Commitments and Contingencies

Operating Lease

In July 2015, we entered into a new operating lease agreement (the "Lease") for office and laboratory space in San Diego, California, for a term of 96 months from the lease commencement date, and moved the Company's headquarters into this new space in May 2016. In conjunction with the Lease, we received $1.4 million from our landlord in August 2015 for assistance with costs associated with the relocation of our corporate headquarters. These funds were received for a specific and limited purpose, and therefore were classified as restricted cash and tenant incentive obligation on the Company's balance sheet. The restricted cash balance was zero and $1.3 million as of December 31, 2016 and 2015, respectively. In addition, the Lease provided a tenant improvement allowance of up to $8.5 million, which was to be used for non-structural leasehold improvements at the new facility. The improvements at the new facility were complete in the second half of 2016, with approximately $8.2 million of the allowance having been used. Under the lease, any unused tenant improvement allowance up to $0.4 million could be used to offset future cash rent. The $0.3 million unused tenant improvement allowance was applied as a credit against future rent payments. The $1.4 million tenant incentive and $8.2 million tenant improvement allowance were classified as deferred rent on the Company's balance sheet and are amortized against rent expense on a straight-line basis over the term of the lease, which commenced upon lease inception.

Previous to moving into our new Company headquarters in May 2016, the Company leased separate office and laboratory space in San Diego, California for use as the Company's corporate headquarters and research facility under an operating lease agreement ("Prior Lease"). The Prior Lease commenced in July 2010 and expires in June 2017. The Prior Lease was amended in November 2012 to increase rented space ("the Additional Space"). Early termination rights were provided with respect to a portion of the space under the Prior Lease after the 60th month of the lease, on condition of at least 9 months prior written notice. No early termination rights were available for the Additional Space.

In October 2015, we provided written notice to our landlord of our election to early terminate the Prior Lease. The effective date of termination of the Prior Lease was June 30, 2016. Termination fees associated with the early termination of the Lease were not material. The Additional Space occupied in conjunction with the amendment of the Prior Lease in November 2012 expires in June 2017. The Additional Space was sublet by the Company in August 2016 for a period extending through the June 2017 expiration of the Prior Lease term. Future sublease income of $0.2 million will be received through the expiration of this sublease agreement in June 2017.

Rent expense for the years ended December 31, 2016, 2015 and 2014 was approximately $1.2 million, $0.6 million and $0.7 million, respectively. We account for the difference between the minimum lease payments and the straight-line amount as deferred rent. Deferred rent under the Lease, which is included in other long-term liabilities, was approximately $10.1 million and zero at December 31, 2016 and 2015, respectively. Deferred rent under the Prior Lease was zero and $0.4 million at December 31, 2016 and 2015, respectively. In connection with the exit and subsequent sublet of the Additional Space, we recorded a liability, which is included in other current liabilities, for unused office space beginning August 2016. As of December 31, 2016, unused office liability was approximately $0.2 million and will amortize against rent expense through the expiration of the Prior Lease term in June 2017. We also pay property taxes, maintenance and insurance, which are expensed as incurred.

The future minimum payment summary below includes amounts payable over the remaining period of the Lease and the Prior Lease.

As of December 31, 2016, aggregate future annual minimum lease payments for our operating leases are as follows (in thousands):




2017	$	2,330
2018	2,576
2019	2,654
2020	2,733
2021	2,815
Thereafter	6,892
	$	20,000

License Agreements

We have license agreements with third parties that require us to make annual license maintenance payments and future payments upon the success of licensed products that include milestones and/or royalties. Minimum future payments over the next five years are not material.