v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The Company’s loss is attributable to domestic activity, and the Company does not have foreign operations. The Company had no current or deferred federal or state income tax expense due to operating losses incurred for the years ended December 31, 2025 and 2024, and the full valuation allowance recorded on net deferred tax assets.
A reconciliation of income tax expense (benefit) from continuing operations to the amount computed by applying the statutory federal income tax rate to the net loss from continuing operations is summarized as follows (in thousands):
Year Ended December 31,
20252024
Tax expense (benefit) at the U.S. statutory rate $(15,806)21.0%$(12,954)21.0%
State income taxes, net of federal income tax effect(1)
— —%— —%
Effects of changes in tax laws or rates enacted in the current period — —%— —%
Tax credits
Research and development tax credits(1,969)2.6%(1,452)2.4%
Nontaxable or nondeductible Items
Stock-based compensation(1,371)1.8%304 (0.5%)
Limitations on executive compensation1,068 (1.4%)— —%
Other permanent differences(54)0.1%25 —%
Other adjustments (43)0.1%— —%
Change in valuation allowance18,175 (24.2%)14,077 (22.9%)
Effective tax rate$— 0.0%$— 0.0%
(1)State taxes in Massachusetts make up the majority of the tax effect in this category.
The components of the Company’s deferred tax assets and liabilities are comprised of the following (in thousands):
Year Ended December 31,
20252024
Net operating loss carryforward$40,906 $18,075 
Tax credits6,848 4,056 
Fixed assets64 36 
Stock-based compensation2,268 885 
Capitalized research costs20,330 23,229 
Accrued expenses1,256 524 
Intangibles4,098 4,362 
Lease liability2,327 2,582 
Other temporary differences23 21 
Total deferred tax assets$78,120 $53,770 
Less valuation allowance(76,144)(51,606)
Net deferred tax asset$1,976 $2,164 
Right of use assets$(1,857)$(2,083)
Other deferred tax liabilities (119)(81)
Total deferred tax liabilities$(1,976)$(2,164)
Net deferred tax asset (liability)$— $— 
As of December 31, 2025 and 2024, the Company had federal net operating loss carryforwards of approximately $148.0 million and $65.6 million, respectively, which may be available to offset future income tax liabilities. The 2017 Tax Cuts and Jobs Act (“TCJA”) will generally allow losses incurred after 2017 to be carried over indefinitely but will generally limit the net operating loss deduction to the lesser of the net operating loss carryover or 80% of a corporation’s taxable income (subject to Section 382 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”)). Also, there is no carry back for losses incurred after 2017. All net operating loss carryforwards were generated after 2017.
In addition, the Company has state net operating loss carryforwards of $155.4 million and $68.2 million as of December 31, 2025 and 2024, respectively, which will expire at various dates through 2045.
As of December 31, 2025 and 2024, the Company had federal research and development tax credit (“Federal R&D Tax Credit”) carryforwards of $4.7 million and $2.7 million, respectively, available to reduce future tax liabilities, which will expire at various dates through 2045.
As of December 31, 2025 and 2024, the Company had state research and development credit (“State R&D Tax Credit”) carryforwards of approximately $2.7 million and $1.7 million, respectively, available to reduce future tax liabilities, which will expire at various dates through 2040.
The Company has evaluated the positive and negative evidence bearing upon its ability to realize its deferred tax assets, which are comprised primarily of net operating loss carryforwards, the capitalization of research and experimental expenditures, and tax credits. Management has considered the Company’s history of cumulative net losses in the United States, estimated future taxable income and prudent and feasible tax planning strategies and has concluded that it is more likely than not that the Company will not realize the benefits of its U.S. federal and state deferred tax assets. Accordingly, a full valuation allowance of $76.1 million and $51.6 million has been established against these net deferred tax assets as of December 31, 2025 and 2024, respectively. The Company reevaluates the positive and negative evidence at each reporting period. The Company’s valuation allowance increased during 2025 by approximately $24.5 million, primarily due to the increase in net operating loss and tax credit carryforwards.
Under the provision of the Internal Revenue Code, the net operating loss and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. Net operating loss and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative change in the ownership interest of significant shareholders over a three-year period in excess of 50%, as defined under Section 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership change may further affect the limitation in future years. The Company has not yet completed a change in control analysis, as defined under Section 382 and 383 of the Internal Revenue Code, through December 31, 2025, and the Company has not determined whether the future utilization of net operating loss carryforwards may be materially limited based on past financings. In addition, the Company may complete future financings that could result in a change in control in the future which may limit the amount of tax attributes available to offset future tax liabilities.
The Company accounts for income taxes by evaluating a probability threshold that a tax position must meet before a financial statement benefit is recognized. The minimum threshold is a tax position that is more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position.
The Company did not have any unrecognized tax benefits as of December 31, 2025 or 2024, respectively. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2025 and 2024, the Company’s balance of interest and penalties was zero.
The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In a normal course of business, the Company is subject to examination by U.S. federal and states. The Company’s tax years are still open since inception. To the extent that the Company has tax attribute carryforwards, the tax year in which the attributes were generated may still be adjusted upon examination by the U.S. Internal Revenue Services or state tax authorities to the extent utilized in a future period. The Company is not currently under examination by any tax authorities.