NEKTAR THERAPEUTICS Leases Disclosure
Note 5 — Operating Leases
Our leases consist of a Lease Agreement (the Mission Bay Lease) with ARE-San Francisco No. 19, LLC (ARE) for our 155,215 square foot corporate office and R&D facility located at 455 Mission Bay Boulevard South, San Francisco, California (the Mission Bay Facility) and a Lease Agreement (the Third Street Lease) with Kilroy Realty Finance Partnership, L.P. (Kilroy) for an additional 135,936 square foot of office space at 360 Third Street, San Francisco, California (the Third Street Facility). Both leases terminate on January 31, 2030, subject to two consecutive five year renewal options for the Mission Bay Facility and one five year renewal option for the Third Street Facility. Other key terms include the following:
Due to our 2022 and 2023 Restructuring Plans, during the years ended December 31, 2025 and 2024, we recorded impairment charges of $3.8 million and $7.3 million, respectively, for our right-of-use assets which we are seeking to sublease. See Note 10 for additional information.
We generally recognize lease expense for our operating leases on a straight-line basis over the lease term. For spaces where we have recognized an impairment charge, the aggregate lease expense recognized over the remaining term is reduced by the amount of the impairment charge, but we recognize the remaining lease expense on an accelerated basis. The components of lease expense, which we include in general and administrative expense in our Consolidated Statements of Operations, were as follows (in thousands):
|
|
Year Ended December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Operating lease expense |
|
$ |
7,155 |
|
|
$ |
8,723 |
|
Variable lease expense |
|
|
7,905 |
|
|
|
9,000 |
|
Total lease expense |
|
$ |
15,060 |
|
|
$ |
17,723 |
|
During the years ended December 31, 2025 and 2024, we paid $22.3 million and $21.6 million, respectively, of operating lease payments related to our lease liabilities, which we include in net cash used in operating activities in our Consolidated Statements of Cash Flows.
As of December 31, 2025, the maturities of our operating lease liabilities were as follows (in thousands):
Year ending December 31, |
|
|
|
|
2026 |
|
$ |
21,096 |
|
2027 |
|
|
23,682 |
|
2028 |
|
|
24,427 |
|
2029 |
|
|
25,195 |
|
2030 and thereafter |
|
|
2,108 |
|
Total lease payments |
|
|
96,508 |
|
Less: portion representing interest |
|
|
(10,757 |
) |
Operating lease liabilities |
|
|
85,751 |
|
Less: current portion |
|
|
(20,495 |
) |
Operating lease liabilities, less current portion |
|
$ |
65,256 |
|
As of December 31, 2025, the weighted-average remaining lease term is 4.1 years and the weighted-average discount rate was 5.8%.
We have entered into subleases for approximately 29,000 square feet of space in our Mission Bay Facility that provide for fixed lease payments, as well as full recovery of the subtenants’ share of operating expenses under our master lease agreement, subject to certain free rent periods. We record the total sublease income as a reduction of general and administrative expense, which totaled $3.7 million and $3.2 million for the years ended December 31, 2025 and 2024, respectively.
As of December 31, 2025, maturities of our operating lease receivables from subleases for each of the next five years and thereafter were as follows:
Year ending December 31, |
|
|
|
|
2026 |
|
$ |
1,670 |
|
2027 |
|
|
1,729 |
|
2028 |
|
|
1,788 |
|
2029 |
|
|
1,846 |
|
2030 and thereafter |
|
|
— |
|
Gross lease receivable |
|
$ |
7,033 |
|
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 13, 2026 | Showing above |
| 2024 | Mar 14, 2025 | |
| 2023 | Mar 5, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Mar 1, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Feb 28, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2017 | Mar 1, 2018 | |
| 2016 | Mar 1, 2017 | |
| 2015 | Feb 29, 2016 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.