UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________________ to ___________________

Commission File Number: 001-39460

KYMERA THERAPEUTICS, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	81-2992166
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
500 North Beacon Street, 4th Floor Watertown, Massachusetts	02472
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (857) 285-5300

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	KYMR	The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 26, 2024, the registrant had 61,358,262 shares of common stock, $0.0001 par value per share, outstanding.

Summary of the Material and Other Risks Associated with Our Business

•We are a biopharmaceutical company with a limited operating history and have not generated any revenue to date from drug sales, and may never become profitable.

•We have incurred significant operating losses in recent periods and anticipate that we will incur continued losses for the foreseeable future.

•We will need to raise substantial additional funding. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, scale back or discontinue some of our product candidate development programs or future commercialization efforts.

•We are very early in our development efforts and our IRAK4, STAT3 and MDM2 programs are still in early clinical development. If we are unable to advance them through the clinic for safety or efficacy reasons or commercialize our product candidates or experience significant delays in doing so, our business will be materially harmed.

•We cannot be certain of the timely completion or outcome of our preclinical testing, including our STAT6 and TYK2 programs. In addition, the results of preclinical studies may not be predictive of the results of clinical trials and the results of any early-stage clinical trials we commence may not be predictive of the results of later-stage clinical trials.

•Our approach to the discovery and development of product candidates based on our PegasusTM platform is novel and unproven, which makes it difficult to predict the time, cost of development, and likelihood of successfully developing any products.

•Business interruptions resulting from any pandemic or similar public health crises could cause a disruption to our supply chain or the development of our product candidates and adversely impact our business.

•We may not be successful in our efforts to identify or discover additional product candidates or we may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.

•If we experience delays or difficulties in the initiation or enrollment of patients in clinical trials, our receipt of necessary regulatory approvals could be delayed or prevented.

•Our current or future product candidates may cause adverse or other undesirable side effects that could delay or prevent their regulatory approval, limit the commercial profile of an approved label, or result in significant negative consequences following marketing approval, if any.

•Even if we receive regulatory approval for any of our current or future product candidates, we will be subject to ongoing obligations and continued regulatory review, which may result in significant additional expense.

•We rely, and expect to continue to rely, on third parties to conduct our ongoing and planned clinical trials for our current and future product candidates. If these third parties do not successfully carry out their contractual duties, comply with regulatory requirements or meet expected deadlines, we may not be able to obtain marketing approval for or commercialize our current and potential future product candidates and our business could be substantially harmed.

•If we are unable to obtain and maintain patent and other intellectual property protection for our technology and product candidates or if the scope of the intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize technology and drugs similar or identical to ours, and our ability to successfully commercialize our technology and drugs may be impaired.

i

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, or Quarterly Report, contains forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts contained in this Quarterly Report are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “expects”, “intends”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential”, “continue” or the negative of these terms or other comparable terminology. These statements are not guarantees of future results or performance and involve substantial risks and uncertainties. Forward-looking statements in this Quarterly Report include, but are not limited to, express or implied statements about:

•the initiation, timing, progress, results, and cost of our research and development programs, and our current and future preclinical and future clinical studies, including statements regarding the timing of initiation and completion of studies or trials and related preparatory work, the period during which the results of the trials will become available, and our research and development programs;

•our ability to continue to construct PegasusTM, our drug discovery platform, and to enable a rational and effective drug discovery and development engine;

•the timing and the success of preclinical development efforts for STAT6 and TYK2 and clinical studies under our IRAK4, STAT3 and MDM2 programs;

•our plans to submit investigational new drug applications to the U.S. Food and Drug Administration, or FDA for current and future product candidates;

•the subsequent initiation of planned clinical trials;

•our ability to identify research priorities and apply a risk-mitigated strategy to efficiently discover and develop product candidates, including by applying learnings from one program to other programs and from one modality to our other modalities;

•our potential ability to manufacture our drug substances, delivery vehicles, and product candidates for preclinical use, for clinical trials and on a larger scale for commercial use, if approved;

•the ability and willingness of our third-party strategic collaborators to continue research and development activities relating to our development candidates and product candidates;

•our ability to obtain funding for our operations necessary to complete further development and commercialization of our product candidates;

•our ability to obtain and maintain regulatory approval of our product candidates;

•our ability to commercialize our products, if approved;

•the pricing and reimbursement of our product candidates, if approved;

•the implementation of our business model, and strategic plans for our business, product candidates, and technology;

•the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates and technology;

•estimates of our future expenses, revenues, capital requirements, and our needs for additional financing;

•the potential benefits of strategic collaboration agreements, our ability to enter into strategic collaborations or arrangements, and our ability to attract collaborators with development, regulatory and commercialization expertise;

•future agreements with third parties in connection with the commercialization of product candidates and any other approved product;

•the size and growth potential of the markets for our product candidates, and our ability to serve those markets;

•our financial performance;

•the rate and degree of market acceptance of our product candidates;

•regulatory developments in the United States and foreign countries;

•our ability to contract with third-party suppliers and manufacturers and their ability to perform adequately;

ii

•our ability to produce our products or product candidates with advantages in turnaround times or manufacturing cost;

•the success of competing therapies that are or may become available;

•our ability to attract and retain key scientific or management personnel;

•the impact of laws and regulations;

•developments relating to our competitors and our industry;

•the effect of any pandemics, including mitigation efforts and economic effects, on any of the foregoing or other aspects of our business operations, including but not limited to our preclinical studies and future clinical trials; and

•other risks and uncertainties, including those listed under the caption “Risk Factors.”

