Quarterly report pursuant to Section 13 or 15(d)

Lease Agreements

Lease Agreements
3 Months Ended
Mar. 31, 2017
Lease Agreements  
Lease Agreements

11.Lease Agreements


We currently lease our research and office space under a noncancelable lease agreement with our landlord, HCP BTC, LLC (formerly known as Slough BTC, LLC) which expires in 2018. The lease term provides for renewal option for up to two additional periods of five years each. In April 2017, we notified our landlord that we exercised our option to extend the term of our lease and negotiate certain terms of our lease agreement.


In December 2014, we entered into a sublease agreement with an unrelated third party to occupy approximately 57,000 square feet of our research and office space. In connection with this sublease, we recognized a loss on sublease of $9.3 million during the fourth quarter of 2014. In February 2017, we entered into an amendment to the sublease agreement to increase the subleased research and office space for an additional 9,328 square feet under the same term of the sublease, and recognized an additional loss on sublease of $495,000. We expect to receive approximately $2.5 million in future sublease income (excluding our subtenant’s share of facilities operating expenses) over the remaining term of the sublease. We record rent expense on a straight-line basis for our lease, net of sublease income. For our sublease arrangement which we classified as an operating lease, our loss on the sublease was comprised of the present value of our future payments to our landlord less the present value of our future rent payments expected from our subtenant over the term of the sublease.  The liability arising from this sublease agreement was determined using a credit-adjusted risk-free rate to discount the estimated future net cash flows.  The changes in the liability related to the sublease agreement for the three months ended March 31, 2017 were as follows (in thousands):







Balance at January 1, 2017





Increase in deferred liability





Accretion of deferred liability





Amortization of deferred liability





Balance at March 31, 2017