4. COMMITMENTS AND CONTINGENCIES Operating Leases 2018 Operating Lease. In February 2018, as amended in March 2018, the Company entered into a non-cancelable operating lease for its new facility in San Diego, California. The lease has an initial term of seven years and the Company has an option to extend the term of the lease for an additional five years and has a termination option subject to early termination fees. The lease is subject to base lease payments and additional charges for common area maintenance and other costs and includes certain lease incentives and tenant improvement allowances. Rent expense is being recognized on a straight-line basis over the term of the lease. Under the terms of the lease, the Company provided the lessor with an irrevocable letter of credit in the amount of $0.5 million. The lessor is entitled to draw on the letter of credit in the event of any default by the Company under the terms of the lease. 2013 Operating Lease. In July 2013, as amended in 2015 and March 2017, the Company entered into a non-cancelable operating lease for laboratory facilities and office space in San Diego, California. The lease expires in April 2020 and is subject to charges for common area maintenance and other costs. The Company has an early termination option subject to at least five months prior written notice and a termination fee of two months base rent and the unamortized portion of any leasing costs, abated rent and any other lease concessions. In addition, the Company has an option to extend the term of the lease for two years. Rent expense is being recognized on a straight-line basis over the term of the lease. Future Minimum Payments . As of June 30, 2018, future minimum payments under the non-cancellable operating leases were as follows (in thousands): Year ending December 31, Minimum Principal Payments 2018 (6 months) $ 286 2019 1,189 2020 1,170 2021 1,173 2022 1,208 Thereafter 3,395 Total $ 8,421 Litigation From time to time, the Company may be subject to various claims and suits arising