Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

11. Income Taxes

The Company's entire pretax loss for the year ended December 31, 2024 and 2023 was from its U.S. domestic operations. During the years ended December 31, 2024 and 2023, the Company did not record a provision for income taxes because it has incurred net operating losses since inception and maintains a full valuation allowance against its deferred tax assets.

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

	Year Ended December 31,
	2024			2023
US Federal statutory income tax rate		(21.0	)%		(21.0	)%
State income taxes, net of federal benefit		(7.5	)		(12.6	)
Change in fair value of financial instruments		(1.0	)		(15.9	)
Research and development tax credits		(4.2	)		(3.1	)
Change in deferred tax asset valuation allowance		33.4			51.6
Stock-based compensation		0.3			1.2
Other permanent differences		0.0			(0.2	)
Effective income tax rate		(0.0	)%		(0.0	)%

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

	Year Ended December 31,
	2024			2023
Deferred tax assets:
Net operating loss carryforwards	$	10,994		$	6,985
Research and development tax credit carryforward		3,754			736
Operating lease liability		501			12
Accrued expenses		705			590
Stock-based compensation		2,261			861
Capitalized research and development expense		25,525			11,618
Amortization of acquired IPR&D		17,412			18,905
Total deferred tax assets before valuation allowance		61,152			39,707
Valuation allowance		(60,664	)		(39,695	)
Total deferred tax assets - net of valuation allowance	$	488		$	12
Deferred tax liabilities:
ROU asset		(488	)		(12	)
Total deferred tax liabilities	$	(488	)	$	(12	)
Net deferred tax asset (liability)	$	—		$	—

As of December 31, 2024, the Company had federal and state net operating loss (“NOLs”) carryforwards of $37.6 million and $49.1 million, respectively. As of December 31, 2023, the Company had federal and state NOLs carryforwards of $25.0 million and $27.6 million, respectively. The federal NOLs are not subject to expiration and are limited in utilization to 80% of taxable income and the state NOLs begin to expire in 2041. The Company also has federal and state research and development credits of $3.5 million and $0.3 million, respectively, which will, if not utilized, begin to expire in 2043 and 2037, respectively.

Management of the Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets. Under the applicable accounting standards, management has considered the Company’s history of losses and concluded that it is more likely than not that the Company will not recognize the benefits of its federal and state deferred tax assets. Accordingly, a full valuation allowance of $60.7 million and $39.7 million has been established as of December 31, 2024 and 2023, respectively.

Changes in valuation allowance for deferred tax assets during the years ended December 31, 2024 and 2023 related primarily to the increase in NOL carryforwards and research and development tax credit carryforwards, offset by amortization of acquired IPR&D in 2024 and were as follows (in thousands):

	Year Ended December 31,
	2024			2023
Valuation allowance at beginning of year	$	(39,695	)	$	(29,086	)
Increases recorded to income tax provision		(20,969	)		(10,609	)
Valuation allowance at end of year	$	(60,664	)	$	(39,695	)

Utilization of the NOL and research and development credit carryforwards may be subject to a substantial annual limitation under Section 382 of the Internal Revenue Code of 1986 due to ownership change limitations that have occurred previously or that could occur in the future. These ownership changes may limit the amount of NOL and research and development credit carryforwards that can be utilized annually to offset future taxable income and tax, respectively. The Company has not completed a study to assess whether a change of ownership has occurred, or whether there have been multiple ownership changes since its formation, due to the significant cost and complexity associated with a study. There could also be additional ownership changes in the future which may result in additional limitations on the utilization of NOL carryforwards and credits.

As of December 31, 2024, the Company has not recorded any amounts for uncertain tax positions. The Company’s policy is to recognize interest and penalties accrued on any uncertain tax positions as a component of income tax expense, if any, in its consolidated statements of operations and comprehensive loss. For the years ended December 31, 2024 and 2023, no estimated interest or penalties were recognized on uncertain tax positions.

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. The Company’s tax years are still open under statute from December 31, 2021, to the present. The resolution of tax matters is not expected to have a material effect on the Company's consolidated financial statements.