v3.26.1
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes
13. Income Taxes
The Company’s pretax net loss for the years ended December 31, 2025 and 2024 results entirely from United States operations. During the years ended December 31, 2025 and 2024, the Company incurred book and tax losses and, because it maintains a full valuation allowance on its net deferred tax assets, did not recognize income tax expense or benefit. Accordingly, the Company did not make any cash payments for income taxes during the years ended December 31, 2025 and 2024.
In July 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant
provisions
, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The Company has evaluated the impact of the OBBBA and determined that it does not have a material impact on the Company’s consolidated financial position and results of operations.
A reconciliation of the U.S. federal statutory tax rate to the Company’s effective tax rate for the years ended December 31, 2025 and 2024 is as follows:
 
    
 Year Ended December 31, 2025 
    
 Year Ended December 31, 2024 
  
    
Amount
     
Percent
    
Amount
     
Percent
  
U.S. federal statutory tax rate
    $ (15,701 )       21.00 %    $ (1,978 )       21.00 % 
State and local income tax, net of federal income tax effect
      —         —        —         —   
Foreign tax effects
      —         —        —         —   
Effects of changes in tax laws or rates enacted in the current period
      —         —        —         —   
Effects of
cross-border-tax
laws
      —         —        —         —   
Tax credits:
           
Federal research and development credits
      (908 )       0.01       (884 )       0.09  
Federal orphan drug credits
      (5,255 )       0.07       (7,297 )       0.77  
Changes in valuation allowances
      20,716        (0.28 )      (89,613 )       9.51  
Nontaxable or nondeductible items:
           
Stock-based compensation
      —         —        587        (0.06 ) 
Officers’ compensation
      879        (0.01 )      482        (0.05 ) 
Other permanent differences
      (103 )       0.00       85        (0.01 ) 
Changes in unrecognized tax benefits
      —         —        —         —   
Other adjustments:
           
Impact of ownership change
      —         —        97,547        (10.36 ) 
Stock compensation cancellations
      —         —        1,322        (0.14 ) 
Other
      372        (0.00 )      (251 )       0.03  
  
 
 
     
 
 
    
 
 
     
 
 
  
Effective income tax rate
    $ —         —  %    $ —         —  % 
  
 
 
     
 
 
    
 
 
     
 
 
  
 
The Company’s deferred tax assets and liabilities consist of the following (in thousands):
 
    
December 31,
2025
     
December 31,
2024
  
Deferred tax assets:
      
Capitalized research and development costs
    $ 29,024      $ 38,850  
Net operating loss carryforwards
      27,713        1,436  
Orphan drug credit carryforwards
      7,448        2,193  
Research and development credit carryforwards
      1,326        422  
Intangible assets
      2,848        2,705  
Accrued expenses and other
      8,298        6,760  
Operating lease liability
      1,703        2,287  
  
 
 
     
 
 
  
Gross deferred tax assets
      78,360        54,653  
Valuation allowance
      (76,506 )       (51,753 ) 
  
 
 
     
 
 
  
Net deferred tax assets
      1,854        2,900  
Deferred tax liability
      (1,854 )       (2,900 ) 
  
 
 
     
 
 
  
Net deferred tax assets
    $ —       $ —   
  
 
 
     
 
 
  
The Company has evaluated the positive and negative evidence bearing upon its ability to realize the net deferred tax assets. The Company considered its history of cumulative net losses incurred since inception and its lack of commercialization of any products since inception and has concluded that it is more likely than not that the Company will not realize the benefits of the net deferred tax assets. Accordingly, a full valuation allowance has been established against the net deferred tax assets as of December 31, 2025 and 2024. The valuation allowance increased by $24.8 million during the year ended December 31, 2025, which is primarily attributable to increases in net operating loss carryforwards as a result of current year net losses and the generation of research and development and orphan drug tax credit carryforwards. The Company reevaluates the positive and negative evidence at each reporting period.
As of December 31, 2025, the Company had federal net operating loss carryforwards of approximately $102.8 million, which may be available to offset future taxable income and do not expire, but are limited in their usage to an annual deduction equal to 80% of annual taxable income. As of December 31, 2025, the Company also had state net operating loss carryforwards of approximately $96.9 million, which begin to expire in 2044. Substantially all state net operating loss carryforwards relate to Massachusetts.
As of December 31, 2025, the Company had federal orphan drug credits of approximately $7.5 million, which begin to expire in 2044. As of December 31, 2025, the Company had federal research and development tax credit carryforwards of approximately $1.2 million, which begin to expire in 2039. As of December 31, 2025, the Company also had state research and development tax credit carryforwards of approximately $0.2 million, which begin to expire in 2039.
Utilization of the net operating loss carryforwards and research and development tax credit carryforwards may be subject to an annual limitation under Section 382 of the Internal Revenue Code, and corresponding provisions of state law, due to ownership changes that have occurred previously or that could occur in the future. These ownership changes may limit the amount of carryforwards that can be utilized annually to offset future taxable income. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain shareholders or public groups in the stock of a corporation by more than 50% over a three-year period.
The Company completed a study to assess whether an ownership change had occurred under Section 382 through December 31, 2024, and determined that all net operating loss carryforwards and credits generated before September 12, 2024 are limited. As a result, the carryforwards before the ownership change date of
 
September 12, 2024 are not available for utilization and have been written off. The carryforwards as of December 31, 2025 and 2024 were generated after the ownership change on September 12, 2024. The Company has not conducted a study to assess whether a change of control has occurred or whether there have been multiple changes of control since December 31, 2024. If the Company has experienced a change of control, as defined by Section 382, subsequent to December 31, 2024, utilization of the net operating loss carryforwards or research and development tax credit carryforwards would be subject to an annual limitation under Section 382. Any limitation may result in expiration of a portion of the net operating loss carryforwards or research and development tax credit carryforwards before utilization. Further, until a study is completed and any limitation is known, no amounts are being presented as an uncertain tax position.
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. As of December 31, 2025, the Company’s tax years are still open under statute from
2016
to the present.
It is the Company’s policy to include penalties and interest expense related to income taxes as a component of the provision for income taxes. As of December 31, 2025 and 2024, the Company had no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in the Company’s statements of operations. For the year ended December 31, 2025, the Company generated research and development tax credits but has not conducted a study to document the qualified activities. This study may result in an adjustment to the Company’s research and development tax credit carryforwards; however, until a study is completed and any adjustment is known, no amounts are being presented as an uncertain tax position. A full valuation allowance has been provided against the Company’s research and development tax credit carryforwards and, if an adjustment is required, this adjustment would result in an adjustment to the deferred tax asset established for the research and development tax credit carryforwards and the valuation allowance.