Barinthus Biotherapeutics plc.BRNS
Barinthus Biotherapeutics plc. Income Taxes Disclosure
Income Taxes
Loss before income before income taxes are as follows (in thousands):
| Year ended December 31, 2025 | Year ended December 31, 2024 | ||||||||||
| United Kingdom | $ | (42,544) | $ | (27,510) | |||||||
| United States | (24,053) | (32,833) | |||||||||
| Other foreign | (36) | (884) | |||||||||
| Loss before income taxes | $ | (66,633) | $ | (61,227) | |||||||
The components of income tax benefit are as follows (in thousands):
| Year ended December 31, 2025 | Year ended December 31, 2024 | ||||||||||
| Current income tax benefit/(expense): | |||||||||||
| United States | $ | — | $ | (70) | |||||||
| Other Foreign | (9) | (22) | |||||||||
| Deferred income tax benefit: | |||||||||||
| United States | 184 | 136 | |||||||||
| Total income tax benefit | $ | 175 | $ | 44 | |||||||
A reconciliation of the U.K. statutory income tax rate to the Company's effective tax rate as reflected in the consolidated financial statements is as follows:
| Year ended December 31, 2025 | Year ended December 31, 2024 | ||||||||||||||||||||||
| Statutory tax rate | $ | 16,658 | 25.00 | % | $ | 15,307 | 25.00 | % | |||||||||||||||
| Increase (decreases) resulting from: | |||||||||||||||||||||||
| Foreign tax effects-United States: | |||||||||||||||||||||||
| Changes in valuation allowance | (6,122) | (9.17) | (4,002) | (6.54) | |||||||||||||||||||
| Share-based compensation | (118) | (0.18) | — | — | |||||||||||||||||||
| Non-taxable or non-deductible items | (506) | (0.76) | (3,505) | (5.73) | |||||||||||||||||||
| Foreign tax effects-Switzerland: | |||||||||||||||||||||||
| Share-based compensation | (2) | — | (30) | (0.05) | |||||||||||||||||||
| Effect of change in tax laws or rates enacted in the current period | 598 | 0.90 | 721 | 1.18 | |||||||||||||||||||
| Tax credits | (81) | (0.12) | (3,501) | (5.72) | |||||||||||||||||||
| Changes in valuation allowance | (7,513) | (11.27) | (2,116) | (3.46) | |||||||||||||||||||
| Non-taxable or non-deductible items | (2,496) | (3.75) | (46) | (0.06) | |||||||||||||||||||
| Other adjustments | (243) | (0.37) | (2,784) | (4.55) | |||||||||||||||||||
| Effective tax rate | $ | 175 | 0.28 | % | $ | 44 | 0.07 | % | |||||||||||||||
The Company has adopted ASU 2023-09 and evaluated all required categories and determined that no additional jurisdictional disaggregation or reconciling items were individually material.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income and for tax carryforwards. Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):
| December 31, 2025 | December 31, 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Net operating loss carryforwards | $ | 40,691 | $ | 26,040 | |||||||
| Research and development credit carryforwards | 313 | 47 | |||||||||
| Share based compensation | 4,190 | 4,753 | |||||||||
| Lease liability | 2,965 | 3,156 | |||||||||
| Accruals | 28 | — | |||||||||
| Intangible amortization | 459 | 452 | |||||||||
| Capitalized Research and Development expenditure | 4,765 | 6,185 | |||||||||
| Other | 62 | 10 | |||||||||
| Gross deferred tax asset | 53,473 | 40,643 | |||||||||
| Valuation allowance | (46,266) | (30,830) | |||||||||
| Net deferred tax assets | 7,207 | 9,813 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Depreciation | (1,130) | (1,815) | |||||||||
| Right-of-use lease asset | (1,060) | (1,149) | |||||||||
| Undistributed earnings of subsidiaries | (1,339) | (1,248) | |||||||||
| Intangible assets | (3,932) | (6,039) | |||||||||
| Net deferred tax liabilities | (7,461) | (10,251) | |||||||||
| Total deferred tax, net | $ | (254) | $ | (438) | |||||||
Specified research and experimentation costs under Section 174 of the Internal Revenue Code are required to be capitalized and amortized ratably over five years for domestic expenditures and over 15 years for foreign expenditures. This provision of Section 174 became effective for tax years beginning after December 31, 2021. As a result of the capitalization of these costs in the current year, the Company has recorded a $4.8 million deferred tax asset (2024: $6.2 million).
As of December 31, 2025, the Company had a valuation allowance of $46.3 million (2024: $30.8 million) against its deferred tax assets, which consisted principally of net operating loss and research and development credit carryforwards. The Company considered the positive and negative evidence bearing upon its ability to realize the deferred tax assets. In addition to the Company’s history of cumulative losses, the Company cannot be certain that future taxable income will be sufficient to realize its deferred tax assets. Accordingly, a valuation allowance has been provided against its deferred tax assets. When the Company changes its determination as to the amount of its deferred tax assets that can be realized, the valuation allowance is adjusted with a corresponding impact to the provision for income taxes in the period in which such determination is made.
Changes in the valuation allowance for deferred tax assets during the years ended December 31, 2025 and 2024 related primarily to the increase in net operating loss and credit carryforwards, and were as follows:
| Year ended December 31, 2025 | Year ended December 31, 2024 | ||||||||||
| Valuations allowance at beginning of year | $ | 30,830 | $ | 25,057 | |||||||
| Changes in valuation allowance arising from in-year additions | — | — | |||||||||
| Increases recorded to income tax provision | 13,634 | 6,123 | |||||||||
| Foreign exchange translation | 1,802 | (350) | |||||||||
| Valuation allowance at end of year | $ | 46,266 | $ | 30,830 | |||||||
As of December 31, 2025, the Company had net operating loss ("NOL") carryforwards totaling approximately $160.4 million which have an unlimited carryforward period, of which $114.0 million originate in the U.K. As of December 31, 2025, the Company had $0.3 million of research and development tax credit carryforwards which also have an unlimited carryforward period.
As of December 31, 2024, the Company had NOL carryforwards totaling approximately $101.7 million which have an unlimited carryforward period, of which $75.6 million originate in the U.K. As of December 31, 2024, the Company had $0.1 million of research and development tax credit carryforwards which also have an unlimited carryforward period.
As of December 31, 2025 and 2024, the Company does not have any material unrecognized tax benefit liabilities. The Company files corporation/income tax returns in the U.K., the United States, Switzerland, Australia and Italy. The associated tax filings remain subject to examination by applicable tax authorities for a certain length of time following the tax year to which those filings relate. In the U.K., tax years from 2022 remain subject to examination by HMRC. In all other jurisdictions, the tax years since inception remain subject to examination by the applicable taxing authorities as of December 31, 2025 and 2024.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 13, 2026 | Showing above |
| 2024 | Mar 20, 2025 | |
| 2023 | Mar 20, 2024 | |
| 2022 | Mar 24, 2023 | |
| 2021 | Mar 25, 2022 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.