Any forward-looking statements in this Quarterly Report reflect our current views with respect to future events and with respect to our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those described under Part II, Item 1A, “Risk Factors” and elsewhere in this Quarterly Report. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

All of our forward-looking statements are as of the date of this Quarterly Report only. In each case, actual results may differ materially from such forward-looking information. We can give no assurance that such expectations or forward-looking statements will prove to be correct. An occurrence of or any material adverse change in one or more of the risk factors or risks and uncertainties referred to in this Quarterly Report or included in our other public disclosures or our other periodic reports or other documents or filings filed with or furnished to the Securities and Exchange Commission, or the SEC, could materially and adversely affect our business, prospects, financial condition and results of operations. Except as required by law, we do not undertake or plan to update or revise any such forward-looking statements to reflect actual results, changes in plans, assumptions, estimates or projections or other circumstances affecting such forward-looking statements occurring after the date of this Quarterly Report, even if such results, changes or circumstances make it clear that any forward-looking information will not be realized. Any public statements or disclosures by us following this Quarterly Report that modify or impact any of the forward-looking statements contained in this Quarterly Report will be deemed to modify or supersede such statements in this Quarterly Report.

We may from time to time provide estimates, projections and other information concerning our industry, the general business environment, and the markets for certain diseases, including estimates regarding the potential size of those markets and the estimated incidence and prevalence of certain medical conditions. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties, and actual events, circumstances or numbers, including actual disease prevalence rates and market size, may differ materially from the information reflected in this Quarterly Report. Unless otherwise expressly stated, we obtained this industry, business information, market data, prevalence information and other data from reports, research surveys, studies and similar data prepared by market research firms and other third parties, industry, medical and general publications, government data, and similar sources, in some cases applying our own assumptions and analysis that may, in the future, prove not to have been accurate.

iii

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss	2
	Condensed Consolidated Statements of Stockholders’ Equity	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	29
PART II.	OTHER INFORMATION	30
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	77
Item 3.	Defaults Upon Senior Securities	77
Item 4.	Mine Safety Disclosures	77
Item 5.	Other Information	77
Item 6.	Exhibits	78
Signatures		79

iv

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

KYMERA THERAPEUTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except for share and per share amounts)

(Unaudited)

	March 31, 2024			December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	93,510		$	109,966
Marketable securities (Note 4)		427,034			264,915
Accounts receivable		—			15,000
Contract assets		2,030			3,762
Prepaid expenses and other current assets		14,679			11,674
Total current assets	$	537,253		$	405,317
Marketable securities, non-current (Note 4)		224,390			61,434
Property and equipment, net (Note 6)		49,336			48,134
Right-of-use assets, operating leases		49,329			52,945
Other non-current assets		2,118			2,118
Restricted cash		5,825			5,811
Total assets	$	868,251		$	575,759
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	6,812		$	7,075
Accrued expenses (Note 8)		15,997			33,864
Deferred revenue		22,613			37,883
Operating lease liabilities		8,757			5,068
Finance lease liabilities		1,133			1,277
Other current liabilities		824			524
Total current liabilities	$	56,136		$	85,691
Non-current liabilities
Deferred revenue, net of current portion		23,781			16,768
Operating lease liabilities, net of current portion		75,975			77,028
Finance lease liabilities, net of current portion		1,156			1,301
Total liabilities	$	157,048		$	180,788
Stockholders’ equity:
Common stock, $0.0001 par value; 150,000,000 shares authorized at March 31, 2024 and December 31, 2023, 61,353,146 and 55,585,305 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively		6			6
Additional paid-in capital		1,292,283			926,269
Accumulated deficit		(579,309	)		(530,752	)
Accumulated other comprehensive loss		(1,777	)		(552	)
Total stockholders’ equity		711,203			394,971
Total liabilities and stockholders’ equity	$	868,251		$	575,759

The accompanying notes are an integral part of these condensed consolidated financial statements.

1

KYMERA THERAPEUTICS, INC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

Three months ended March 31, 2024 and 2023

(In thousands, except for share and per share amounts)

(Unaudited)

	Three Months Ended March 31,
	2024			2023
Collaboration Revenue	$	10,287		$	9,466
Operating expenses:
Research and development	$	48,819		$	42,227
General and administrative		14,374			12,565
Impairment of long-lived assets		4,925			—
Total operating expenses		68,118			54,792
Loss from operations		(57,831	)		(45,326	)
Other income (expense):
Interest and other income		9,343			4,453
Interest and other expense		(69	)		(55	)
Total other income:		9,274			4,398
Net loss	$	(48,557	)	$	(40,928	)
Other comprehensive loss:
Unrealized gain (loss) on marketable securities		(1,225	)		1,911
Total comprehensive loss	$	(49,782	)	$	(39,017	)
Net loss	$	(48,557	)	$	(40,928	)
Net loss per share, basic and diluted	$	(0.69	)	$	(0.70	)
Weighted average common stock outstanding, basic and diluted		70,770,320			58,187,038

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

KYMERA THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the three months ended March 31, 2024 and 2023

(In thousands, except for share amounts)

(Unaudited)

