Kodiak Sciences Inc. Notes to Consolidated Financial Statements 93 The tax effects of temporary differences that give rise to significant components of the deferred tax assets are as follows (in thousands): December 31, 2025 2024 Deferred tax assets: ............................................................................ Net operating loss carryforwards $ 179,757 $ 146,537 ...................................................................................................... Intangible assets 11,891 11,902 .................................................................... Research and development tax credits 37,193 32,641 ...................................................................................... Stock-based compensation 32,708 27,904 .................................................................................................................. Accruals 1,569 1,085 .......................................................................................... Operating lease liability 11,634 13,748 ...................................................................................... Sec. 174 Capitalized R&D 21,312 23,683 ............................................................................ Total gross deferred tax assets 296,064 257,500 ............................................................................................ Valuation allowance (288,065) (247,216) ........................................................................................ Net deferred tax assets 7,999 10,284 Deferred tax liabilities: ........................................................................... Operating lease right-of-use asset (6,891) (8,822) .......................................................................................... Property and equipment (1,108) (1,462) ....................................................................... Total gross deferred tax liabilities (7,999) (10,284) ................................................................................ Total net deferred tax assets $ — $ — The Company has recorded a full valuation allowance against its net deferred tax assets due to the uncertainty as to whether such assets will be realized. The net change in the total valuation allowance for the years ended December 31, 2025 and 2024, was an increase of approximately $40.8 million and a decrease of $126.3 million, respectively. The decrease in the year ended December 31, 2024 was due to the expiration of a foreign intangible asset. As required under ASU 2023-09, the Company has included only the portion of the valuation allowance related to federal deferred tax assets in the “change in valuation allowance” line of the rate reconciliation. The following table presents a reconciliation of the total change in the valuation allowance (in thousands): December 31, 2025 2024 ...................................................................................................... Beginning balance $ 247,216 $ 373,474 .................................................................... Change related to continuing operations 40,849 (126,258) .......................................................................................................... Ending balance $ 288,065 $ 247,216 NOLs and tax credit carry-forwards are subject to review and possible adjustment by the Internal Revenue Service (“IRS”) and may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50% as defined under Sections 382 and 383 in the Internal Revenue Code, which could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the Company’s value immediately prior to the ownership change. The Company periodically completes a Section 382 analysis. Subsequent ownership changes since the most recent study may further affect the limitation in future years. As of December 31, 2025, the Company had $224.3 million of federal and $616.3 million of state net operating loss available to offset future taxable income. A portion of the federal net operating loss carryforwards begin to expire in 2035 and the state net operating loss carryforwards begin to expire in 2035, if not utilized. $206.2 million of the federal net operating loss are not subject to expiration. As of December 31, 2025, the Company also had federal and state research and development credit carryforwards of approximately $35.3 million and $11.5 million, respectively. The federal research and development credit carryforwards expire beginning 2035. The California tax credit can be carried forward indefinitely.