Clene Inc. Income Taxes Disclosure

Note 10. Income Taxes

 

The components of loss before income taxes for the years ended December 31, 2025 and 2024 were as follows:

 

		Year Ended December 31,
(in thousands)		2025				2024
United States		$	(25,996	)		$	(39,240	)
Foreign			(177	)			(160	)
Net loss before income taxes		$	(26,173	)		$	(39,400	)

 

We had no income tax expense or benefit for the years ended December 31, 2025 and 2024. Pursuant to our prospective adoption of ASU 2023-09 (see Note 2), the following table presents a reconciliation of income tax computed at the U.S. federal statutory rate of 21.00% to expense for income taxes for the year ended  December 31, 2025 as follows:

 

		Year Ended December 31,
(in thousands, except tax rates)		2025
U.S. Federal statutory tax rate		$	(5,496	)			21.00	%
State and local income tax effects(1)			—				0.00	%
Foreign tax effects			37				(0.14	)%
Tax credits:
Research and development credits - Federal			(392	)			1.50	%
Changes in valuation allowances			5,139				(19.63	)%
Nontaxable or nondeductible items:
Stock-based compensation			398				(1.52	)%
Other			314				(1.20	)%
Income tax benefit		$	—				0.00	%

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(1)

2025 state taxes in Utah made up the majority (greater than 50%) of the tax effect in this category.

 

A reconciliation of income tax computed at the U.S. federal statutory rate of 21.00% to expense for income taxes for the years ended  December 31, 2024, prior to the adoption of ASU 2023-09, was as follows:

 

		Year Ended December 31,
(in thousands)		2024
Income tax expense (benefit) at federal statutory rate		$	(8,270	)
State income taxes (net of federal benefit)			(1,012	)
Loss on initial issuance of equity			473
Change in fair value of common stock warrant liabilities			148
Change in fair value of contingent earn-outs			(18	)
Research and development tax credits			(779	)
Stock compensation			428
Foreign rate differential			(11	)
Adjustment for change in tax rate			269
Other			206
Change in valuation allowance			8,566
Income tax benefit		$	—

 

Our effective tax rate was 0.00% and 0.00% during the years ended December 31, 2025 and 2024, respectively. The primary difference between the effective tax rate and the federal statutory tax rate relates to the full valuation allowance on our net operating losses and other deferred tax assets. Significant components of deferred tax assets (liabilities) as of December 31, 2025 and 2024 were as follows:

 

		December 31,				December 31,
(in thousands)		2025				2024
Deferred tax assets:
Net operating loss carryforwards		$	46,824			$	40,749
Depreciation and amortization			1,219				1,241
Research and development and employment tax credits			6,796				6,345
Lease liability			967				1,216
Capitalized research and development expenses			7,255				8,889
Non-qualified stock options and restricted stock awards			8,475				7,369
Accrued compensation			730				970
Total deferred tax assets			72,266				66,779
Deferred tax liabilities:
Right-of-use asset			(732	)			(876	)
Other			(25	)			(23	)
Total deferred tax liabilities			(757	)			(899	)
Less: valuation allowance			(71,509	)			(65,880	)
Net deferred tax assets (liabilities)		$	—			$	—

 

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 periods in which those temporary differences become deductible. We consider the scheduled reversal of deferred tax liabilities, projected future taxable income, carry back opportunities and tax planning strategies in making the assessment. We believe it is more likely than not that we will not realize the benefits of these deductible differences and have applied a full valuation allowance against them.

 

We have federal and state net operating losses (“NOLs”) of approximately $195.7 million and $136.3 million as of December 31, 2025, respectively that, subject to limitation, may be available in future tax years to offset taxable income. Of the available federal NOLs, approximately $162.3 million can be carried forward indefinitely but utilization is limited to 80% of our taxable income in any given tax year based on current federal tax laws. The remaining balance of $33.4 million will begin to expire after 2034. Of the available state NOLs, approximately $123.4 million can be carried forward indefinitely but utilization is limited to 80% of our taxable income in any given tax year based on current tax laws. The remaining balance of $12.9 million will begin to expire after 2032. Additionally, we had approximately $6.7 million of research and development credit carryforwards that will begin to expire after 2034 if not utilized.

 

Under the provisions of Section 382 of the Internal Revenue Code of 1986, substantial changes in our ownership may result in limitations on the amount of NOL carryforwards and research and development credits that can be utilized in future years. NOL carryforwards and research and development credits are subject to examination in the year they are utilized regardless of whether the tax year in which they are generated has been closed by statute. The amount subject to disallowance is limited to the amount utilized. Accordingly, we may be subject to examination for prior NOLs and credits generated as such tax attributes are utilized.

 

We have not recorded any amounts for unrecognized tax benefits as of December 31, 2025 and 2024. We recognize interest and penalties related to income tax matters in income tax expense. We have no accrual of interest and penalties on the consolidated balance sheets and have not recognized interest and penalties in the consolidated statements of operations and comprehensive loss for the years ended December 31, 2025 and 2024.

 

We are subject to taxation in the U.S., Australia, Netherlands, and various state jurisdictions. Our tax returns from 2015 to present are subject to examination by U.S. and state authorities due to the carry forward of unutilized net operating losses and research and development credits. We currently have no pending examinations.