Kodiak Sciences Inc. Notes to Consolidated Financial Statements (in thousands, except share and per share data) 97 Ursus Facility In August 2020, the Company and its wholly owned subsidiary Kodiak Sciences GmbH entered into a manufacturing agreement with Lonza Ltd (“Lonza”) for the clinical and commercial supply of the Company’s antibody biopolymer conjugate drug substance which included a custom-built manufacturing facility. The manufacturing agreement has an initial term of 8 years, and the Company has the right to extend the term up to a total of 16 years. The Company and Lonza each have the ability to terminate this agreement upon the occurrence of certain events. In April 2021, the agreement was amended to provide for greater manufacturing flexibility, to define a comprehensive mandate as an antibody biopolymer conjugates manufacturing facility to be used for the Company’s antibody biopolymer conjugates pipeline, at clinical as well as commercial scales, across a broad capacity range under the tight quality controls required for ophthalmology and retinal medicines, and to allow for future process and equipment changes as needed. The Company concluded that this agreement contained an embedded lease as the custom-built manufacturing suite would be dedicated for the Company’s use. On January 31, 2023, the custom-built manufacturing suite was commissioned as a cGMP facility. The consideration was allocated to lease and non-lease components as this agreement contained a significant service component (manufacturing services). Under ASC 842, the Company classified the lease portion as an operating lease and recorded a right-of-use asset and lease liability on the lease commencement date. Fixed assets of $81.7 million, in leasehold improvements and machinery and equipment, were placed in service and capitalized as of January 31, 2023. In October 2023, payment was made for the remaining $26.8 million of these fixed assets. The maturities of the operating lease liabilities, including the Ursus Facility lease, as of December 31, 2024 were as follows (in thousands): Year ending December 31, As of December 31, 2024 2025 .............................................................................................................................................. $ 14,910 2026 .............................................................................................................................................. 16,537 2027 .............................................................................................................................................. 9,809 2028 .............................................................................................................................................. 8,606 2029 .............................................................................................................................................. 8,832 Thereafter...................................................................................................................................... 29,931 Total undiscounted lease payments .............................................................................................. 88,625 Less: imputed interest................................................................................................................... (18,280) Total operating lease liabilities..................................................................................................... $ 70,345 The minimum lease payments above do not include any related common area maintenance charges or real estate taxes. The operating lease expenses for the years ended December 31, 2024, 2023 and 2022 were $13.0 million, $13.2 million and $12.8 million, respectively. Variable lease expenses, including common area maintenance charges and real estate taxes, for the years ended December 31, 2024, 2023 and 2022 were $3.3 million, $3.6 million and $3.1 million, respectively. The weighted-average remaining lease terms and weighted-average discount rates were as follows: December 31, 2024 December 31, 2023 Weighted-average remaining lease term (in years)............................................. 6.8 7.5 Weighted-average discount rate.......................................................................... 6.8% 6.8%