	Common Stock				Additional Paid in		Accumulated			Accumulated Other Comprehensive			Total Stockholders’
	Shares		Value		Capital		Deficit			Gain/(Loss)			Equity
Balance at December 31, 2022		55,039,380	$	6	$	878,884	$	(383,790	)	$	(4,949	)	$	490,151
Exercise of stock options		208,705		—		1,486		—			—			1,486
Vesting restricted stock		28,141		—		—		—			—			—
Stock-based compensation expense		—		—		9,385		—			—			9,385
Unrealized gain on marketable securities		—		—		—		—			1,911			1,911
Net Loss		—		—		—		(40,928	)		—			(40,928	)
Balance at March 31, 2023		55,276,226	$	6	$	889,755	$	(424,718	)	$	(3,038	)	$	462,005
Balance at December 31, 2023		55,585,305	$	6	$	926,269	$	(530,752	)	$	(552	)	$	394,971
Issuance of common stock and accompanying pre-funded warrants from public offering, net of issuance costs of $14.9 million		3,884,158		—		301,373		—			—			301,373
Issuance of common stock through at-the market sales agreement, net of issuance costs of $1.2 million		1,519,453		—	$	48,740		—			—			48,740
Exercise of stock options		281,021		—		3,933		—			—			3,933
Vesting restricted stock		83,209		—		—		—			—			—
Stock-based compensation expense		—		—		11,968		—			—			11,968
Unrealized gain on marketable securities		—		—		—		—			(1,225	)		(1,225	)
Net loss		—		—		—		(48,557	)		—			(48,557	)
Balance at March 31, 2024		61,353,146	$	6	$	1,292,283	$	(579,309	)	$	(1,777	)	$	711,203

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

KYMERA THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the three months ended March 31, 2024 and 2023

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2024			2023
Operating activities
Net loss	$	(48,557	)	$	(40,928	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense		11,968			9,385
Lease Impairment Charge		4,925			—
Depreciation and amortization		1,461			879
Premiums and discounts on available-for-sale marketable securities		(3,072	)		(1,326	)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(3,005	)		(1,641	)
Accounts Receivable		15,000			—
Contract asset		1,732			(783	)
Accounts payable		75			2,217
Accrued expenses and other current liabilities		(15,394	)		(10,037	)
Deferred revenue		(8,257	)		(6,145	)
Operating lease right-of-use assets		619			1,138
Operating lease liabilities		2,636			2,915
Other assets and liabilities		278			358
Net cash used in operating activities	$	(39,591	)	$	(43,968	)
Investing activities
Purchase of property and equipment, net		(7,402	)		(4,009	)
Purchases of investments		(422,704	)		(61,835	)
Maturities of investments		99,499			90,428
Net cash provided by investing activities	$	(330,607	)	$	24,584
Financing activities
Proceeds from issuance of common stock and accompanying pre-funded warrants from public offering, net of underwriting discounts and issuance costs		301,373			—
Proceeds from issuance of common stock through at-the market sales agreement, net of issuance costs		48,740			—
Proceeds from stock option exercises		3,933			1,486
Payments on finance leases		(290	)		(327	)
Net cash provided by financing activities	$	353,756		$	1,159
Net increase in cash, cash equivalents and restricted cash		(16,442	)		(18,225	)
Cash, cash equivalents and restricted cash at beginning of period		115,777			74,524
Cash, cash equivalents and restricted cash at end of period	$	99,335		$	56,299
Supplemental disclosure of cash flow activities
Right-of-use assets obtained in exchange for new operating lease liabilities	$	-		$	48,833
Cash paid for interest		49			52
Supplemental disclosure of noncash investing and financing activities
Property and equipment purchases included in accounts payable and accrued expenses	$	1,205		$	1,100

The following table provides a reconciliation of the cash, cash equivalents, and restricted cash balances as of each of the periods shown above:

	March 31,
	2024		2023
Cash and cash equivalents	$	93,510	$	50,152
Restricted cash		5,825		6,147
Total cash, cash equivalents, and restricted cash	$	99,335	$	56,299

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

KYMERA THERAPEUTICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Nature of Business

Kymera Therapeutics, Inc., together with its subsidiary Kymera Securities Corporation, is referred to on a consolidated basis as the “Company”. The Company is a biopharmaceutical company focused on discovering and developing small molecule therapeutics that selectively degrade disease-causing proteins by harnessing the body’s own natural cellular process, a method known as targeted protein degradation. The Company has devoted its efforts principally to research and development since formation. The Company has not yet completed product development, filed for or obtained regulatory approvals for any products, nor verified the market acceptance and demand for such products. As a result, the Company is subject to a number of risks common to emerging companies in the biotech industry. Principal among these risks are the uncertainties of the product discovery and development process, dependence on key individuals, development of the same or similar technological innovations by the Company’s competitors, protection of proprietary technology, compliance with government regulations and approval requirements, the Company’s ability to access capital and uncertainty of market acceptance of products.

The Company has historical net losses and anticipates that it will continue to incur losses for the foreseeable future and had an accumulated deficit of $579.3 million as of March 31, 2024. The Company has funded these losses principally through issuance of preferred stock, convertible notes, common stock, including its initial public offering and concurrent private placement completed in August 2020 (“IPO”), follow-on offering and concurrent private placement completed in July 2021 (“2021 Follow-on”) offering, August 2022 Private Investment in Public Equity (“PIPE”) offering, follow-on offering completed in January 2024 ("2024 Follow-on"), sales under our Sales agreement with Cowen, and from cash proceeds received in connection with the Company’s collaboration agreements with Vertex Pharmaceuticals Incorporated (“Vertex”) and Genzyme Corporation (“Sanofi”) (see Note 5). The Company expects to continue to incur operating losses and negative cash flows until such time as it generates a level of revenue that is sufficient to support its cost structure.

As of March 31, 2024, the Company had cash, cash equivalents and marketable securities of $744.9 million. The Company believes these cash, cash equivalents and marketable securities will be sufficient to fund its operations and capital expenditure requirements through at least twelve months from the issuance of these condensed consolidated financial statements.

The Company expects to finance the future research and development costs of its product portfolio with its existing cash, cash equivalents and marketable securities, or through strategic financing opportunities that could include, but are not limited to future offerings of its equity, collaboration agreements, or the incurrence of debt. However, there is no guarantee that any of these strategic or financing opportunities will be executed or realized on favorable terms, if at all, and some could be dilutive to existing stockholders. If the Company fails to obtain additional future capital, it may be unable to complete its planned preclinical studies and clinical trials.

