Commitments and Contingencies

12 Months Ended

Dec. 31, 2015

10. Commitments and Contingencies

Sublease

In September 2013, the Company entered into a sublease agreement for its office space with related parties (see Note 12), with a term ending on November 30, 2016. As part of an amendment to the sublease agreement entered into in December 2014, the Company increased the amount of office space to be subleased and agreed to new monthly sublease terms commencing in January 2015. On August 14, 2015, the Company further amended its sublease agreement to increase the square footage of the space and to extend the term of the sublease to November 2019. Effective December 1, 2015, the Company further amended its sublease agreement to increase the square footage and agreed to new monthly sublease terms. Rent expense under operating subleases was $119 and $66 for the years ended December 31, 2015 and 2014, respectively. The Company recognizes rent expense on a straight line basis over the sublease period and has accrued for rent expense incurred but not yet paid.

As of December 31, 2015, future minimum lease payments under the sublease were as follows:


Years Ending December 31,
2016	$	237
2017		263
2018		268
2019		251
2020		—
Total	$	1,019

Indemnification Agreements

In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its board of directors that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. To date, the Company has not incurred any material costs as a result of such indemnifications. The Company does not believe that the outcome of any claims under indemnification arrangements will have a material effect on its financial position, results of operations or cash flows, and it has not accrued any liabilities related to such obligations in its consolidated financial statements as of December 31, 2014 or 2015.

Supply Agreement

In January 2015, the Company executed a clinical and commercial supply agreement with a third party for the manufacture and assembly of certain components for the product applicator that the Company intends to use to dispense A-101 in Phase 3 clinical trials and for the commercial drug product. The agreement has a term of three years and automatically renews for consecutive one-year terms. If the agreement is terminated by the Company without cause or by the third party for cause prior to the FDA’s approval of A-101, the Company will owe a termination fee equal to $375. If the agreement is terminated by the Company without cause or by the third party for cause after the FDA approval of A-101, the Company will owe a termination fee equal to $275. The Company’s obligation to pay the termination fee expires after the third anniversary date of the FDA’s approval of A-101.