Commitments and Contingencies

The Company is not currently involved in any material legal proceedings. The Company may become involved in various legal proceedings and claims that arise in the ordinary course of business. Such matters are subject to uncertainty and there can be no assurance that such legal proceedings will not have a material adverse effect on its business, results of operations, financial position or cash flows.

Operating Leases

The Company has two noncancelable operating leases consisting of administrative and research and development office space for its Emeryville, California headquarters and former headquarters in San Diego, California that expire in November 2022 and March 2020, respectively. The base rent for the Emeryville headquarters is subject to a 3% increase each year for the duration of the lease. Under the terms of the lease, as amended, the Company received an option to expand into additional space under certain conditions, as well as a renewal option for an additional five year term upon the expiration date. The Company will also pay a portion of common area and pass-through expenses in excess of base year amounts.

In September 2017, the Company completely vacated its former headquarters in anticipation of subleasing the available space, which was subleased in October 2017 to an unrelated third party pursuant to which it will rent the vacated space through the remainder of the Company’s original lease term. Accordingly, the Company recognized a cease-use liability of $1.1 million. The fair value of the cease-use liability was calculated based on the present value of the remaining net cash flows related to the Company’s continuing obligations under the lease less the present value of sublease rental payments to be received under the sublease agreement over the term of the sublease. The net cash flows were discounted using the Company’s estimated incremental borrowing rate, a Level 2 input within the fair value hierarchy. Additionally, the Company derecognized the related deferred rent liability in the amount of $0.5 million. These adjustments resulted in a loss on lease of $0.6 million, which has been included in general and administrative expenses in the consolidated statements of operations. As of December 2017, accrued operating lease obligations related to the cease-use liability was $0.9 million, of which $0.5 million was long-term.

The Company recognizes rent expense on a straight-line basis over the noncancelable term of its operating leases. Rent expense for 2017, 2016 and 2015 was $1.8 million, $1.9 million and $1.5 million, respectively.

Future minimum operating lease payments, net of sublease income, were as follows (in thousands):



	Gross Lease Payments		Sublease Income			Net Lease Payments
2018	$	1,896	$	(500	)	$	1,396
2019	1,955		(576		)	1,379
2020	1,234		(148		)	1,086
2021	1,004		—			1,004
2022	946		—			946
Total	$	7,035	$	(1,224	)	$	5,811