v3.26.1
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
Income (loss) before provision for income taxes consisted of the following (in thousands):
Year Ended December 31,
20252024
United States$(90,351)$(75,144)
Loss before provision for income taxes$(90,351)$(75,144)
No provision for federal or state income taxes was recorded during the years ended December 31, 2025 and 2024, as the Company incurred operating losses and maintains a full valuation allowance against its net deferred tax assets. The reported amount of income tax benefit for the years ended December 31, 2025 and 2024 differs from the amount that
would result from applying domestic federal statutory rates to pretax losses primarily because of changes in the valuation allowance, state taxes, and the generation of research and development credits.
The reconciliation of the Company’s statutory tax rate and effective income tax rate is as follows (in thousands):
Year Ended
December 31,
20252024
AmountPercentAmountPercent
US Federal Statutory Tax Rate$(18,974)21.0%$(15,781)21.0%
Tax Credits:
Research and development credit(7,288)8.1%(3,765)5.0%
Change in valuation allowance24,008 (26.6)%15,206 (20.2)%
Nontaxable or Nondeductible Items:
Equity Compensation 704 (0.8)%3,242 (4.3)%
Other92 (0.1)%345 (0.5)%
Changes in Unrecognized Tax Benefits1,458 (1.6)%753 (1.0)%
Effective income tax rate$——%$——%

The Company’s effective tax rate differs from the statutory rate primarily due to continued losses and the maintenance of a full valuation allowance on deferred tax assets, resulting in zero income tax expense for the period.
Significant components of the Company’s net deferred tax assets are as follows (in thousands):
Year Ended
December 31,
20252024
Deferred tax assets:
Net operating loss carryforwards$80,368 $69,308 
Research and development credits18,861 12,840 
Accruals & reserves1,071 901 
Stock compensation3,269 1,198 
Amortization716 768 
Lease liability2,132 2,648 
Capitalized research and development expenses33,861 28,023 
Depreciation70 — 
Total deferred tax assets140,348 115,686 
Valuation allowance(139,776)(114,972)
Net deferred tax assets572 714 
Deferred tax liabilities:
Depreciation— (71)
Right of use asset(572)(643)
Total deferred tax liabilities(572)(714)
Net deferred taxes$— $— 
As of December 31, 2025 and 2024, the Company had a federal net operating loss carryforward of $372.2 million and $319.8 million, respectively, which may be available to offset future income tax liabilities. Of this amount, approximately $2.3 million will begin to expire in 2038 and approximately $369.9 million are carried forward indefinitely. As of December 31, 2025 and 2024, the Company has state NOL carryforwards of $43.5 million and $39.6 million, respectively.
Of this amount, approximately $40.5 million will begin to expire in 2029 and approximately $3.0 million are carried forward indefinitely.
As of December 31, 2025 and 2024, the Company has federal research and development tax credit carryforwards of $8.5 million and $7.9 million, respectively, which begin to expire in 2039. As of December 31, 2025, the Company has federal orphan drug tax credit carryforwards of $10.0 million, which begin to expire in 2043. As of December 31, 2025, the Company has state research and development tax credit carryforwards of $0.4 million which begin to expire in 2036.
Future realization of the tax benefits of existing temporary differences and net operating loss carryforwards ultimately depends on the existence of sufficient taxable income within the carryforward period. As of December 31, 2025 and 2024, the Company performed an evaluation to determine whether a valuation allowance was needed. The Company considered all available evidence, both positive and negative, which included the results of operations for the current and preceding years. The Company determined that it was not possible to reasonably quantify future taxable income and determined that it is more likely than not that all of the deferred tax assets will not be realized. Accordingly, the Company maintained a full valuation allowance as of December 31, 2025 and 2024.
The Tax Cuts and Jobs Act ("TCJA") requires taxpayers to capitalize and amortize research and development ("R&D") expenditures under section 174 for tax years beginning after December 31, 2021. This rule became effective for the Company during 2022. These costs were required to be amortized for tax purposes over 5 years for R&D performed in the U.S. and over 15 years for R&D performed outside of U.S.
The One Big Beautiful Bill Act ("OBBBA") was passed and became effective for the Company during 2025. The legislation includes, among other provisions, permanent full expensing for certain business assets, changes to the interest deduction limitation under Section 163(j), amendments to international tax provisions including the global intangible low-taxed income (“GILTI”) and foreign-derived intangible income (“FDII”) regimes, the permanent extension of the controlled foreign corporation (“CFC”) look-through rule, as well as modifications to the treatment of research and development expenditures mentioned above.
Congress modified the treatment for research and development expenditures by adding new Section 174A, which applies for tax years beginning after December 31, 2024. Section 174A permits the immediate deduction of domestic R&D expenditures or, at the taxpayer’s election, capitalization and amortization over a period of at least five years beginning when the related benefits are first realized. Foreign R&D expenditures continue to be capitalized and amortized over 15 years. Transition provisions allow taxpayers either to continue amortizing amounts capitalized under the TCJA rules or to deduct remaining unamortized domestic R&D expenditures in the first tax year beginning after December 31, 2024. The Company has elected to continue amortizing previously capitalized domestic R&D expenditures over the remaining amortization period permitted under OBBBA.
The Company’s valuation allowance increased by $24.8 million and $16.0 million for the years ended December 31, 2025 and 2024, respectively, due primarily to the generation of NOLs. The Company’s valuation allowance for the years ended December 31, 2025 and 2024 is as follows (in thousands):
Year Ended
December 31,
20252024
Valuation allowance beginning of year$114,972 $98,926 
Increases recorded to income tax provision24,804 16,046 
Valuation allowance at end of year$139,776 $114,972 
Utilization of the net operating loss and research and development credit carryforwards may be subject to a substantial annual limitation under Section 382 of the Internal Revenue Code of 1986 due to ownership change limitations that have occurred previously or that could occur in the future. These ownership changes may limit the amount of net operating loss and research and development credit carryforwards that can be utilized annually to offset future taxable income and tax, respectively. The Company has not completed a study to assess whether a change of ownership has occurred, or whether there have been multiple ownership changes since its formation, due to the significant cost and complexity associated with a study. There could also be additional ownership changes in the future which may result in additional limitations on the utilization of net operating loss carryforwards and tax credits.
The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal and state jurisdictions, where applicable. There are currently no pending tax examinations. The Company’s tax returns are open under statute from 2018 to the present.
As of December 31, 2025 and 2024, the Company had liabilities for uncertain tax positions of $4.8 million and $3.4 million, respectively, which, if recognized, would impact the Company’s effective income tax rate. The Company’s policy is to record interest and penalties related to income taxes as part of its income tax provision. As of December 31, 2025 and 2024, the Company had not accrued interest or penalties related to uncertain tax positions.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
Year Ended
December 31,
20252024
Beginning balance$3,364 $2,611 
Additions based on tax positions related to current year1,138 654 
Additions for tax positions of prior years320 99 
Ending Balance$4,822 $3,364 
Due to cumulative losses, the Company has not made any income tax payments (or received any refunds) for the years ended December 31, 2025 and 2024.