Kodiak Sciences Inc. Notes to Consolidated Financial Statements (in thousands, except share and per share data) 95 6. Marketable Securities The marketable securities are classified as available-for-sale and consist of U.S. treasury securities. The fair value measurement data for marketable securities is obtained from independent pricing services. The Company validates the prices provided by the third-party pricing services by understanding the valuation methods and data sources used and analyzing the pricing data in certain instances. The following table summarizes the marketable securities (in thousands): As of December 31, 2022 Amortized Cost Unrealized Gains Unrealized Losses Fair Value U.S. treasury securities............................................................ $ 289,807 $ — $ (1,307) $ 288,500 Total ........................................................................................ $ 289,807 $ — $ (1,307) $ 288,500 The Company had no marketable securities as of December 31, 2021. All marketable securities held as of December 31, 2022 had effective maturities of less than one year. The unrealized losses for marketable securities related to changes in interest rates. No allowance for credit losses was recorded and no impairment losses were recognized for the year ended December 31, 2022. The Company did not realize any gains or losses recognized on the sale or maturity of available-for-sale debt securities during the year ended December 31, 2022 and as a result, the Company did not reclassify any amounts out of accumulated comprehensive loss. 7. Derivatives Starting 2022, the Company uses certain derivative instruments, that are not designated as hedges for accounting purposes, which include foreign currency forward contracts. The Company uses standard models with market-based inputs which include exchange rate curves of the foreign currency for translating future cash flows. Although these derivatives do not qualify for hedge accounting, the Company believes that such instruments are closely correlated with the underlying exposure, thus managing the associated risk. As of December 31, 2022, these derivatives have been net settled. 8. Commitments and Contingencies Leases Palo Alto, California Leases In June 2020, the Company entered into lease agreements for two buildings at 1200 and 1250 Page Mill Road in Palo Alto, California, which are now the Company’s U.S. corporate offices. The facilities are approximately 82,662 square feet and 72,812 square feet, respectively and include office and laboratory space. For 1200 Page Mill Road, the monthly rent during the initial 6.5-year term will be approximately $0.6 million, with annual year-over-year increases of 3% plus certain operating expenses and taxes and total rent abatement of approximately $7.2 million. The Company has an option to extend the lease term for a period of 6.5 years. For 1250 Page Mill Road, the monthly rent during the initial 13-year term will be approximately $0.5 million, with annual year-over-year increases of 3% plus certain operating expenses and taxes and total rent abatement of approximately $6.3 million. The Landlord will provide a tenant improvement allowance of approximately $1.2 million and $10.6 million for each building, respectively. The Company has two options to extend the lease term for a period of 5 years each. The Company determined that the renewal options were not reasonably certain at lease inception for the two buildings. The Company executed a $10.9 million cash-collateralized letter of credit, which was subsequently reduced to $6.2 million as a result of meeting certain reduction requirements specified therein in 2020. The cash collateralizing the letter of credit is classified as restricted cash on the Company’s consolidated balance sheet. Under ASC 842, the Company classified these leases as operating leases and recorded right-of-use assets and lease liabilities on the lease commencement date. As of December 31, 2022, the Company received a tenant improvement allowance of $10.2 million. The Company continues to lease office and laboratory space at 2631 Hanover Street in Palo Alto, California. The Company entered into a lease agreement in January 2013 which was amended in March 2016 and extended the lease term until October 2023. The Company classified this lease as an operating lease and recorded a right-of-use asset and lease liability.