Income taxes

9 Months Ended

Sep. 30, 2025

Income Tax Disclosure [Abstract]

Income taxes

Income taxes

The Company accounts for income taxes under ASC Topic 740 – Income Taxes. Under this standard, deferred tax assets and liabilities are recognized for future tax benefits or consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The Company’s tax provision for interim periods is determined using an estimate of the annual effective income tax rate, adjusted for discrete items, if any, that occur in the relevant period. Income tax expense of $0.2 million for the nine months ended September 30, 2025 resulted in an effective income tax rate of negative 1.4%. Included in the $0.2 million of tax expense was discrete tax benefit of $0.7 million related to stock compensation, which was offset by a change in the valuation allowance.

The Company’s projected effective income tax rate excluding the impact, if any, of discrete items is negative 1.5%, which is lower than the U.S. federal statutory rate of 21% primarily due to the increase in the valuation allowance on deferred tax assets and non-deductible executive compensation offset by state tax benefits and research tax credits.

The Company acquired the remaining equity of PanTHERA, a Canadian corporation, on April 4, 2025. The Company's projected effective income tax rate is 0% with respect to its Canadian jurisdiction, primarily due to research and development credits.

Realization of deferred tax assets is dependent upon the generation of future taxable income, the timing and amount of which are uncertain. In determining the need for a valuation allowance, the Company’s management evaluates all available positive and negative evidence to determine if it is more likely than not that its deferred tax assets are realizable. As of September 30, 2025, the Company's management believes there is uncertainty regarding the future realizability of the U.S. net operating loss carryforward and is projecting a full valuation allowance of $56.8 million against its deferred tax assets as the realization of such assets is not considered to be more likely than not at this time. If the Company's conclusion about the realizability of its deferred tax assets and therefore the appropriateness of the valuation allowance changes in a future period, the Company could record a tax benefit in its Condensed Consolidated Statements of Operations when that occurs.

On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted, introducing significant changes to U.S. tax law. Among other items, the OBBBA allows the deduction of U.S. research and development expenses from taxable income.

The Company is in the process of evaluating the impact of this recently enacted law on its Consolidated Financial Statements but does not expect a material impact due to the valuation allowance.