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Build-to-Suit Lease
12 Months Ended
Dec. 31, 2017
Leases Operating [Abstract]  
Build-to-Suit Lease

7. Build-to-Suit Lease

In March 2017, the Company entered into an operating facility lease agreement for approximately 34,500 rentable square feet located at 1020 Marsh Road, Menlo Park, California and for approximately 17,400 rentable square feet located at 1060 Marsh Road.  In September 2017, the Company opted out of its intent to occupy 1060 Marsh Road.  The Company’s corporate headquarters are located at 1020 Marsh Rd.  The Company began occupying 1020 Marsh Rd in August 2017. The lease has a term of 86 months from the commencement date as defined in the lease agreement with the Company’s option to extend the term of the lease for an additional five years. The Company is obligated to make lease payments totaling approximately $20.0 million over the initial term of the lease. In connection with this lease, the landlord is providing a tenant improvement allowance of approximately $1.9 million for the 1020 Space, for costs associated with the design, development and construction of the Company’s improvements. The Company is obligated to fund all costs incurred in excess of the tenant improvement allowance. The Company provided the Landlord with a letter of credit to secure its obligations under the lease in the initial amount of approximately $2.4 million, reported as restricted cash on the balance sheet, which is subject to reductions in future years if certain financial hurdles are met.

Under the terms of the lease agreement, the Company has indemnified the landlord during the construction period.  Accordingly, for accounting purposes, the Company has concluded that it is the deemed owner of the building during the construction period and the Company capitalized approximately $8.9 million within property and equipment and recognized an $5.4 million corresponding build-to-suit obligation in non-current liabilities in the consolidated balance sheet as of December 31, 2017. Of the $8.9 million, approximately $3.5 million has been recorded as a build-to-suit asset related to construction costs incurred as of December 31, 2017.