11. Income Taxes

During the years ended December 31, 2025 and 2024, the Company did not record a provision for income taxes because it has incurred net operating losses (NOLs) entirely in the United States since inception and maintains a full valuation allowance against its deferred tax assets. The Company’s entire pre-tax loss for the years ended December 31, 2025 and 2024 were from U.S. operations and resulted in no tax expense or benefit.

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A reconciliation of the Company’s total tax using the statutory income tax rate to the Company’s total tax using their effective income tax rate is as follows (in thousands):

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State and local income taxes, net of the federal income tax benefit, do not have any impact on the Company’s effective tax rate since the Company is in a cumulative loss position over the past three years, and as a result, the Company offsets any deferred state tax with a valuation allowance.

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The Company’s significant components of deferred tax assets are as follows (in thousands):

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As of December 31, 2025 and 2024, the Company had a federal NOL carryforward of $383.6 million and $47.2 million, respectively. Of the federal NOL carryforward, $0.4 million begin to expire in 2037 and $383.2 million have an unlimited carryforward period.

As of December 31, 2025, the Company has state NOL carryforwards of $419.2 million. Of the state NOL carryforwards, $368.3 million begin to expire in 2027 and $50.9 million have an unlimited carryforward period. The Company had no state NOL carryforwards as of December 31, 2024.

As of December 31, 2025 and 2024, the Company had $9.0 million $0.4 million, respectively, of U.S. federal research and development tax credits that begin to expire 2039.

The future realization of the tax benefits from existing temporary differences and tax attributes ultimately depends on the existence of sufficient taxable income. The Company assesses the realizability of its deferred tax assets at each balance sheet date. In assessing the realization of its deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company considers the projected future taxable income, expected reversal of existing deferred tax liabilities, and tax planning strategies in making this assessment. After consideration of all available evidence, both

positive and negative, the Company determined that it is not more likely than not that its net deferred tax assets will be realized in the foreseeable future. As a result, the Company increased its federal and state valuation allowance by $106.5 million and $22.9 million, respectively, as of December 31, 2025.

The future realization of the Company’s NOL carryforwards and other tax attributes may also be limited by the change in ownership rules under the U.S. Internal Revenue Code Section 382. Under Section 382, if a corporation undergoes an ownership change (as defined), the corporation’s ability to utilize its NOL carryforwards and other tax attributes to offset income may be limited. The Company has calculated/analyzed whether an ownership change has occurred on April 15, 2025, in relation to the Merger with Cara, and has determined that an ownership change more likely than not has occurred. Next, the Company calculated a high level annual limit based on the ownership change, which as a result puts a very restrictive limit on the legacy Cara tax attributes. The Company concluded its likely that substantially none of the legacy Cara federal or state research and development credits or pre-2018 federal NOL carryforwards will be able to be utilized moving forward, and therefore, the related deferred tax assets have been written off entirely and are not included in the consolidated financial statements.

The Company files income tax returns in the U.S. federal and multiple state jurisdictions. Therefore, the Company is subject to tax examination by various U.S. taxing authorities. The Company is not currently under examination, and is not aware of any issues under review that could result in significant payments, accruals or material deviation from its tax positions. As of December 31, 2025, tax years from 2022 to present remain open to examination by the Company’s relevant taxing jurisdictions. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service and state tax authorities to the extent utilized in a future period.

The calculation and assessment of the Company’s income tax exposures generally involve the uncertainties in the application of complex tax laws and regulations for U.S. federal and state jurisdictions. A tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation, on the basis of the technical merits. As of December 31, 2025, the Company has not recorded any liabilities or interest and penalties related to uncertain tax positions in its consolidated financial statements. The Company recognizes accrued interest and penalties, if any, related to uncertain tax positions in tax expense in its consolidated financial statements.

The Company has not paid income taxes at the federal or state level as it has incurred losses since inception.

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law. The OBBBA introduced multiple U.S. federal income tax changes such as favorable changes to the deductibility of domestic research and development expenses, bonus depreciation of certain property additions, and limitations on interest expense deductions. The Company has considered the impact of these provisions on its consolidated financial statements for the year ended December 31, 2025, however, the changes in tax law did not result in a change in the Company’s tax provision. Because the Company maintains a full valuation allowance and has no current income tax expense or cash tax payments, the enactment of OBBBA did not have a material impact on its financial position, results of operations, or cash flows for the year ended December 31, 2025.