Kodiak Sciences Inc. Notes to Consolidated Financial Statements (in thousands, except share and per share data) 121 A reconciliation of the Company’s effective tax rate to the statutory U.S. federal rate is as follows: December 31, 2018 December 31, 2017 December 31, 2016 Federal statutory income tax rate........................................................ 21.0% 34.0% 34.0% State taxes (tax effected)..................................................................... 5.6 7.1 5.1 Foreign tax rate differential ................................................................ (3.8) (17.1) (2.8) Research tax credit.............................................................................. 1.3 0.8 0.4 Stock-based compensation.................................................................. (0.6) (0.3) (0.2) Other ................................................................................................... (0.1) (0.3) (0.3) Remeasurement of deferred tax due to tax law change ...................... — (8.8) — Fair value adjustments........................................................................ (2.4) — — Extinguishment of convertible note.................................................... (2.7) — — Change in valuation allowance........................................................... (18.3) (15.4) (36.2) Provision for income taxes ................................................................. 0.0% 0.0% 0.0% The Company recognizes benefits of uncertain tax positions if it is more likely than not that such positions will be sustained upon examination based solely on their technical merits, as the largest amount of benefit that is more likely than not to be realized upon the ultimate settlement. It is the Company’s policy to include penalties and interest expense related to income taxes as a component of other expense, net as necessary. The beginning and ending unrecognized tax benefits amounts are as follows (in thousands): December 31, 2018 December 31, 2017 December 31, 2016 Unrecognized tax benefits at beginning of period .............................. $ 357 $ 235 $ 128 Increases related to prior year tax positions .................................. — 102 — Increases related to current year tax positions............................... 41 20 107 Unrecognized tax benefits at end of period......................................... $ 398 $ 357 $ 235 The Company files income tax returns in the United States and Switzerland. The Company is not currently under examination by income tax authorities in federal, state or other jurisdictions. All tax returns remain open for examination by the federal and state authorities for three and four years, respectively, from the date of utilization of any net operating loss or credits. 9. Redeemable Convertible Preferred Stock As of December 31, 2018 and 2017, the Company’s certificate of incorporation, as amended and restated, authorized the Company to issue up to 10,000,000 and 18,753,595 shares of preferred stock at the par value of $0.0001 per share. Upon the closing of the Company’s IPO on October 9, 2018, all outstanding redeemable convertible preferred stock converted into shares of common stock. As of December 31, 2018, there are no holders of the Company’s preferred stock. As of December 31, 2017, redeemable convertible preferred stock consisted of the following (in thousands, except per share and share amounts): Redeemable Convertible Preferred Stock Liquidation Carrying Original Issuance Authorized Outstanding Value Value Price Series A redeemable convertible preferred stock.............................................. 6,253,595 5,593,154 $ 16,364 $ 16,283 $ 3.17 Series B redeemable convertible preferred stock.............................................. 12,500,000 6,792,000 33,960 33,734 $ 5.00 Total ........................................................... 18,753,595 12,385,154 $ 50,324 $ 50,017