Commitments and Contingencies

12 Months Ended

Dec. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

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.

See Note 3 for the Company’s commitments under collaboration, license and purchase agreements.

Operating Leases

In October 2018, the Company entered into a new lease agreement for new headquarters and amended its existing headquarter lease, both with the same landlord. The new lease agreement provides for 37,307 square feet of office and laboratory space also located in Emeryville, California under a noncancellable lease that expires on June 30, 2027 and has a renewal option for an additional five years. The cash expected to be paid for base rent over the term of the new lease is approximately $15.3 million beginning in June 2019. The lease provides for lease incentives for tenant improvements of $3.1 million, a rent free period, and scheduled rent increases over the term of the lease. The Company is also required to pay its proportionate share of costs related to common area maintenance, property taxes, and other operating costs. Upon completion of its relocation to its new headquarters, which is expected to be by the end of the second quarter of 2019, the lease agreement for its existing headquarters will be terminated.

The Company was provided access to the leased space upon lease execution and recorded a $3.1 million lease incentive receivable within other current assets, with a corresponding lease incentive obligation as a component of deferred rent, in accrued liabilities or long-term liabilities, as appropriate.

The Company also has a noncancellable operating lease expiring in March 2020 for office space in San Diego, California, which previously served as the Company’s headquarters prior to its relocation to Emeryville, California. In 2017, the Company vacated the leased premises upon entering into a noncancellable sublease agreement with a sublessee for the remainder of the Company’s lease term. Because amounts to be received under the sublease were less than the amounts the Company is required to pay its lessor, the Company recorded a loss on lease of $0.6 million, net of adjustments to derecognize the related deferred rent liability, as a component of general and administrative expenses in the consolidated statements of operations. As of December 31, 2018, accrued liabilities related to this lease arrangement was $0.5 million, of which $0.1 million was long-term.

Rent expense for 2018, 2017 and 2016 was $1.6 million, $1.8 million and $1.9 million, respectively.

Future minimum rental payments under the Company’s noncancellable operating leases, net of sublease rental income, were as follows (in thousands):


	Gross Rental Payments		Sublease Rental Income		Net Rental Payments
2019	$	1,777	$	(576)	$	1,201
2020	1,788		(148)		1,640
2021	1,839		—		1,839
2022	1,894		—		1,894
2023	1,951		—		1,951
Thereafter	7,296		—		7,296
Total	$	16,545	$	(724)	$	15,821