v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The Company’s losses before provision for income taxes during each period relate entirely to operations within the United States. The Company did not record a provision for income tax expense or benefit for the years ended December 31, 2025 and 2024 due to recurring losses and the maintenance of a full valuation allowance on its deferred tax assets.
On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was enacted in the United States. The OBBBA includes significant provisions, including to the treatment of research and development expenditures under Section 174, modifications to the business interest expense limitation, and updates to other business tax provisions. Certain provisions are effective beginning in 2025, while others are phased in through 2027. The Company has reflected the applicable provisions of the OBBBA in its income tax provision for the year ended December 31, 2025. In particular, the Company elected to recover previously capitalized domestic research and development expenditures ratably over 2025 and 2026 pursuant to newly enacted Section 174A. State conformity has been considered in material jurisdictions for purposes of determining the income tax provision.
The Company has adopted Accounting Standards Update (“ASU”) 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, on a prospective basis for the year ended December 31, 2025. See Note 2. Significant Accounting Policies - Adoption of New Accounting Standards for additional details on the adoption of ASU 2023-09.
The provision (benefit) for income taxes differs from the amount that would result by applying the federal income tax rate to income before income taxes, as follows (in thousands, except percentages):
Year Ended December 31, 2025
AmountPercent
U.S. federal statutory tax rate
$(2,437)21.0 %
State and local income taxes, net of federal income tax effect—— %
Federal R&D tax credits
(2,418)20.8 %
Stock compensation
(137)1.2 %
Other
501(4.3)%
Change in valuation allowance
3,866(33.3)%
World wide changes in unrecognized tax benefits625(5.4)%
Total
$——%

As previously disclosed for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the effective income tax rate differs from the statutory federal income tax rate as follows:
Year Ended December 31,
20242023
Statutory rate
21.0 %21.0 %
State tax
4.3 %4.3 %
Credits
4.6 %2.3 %
Stock compensation
(1.7)%(2.0)%
Other
(0.2)%(0.3)%
Change in valuation allowance
(27.8)%(25.8)%
Total
— %— %
Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The tax effects of the temporary differences and carryforwards that give rise to deferred tax assets and liabilities consists of the following (in thousands):
Year Ended December 31,
20252024
Deferred tax assets:
Net operating loss carryforwards
$88,612 $79,341
Credit carryforwards
17,220 14,876
Fixed assets
85 287
Share-based compensation
2,741 1,751
Operating lease liability
— 102
Interest carryforwards
1,087 1,593
Section 174 research and development capitalization
8,889 17,526
Other accruals and reserves
7,369 6,376
Total deferred tax assets
126,003 121,852
Deferred tax liabilities:
Intangible assets
(2,222)(2,233)
Operating lease right-of-use asset
—(110)
Deferred costs
(3,048)(3,015)
Total deferred tax liabilities
(5,270)(5,358)
Valuation allowance
(120,733)(116,494)
Deferred taxes, net of valuation allowance
$— $—
In determining the need for a valuation allowance, the Company reviewed both positive and negative evidence pursuant to ASC 740, Income Taxes, including current and historical results of operations, future income projections, and potential tax planning strategies. A significant piece of objective negative evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2025, which limits the Company’s ability to rely on subjective evidence such as its projections for future growth. Based on this evaluation, the Company concluded that it is not more likely than not that its’s deferred tax assets will be realized and, accordingly, a full valuation allowance has been recorded as of December 31, 2025, 2024, and 2023. A reconciliation of the beginning and ending amount of the valuation allowance is as follows (in thousands):
Year Ended December 31,
202520242023
Valuation allowance, beginning of period
$(116,494)$(103,517)$(86,334)
Additions
(4,239)(12,977)(17,183)
Valuation allowance, end of period
$(120,733)$(116,494)$(103,517)
As of December 31, 2025, 2024, and 2023 the Company had tax net operating loss carryforwards and tax credit carryforwards as follows (in thousands):
Year Ended December 31,
202520242023
Net operating loss carryforwards, federal
$358,221$317,173 $306,885 
Net operating loss carryforwards, state
219,928 206,626 203,782 
Tax credit, federal
15,802 13,384 10,616 
Tax credit, state
8,802 7,933 7,056 
As of December 31, 2025, the Company had $358.2 million of federal and $219.9 million of state net operating loss carryforwards available to offset future taxable income. Carryforwards generated in tax years ended December 31, 2017 and prior will expire in varying amounts beginning in 2031 for federal and state purposes. Carryforwards generated in the tax year ended December 31, 2018 and future years do not expire for federal purposes.
As of December 31, 2025, the Company had federal and state research and development tax credits of $15.8 million and $8.8 million, respectively. If not utilized, the federal research and development credits will expire in 2031. The California research and development credits can be carried forward indefinitely.
The Company’s ability to utilize the net operating loss and tax credit carryforwards in the future may be subject to substantial restrictions in the event of past or future ownership changes as defined in Section 382 of the Internal Revenue Code and similar state tax laws. In the event the Company should experience an ownership change, as defined, utilization of its net operating loss carryforwards and tax credits could be limited.
As of December 31, 2025, the total amount of unrecognized tax benefits, excluding interest and penalties, was $6.0 million, none of which would impact the effective tax rate if recognized. The Company’s policy is to include interest and penalties with its provision for income taxes. For the year ended December 31, 2025, the Company did not recognize accrued interest and penalties related to unrecognized tax benefits. The Company does not anticipate any significant changes to its unrecognized tax positions within the next twelve months.
A reconciliation of the beginning and ending amount of the Company’s unrecognized tax benefits during the years ended December 31, 2025, 2024, and 2023 is as follows (in thousands):
Year Ended December 31,
202520242023
Balance, beginning of period
5,1734,262$3,528 
Increases related to current year tax positions
803911791 
Lapse of the applicable statute of limitations
——(57)
Reductions for tax positions of prior years(19)$— $— 
Balance, end of period
$5,957 $5,173 $4,262 
The Company files tax returns in the U.S. federal and California tax jurisdictions. The federal and state income tax returns from inception to December 31, 2021 remain subject to examination.