Private Investment in Public Equity “PIPE” offering

On August 18, 2022, the Company and certain accredited investors entered into a securities purchase agreement pursuant to which the Company agreed to sell and issue to such investors in a private placement (i) an aggregate of 2,769,228 shares of the Company’s common stock at a purchase price of $26.00 per share, and (ii) 3,000,000 pre-funded warrants to purchase common stock, at a purchase price of $25.9999 per Pre-Funded Warrant. The Pre-Funded Warrants will have an exercise price of $0.0001 per share of common stock. The offering closed on August 22, 2022, resulting in net proceeds of $149.8 million after offering expenses.

2024 Follow-on Public Offering

On January 9, 2024, the Company completed a follow-on offering of its common stock and, in lieu of common stock to certain investors, pre-funded warrants to purchase shares of its common stock. The Company issued and sold 3,884,158 shares of common stock, including full exercise of the underwriters’ over-allotment option to purchase an additional 1,633,663 shares, at a public offering price of $25.25 per share. Additionally, in lieu of common stock to certain investors, the Company issued and sold pre-funded warrants to purchase 8,640,594 shares of its common stock at a public offering price of $25.2499 per pre-funded warrant, which represents the per share public offering price of each share of common stock less the $0.0001 per share exercise price for each pre-funded warrant. The aggregate gross proceeds before deducting underwriting discounts and commissions, and other estimated offering expenses payable by the Company were approximately $316.2 million.

5

Pre-funded warrants

In connection with certain offerings mentioned above the Company has issued pre-funded warrants to purchase common stock in lieu of common stock. As the pre-funded warrants are indexed to the Company’s common stock (and otherwise meet the requirements to be classified in equity), the Company recorded the consideration received from the issuance of the pre-funded warrants as additional paid-in capital on the Company’s consolidated balance sheets. The pre-funded warrants are exercisable at any time. The holders of Pre-Funded Warrants may not exercise the warrant if the holder, together with its affiliates, would beneficially own more than 4.99% (or, at the election of the holder, 9.99%) of the number of shares of the Common Stock outstanding immediately after giving effect to such exercise. The holders of Pre-Funded Warrants may increase or decrease such percentages not in excess of 19.99% by providing at least 61 days’ prior notice to the Company.

During the three months ended March 31, 2024, no pre-funded warrants were exercised. As of March 31, 2024, there were 11,640,594 pre-funded warrants outstanding.

2. Summary of Significant Accounting Policies

The accompanying condensed consolidated financial statements reflect the application of certain significant accounting policies as described in this note, and elsewhere in the accompanying condensed consolidated financial statements and notes.

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary Kymera Securities Corporation. All intercompany transactions and balances have been eliminated in consolidation.

Basis of Presentation

The unaudited interim condensed consolidated financial statements of the Company included herein have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) as found in the Accounting Standards Codification (“ASC”), Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”) and the rules and regulations of the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this report, as is permitted by such rules and regulations. Accordingly, these condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K, filed with the SEC on February 22, 2024.

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements as of and for the year ended December 31, 2023, and, in the opinion of management, reflect all adjustments necessary, all of which were normal and recurring, for the fair statement of the Company’s financial position as of March 31, 2024, and the results of operations and cash flows for the three months ended March 31, 2024 and 2023. The results for the three months ended March 31, 2024 are not necessarily indicative of the results for the year ended December 31, 2024 or for any future period.

Significant Accounting Policies

The significant accounting policies used in preparation of these condensed consolidated financial statements for the three months ended March 31, 2024 are consistent with those discussed in Note 2 to the consolidated financial statements in the 2023 Annual Report on Form 10-K.

6

3. Fair Value Measurements

The following tables present information about the Company’s financial assets measured at fair value on a recurring basis and indicates the level of the fair value hierarchy utilized to determine such fair values as of March 31, 2024 and December 31, 2023 (in thousands):

	Fair Value Measurements at March 31, 2024:
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents
Money market fund	$	50,248	$	—	$	—	$	50,248
US treasuries		19,928		—		—		19,928
Corporate bonds		19,666		—		—		19,666
Marketable securities, current
US treasuries		167,206		—		—		167,206
US government agencies		—		106,672		—		106,672
Corporate bonds		—		153,157		—		153,157
Marketable securities, non-current
US treasuries		20,365		—		—		20,365
US government agencies		—		36,278		—		36,278
Corporate bonds		—		167,746		—		167,746
Restricted cash		5,825		—		—		5,825
Total	$	283,238	$	463,853	$	—	$	747,091

	Fair Value Measurements at December 31, 2023:
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents
Money market fund	$	78,010	$	—	$	—	$	78,010
US treasuries		27,985				—		27,985
Commercial Paper		997				—		997
Marketable securities, current
US treasuries		23,253		—		—		23,253
US government agencies		—		114,384		—		114,384
Corporate bonds		—		127,278		—		127,278
Marketable securities, non-current
US treasuries		—		—		—		-
US government agencies		—		28,307		—		28,307
Corporate bonds		—		33,127		—		33,127
Restricted cash		5,811		—		—		5,811
Total	$	136,056	$	303,096	$	—	$	439,152

During the three months ended March 31, 2024 and the year ended December 31, 2023, there were no transfers in or out of Level 3.

