Elicio Therapeutics, Inc.ELTX
Elicio Therapeutics, Inc. Income Taxes Disclosure
Income Taxes
Income (loss) before taxes related to the Company’s United States and foreign operations for the years ended December 31, 2025 and 2024 consists of the following (in thousands):
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| United States | $ | (39,476) | $ | (51,728) | |||||||
| Foreign | (95) | (170) | |||||||||
| Loss before income taxes | $ | (39,571) | $ | (51,898) | |||||||
The Company had no income tax expense or benefit due to operating losses incurred for the years ended December 31, 2025 and 2024.
Beginning with the year ended December 31, 2025, the Company adopted ASU 2023-09 on a prospective basis. See Note 2 for additional details. A reconciliation between the federal statutory income tax amount and rate to the Company's actual effective amount and rate pursuant to the disclosure requirements of ASU 2023-09 for the year ended December 31, 2025 is as follows (in thousands):
| Year Ended Year Ended December 31, 2025 | |||||||||||
| $ | % | ||||||||||
US federal statutory income tax rate | $ | (8,310) | 21.0 | % | |||||||
| Domestic state and local taxes, net of federal effect | — | — | % | ||||||||
| Foreign tax effects | 20 | (0.1) | % | ||||||||
| Tax credits: | |||||||||||
| Research and development credits | (1,126) | 2.9 | % | ||||||||
Nontaxable or nondeductible items: | |||||||||||
Nondeductible stock based compensation | 310 | (0.8) | % | ||||||||
| Change in fair value of warrants | 402 | (1.0) | % | ||||||||
| Other nontaxable and nondeductible items | 244 | (0.6) | % | ||||||||
| Changes in valuation allowance | 8,460 | (21.4) | % | ||||||||
| Provision for income taxes and effective income tax rate | $ | — | 0.0 | % | |||||||
A reconciliation between the federal statutory income tax rate and the Company's effective income tax rate prior to the adoption of ASU 2023-09 for the year ended December 31, 2024 is as follows:
| Year Ended December 31, 2024 | |||||
| Statutory federal income tax rate | 21.0 | % | |||
| State tax, net of federal benefits | (2.4) | % | |||
| Permanent differences | (3.5) | % | |||
| Federal research and development credits | 3.6 | % | |||
| State research and development credits | 0.6 | % | |||
| Other differences | 0.1 | % | |||
| Change in valuation allowance | (19.4) | % | |||
| Effective income tax rate | 0.0 | % | |||
The principal components of the Company's net deferred tax assets at December 31, 2025 and 2024 is as follows (in thousands):
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets (liabilities): | |||||||||||
| Net operating loss carryforwards | $ | 77,260 | $ | 64,646 | |||||||
| Research and development tax credits | 16,534 | 15,117 | |||||||||
| Capitalized research and development | 13,412 | 17,585 | |||||||||
| Lease liability | 1,301 | 1,548 | |||||||||
| Other | 3,023 | 2,704 | |||||||||
| ROU asset | (1,218) | (1,470) | |||||||||
| Property and equipment | (8) | (13) | |||||||||
| Total deferred tax assets | 110,304 | 100,117 | |||||||||
| Less: Deferred tax asset valuation allowance | (110,304) | (100,117) | |||||||||
| Net deferred tax assets | $ | — | $ | — | |||||||
Net operating losses (“NOLs”) generated in tax years ended December 31, 2017 and prior can be carried forward 20 years under the Internal Revenue Code (“IRC”). Use of NOLs arising in tax years ended after December 31, 2017 are limited to 80% of taxable income in any one tax year, and are carried forward indefinitely. At December 31, 2025, Elicio has federal NOLs of $311.4 million, of which $19.1 million will start to expire in 2032 and $292.3 million can be carried forward indefinitely, and state NOLs of $179.5 million that will start to expire in 2032. At December 31, 2025, Elicio has $14.1 million and $2.9 million of federal and state research and development credit carryforwards, respectively, that start to expire in 2027. At December 31, 2025, Elicio has $1.4 million and $0.2 million of Australian NOLs and research and development credit carryforwards, respectively, that can be carried forward indefinitely.
As the Company has not yet achieved profitable operations, management believes the tax benefits as of December 31, 2025 did not satisfy the realization criteria set forth in ASC Topic 740, Income Taxes, and, therefore, has recorded a full valuation allowance for the entire deferred tax asset. The valuation allowance increased in 2025 by $10.2 million primarily due to current year operating losses and research and development credits generated.
Ownership changes, as defined in the IRC, may limit the amount of NOL carryforwards that can be utilized annually to offset future taxable income pursuant to IRC Section 382 or similar provisions. Subsequent ownership changes could further affect the limitation in future years. The Company has not completed a study to assess whether a change in control has occurred or whether there have been multiple changes in control since the Company’s formation due to the significant complexity and cost associated with such study and because there could be additional changes in control in the future. As a result, the Company is not able to estimate the effect of the change in control, if any, on the Company’s ability to utilize NOL and research and development credit carryforwards in the future.
The Company files tax returns in the United States, Australia, California, Connecticut, Florida, Massachusetts, Michigan, Missouri, Nevada, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Tennessee, and Utah. The federal and state tax returns for the periods ended December 31, 2022, 2023, and 2024 remain open to examination by the major taxing jurisdictions to which the Company is subject, as carryforward attributes generated in years past may still be adjusted upon examination by the Internal Revenue Service (“IRS”) or other authorities if they have or will be used in a future period. To its knowledge, the Company is not currently under examination by the IRS or any other jurisdictions for any tax years.
A reconciliation of the unrecognized tax benefits for the years ended December 31, 2025 and 2024 is as follows (in thousands):
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Gross unrecognized tax benefit, beginning of period | $ | 4,141 | $ | 4,141 | |||||||
| Increase (decrease) recognized in the income statement | — | — | |||||||||
| Gross unrecognized tax benefit, end of period | $ | 4,141 | $ | 4,141 | |||||||
As of December 31, 2025, the Company had $4.1 million of unrecognized tax benefits related to prior research tax credits that may not be substantiated upon audit. If recognized, the Company anticipates that its effective tax rate would not be affected for the years ended December 31, 2025 and 2024. The Company has elected to recognize interest and penalties related to income tax matters as a component of income tax expense, of which no interest or penalties were recorded for the years ended December 31, 2025 and 2024.
On July 4, 2025, H.R. 1 (the “Act”), commonly referred to as the One Big Beautiful Bill Act, was signed into law in the United States, introducing changes to U.S. federal tax provisions affecting businesses. The Act has multiple effective dates, with certain provisions effective in 2025 and others to be implemented through 2027. The Act includes modifications to the capitalization of research and development expenses and to the depreciation of fixed assets. The provisions impacting the Company have been reflected in the financial statements for the year ended December 31, 2025, and did not have a material impact as the Company has a valuation allowance against its net deferred tax assets.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 12, 2026 | Showing above |
| 2024 | Mar 31, 2025 | |
| 2023 | Mar 29, 2024 | |
| 2022 | Mar 17, 2023 | |
| 2021 | Mar 30, 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.