Commitments and Contingencies Operating Leases The Company leases its headquarters and laboratory facilities in South San Francisco, California under a non-cancelable lease agreement for approximately 59,000 square feet. The lease began in June 2015 and ends in March 2026 and contains extension of lease term and expansion options. The Company had deposits of $603,000 included in long-term assets as of September 30, 2019 and December 31, 2018 , restricted from withdrawal and held by a bank in the form of collateral for an irrevocable standby letter of credit held as security for the lease of the South San Francisco facility. The Company also leases laboratory and office space in Austin, Texas under a lease that expires in January 2029 and includes options for expansion and early termination in 2025. The Company provided a cash security deposit for this lease of $139,000 , included in other assets in the Companys condensed balance sheets as of September 30, 2019 and December 31, 2018 . The Company determined its operating lease liabilities for the two operating leases mentioned above using a discount rate of 7.53% based on the rate that the Company would have to pay to borrow on a collateralized basis for a similar lease an amount equal to the lease payments in a similar economic environment. Operating lease liabilities along with the associated right-of-use assets as of September 30, 2019 are disclosed in the accompanying condensed balance sheets. After the adoption of ASC 842, the Company classified its deferred rent for tenant improvements with its operating lease right-of-use assets on the condensed balance sheets. Future minimum lease payments under non-cancelable operating leases as of September 30, 2019 are as follows (in thousands of dollars): Year Ending December 31, Remainder of 2019 $ 572 2020 2,332 2021 2,401 2022 2,472 2023 2,543 Thereafter 6,841 Total minimum lease payments $ 17,161 The Company recognizes operating lease expense on a straight-line basis over the non-cancelable lease period. Operating lease expense was $474,000 and $476,000 for the three months ended September 30, 2019 and 2018 , respectively and $1.4 million for each of the nine months ended September 30, 2019 and 2018 . Finance Lease The Company entered into a finance lease in December 2016 for $1.2 million of laboratory equipment which ends in December 2019. The Company paid an upfront amount of $330,000 and the present value of the total future minimum lease payments at the inception of the lease was $874,000 . As of September 30, 2019 , $79,000 of future minimum lease payments remained, and are due in 2019. The interest expense and related amortization of laboratory equipment are recorded in the statements of operations for nominal amounts. After the adoption of ASC 842, this finance lease remained a finance lease and the Company did not change the discount rate to determine the lease liability nor the amortization life of the related right-of-use assets. Contingencies From time to time, the Company may be involved in legal proceedings arising in the ordinary course of business. The Company assesses contingencies to determine the degree of probability and range of possible loss for potential accrual in its financial statements. An estimated loss contingency is accrued in the financial statements if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company believes there is no litigation pending that could have, either individually or in the aggregate, a material adverse effect on the Companys financial statements.