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4. Marketable Securities

The following tables summarize the available-for-sale debt securities held at March 31, 2024 and December 31, 2023 (in thousands):

Description	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
March 31, 2024
US treasury securities	$	187,847	$	—	$	(277	)	$	187,570
US government agencies		143,361		12		(423	)		142,950
Corporate securities		321,978		10		(1,084	)		320,904
Total	$	653,186	$	22	$	(1,784	)	$	651,424

Description	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
December 31, 2023
US treasury securities	$	23,361	$	5	$	(113	)	$	23,253
US government agencies		142,948		48		(305	)		142,691
Corporate securities		160,598		113		(306	)		160,405
Total	$	326,907	$	166	$	(724	)	$	326,349

As of March 31, 2024, the Company held 113 securities that had been in an unrealized loss position for less than 12 months with an aggregate fair value of $467.4 million. As of December 31, 2023, the Company held 109 securities that had been in an unrealized loss position for less than 12 months with an aggregate fair value of $229.7 million. As of March 31, 2024, the Company held 39 securities that had been in an unrealized loss position for greater than 12 months with an aggregate fair value of $81.5 million. As of December 31, 2023, the Company held 16 securities that had been in an unrealized loss position for greater than 12 months with an aggregate fair value of $36.6 million.

As of March 31, 2024 the Company had 140 securities with a fair value of $427.0 million with a contractual maturity of less than 12 months and 61 securities with a fair value of $224.4 million with a contractual maturity of greater than 12 months. As of December 31, 2023 the Company had 124 securities with a fair value of $264.9 million with a contractual maturity of less than 12 months and 27 securities with a fair value of $61.4 million with a contractual maturity of greater than 12 months.

The Company is required to determine whether a decline in the fair value below the amortized cost basis of available-for-sale securities is due to credit-related factors. At each reporting date, the Company performs an evaluation of impairment to determine if any unrealized losses are the result of credit losses. Impairment is assessed at the individual security level. Factors considered in determining whether a loss resulted from a credit loss or other factors include the Company’s intent and ability to hold the investment until the recovery of its amortized cost basis, the extent to which the fair value is less than the amortized cost basis, the length of time and extent to which fair value has been less than the cost basis, the financial condition of the issuer, any historical failure of the issuer to make scheduled interest or principal payments, any changes to the rating of the security by a rating agency, any adverse legal or regulatory events affecting the issuer or issuer’s industry, and any significant deterioration in economic conditions.

Unrealized losses on available-for-sale securities presented in the previous table have not been recognized in the condensed consolidated statements of operations because the securities are high credit quality, investment grade securities that the Company does not intend to sell and will not be required to sell prior to their anticipated recovery, and the decline in fair value is attributable to factors other than credit losses. Based on its evaluation, the Company determined it does not have any credit losses related to its available-for-sale securities as of March 31, 2024 and December 31, 2023.

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5. Collaborations

Sanofi Agreement

Agreement Terms

On July 7, 2020, the Company entered into a collaboration agreement, or the Sanofi Agreement, with Sanofi, to co-develop drug candidates directed to two biological targets. Under the Sanofi Agreement, the Company granted to Sanofi a worldwide exclusive license to develop, manufacture and commercialize certain lead compounds generated during the collaboration directed against IRAK4, or Collaboration Target 1, and one additional undisclosed target in an undisclosed field of use, or Collaboration Target 2. Such license is exercisable on a collaboration target-by-collaboration target basis only after specified milestones. For compounds directed against IRAK4, the field of use includes diagnosis, treatment, cure, mitigation or prevention of any diseases, disorders or conditions, excluding oncology and immuno-oncology.

Pursuant to the Sanofi Agreement, the Company is responsible for discovery and preclinical research and conducting a Phase 1 clinical trial for at least one degrader directed against IRAK4 plus up to three backup degraders. With respect to both targets, Sanofi is responsible for development, manufacturing, and commercialization of product candidates after a specified development milestone occurs with respect to each collaboration candidate.

In addition, pursuant to the Sanofi Agreement, Sanofi will grant to the Company an exclusive option, or Opt-In Right, exercisable on a collaboration target-by-collaboration target basis that will include the right to (i) to fund 50% of the United States development costs for collaboration products directed against such target in the applicable field of use and (ii) share equally in the net profits and net losses of commercializing collaboration products directed against such target in the applicable field of use in the United States. In addition, if the Company exercises the Opt-In Right, Sanofi will grant to the Company an exclusive option, applicable to each collaboration target, which upon exercise will allow the Company to conduct certain co-promotion activities in the field in the United States.

The Sanofi Agreement, unless earlier terminated, will expire on a product-by-product basis on the date of expiration of all payment obligations under the Sanofi Agreement with respect to such product. The Company or Sanofi may terminate the agreement upon the other party’s material breach or insolvency or for certain patent challenges. In addition, Sanofi may terminate the Sanofi Agreement for convenience or for a material safety event upon advance prior written notice, and the Company may terminate the Sanofi Agreement with respect to any collaboration candidate if, following Sanofi’s assumption of responsibility for the development, commercialization or manufacturing of collaboration candidates with respect to a particular target, Sanofi ceases to exploit any collaboration candidates directed to such target for a specified period.

In consideration for the exclusive licenses granted to Sanofi under the Sanofi Agreement, Sanofi paid to the Company an upfront payment of $150.0 million. The Company will also be reimbursed for certain research activities for a certain backup degrader under the IRAK4 program as well as contract manufacturing costs for the lead KT-474 program, unless certain criteria are not met for an initial IRAK4 degrader. In addition to the upfront payment and the reimbursements, the Company is eligible to receive certain development milestone payments of up to $1.48 billion in the aggregate, of which more than $1.0 billion relates to the IRAK4 program, upon the achievement of certain developmental or regulatory events. The Company will be eligible to receive certain commercial milestone payments up to $700.0 million in the aggregate, of which $400.0 million relates to the IRAK4 program, which are payable upon the achievement of certain net sales thresholds. The Company will be eligible to receive tiered royalties for each program on net sales ranging from the high-single digits to high teens, subject to low-single digits upward adjustments in certain circumstances.

