v3.25.2
Income Taxes
 6 Months Ended
Jun. 30, 2025
Income Tax Disclosure [Abstract]  
Income Taxes

Note 9. Income taxes

The following table presents the loss before income taxes, income tax expense and effective income tax rates for all periods presented:

 

(Loss) income before income tax expense

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

(in thousands)

2025

 

 

2024

 

 

2025

 

 

2024

 

Domestic

 

(38,476

)

 

 

(22,729

)

 

 

(53,638

)

 

 

(42,808

)

Foreign

 

(38,583

)

 

 

17,862

 

 

 

(56,931

)

 

 

1,939

 

Loss before income tax expense

 

(77,059

)

 

 

(4,867

)

 

 

(110,569

)

 

 

(40,869

)

Income tax expense

 

(1,670

)

 

 

(2,261

)

 

 

(2,772

)

 

 

(4,475

)

Effective tax rate

(2.2)%

 

 

(46.4%)

 

 

(2.5)%

 

 

(10.9%)

 

 

Our effective tax rates were -(2.2)% and -(46.4)% for the three months ended June 30, 2025 and 2024, respectively, which differed from the federal and foreign statutory rates of 21% and 25%, respectively. The income tax expense for the three months ended June 30, 2025 resulted primarily from additional interest accrued on the unrecognized tax benefits liability. For the three months ended June 30, 2024, income tax expense resulted primarily from investment income generated by marketable investments held by iTeos LLC, which was not consolidated for U.S. income tax purposes during that period. The Company incurred income tax expense, despite a loss before income taxes, due to taxable interest income generated by a subsidiary of iTeos Belgium which could not be offset by the net operating losses of iTeos Inc. or iTeos Belgium. In addition, for the three months ended June 30, 2024, additional interest was recorded on the unrecognized tax benefits liability.

 

Our effective tax rates were -(2.5)% and -(10.9)% for the six months ended June 30, 2025 and 2024, respectively, which differed from the federal and foreign statutory rates of 21% and 25%, respectively. The income tax expense for the six months ended June 30, 2025 resulted primarily from additional interest accrued on the unrecognized tax benefits liability. For the six months ended June 30, 2024, income tax expense resulted primarily from investment income generated by marketable investments held by iTeos LLC, which was not consolidated for U.S. income tax purposes during that period. The Company incurred income tax expense, despite a loss before income taxes, due to taxable interest income generated by a subsidiary of iTeos Belgium which could not be offset by the net operating losses of iTeos Inc. or iTeos Belgium. In addition, for the six months ended June 30, 2024, additional interest was recorded on the unrecognized tax benefits liability.

 

The Company's uncertain tax position relates to the Company’s allocation of revenue between the U.S. and Belgium under the GSK Agreement. As the uncertain tax position relates to the Company’s allocation of that revenue

between the U.S. and Belgium under the GSK Agreement, the additional recognition of revenue under that agreement may increase the liability for the uncertain tax position. The unrecognized tax benefits liability increased by $1.1 million and $2.1 million during the three months ended June 30, 2025 and 2024, respectively, related to the accrual of interest expense on the liability. The unrecognized tax benefits liability increased by $2.1 million during the six months ended June 30, 2025 and 2024, related to the accrual of interest expense on the liability. As of June 30, 2025, the Company had accrued interest and penalties relating to uncertain tax positions of $10.3 million, all of which was included in unrecognized tax benefits liability in the condensed consolidated balance sheet as of June 30, 2025.

.