's Equity - Assumptions Used for Determining Fair Value of Stock Options Using Black-Scholes Valuation Model (Detail)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]
Weighted-average volatility	78.10%	75.80%	71.90%
Weighted-average expected term (years)	6 years 2 months 12 days	6 years 2 months 12 days	5 years 9 months 18 days
Risk-free interest rate	2.60%	2.20%	1.50%
Expected dividend yield

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Stockholder's Equity - Assumptions Used for Determining Fair Value of Stock Purchase Rights Granted under Company's ESPP Using Black-Scholes Valuation Model (Detail)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Weighted-average volatility	78.10%	75.80%	71.90%
Weighted-average expected term (years)	6 years 2 months 12 days	6 years 2 months 12 days	5 years 9 months 18 days
Risk-free interest rate	2.60%	2.20%	1.50%
Expected dividend yield
Employees Stock Purchase Plan [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Weighted-average expected term (years)	6 months	6 months	6 months
Expected dividend yield
Employees Stock Purchase Plan [Member] | Minimum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Weighted-average volatility	66.50%	54.00%	45.40%
Risk-free interest rate	1.10%	0.47%	0.26%
Employees Stock Purchase Plan [Member] | Maximum [Member]
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Weighted-average volatility	93.70%	93.70%	104.50%
Risk-free interest rate	2.28%	1.10%	0.50%

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Restructuring Charges - Additional Information (Detail) - USD ($)			3 Months Ended	12 Months Ended
	Dec. 01, 2018	Apr. 24, 2017	Dec. 31, 2018	Dec. 31, 2018	Dec. 31, 2017
Restructuring Cost And Reserve [Line Items]
Restructuring charges				$ 1,851,000	$ 2,527,000
2018 Restructuring [Member]
Restructuring Cost And Reserve [Line Items]
Restructuring charges			$ 1,900,000
Percentage of reduction in workforce	75.00%
Restructuring plan, description				Under the 2018 restructuring plan, the Company recorded $1.9 million of restructuring charges consisting of one-time severance payments and other employee related costs, and other charges during the fourth quarter of 2018. Restructuring charges are included in operating expenses in the statement of operations. The restructuring plan is ongoing and the Company expects to complete the actions associated with the restructuring in the first quarter of 2019.
2017 Restructuring [Member]
Restructuring Cost And Reserve [Line Items]
Restructuring charges				$ 0	$ 2,500,000
Percentage of reduction in workforce		48.00%
Restructuring plan, description				Under the 2017 restructuring plan, the Company recorded $2.5 million in restructuring charges consisting of one-time severance payments and other employee related costs, and other charges during the year ended December 31, 2017. Restructuring charges are included in operating expenses in the statement of operations. The Company has substantially completed this plan and paid the restructuring cost at the end of the fourth quarter of 2017.

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Restructuring Charges - Summary of Restructuring Activity (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017
Restructuring And Related Activities [Abstract]
Balance as of December 31, 2017	$ 6
Costs incurred	1,851	$ 2,527
Less cash payments	(572)
Less non-cash settlements	(65)
Balance as of December 31, 2018	$ 1,220	$ 6

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Income Taxes - Additional Information (Detail) - USD ($)		3 Months Ended	12 Months Ended
	Dec. 22, 2017	Dec. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Operating Loss Carryforwards [Line Items]
Income tax provision (benefit)			$ (382,000)	$ (1,083,000)	$ 14,000
Decrease in valuation allowance			$ 19,600,000	$ 32,100,000
Federal corporate income tax rate			21.00%	35.00%	35.00%
Income tax benefit		$ (1,100,000)
Alternative minimum tax refundable period	12 months
Alternative minimum tax carryforwards			$ 1,500,000
Impact on income tax provision of unrecognized tax benefits, if recognized		15,900,000	16,200,000	$ 15,900,000
Significant changes in unrecognized tax benefits reasonably possible in following 12 months			0
Interest and penalties related to unrecognized tax benefits				15,000	$ 14,000
Income tax benefit resulting from lapse of statute of limitations			86,000
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued		$ 86,000	$ 0	$ 86,000
Internal Revenue Code [Member]
Operating Loss Carryforwards [Line Items]
Cumulative change in ownership percentage			5.00%
Minimum percentage of change in ownership of shareholders over rolling period			50.00%
Rolling period of ownership change			3 years
Federal [Member] | Tax Year 2018 [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carryforward			$ 228,600,000
Net operating loss carryforwards, indefinite carryforward			$ 39,100,000
Operating loss carryforwards, expiration year			2023
Federal [Member] | Orphan drug credit [Member]
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards, expiration year			2034
Aggregate tax credit carryforwards			$ 39,300,000
Federal [Member] | Research and Development Tax Credit Carryforwards [Member]
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards, expiration year			2025
Aggregate tax credit carryforwards			$ 25,400,000
State [Member]
Operating Loss Carryforwards [Line Items]
Net operating loss carryforward			$ 97,200,000
Operating loss carryforwards, expiration year			2028
State [Member] | Research and Development Tax Credit Carryforwards [Member]
Operating Loss Carryforwards [Line Items]
Aggregate tax credit carryforwards			$ 19,800,000
Tax credit carryforward description			California research and development credits have no expiration date.

