CYTOKINETICS INC Leases Disclosure

Note 6 — Leases

The Lease for our existing facilities expires in 2021 and includes rental payments on a graduated scale and payment of certain operating expenses. As of December 31, 2019, the remaining lease term is 1.5 years, the discount rate used to determine the operating lease liability was 9%. In July 2019, we amended the lease agreement in connection with our leasing of additional premises within the same office location (the “Expansion Lease”) for 9,530 square feet of an office space. The Expansion Lease has an initial term of 39 months, and is expected to commence in January 2020. The total commitment of undiscounted lease payments for the Expansion Lease was $1.3 million as at December 31, 2019.

In July 2019, we entered into a lease agreement for approximately 234,892 square feet of office and laboratory space at a facility located in South San Francisco, California (the “Oyster Point Lease”). The lease has an initial term of twelve years, and is expected to commence in September 2021. We have two consecutive five-year options to extend the lease. Subject to rent abatement for the first two months of the lease, we will be required to pay $5.45 per square foot for 159,891 square feet for the first twelve months of the lease term, which will increase at a rate of 3.5% per year. After the first twelve months of the lease, rent will be payable on the entire leased square footage. A refundable security deposit of $5.1 million is also required as part of the lease. We paid fifty percent of the security deposit amount by January 1, 2020 and the remaining fifty percent is due in January 2021. The landlord will provide a tenant improvement allowance of $34.1 million for costs relating to the initial design and construction of the improvements. We will pay certain operating costs of the facility and have certain rights to sublease under the agreement. The total commitment of undiscounted lease payments for this lease was $217.7 million at December 31, 2019.

The Company has not recognized a right-of-use asset or aggregate lease liability as of December 31, 2019 for either the Expansion Lease or the Oyster Point Lease as we did not control the underlying assets at any time in the period ended December 31, 2019.

The undiscounted future non-cancellable lease payments under the lease agreements as of December 31, 2019 is as follows (in thousands):

As of December 31, 2018, future minimum lease payments under noncancelable operating leases were $4.7 million in 2019, $4.8 million in 2020 and $2.5 million in 2021.

Cash paid for amounts included in the measurement of lease liabilities for the year ended December 31, 2019 was $5.0 million and was included in net cash used in operating activities in our consolidated statements of cash flows.

Rent expenses were $5.1 million and $5.0 million for 2019 and 2018, respectively.