Commitments and Contingencies Lease Obligations In September 2015, the Company entered into a non-cancelable operating lease for its corporate headquarters comprising 38,109 of rentable square feet in a building in South San Francisco (the "Headquarters Lease"). The Headquarters Lease commenced on August 1, 2016 with a lease term of eight years . The Headquarters Lease provides for monthly base rent amounts escalating over the term of the lease. In addition, the Headquarters Lease provided a tenant improvement allowance (TIA) of up to $7.4 million , of which $1.9 million was to be repaid to the landlord in the form of additional monthly rent with interest applied. This additional monthly rent commenced in November 2016 when the entire TIA was utilized, and resulted in an increase of base rent of $0.4 million per year over the eight -year lease term. On May 2, 2018 , the Company entered into an amendment to the Headquarters Lease (the "Headquarters Lease Amendment") to relocate and expand its headquarters to 148,020 rentable square feet in a to-be-constructed building located in South San Francisco, California (the "New Premises"). The Headquarters Lease Amendment has a contractual term of ten years from the legal commencement date, which is the later of February 1, 2019 or the date that the premises are ready for occupancy. For accounting purposes, the lease commencement date was determined to be August 1, 2018, which was the date at which the Company obtained control over the property. The Company has an option to extend the lease term for a period of ten years by giving the landlord written notice of the election to exercise the option at least nine months, but not more than twelve months, prior to the expiration of the Headquarters Lease Amendment lease term. Under the terms of the Headquarters Lease, the Company was required to pay a security deposit of $0.5 million , which was increased to $1.5 million under the Headquarters Lease Amendment. This is recorded as other non-current assets in the accompanying condensed consolidated balance sheets. The Headquarters Lease Amendment provides for monthly base rent amounts escalating over the term of the lease. In addition, the Headquarters Lease Amendment provides a TIA of up to $25.9 million , of which $4.4 million , if utilized, would be repaid to the landlord in the form of additional monthly rent. The Company will also be required to pay its share of operating expenses for the New Premises. The total $7.4 million TIA under the 2015 Headquarters Lease was recorded as leasehold improvements and deferred rent liability on the condensed consolidated balance sheet under the Headquarters Lease. The Company is amortizing the deferred rent liability as a reduction of rent expense and the leasehold improvement through an increase of depreciation expense of leasehold improvements ratably over the remaining period of expected use. The portion of the TIA utilized to date under the Headquarters Lease Amendment was $4.4 million and has been recorded as leasehold improvements and deferred rent liability on the condensed consolidated balance sheet as of September 30, 2018 . The Company will amortize the deferred rent liability as a reduction of rent expense and the leasehold improvement through an increase of depreciation expense of leasehold improvements ratably over the period of expected use, which is expected to commence in April 2019. The Company recognizes rent expense on a straight-line basis over the non-cancelable lease term and records the difference between cash rent payments and the recognition of rent expense as a deferred rent liability. Where leases contain escalation clauses, rent abatements, and/or concessions such as rent holidays and landlord or tenant incentives or allowances, the Company applies them in the determination of straight-line rent expense over the lease term. The Company records tenant improvement allowances as deferred rent and associated expenditures as leasehold improvements that are being amortized over the shorter of their estimated useful life or the term of the lease. The Company does not assume renewals in its determination of the lease term unless the renewals are deemed by management to be reasonably assured at lease inception. As of September 30, 2018 , the future minimum lease payments under the Headquarters Lease and subsequently the Headquarters Lease Amendment are as follows (in thousands): Year Ended December 31: 2018 (three months) $ 658 2019 4,941 2020 9,097 2021 9,716 2022 10,056 2023 and later 71,290 $ 105,758 Rent expense excluding amortization of leasehold improvements was $2.4 million and $3.7 million for the three and nine months ended September 30, 2018 , and $0.4 million and $1.6 million for the three and nine months ended September 30, 2017 , respectively. Indemnification In the ordinary course of business, the Company may provide indemnifications of varying scope and terms to vendors, lessors, business partners, board members, officers, and other parties with respect to certain matters, including, but not limited to, losses arising out of breach of such agreements, services to be provided by the Company, negligence or willful misconduct of the Company, violations of law by the Company, or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with directors and certain officers and employees 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, officers or employees. No demands have been made upon the Company to provide indemnification under such agreements, and thus, there are no claims that the Company is aware of that could have a material effect on the Companys balance sheet, statements of comprehensive loss, or statements of cash flows. Commitments Effective September 2017, the Company entered into a Development and Manufacturing Services Agreement as amended (DMSA) with Lonza Sales AG (Lonza) for the development and manufacture of biologic products. Under the DMSA, the Company will execute purchase orders based on project plans authorizing Lonza to provide development and manufacturing services with respect to certain of the Company's antibody and enzyme products, and will pay for the services provided and batches delivered in accordance with the DMSA and project plan. Unless earlier terminated, the Lonza agreement will expire on September 6, 2022. As of September 30, 2018 , the Company had several purchase orders for biological product development and manufacturing costs totaling $13.0 million . The activities under these purchase orders are expected to be completed by April 2024 . During the three and nine months ended September 30, 2018 , the Company incurred costs of $1.4 million and $2.6 million , respectively, and made payments of $1.3 million and $2.0 million , respectively, for the development and manufacturing services rendered under the agreement. As of September 30, 2018 , the Company had total non-refundable purchase commitments of $7.7 million under the DMSA.