v3.25.4
INCOME TAXES
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The Company recorded no federal or state income tax expense due to the operating losses for tax purposes incurred for the years ended December 31, 2025 and December 31, 2024.
The following were components of loss (income) before taxes for the years ended December 31, 2025 and December 31, 2024.
Years Ended December 31,
20252024
Pre-tax book income (loss)
Domestic$(45,724)$7,167 
Foreign— — 
Total pre-tax book income (loss)$(45,724)$7,167 
Significant components of the Company’s deferred tax assets and deferred tax liabilities are as follows (in thousands):
Years Ended December 31,
20252024
Noncurrent deferred tax assets:
Net operating loss carryforwards$73,788 $51,777 
Contribution carryforwards26 26 
Lease liability1,345 1,671 
Deferred revenue— 5,681 
Capitalized R&D costs22,533 31,282 
Other assets12,816 14,845 
Tax credits36,036 33,701 
Less: valuation allowance(145,281)(136,872)
Total deferred tax assets, noncurrent1,263 2,111 
Noncurrent deferred tax liability:
Investments in equity securities43 577 
Right of use asset1,220 1,534 
Total deferred tax liabilities, noncurrent1,263 2,111 
Net deferred tax assets$— $— 
As of December 31, 2025 and December 31, 2024, the Company has provided a valuation allowance for the full amount of the net deferred tax assets as the realization of the net deferred tax assets is not determined to be more likely than not. The net increase in the valuation allowance for the year ended December 31, 2025 of $8.4 million is comprised of an increase in the valuation allowance recorded against the deferred tax assets, primarily related to tax credits and net operating loss (“NOL”) carryforwards for the year.
The reasons for the difference between actual income tax benefit for the years ended December 31, 2025 and December 31, 2024 and the amount computed by applying the statutory federal income tax rate to losses before income tax benefit after the adoption of ASU 2023-09 are as follows (in thousands):
Year Ended December 31, 2025Year Ended December 31, 2024
Amount% of Pre-Tax
Loss		Amount% of Pre-Tax
Loss
US federal statutory tax rate$(9,602)21.0%$1,501 21.0%
State and local income taxes, net of federal income taxes— —%— —%
Effect of changes in tax laws or rates enacted in the current period— —%— 0.0%
Tax credits
Research and development tax credits(2,336)5.1%(2,944)(41.2%)
Changes in valuation allowances9,730 (21.3%)5,691 79.6%
Nontaxable or nondeductible items
Equity compensation4,359 (9.5%)2,137 29.9%
Change in warrant liability(2,337)5.1%(6,218)(87.0%)
Other182 (0.4%)(4)(0.0%)
Changes in unrecognized tax benefits— —%— —%
Other Adjustments
Provision to return— —%(130)(1.8%)
Other4 0.0%(33)(0.5%)
Effective tax rate$— 0.0%$— 0.0%
As of December 31, 2025, the Company had federal and state NOL carryforwards of approximately $340.2 million and $317.3 million respectively. As of December 31, 2024, the Company had federal and state NOL carryforwards of approximately $235.5 million and $212.0 million, respectively. The federal NOL carryforward carries forward indefinitely. The state NOL carryforwards begin to expire in 2027.
As of December 31, 2025, the Company had federal and state R&D tax credits of $22.5 million and an amount less than $0.1 million, which begin to expire in 2029 and 2030, respectively. As of December 31, 2024, the Company had federal and state tax R&D credits of $20.2 million and an amount less than $0.1 million. As of December 31, 2025 and December 31, 2024, the Company had federal Orphan Drug credits of $13.5 million which begin to expire in 2038. As of December 31, 2025 and December 31, 2024, the Company had federal contribution carryforwards of $0.1 million and $0.1 million, respectively, which begin to expire in 2026.
The Company’s ability to utilize its NOL and R&D credit carryforwards may be substantially limited due to ownership changes that may have occurred or that could occur in the future, as required by Section 382 of the Internal Revenue Code of 1986, as amended (the Code), as well as similar state provisions. These ownership changes may limit the amount of NOL and R&D credit carryforwards that can be utilized annually to offset future taxable income and tax, respectively. In general, an “ownership change,” as defined by Section 382 of the Code, results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50 percent of the outstanding stock of a company by certain stockholders or public groups. The Company has not completed a study to assess whether one or more ownership changes have occurred since the Company became a loss corporation under the definition of Section 382. If the Company has experienced an ownership change, utilization of the NOL or R&D credit carryforwards would be subject to an annual limitation, which is determined by first multiplying the value of the Company’s stock at the time of the ownership change by the applicable long-term, tax-exempt rate, and then could be subject to additional adjustments, as required. Any such limitation may result in the expiration of a portion of the NOL or R&D credit carryforwards before utilization. Until a study is completed and any limitation known, no amounts are being considered as an uncertain tax position or disclosed as an unrecognized tax benefit. Any carryforwards that expire prior to utilization as a result of such limitations will be removed from deferred tax assets with a corresponding reduction of the valuation allowance. Due to the existence of the valuation allowance, it is not expected that any possible limitation will have an impact on the results of operations of the Company.
The Company reflects in the accompanying financial statements the benefit of positions taken in a previously filed tax return or expected to be taken in a future tax return only if it is considered ‘more-likely-than-not’ that the position taken will be sustained by the appropriate taxing authority. As of December 31, 2025 and December 31, 2024, the Company had no unrecognized income tax benefits. The Company’s policy for recording interest and penalties relating to uncertain income tax positions is to record them as a component of income tax expense in the accompanying statements of operations. As of December 31, 2025 and December 31, 2024, the Company had no such accruals.
In November 2021, North Carolina enacted the 2021 Appropriations Act, which included a gradual corporate income tax rate decrease from the current 2.5% to 0% by 2030. For tax years beginning on or after January 1, 2025, the rate is 2.25%. The rate decreases to 2% in 2026 and 2027; and to 1% in 2028 and 2029. After 2029, the rate decreases to 0%. As a result of the revised tax rate, the Company adjusted its North Carolina net operating loss deferred tax asset as of December 31, 2024, by applying the revised tax rate, which resulted in a decrease to the deferred tax assets and corresponding decrease to the valuation allowance of approximately $8.5 million in 2024.
On July 4, 2025, the U.S. government enacted the One Big Beautiful Bill Act (OBBBA), which includes several changes to U.S. federal income tax law, including temporary and permanent extension, of expiring provisions of the Tax Cuts and Jobs Act of 2017. Significant provisions for corporate taxpayers include permanent 100% bonus depreciation for qualified property, immediate expensing of domestic R&D expenditures, and changes to the limitation on business interest expense deductions under Section 163(j). None of these provisions have a material impact on the Company’s 2025 income tax provision.
The amounts of cash income taxes paid (received) by the Company were as follows:
Years Ended December 31,
2025
Federal$— 
State and local— 
Foreign— 
Income taxes, net of amounts refunded$—