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Income Taxes - Components of Income Tax Provision (Benefit) (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Current:
Federal	$ (383)	$ (1,084)	$ 13
State	1	1	1
Total	(382)	(1,083)	14
Deferred:
Income tax provision (benefit)	$ (382)	$ (1,083)	$ 14

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Income Taxes - Schedule of Reconciliation of Statutory Federal Income Tax Rate to Company's Effective Tax Rate (Detail)	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Income Tax Disclosure [Abstract]
Tax at statutory federal rate	21.00%	35.00%	35.00%
State tax—net of federal benefit	9.00%	1.00%	1.00%
Tax credits	18.00%	12.00%	8.00%
Stock compensation	(25.00%)	(7.00%)	(2.00%)
Change in valuation allowance	(13.00%)	90.00%	(42.00%)
Transaction costs	(4.00%)
Impact of corporate rate change on deferred taxes		(129.00%)
Other	(1.00%)	1.00%
Income tax (provision) benefit	5.00%	3.00%

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Income Taxes - Schedule of Net Deferred Tax Assets (Detail) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Deferred tax assets:
Net operating loss carryforwards	$ 63,011	$ 54,931
Accruals	733	643
Tax credit carryovers	65,719	63,406
Deferred revenue	778	30,259
Other	3,049	3,643
Gross deferred tax assets	133,290	152,882
Valuation allowance	$ (133,290)	$ (152,882)

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Income Taxes - Reconciliation of Unrecognized Tax Benefits (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Income Tax Disclosure [Abstract]
Balance at beginning of year	$ 16,658	$ 14,260	$ 10,022
Increase related to current year tax provision	628	2,398	4,238
Decrease related to prior year tax provision	(297)
Balance at end of year	$ 16,989	$ 16,658	$ 14,260

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Net Loss per Common Share - Outstanding Common Stock Equivalents Excluded from Computation of Diluted Net Loss per Common Share (Detail) - shares shares in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Outstanding shares of common stock equivalents	4,451	6,097	4,901
Options to purchase common stock [Member]
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Outstanding shares of common stock equivalents	4,145	5,217	4,325
Restricted Stock Units [Member]
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Outstanding shares of common stock equivalents	306	880	576

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Selected Quarterly Financial Data - Summary of Selected Quarterly Results from Operations (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Income Statement [Abstract]
Total revenue	$ 10,184	$ 19,518	$ 6,870	$ 7,849	$ 20,640	$ 5,106	$ 6,195	$ 6,213	$ 44,421	$ 38,154	$ 25,153
Operating expenses	15,200	13,727	11,758	13,781	12,395	16,131	21,630	28,971	54,466	79,127	128,540
Net income (loss)	$ (4,666)	$ 6,115	$ (3,976)	$ (5,574)	$ 9,463	$ (10,692)	$ (15,225)	$ (22,608)	$ (8,101)	$ (39,062)	$ (103,102)
Basic and diluted net income (loss) per common share	$ (0.12)	$ 0.16	$ (0.10)	$ (0.15)	$ 0.25	$ (0.28)	$ (0.40)	$ (0.61)	$ (0.21)	$ (1.04)	$ (3.14)

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Subsequent Events - Additional Information (Detail) - Redwood City, California - USD ($) $ in Millions	1 Months Ended
	Jan. 31, 2019	Oct. 31, 2018
Subsequent Event [Line Items]
Sub lease rentals expiration year		2020
Subsequent Event | Office Facility
Subsequent Event [Line Items]
Sublease rentals term	12 months
Sub lease rentals expiration year	2019
Aggregate sublease proceeds	$ 0.8