109 Kodiak Sciences Inc. Notes to Consolidated Financial Statements (in thousands, except share and per share data) 1. The Company Kodiak Sciences Inc. (the “Company”) is a clinical-stage biopharmaceutical company specializing in novel therapeutics to treat high-prevalence ophthalmic diseases. The Company devotes substantially all of its time and efforts to performing research and development, raising capital and recruiting personnel. The Company was formed as a limited liability company on June 22, 2009 under the name Oligasis LLC. The Company changed its name and converted into a corporation which was incorporated in the state of Delaware on September 8, 2015. Initial Public Offering In October 2018, the Company sold and issued 9,000,000 shares of common stock at a price to the public of $10.00 per share for gross proceeds of $90.0 million. In November 2018, the Company sold and issued an additional 400,000 shares of common stock at $10.00 per share to the underwriters of the initial public offering (“IPO”) following the partial exercise of their over-allotment option for gross proceeds of $4.0 million. The aggregate net proceeds to the Company from the IPO, inclusive of the partial over-allotment option exercise, were $83.5 million after deducting underwriting discounts and commissions and other offering costs. Upon the closing of the IPO, all convertible preferred shares then outstanding automatically converted into 12,385,154 shares of common stock, 500,000 redeemable convertible preferred stock warrants automatically converted into common stock warrants and 100,000 of such warrants were exercised immediately following the closing of the IPO. The 2017 convertible notes converted into 2,637,292 shares of common stock and the 2018 convertible notes converted into 4,295,677 shares of common stock upon closing of the IPO. In connection with the IPO, the Company amended and restated its certificate of incorporation and bylaws. Liquidity The Company has incurred significant losses and negative cash flows from operations since inception and had an accumulated deficit of $110.8 million as of December 31, 2018. The Company has historically financed its operations primarily through the sale of redeemable convertible preferred stock, convertible notes, warrants to purchase Series B redeemable convertible preferred stock and the sale of common stock in the IPO. To date, none of the Company’s product candidates have been approved for sale and therefore, the Company has not generated any revenue from product sales. Management expects operating losses to continue for the foreseeable future. The Company currently plans to raise additional funding as required based on the status of its clinical trials and projected cash flows, however the Company believes that its cash and cash equivalents as of December 31, 2018 are sufficient for the Company to continue as a going concern for at least 12 months from the filing date of these consolidated financial statements for the period ended December 31, 2018. 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Principles of Consolidation The consolidated financial statements include the Company’s accounts and the accounts of Kodiak Sciences Financing Corporation, the Company’s direct wholly owned subsidiary, incorporated in the United States, and Kodiak Sciences GmbH, the Company’s indirect wholly owned subsidiary, incorporated in Switzerland. All intercompany accounts and transactions have been eliminated. The functional and reporting currency of the Company and its subsidiaries is the U.S. dollar. The aggregate foreign currency transaction loss included in determining net loss was $0.3 million, $0.1 million and less than $0.1 million for the years ended December 31, 2018, 2017 and 2016, respectively.