Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

9.Income Taxes

The reconciliation of the Federal statutory income tax (provision) benefit to the Company’s effective income tax provision is as follows (in thousands):

	Years Ended December 31,
	2024			2023
Federal statutory income tax	$	27,309		$	20,060
State income taxes, net of federal tax benefit		8,550			6,133
Foreign research and development tax credit		2,210			1,411
Permanent differences in non-tax-deductible executive compensation		(3,348	)		(2,842	)
Permanent differences in foreign jurisdiction		(1,650	)		(1,013	)
Permanent differences others		(469	)		323
Other deferred items		351			750
Rate changes		(90	)		(63	)
Valuation allowance		(32,865	)		(24,761	)
Net expense for income taxes	$	(2	)	$	(2	)

Deferred income taxes reflect the net tax effects of loss and credit carryforwards and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company’s deferred income tax assets and liabilities at December 31, 2024 and 2023 comprised the following (in thousands):

	As of December 31,
	2024			2023
Deferred tax assets:
Net operating loss carryforwards	$	60,600		$	44,705
Capitalized research and development		35,639			20,562
Equity compensation		6,963			5,105
Lease Liability		405			682
Other		1,482			1,452
Total deferred tax assets	$	105,089		$	72,506
Deferred tax liabilities:
Fixed assets	$	(215	)	$	(281	)
Right-of-use assets		(372	)	$	(646	)
Total deferred tax liabilities		(587	)		(927	)
Valuation allowance		(104,502	)		(71,579	)
Net deferred tax assets	$	—		$	—

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax

assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Based on the level of historical operating results and the uncertainty of the economic conditions, the Company has recorded a valuation allowance of $104.5 million and $71.6 million at December 31, 2024 and 2023, respectively. The change in the valuation allowance for the year end December 31, 2024 was an increase of $32.9 million.

At December 31, 2024 and 2023, the Company had Federal net operating losses (NOLs) of approximately $190.2 million and $150.8 million, and state NOLs of $296.7 million and $187.0 million, respectively. As a result of the Tax Act, as modified by the CARES Act, for U.S. income tax purposes, NOLs generated in tax years beginning before January 1, 2018 can still be carried forward for up to 20 years, but net operating losses generated for tax years beginning after December 31, 2017 are carryforward indefinitely and can be used to offset taxable income, but the deductibility of such Federal NOLs may be limited to 80% of current year taxable income for tax years beginning on or after December 31, 2024. Of the total Federal NOLs of $190.2 million, $3.3 million will begin to expire in 2032 and $186.9 million will not expire. The state NOL carryover of $296.7 million will begin to expire in 2032.

Pursuant to Internal Revenue Code (IRC) Sections 382 and 383, annual use of the Company’s net operating loss and research and development credit carryforwards may be limited in the event a cumulative change in ownership of more than 50% occurs within a three-year period. The Company has not completed an ownership change analysis pursuant to IRC Section 382. If ownership changes within the meaning of IRC Section 382 are identified as having occurred, the amount of remaining tax attribute carryforwards available to offset future taxable income and income tax expense in future years may be significantly restricted or eliminated. Further, the Company’s deferred tax assets associated with such tax attributes could be significantly reduced upon realization of an ownership change within the meaning of IRC Section 382 that has occurred or may occur in the future. Any adjustment to the Company’s tax attributes as a result of an ownership change will result in a corresponding decrease to the valuation allowance recorded against the Company’s deferred tax assets.

The Company’s valuation allowance increased during the years ended December 31, 2024 and 2023 due primarily to the generation of net operating losses, as follows (in thousands):

	Years Ended December 31,
	2024		2023
Valuation allowance at beginning of year	$	71,579	$	47,427
Increase recorded to provision for income taxes		32,923		24,152
Valuation allowance at end of year	$	104,502	$	71,579

The Company has not incurred any material interest or penalties as of the current reporting date with respect to income tax matters. The Company is subject to U.S. Federal and state income taxes. The Federal and state income tax returns for tax years prior to 2024 may remain open to examination as carry-forward attributes generated prior may be adjusted upon examination.