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Income Taxes
 9 Months Ended 12 Months Ended
Sep. 30, 2025
Dec. 31, 2024
Income Tax Disclosure [Abstract]    
Income Taxes
14. Income Taxes
The Company’s income tax expense was immaterial for the three and nine months ended September 30, 2025, and 2024.
The Company’s effective tax rate for the three and nine months ended September 30, 2025 and 2024 was approximately 0%. For the periods presented, the difference between the effective tax rate and the federal statutory rate of 21% primarily relates to
certain non-deductible items,
the absence of current taxable income, and the full valuation allowance on deferred tax assets.
15.
Income Taxes
Income Taxes and Rate Reconciliation
The Company is subject to U.S. federal and state corporate income taxes. For the years ended December 31, 2024 and 2023, net loss before income taxes was generated in the U.S.
Income taxes consisted of the following for the periods presented (in thousands):
 
    
Year Ended December 31,
  
    
 2024 
     
 2023 
  
Current:
      
Federal
    $    —       $    —   
State
      1        9  
  
 
 
     
 
 
  
Total
      1        9  
  
 
 
     
 
 
  
Deferred:
      
Federal
      —         —   
State
      —         —   
  
 
 
     
 
 
  
Total
      —         —   
  
 
 
     
 
 
  
Income taxes
    $ 1      $ 9  
  
 
 
     
 
 
  
 
The Company’s effective income tax rate reconciliation was composed of the following for the periods presented (in thousands):
 
    
Year Ended December 31,
  
    
 2024 
     
 2023 
  
Federal statutory rate, benefit
    $ (14,586 )     $ (11,958 ) 
State income taxes, net of benefit
      (5,318 )       (4,881 ) 
Nondeductible expenses
      35        153  
Stock-based compensation
      2,566        1,618  
Change in valuation allowance
      20,366        18,099  
R&D credits
      (3,084 )       (3,022 ) 
Other
      22        —   
  
 
 
     
 
 
  
Income taxes
    $ 1      $ 9  
  
 
 
     
 
 
  
The expense for income taxes in the table above related to continuing operations differs from the amounts computed by applying the statutory income tax rate of 21% due to a pretax loss in each period.
Deferred Income Taxes
The components of net deferred tax assets were as follows for the periods presented (in thousands):
 
    
December 31,
  
    
2024
     
2023
  
Deferred tax assets:
      
Net operating loss carryforwards
    $ 47,448      $ 35,486  
Accrued expenses and other current liabilities
      1,666        1,212  
Charitable contributions
      22        8  
Depreciation and amortization
      930        756  
Stock-based compensation
      233        —   
Operating lease liabilities
      2,136        1,848  
Capitalized research and development expense
      12,920        8,659  
Tenant improvement allowance
      —         4  
Section 195 capitalization
      369        418  
Research and development credits
      12,076        8,764  
  
 
 
     
 
 
  
Total deferred tax assets
      77,800        57,155  
Less: valuation allowance
      (75,737 )       (55,372 ) 
  
 
 
     
 
 
  
Total deferred tax assets, net of valuation allowance
      2,063        1,783  
  
 
 
     
 
 
  
Deferred tax liabilities:
      
Operating lease
right-of-use
assets
      (2,064 )       (1,784 ) 
Other
      1        1  
  
 
 
     
 
 
  
Total deferred tax liabilities
      (2,063 )       (1,783 ) 
  
 
 
     
 
 
  
Net deferred tax assets
    $ —       $ —   
  
 
 
     
 
 
  
The Company determines its valuation allowance on deferred tax assets by considering whether it is more likely than not that deferred tax assets will be realized. Due to the Company’s history of operating losses, the
 
Company’s deferred tax assets are not likely to be realized and, accordingly, the Company has provided a full valuation allowance on its deferred tax assets. The valuation allowance increased by $20.4 million and $18.1 million for the years ended December 31, 2024 and 2023, respectively, primarily due to the increase in the Company’s U.S. and state net operating losses (“NOL”) carryforwards and tax credit carryforwards.
Available Carryforwards
As of December 31, 2024, NOLs and tax credit carryforwards were as follows (in millions):
 
    
Amount
     
Expiration Years
NOLs, federal
    $  160.8      Indefinite
NOLs, state
      154.3      2039
Research and development tax credits, federal
      9.4      2039
Research and development tax credits, state
      6.7      Indefinite
Under Section 382 and Section 383 of the Internal Revenue Code of 1986, utilization of the Company’s NOL carryforwards and tax credit carryforwards may be subject to a substantial annual limitation if the Company experiences an “ownership change.” An ownership change generally occurs if one or more stockholders or groups of stockholders that own at least 5% of the Company’s stock increase their ownership by more than 50 percentage points over their lowest ownership percentage (by value) within a rolling three-year period. Similar rules may apply under state tax laws. The Company may have experienced an ownership change in the past, and may experience future
ownership
changes, some of which are outside of the Company’s control, or future regulatory changes could further limit the Company’s ability to utilize its net operating loss and tax credit carryforwards. The Company has not conducted a study to assess whether a change of control has occurred. Any limitation may result in expiration of a portion of the NOL carryforwards or tax credit carryforwards before utilization; however, such limitation, if any, would not have an impact on the Company’s financial statements as of December 31, 2024 due to the recognition of a full valuation.
Uncertain Tax Positions
A reconciliation of the beginning and ending balance of total gross unrecognized tax benefits was as follows for the periods presented (in thousands):
 
    
December 31,
  
    
2024
     
2023
  
Beginning balance of unrecognized tax benefits
    $  2,441      $  1,679  
Gross increases based on tax positions related to current year
      795        762  
Gross increases based on tax positions related to prior years
      33        —   
  
 
 
     
 
 
  
Ending balance of unrecognized tax benefits
    $ 3,269      $ 2,441  
  
 
 
     
 
 
  
The unrecognized tax benefits, if recognized, would not have an impact on the Company’s effective tax rate assuming the Company continues to maintain a full valuation allowance. As of December 31, 2024, no significant increases or decreases are expected to the Company’s uncertain tax positions within the next twelve months.
For the years
ende
d December 31, 2024 and 2023, no material interest and penalties related to unrecognized tax benefits were recognized. The Company is subject to taxation in the United States and various state jurisdictions. All tax years are open for examination. The Company currently has no federal or state tax examinations in progress.