On November 15, 2022, we entered into an Amended and Restated Collaboration and License Agreement with Sanofi, or the Amended Sanofi Agreement, which amended the Original Sanofi Agreement to revise certain research terms and responsibilities set forth under the Original Sanofi Agreement. The Amended Sanofi Agreement also specifies details around the timing and number of Phase 2 trials required under the terms of the collaboration. The Amended Sanofi Agreement became effective on December 5, 2022.

Additionally with respect to Sanofi, on December 2, 2022, Sanofi provided the Company with written notice of its intention to advance the collaboration target 1 candidate, KT-474, into Phase 2 clinical trials. In the fourth quarter of 2023, the Company achieved two milestones of $40.0 million and $15.0 million relating to the dosing of the first patient in the Phase 2 clinical trial for the first and second indications, respectively.

In September 2023, the Company and Sanofi mutually agreed to cease activities related to Collaboration Target 2.

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Accounting Treatment

The Company analyzed the discovery and pre-clinical research activities as well as the exclusive license grants under the Sanofi Agreement and concluded that the arrangement was indicative of a vendor-customer relationship and would be accounted for under ASC 606.

The Company identified the following material promises under the arrangement: (1) research services for Collaboration Target 1, (2) research license for Collaboration Target 1, (3) exclusive license for Collaboration Target 1, (4) research services for Collaboration Target 2, (5) research license for Collaboration Target 2, (6) exclusive license for Collaboration Target 2, (7) option to extend the research term, and (8) optional research services during the development period.

The Company determined that Collaboration Targets 1 and 2 are distinct from each other. The research associated with degraders directed to each target is at different stages and the licensed field, should development activities be successful, are different from each other. As such, all promises associated with each target are considered distinct from promises associated with the other target.

The research and development services for each collaboration target were determined not to be distinct from the research license and the exclusive license and have been combined into a single performance obligation for each collaboration target. That is, two performance obligations were identified, the combined research services, research license and exclusive license for Collaboration Target 1 and the combined research services, research license and exclusive license for Collaboration Target 2. The exclusive license for each target is not distinct from the pre-clinical and clinical research and development services under the Sanofi Agreement, primarily due to the highly specialized nature of the research and novel technology involved with developing protein degraders – the pre-clinical activities and studies and first phase 1 clinical trial could not be conducted by another party in the manner required.

The option to extend the research term and optional research services during the development period were evaluated as material rights. The fees associated with each option are at or above the standalone selling price. As such, the underlying options are not performance obligations and fees associated with each option are excluded from the transaction price until the underlying option is exercised.

The Company determined the total transaction price to be $150.0 million, which consists solely of the upfront payment. All milestone payments and option payments are constrained as the achievement of such milestones are contingent upon the success of the underlying research and development activities and are generally outside the control of the Company. The reimbursement of costs for the IRAK4 backup degrader is also treated as constrained variable consideration as the criteria for reimbursement may not always be met, under which circumstances the Company would be responsible for the costs related to the backup degrader. Upon becoming unconstrained, the reimbursement consideration will be added to the transaction price and allocated to Collaboration Target 1.

The Company allocated the upfront payment to each performance obligation based on the relative standalone selling price, as follows:

•Collaboration Target 1: $120.0 million

•Collaboration Target 2: $30.0 million

The Company determined the allocation of the $150.0 million transaction price between Collaboration Target 1 and Collaboration Target 2 based on the value of the research and development for the programs from projected research and development costs for each collaboration target plus a developer’s profit and the total potential milestones for each collaboration target.

The Company recognizes revenue associated with each performance obligation as the research and development services are provided using an input method, according to costs incurred as related to the research and development activities for each individual program and the costs expected to be incurred in the future to satisfy that individual performance obligation. The transfer of control occurs over this time period and, in management’s judgment, is the best measure of progress towards satisfying each performance obligation. The amounts received that have not yet been recognized as revenue are deferred as a contract liability on the Company’s consolidated balance sheet and will be recognized over the remaining research and development period until the performance obligation is satisfied. Milestone and reimbursement consideration added to the transaction price will be recognized as revenue with a cumulative catch-up upon becoming unconstrained. The performance obligation associated with Collaboration Target 1 has not been fully satisfied as of March 31, 2024. The performance obligation associated with Collaboration Target 2 has been fully satisfied. In the three months ended March 31, 2024, the Company recognized $10.3 million in revenue under the Sanofi Agreement, all of which was associated with Collaboration Target 1. In the three months ended March 31, 2023, the Company recognized $7.7 million in revenue under the Sanofi Agreement, of which $7.1 million was associated with Collaboration Target 1 and $0.6 million was associated with Collaboration Target 2. Of the $10.3 million of revenue recognized in the three months ended March 31, 2024, $8.7 million was recognized from amounts that were recorded in deferred revenue as of December 31, 2023. The aggregate amount of the transaction price allocated to the

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Company’s unsatisfied performance obligations and recorded in deferred revenue at March 31, 2024 and December 31, 2023 is $46.4 million and $54.7 million, respectively. During the three months ended March 31, 2024, the Company received $3.8 million in cost reimbursement payments, and additionally received a $15.0 million milestone payment from Sanofi for dosing of the first patient in the second indication of the Phase 2 Clinical Trial which had been recorded in accounts receivable as of December 31, 2023. As of March 31, 2024, the Company recorded a contract asset for unbilled accounts receivable of $2.0 million related to reimbursable research and development costs under the Sanofi Agreement for activities performed during the first quarter of 2024 The Company will recognize the deferred revenue related to the performance obligations based on a cost input method, as described, over the remaining research term, which as a result of the amended agreement, is a maximum of approximately 2.8 years as of March 31, 2024.

