AGENUS INC Income Taxes Disclosure

(7) Income Taxes

Current and deferred income tax in the U.S. and foreign jurisdiction was nil for the years ended December 31, 2025, 2024 and 2023.

For all periods presented, state and local income taxes in California and Massachusetts comprise the majority of the domestic state and local income taxes, net of federal effect category.

In each of the years presented there were no cash taxes paid or received.

As of December 31, 2025, we had available net operating loss carryforwards of $992.4 million and $532.5 million for Federal and state income tax purposes, respectively, which are available to offset future Federal and state taxable income, if any, $546.5 million of these Federal and $1.9 million of these State net operating loss carryforwards do not expire, while the remaining net operating loss carryforwards expire between 2026 and 2044. Our ability to use these net operating losses may be limited by change of control provisions under Internal Revenue Code Section 382 and may expire unused. In addition, we have $3.8 million and $1.2 million of Federal and state research and development credits, respectively, available to offset future taxable income. These Federal and state research and development credits expire between 2026 and 2034 and 2026 and 2030, respectively. Additionally, we have $24,000 of state investment tax credits, available to offset future taxable income that expire in 2026. We also have foreign net operating loss carryforwards, which do not expire, available to offset future foreign taxable income of $715,000 in Ireland. Additionally, we have $2.9 million of net operating loss carryforwards, in Switzerland, which begin to expire in 2030. The potential impacts of these provisions are among the items considered and reflected in management’s assessment of our valuation allowance requirements.

Beginning January 1, 2022, the Tax Cuts and Jobs Act (the “Tax Act”) eliminated the option to deduct research and development expenditures in the current year and requires taxpayers to capitalize such expenses pursuant to Internal Revenue Code (“IRC”) Section 174. Under the Tax Act the capitalized expenses are amortized over a 5-year period for domestic expenses and a 15-year period for foreign expenses. On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA contains, among other provisions, changes to the U.S. corporate income tax system, including allowing immediate expensing of U.S. qualifying research and development expenses and allowing taxpayers an election to accelerate the deduction for previously capitalized U.S. research and development costs. The favorable U.S. research and development expenditure provisions increase the net operating loss generated in 2025 but does not have a material impact on the Company’s deferred tax expense as a result of the valuation allowance maintained against the Company’s net deferred tax assets. The Company is electing to continue amortization of the domestic capitalized research and development expenses in 2025. We have included the impact of this provision, which results in capitalized research expense deferred tax assets of approximately $55.9 million and $87.0 million as of December 31, 2025 and 2024, respectively.

The tax effect of temporary differences and net operating loss and tax credit carryforwards that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of December 31, 2025 and 2024 are presented below (in thousands).

In assessing the realizability of deferred tax assets, we consider 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 the net operating loss and tax credit carryforwards can be utilized or the temporary differences become deductible. We consider projected future taxable income and tax planning strategies in making this assessment. In order to fully realize the deferred tax asset, we will need to generate future taxable income sufficient to utilize net operating losses prior to their expiration. Based upon our history of not generating taxable income due to our business activities focused on product development, we believe that it is more likely than not that deferred tax assets will not be realized through future earnings. Accordingly, a valuation allowance has been established for deferred tax assets which will not be offset by the reversal of deferred tax liabilities. The valuation allowance on the deferred tax assets decreased by $6.2 million and increased by $25.0 million during the years ended December 31, 2025 and 2024, respectively.

We are subject to taxation in the U.S. and in various state, local, and foreign jurisdictions. We remain subject to examination by U.S. Federal, state, local, and foreign tax authorities for tax years 2022 through 2025. With a few exceptions, we are no longer subject to U.S. Federal, state, local, and foreign examinations by tax authorities for the tax year 2021 and prior. However, net operating losses from the tax year 2021 and prior would be subject to examination if and when used in a future tax return to offset taxable income. Our policy is to recognize income tax related penalties and interest, if any, in our provision for income taxes and, to the extent applicable, in the corresponding income tax assets and liabilities, including any amounts for uncertain tax positions.

These unrecognized tax benefits would all impact the effective tax rate if recognized.