Commitments

San Diego Leases

In April 2013, the Company entered into a lease for 26,500 square feet of office space located in San Diego, California (the "San Diego Lease"). The term of the San Diego Lease commenced on December 1, 2013. The initial term of the San Diego Lease is ten years, with a right to terminate on December 1, 2019 and a right to extend the term by five years, subject to specified conditions. In June 2015, the Company amended the San Diego Lease to increase the total leased space to 31,207 square feet and occupy the entire building. The commencement of the amended San Diego Lease was in January 2016. As of December 31, 2018, rent payments under the San Diego Lease include base rent with an annual increase of approximately 3 percent, and additional monthly fees to cover the Company’s share of certain facility expenses, including utilities, property taxes, insurance and maintenance. The Company has capitalized $3.4 million of total tenant improvements within fixed assets on the consolidated balance sheet related to the entire building and has recorded a corresponding increase to deferred rent.

In October 2016, the Company entered into an office lease (the “new Lease”) for a second property located in San Diego, California. The total space under the new Lease is approximately 51,000 square feet. The Company is using the facility for office, manufacturing and research and development purposes. The term of the new Lease commenced on June 1, 2017. The initial term of the new Lease is ten years, with a right to terminate on November 30, 2023, subject to specified conditions.

The base rent adjusts periodically throughout the term of the new Lease. As of December 31, 2018, rent payments under the San Diego Lease include base rent with an annual increase of approximately 3 percent, and additional monthly fees to cover the Company’s share of certain facility expenses, including utilities, property taxes, insurance and maintenance. In addition, the Company has paid a security deposit of $95,000. The Company has capitalized $2.3 million of reimbursable tenant improvements to the new office which has been recorded as a leasehold improvement within fixed assets on the consolidated balance sheet, offset by a corresponding amount recorded in deferred rent.

Plymouth Meeting Lease

In March 2014, the Company entered into a lease (the "Lease") for 20,858 square feet of office space located in Plymouth Meeting, Pennsylvania. The Company occupied the space in June 2014. The initial term of the Lease was 11.5 years, with a right to extend the term by five years, subject to specified conditions.

The base rent adjusts periodically throughout the term of the Lease. As of December 31, 2018, rent payments under the Lease include base rent with an annual increase of approximately 2 percent, and additional monthly fees to cover the Company’s share of certain facility expenses, including utilities, property taxes, insurance and maintenance. In addition, the Company has paid a security deposit of $49,000. In July 2015, the Company amended the Lease to increase the total leased space to 27,583 square feet. The Company has capitalized $2.6 million of tenant improvements to the Plymouth Meeting office within fixed assets on the consolidated balance sheet, offset by a corresponding amount recorded in deferred rent.

In June 2017, the Company entered into another amendment to the Lease to increase the total leased space to 57,361 square feet and extend the lease term through December 31, 2029. In connection with this amendment, the Company has paid the landlord an additional security deposit of $75,000.

Rent expense was $3.2 million, $2.4 million and $1.6 million for the years ended December 31, 2018, 2017 and 2016, respectively. The terms of the leases provide for rental payments on a monthly basis on a graduated scale. The Company recognizes rent expense on a straight-line basis over the lease period. Future minimum lease payments under non-cancelable operating leases as of December 31, 2018 are as follows:



Year ending December 31,
2019	$	3,756,000
2020	3,891,000
2021	3,979,000
2022	4,052,000
2023	4,023,000
Thereafter	15,952,000
Total	$	35,653,000

In the normal course of business, the Company is a party to a variety of agreements pursuant to which it may be obligated to indemnify the other party. It is not possible to predict the maximum potential amount of future payments under these types of agreements due to the conditional nature of the Company's obligations and the unique facts and circumstances involved in each particular agreement. Historically, payments made by us under these types of agreements have not had a material effect on the Company's business, consolidated results of operations or financial condition.