v3.26.1
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and liabilities were as follows (amounts in thousands):
December 31,
20252024
Deferred tax assets:
Tax loss carryforwards$144,366 $96,444 
Capitalized research and development8,239 13,606 
Research and development credits13,557 11,063 
Other4,321 3,068 
Total deferred tax assets170,483 124,181 
Valuation allowance(143,002)(94,894)
Deferred tax assets, net of allowance
27,481 29,287 
Deferred tax liabilities:
Other
(2,703)(2,701)
Net deferred tax assets
$24,778 $26,586 
The Company regularly assesses its ability to realize its deferred tax assets. Assessing the realization of deferred tax assets requires significant judgment. In determining whether its deferred tax assets are more likely than not realizable, the Company evaluated all available positive and negative evidence, and weighed the evidence based on its objectivity. After consideration of the evidence, including the Company's history of cumulative net losses in the UK, the Company has concluded that it is more likely than not that the Company will not realize the benefits of its UK deferred tax assets and accordingly the Company has provided a valuation allowance for the full amount of the net deferred tax assets in the UK.
The Company has considered the history of cumulative net profits in an operating entity in the United States, which carries out services for other entities in the group and recognizes most of the interest income from cash, cash equivalents, and investments, and estimated that entity’s future taxable income and concluded that it is more likely than not that the Company will realize the benefits of the deferred tax assets in that entity, and has not provided a valuation allowance against the net deferred tax assets in that entity. For the year ended December 31, 2025, the consolidated valuation allowance increased by $48.1 million due to the increase in tax loss carryforward resulting from the current year operating losses.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted. Key income tax provisions of the OBBBA include the repeal of the mandatory capitalization of research and development (“R&D”) expenditures under Internal Revenue Code Section 174, thereby reinstating full expensing of R&D costs beginning in 2025, the extension of bonus depreciation, and certain revisions to international tax regimes. The Company recognized the income tax effects of the OBBBA in its consolidated financial statements for the year ended December 31, 2025, in accordance with ASC 740, Income Taxes. The enactment of the OBBBA resulted in a reduction to the Company’s income tax liability for the current fiscal year, primarily reflecting the accelerated recognition of the deferred tax asset related to previously capitalized R&D expenditures. The provisions of the OBBBA did not have a material impact on the Company’s effective tax rate for the period.

Components of the Company’s pre-tax loss are as follows (amounts in thousands):
Years Ended December 31,
20252024
(Loss) Income before tax:
UK$(217,984)$(248,649)
Non-UK22,271 15,736 
Total $(195,713)$(232,913)
The income tax expense (benefit) consists of the following (amounts in thousands):
December 31,
20252024
Federal - U.S.
Current(40)(513)
Deferred2,491 2,599 
State - U.S.
Current(659)702 
Deferred18 56 
Foreign
Current9 — 
Deferred— — 
Income tax expense (benefit)
$1,819 $2,844 
A reconciliation of the United Kingdom (“UK”) income tax rate to the Company’s effective tax rate is as follows:

Years Ended December 31,
20252024
Statutory tax rate benefit25 %25 %
Non-deductible share-based compensation
(4)%(3)%
Other non-deductible expenses— %(4)%
Enhanced UK research and development expenses
8 %6 %
Losses surrendered for UK research tax incentive
(13)%(18)%
UK non-taxable research and development incentive
3 %3 %
U.S. research & development tax credits
1 %— %
Return to provision adjustments
1 %— %
Increase in valuation allowance
(22)%(10)%
Effective income tax rate(1)%(1)%

The following table summarizes carryforwards of U.S. federal and UK net operating losses (NOL) and U.S. research tax credits (amounts in thousands):
December 31,
20252024
UK$557,930 $365,638 
U.S.
$35,197 $33,423 

UK income tax returns from 2023 remain open for examination and UK NOLs do not expire. In the US, income tax returns from 2022 and later remain open for examination and unutilized US NOLs and credit carryforwards are subject to examination until utilized. If not utilized prior to the specified dates, US federal NOLs totaling $3.2 million would expire in 2036, a US tax credit carryforward of $13.6 million would expire starting in 2039, and a $38.8 million of US state NOLs would expire beginning in 2036.
Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”) provides for limitation on the use of net operating loss and research and development tax credit carryforwards following certain ownership changes (as defined in Code) that could limit the Company’s ability to utilize these carryforwards, in relation to its principal operating unit in the U.S. Pursuant to Section 382 of the Code, an ownership change occurs when the stock ownership of a 5% stockholder increases by more than 50% over a three-year testing period. The Company’s U.S. entities may have experienced various ownership changes, as defined by the Code, as a result of past financings and may in the future experience an ownership change. Accordingly, the Company’s ability to utilize the aforementioned carryforwards may be limited.
A reconciliation of gross unrecognized tax benefits, as of December 31, 2025 and 2024 is as follows (amounts in thousands):
20252024
Gross unrecognized tax benefits at beginning of period
$2,614 $2,614 
Increase related to current year tax positions
— — 
Gross unrecognized tax benefits at end of period
$2,614 $2,614 
As of December 31, 2025, the Company had a total of $2.6 million of unrecognized tax benefits which, if recognized, would impact the Company’s effective tax rate. The Company does not anticipate a significant change to this balance in the twelve months following December 31, 2025. The Company will recognize interest and penalties related to uncertain tax positions as a component of income tax expense. As of December 31, 2025, there was no accrued interest or penalties related to unrecognized tax benefits.