Any additional consideration related to performance-based milestones will be recognized when the risk of probable reversal is resolved, at which point the Company shall adjust the transaction price determined for the agreement accordingly and recognize revenue on a cumulative-catch up basis, reallocating the revised arrangement consideration to the performance obligations. Any consideration related to sales milestone payments and royalties will be recognized when the related milestone events or sales occur and therefore are recognized at the later of when the related sales occur or the relevant performance obligation is satisfied. As part of its evaluation of constraining the milestones, the Company considered numerous factors, including the fact that the achievement of the research and development milestones are contingent upon the results of the underlying research and development activities and are thus outside of the control of the Company. In the fourth quarter of 2023, the Company achieved two development milestones relating to the dosing of the first patient in the KT-474 Phase 2 clinical trials for the first and second indications, respectively. In connection with these milestones the Company unconstrained $55.0 million of consideration in the fourth quarter of 2023. During the quarter ended March 31, 2024, the Company recognized $2.3 million of revenue from the unconstrained milestones. As of March 31, 2024, $42.6 million of the $55.0 million of consideration has been recorded as revenue, with the remaining $12.4 million recorded as deferred revenue.

Vertex Agreement

On May 9, 2019 (the “Effective Date”), the Company entered into a collaboration agreement (the “Vertex Agreement”) with Vertex to advance small molecule protein degraders against up to six targets. Under the Vertex Agreement, Vertex had the exclusive option to license the rights to the product candidates developed for the designated targets at which point Vertex would control development and commercialization. Pursuant to the Vertex Agreement, the Company was only responsible for discovery and preclinical research on the targets, and Vertex was responsible for development, manufacturing, and commercialization of the product candidates after it exercises its option to license. The initial research term of the collaboration was four (4) years, extendable for an additional one (1) year period upon mutual agreement by the parties and payment by Vertex of certain per-target fees.

The Company was eligible to receive up to $170.0 million in payments per target, including development, regulatory and commercial milestones as well as option exercise payments. In addition, Vertex was obligated to pay the Company tiered royalties on future net sales on any products that may result from the Vertex Agreement. None of the payments under the Vertex Agreement are refundable. The Company may also perform follow-on research for an optioned target upon Vertex’s request and at Vertex’s expense.

The term of the Vertex Agreement began on the Effective Date and expired upon the completion of the initial research term on May 9, 2023.

Vertex provided the Company with a non-refundable upfront payment of $50.0 million and purchased 3,059,695 shares of the Company’s Series B-1 Convertible Preferred Stock (the “Series B-1 Preferred Stock”) at $6.54 a share, pursuant to a separate, but simultaneously executed Share Purchase Agreement. The shares were purchased at a premium of $5.9 million, which was included in the transaction price and will be recognized as revenue over the period of performance. As a result of this purchase, Vertex was considered a related party. Vertex is no longer considered a related party.

Accounting Treatment

The Company analyzed the joint research activities required under the Vertex Agreement and concluded that the arrangement was indicative of a vendor-customer relationship and would be accounted for under ASC 606.

The Company identified the following material promises under the arrangement: (1) the non-exclusive, royalty-free research license; (2) the research and development services to be performed on up to six targets; and (3) the option to license each of the targets for development, manufacturing, and commercialization efforts. The research and development services were determined not to be distinct from the research and development license and have been combined into a single performance obligation. The Company determined that the option to license the targets in the future was not priced at a discount, and that the option exercise fee for each target is at or above the standalone selling price for research at this stage of development; as such, the options and the underlying licenses are excluded from the performance obligation and the option exercise fees are excluded from the transaction price until the underlying option is exercised.

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As part of its evaluation of constraining the research and development milestones, the Company considered numerous factors, including the fact that the achievement of the research and development milestones is contingent upon the results of the underlying research and development activities and is thus outside of the control of the Company.

At the commencement of the arrangement, two units of accounting were identified: the issuance of 3,059,695 shares of the Series B-1 Preferred Stock and the research activities the Company will perform over the Research Term. The Company determined the total transaction price to be $55.9 million, which consists of $5.9 million attributed to the premium from the shares of Series B-1 Preferred Stock sold to Vertex and the $50.0 million upfront payment. To determine the fair value of the Series B-1 Preferred Stock issued to Vertex, the Company performed a valuation of the shares of the Company’s common and preferred stock, which took into consideration recent financings, and the Company’s recent development and future exit strategies, as well as a discount for lack of marketability.

The Company recognizes revenue associated with the performance obligation as the research and development services are provided using an input method, according to the costs incurred as related to the research and development activities on each program and the costs expected to be incurred in the future to satisfy the performance obligation. The transfer of control occurs over this time period and, in management’s judgment, is the best measure of progress towards satisfying the performance obligation. The Vertex collaboration agreement expired upon completion of the initial research term in May of 2023. Accordingly, the Company fully satisfied its performance obligation and recognized all remaining deferred revenue associated with the Vertex collaboration in May 2023. No revenue was recognized during the three months ended March 31, 2024, under the Vertex Agreement. During the three months ended March 31, 2023, the Company recognized $1.8 million, under the Vertex Agreement. All $1.8 million of revenue recognized in the three months ended March 31, 2023 was recognized from amounts that were recorded in deferred revenue as of December 31, 2022. There were no unsatisfied performance obligations as of March 31, 2024. The aggregate amount of the transaction price allocated to the Company’s unsatisfied performance obligation and recorded in deferred revenue is $0 at both March 31, 2024 and December 31, 2023.

