v3.26.1
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes

12. Income Taxes

The Company has recorded no income tax expense for the years ended December 31, 2025 and 2024. All the Company’s taxable losses were generated in the U.S.

The Company paid no income taxes for the years ended December 31, 2025 and 2024.

A reconciliation of the U.S. federal statutory income tax rate to the Company’s effective income tax rate was as follows:

 

 

 

Year Ended December 31,

 

 

 

2025

 

 

2024

 

Income tax computed at federal statutory rate

 

 

(33,874

)

 

 

21.00

%

 

 

(26,770

)

 

 

21.00

%

State taxes, net of federal effect

 

 

26

 

 

 

—

%

 

 

(105

)

 

 

0.1

%

Nontaxable or nondeductible items

 

 

1,555

 

 

 

(1.0

)%

 

 

1,373

 

 

 

(1.1

)%

Tax credits

 

 

 

 

 

 

 

 

 

 

 

 

Research credits

 

 

9,212

 

 

 

(5.7

)%

 

 

(6,760

)

 

 

5.3

%

Worldwide changes in unrecognized tax benefits

 

 

(1,899

)

 

 

1.2

%

 

 

683

 

 

 

(0.5

)%

Change in valuation allowance

 

 

24,980

 

 

 

(15.5

)%

 

 

31,579

 

 

 

(24.8

)%

Effective income tax rate

 

 

—

 

 

 

—

%

 

 

—

 

 

 

—

%

 

Significant components of the Company’s deferred tax assets for federal and state income taxes are as follows (in thousands):

Deferred Tax Assets:

 

 

 

Year Ended December 31,

 

 

 

2025

 

 

2024

 

Net operating loss carry forwards

 

$

52,127

 

 

$

17,209

 

Capitalized research and development expenditures

 

 

27,260

 

 

 

30,769

 

Reserves and accruals

 

 

2,742

 

 

 

1,505

 

Lease liabilities

 

 

1,141

 

 

 

2,123

 

Research credits

 

 

2,986

 

 

 

9,950

 

Stock-based compensation

 

 

1,482

 

 

 

963

 

Accrued license

 

 

1,074

 

 

 

1,812

 

License and upfront fees

 

 

3,684

 

 

 

3,080

 

Other

 

 

52

 

 

 

57

 

Total gross deferred tax assets

 

 

92,548

 

 

 

67,468

 

Less: Valuation allowance

 

 

(91,421

)

 

 

(65,593

)

Total deferred tax assets

 

$

1,127

 

 

$

1,875

 

Deferred tax liabilities

 

 

 

 

 

 

Property and equipment

 

 

(105

)

 

 

—

 

Lease right-of-use assets

 

 

(1,022

)

 

 

(1,875

)

Total gross deferred tax liabilities

 

 

(1,127

)

 

 

(1,875

)

Net deferred tax assets

 

$

—

 

 

$

—

 

A valuation allowance is required to be established when it is more likely than not that all or a portion of a deferred tax asset will not be realized. Realization of deferred tax assets is dependent upon future earnings, the timing and amount of which are uncertain. The Company has reviewed its positive and negative evidence and has concluded that it is more likely than not that the net deferred tax assets will not be realized due to the cumulative losses incurred since inception; therefore, the Company continues to maintain a valuation allowance. The valuation allowance increased by $25.8 million and $33.8 million during the years ended December 31, 2025 and 2024, respectively.

As required under ASU No. 2023-09, the Company has included only the portion of the valuation allowance related to federal deferred tax assets in the "change in valuation allowance" line of the rate reconciliation. The

following table presents a reconciliation of the total change in the valuation allowance (in thousands):
 

 

 

Year Ended December 31,

 

 

 

2025

 

 

2024

 

Beginning balance

 

$

65,593

 

 

$

31,772

 

Change related to continuing operations

 

 

25,826

 

 

 

33,842

 

Change related to acquisitions

 

 

—

 

 

 

—

 

Change related to other comprehensive income

 

 

2

 

 

 

(21

)

Ending balance

 

$

91,421

 

 

$

65,593

 

The Company has net operating loss carryforwards for federal and state income tax purposes of approximately $245.1 million and $333.8 million, respectively, as of December 31, 2025. The federal net operating loss carryforwards are not subject to expiration but are limited to 80% of the taxable income in the year the carryforward is used. State net operating loss carryforwards, if not utilized, will expire in various amounts from 2036 through 2045.

As of December 31, 2025, the Company has federal and state research and development credit carryforwards of approximately $12.2 million and $3.6 million, respectively. The federal credits will expire in various amounts from 2041 through 2045 and the state credits can be carried forward indefinitely.

Utilization of some of the federal and state net operating loss and credit carryforwards may be subject to annual limitations due to the change in ownership provisions of the Internal Revenue Code of 1986, as amended, and similar state provisions. The annual limitation may result in the expiration of net operating losses and credits before utilization. The Company has performed a Section 382 study as of December 31, 2025 and expects approximately $2.0 million of federal net operating losses, $12.1 million of federal research and development credits and $1.9 million California net operating losses to expire unused due to Section 382 limitations.

Uncertain Tax Positions

A reconciliation of the beginning and ending balances of the unrecognized tax benefits during the years ended December 31, 2025 and 2024, is as follows (in thousands):

 

 

 

2025

 

 

2024

 

Beginning balance

 

$

19,463

 

 

$

8,395

 

Increase in tax positions in prior periods

 

 

22

 

 

 

711

 

Decrease in tax positions in prior periods

 

 

(1,927

)

 

 

—

 

Increase in tax positions in the current period

 

 

11,430

 

 

 

10,357

 

Ending balance

 

$

28,988

 

 

$

19,463

 

The entire amount of the unrecognized tax benefits would not impact the Company’s effective tax rate if recognized. The Company has elected to include interest and penalties as a component of tax expense. During the years ended December 31, 2025 and 2024, the Company did not recognize accrued interest and penalties related to unrecognized tax benefits.

The Company files tax returns in the U.S., California and other various states. The Company is not currently under examination in any of these jurisdictions and all its tax years remain effectively open to examination due to net operating loss carryforwards.