Commitments and Contingent Liabilities

Leases

We rent laboratory and office space under non-cancelable operating leases. These lease agreements contain various clauses for renewal at our option and escalation clauses. Rental expense under these leases, net of tenant improvement reimbursements, amounted to $6.0 million, $6.0 million and $7.1 million for the years ended December 31, 2017, 2016 and 2015, respectively.

We provided our landlord a standby letter of credit of $2.9 million as security for our leases. We are not required to maintain any cash collateral for the standby letter of credit.

As of December 31, 2017, minimum rental commitments under non-cancelable leases, for each of the next five years and total thereafter were as follows (in thousands):



2018	$	11,295
2019	11,770
2020	12,077
2021	12,392
2022	14,447
Thereafter	33,891
	$	95,872

In addition to rent, the leases may require us to pay additional amounts for taxes, insurance, maintenance and other operating expenses.

Program license agreements

We have entered into various cancelable license agreements for certain technology. None of our lead product candidates utilize technology covered by these licenses. Under the terms of these license agreements, we could be required to make clinical development, regulatory and sales-based milestone payments of up to $1.6 million, $5.4 million and $3.7 million, respectively, to the licensors.

The license agreements also require us to remit royalties in amounts ranging from 0.5% to 2.5% based on net sales of products utilizing the licensed technology. We are also required to make payments in amounts ranging from 7.0% to 25.0% for non-royalty income received from any sublicense of the rights granted to us under the agreements.

Milestone payment agreements

We entered into an agreement with a service provider to receive discounted upfront labor costs for a defined program in consideration of a milestone payment in five years from the effective date, as defined in the agreement. During the year ended December 31, 2016, we accrued a milestone payment of $4.1 million, which was paid during the year ended December 31, 2017. No other amounts are due to the service provider under the terms of the agreement.

Legal contingencies

From time to time, we may be involved in disputes and legal proceedings in the ordinary course of business. These proceedings may include allegations of infringement of intellectual property, employment or other matters. We do not have any ongoing legal proceedings that, based on our estimates, could have a material effect on our consolidated financial statements.