The following table presents the changes in accounts receivable, contract assets and contract liabilities for the three months ended March 31, 2024 (in thousands):

	Balance at December 31, 2023		Additions		Deductions			Balance at March 31, 2024
Accounts receivable and contract assets:
Billed receivables - Sanofi	$	15,000	$	3,762	$	(18,762	)	$	—
Unbilled receivables - Sanofi		3,762		2,030		(3,762	)		2,030
Total accounts receivable and contract assets	$	18,762	$	5,792	$	(22,524	)	$	2,030
Contract liabilities:
Deferred revenue - Sanofi	$	54,651	$	2,030	$	(10,287	)	$	46,394
Total contract liabilities	$	54,651	$	2,030	$	(10,287	)	$	46,394

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6. Property and Equipment

Property and equipment consisted of the following as of March 31, 2024 and December 31, 2023 (in thousands):

	March 31, 2024			December 31, 2023
Lab and office equipment under finance right-of-use asset	$	5,749		$	6,725
Lab equipment		7,441			5,098
Computer equipment		966			582
Furniture & fixtures		3,182			1,064
Leasehold improvements		40,084			7,802
Assets not yet in service		2,450			37,303
Total property and equipment		59,872			58,574
Less accumulated depreciation		(10,536	)		(10,440	)
Property and equipment, net	$	49,336		$	48,134

Depreciation expense for the three months ended March 31, 2024 and 2023 was $1.5 million and $0.9 million, respectively.

Included in property and equipment is lab and office equipment right-of-use assets under finance leases with a cost basis of $5.7 million and $6.7 million and accumulated amortization expense of $3.5 million and $4.1 million as of March 31, 2024 and December 31, 2023, respectively.

Amortization expense related to right-of-use assets during the three months ended March 31, 2024 and 2023 was $0.4 million and $0.4 million, respectively.

7. Leases

In October 2019, the Company entered into a noncancelable facility lease agreement (the “2019 Lease”) for 34,522 square feet of research and development and office space in Watertown, Massachusetts. The term of the 2019 Lease is 120 months and expires on March 31, 2030. The 2019 Lease has an option to be extended for an additional five years. The lease is not reasonably certain to be extended and as such the additional term is not included in the measurement of the lease. The 2019 Lease includes a rent escalation clause, and rent expense is being recorded on a straight-line basis. In accordance with the lease agreement, the Company is required to maintain a security deposit and provided a letter of credit to the landlord, which is recorded in restricted cash as of March 31, 2024 and December 31, 2023. The letter of credit totaled $1.3 million and $1.3 million as of March 31, 2024 and December 31, 2023, respectively.

In December 2021, the Company entered into a noncancelable lease (the “2021 Lease”) for 100,624 square feet of office and laboratory space in Watertown, Massachusetts, which the Company began occupying in February 2024. The 2021 Lease is subject to base rent of $0.8 million per month beginning two months after the commencement date, plus the Company’s ratable share of taxes, maintenance and other operating expenses. Base rent is subject to a 3% annual increase over the lease term of approximately 134 months following the commencement date. The Company also has two consecutive options to extend the term of the lease for five years each at then-market rates. The 2021 Lease also includes a tenant improvement allowance of approximately $20.1 million. In connection with the signing of the 2021 Lease, the Company issued a letter of credit for $4.5 million which is classified as restricted cash as of March 31, 2024 and December 31, 2023.

The 2021 Lease required the landlord to build-out the base building prior to the construction of the Company’s premises. The Company concluded the accounting commencement date occurred when the landlord completed the build-out of the base building and control passed to the Company, which occurred in early January 2023. The Company assessed the classification of the 2021 Lease at the accounting commencement date and concluded the lease should be accounted for as an operating lease. The Company recorded an operating lease liability of $48.9 million, measured as the present value of the remaining lease payments discounted using the incremental borrowing rate as of the accounting commencement date. The Company recorded an operating lease right-of-use asset of $48.9 million, measured as the present value of the remaining lease payments, net of the tenant incentives.

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The Company concluded the improvements paid for by the landlord in connection with the tenant improvement allowance represent lessee assets and therefore recorded $17.6 million of leasehold improvements in property and equipment. The Company recorded an additional $12.1 million of leasehold improvements in excess of the tenant improvement allowance, all of which were placed in service as of March 31, 2024.

Upon occupancy of the 2021 Lease facility in February of 2024, the Company exited the 2019 Lease facility and is actively looking to sublease the entire facility for the remaining noncancellable lease term through March 31, 2030. These actions resulted in an impairment charge of $4.9 million in the three months ended March 31, 2024. The Company continues to evaluate the potential recovery of the ROU asset under sublease scenarios, and thus it is possible that additional impairments could be identified in future periods, and such amounts could be material.

The impairment charge reduces the carrying value of the associated ROU asset, leasehold improvements and certain furniture and fixture assets that remained in the facility to their estimated fair values. The fair values are estimated using a discounted cash flows approach based on forecasted future cash flows expected to be derived from the property based on current sublease market rent, which is considered a level 3 input in the fair value hierarchy, and other key assumptions such as future sublease market conditions and the discount rate.

The Company’s finance lease obligations consist of certain property and equipment financed through finance leases.

The components of the lease costs for the three months ended March 31, 2024 and 2023, were as follows (in thousands):

	Three Months Ended March 31,
	2024		2023
Operating lease costs	$	2,489	$	2,521
Finance lease costs:
Amortization of right-to-use assets, finance leases		414		369
Interest expense for finance lease liabilities		49		52
Variable lease costs		1,204		220
Total lease costs	$	4,156	$	3,162

Supplemental cash flow information relating to the Company’s leases for the three months ended March 31, 2024 and 2023, were as follows (in thousands):

Three Months Ended
March 31,

2024