ImageneBio, Inc. Income Taxes Disclosure
18. Income Taxes
The Company is subject to taxation in the United States and various foreign tax jurisdictions. Loss before income taxes was as follows (in thousands):
|
|
Year Ended December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
U.S. operations (domestic) |
|
$ |
34,633 |
|
|
$ |
7,941 |
|
Non-U.S. operations (foreign) |
|
|
11,066 |
|
|
|
28,614 |
|
Loss before provision for income taxes |
|
$ |
45,699 |
|
|
$ |
36,555 |
|
The significant components of income tax benefits/provision are as follows:
|
|
Year Ended December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Current expense: |
|
|
|
|
|
|
||
Federal |
|
$ |
(383 |
) |
|
$ |
— |
|
State |
|
|
33 |
|
|
|
13 |
|
Foreign |
|
|
— |
|
|
|
— |
|
Total current expense: |
|
$ |
(350 |
) |
|
|
13 |
|
Deferred expense: |
|
|
|
|
|
|
||
Federal |
|
|
— |
|
|
|
— |
|
State |
|
|
— |
|
|
|
— |
|
Foreign |
|
|
— |
|
|
|
— |
|
Total deferred expense: |
|
|
— |
|
|
|
— |
|
Total income tax provision: |
|
$ |
(350 |
) |
|
$ |
13 |
|
The Company adopted ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures on a prospective basis. As a result, the rate reconciliation for the year ended December 31, 2025 is presented in accordance with the new disclosure requirements, while the reconciliation for the year ended December 31, 2024 continue to be presented under disclosure requirements in effect for that period.
A reconciliation of the income tax benefits and provision for income taxes to the amount computed by applying the statutory federal income tax rate to the net loss is summarized as follows (in thousands):
|
|
Year ended December 31, 2025 |
|
|||||
U.S. Federal statutory tax rate |
|
$ |
(9,597 |
) |
|
|
21.0 |
% |
State and local income tax, net of federal income tax effect (1) |
|
|
37 |
|
|
|
(0.1 |
)% |
Foreign tax effects: |
|
|
|
|
|
|
||
China |
|
|
|
|
|
|
||
Foreign Rate Differential |
|
|
710 |
|
|
|
(1.6 |
)% |
Change in Valuation Allowance |
|
|
(25,302 |
) |
|
|
55.4 |
% |
Effects of entity disposition |
|
|
25,298 |
|
|
|
(55.4 |
)% |
Cayman |
|
|
|
|
|
|
||
Foreign Rate Differential |
|
|
1,551 |
|
|
|
(3.4 |
)% |
Other foreign jurisdictions |
|
|
67 |
|
|
|
(0.1 |
)% |
Tax credits |
|
|
|
|
|
|
||
R&D Tax Credit |
|
|
(564 |
) |
|
|
1.2 |
% |
Change in valuation allowance |
|
|
2,000 |
|
|
|
(4.4 |
)% |
Nontaxable or nondeductible items |
|
|
|
|
|
|
||
Stock Compensation |
|
|
2,618 |
|
|
|
(5.7 |
)% |
IP Distribution |
|
|
2,555 |
|
|
|
(5.6 |
)% |
Other |
|
|
3 |
|
|
|
0.0 |
% |
Changes in unrecognized tax benefits |
|
|
(212 |
) |
|
|
0.5 |
% |
Other |
|
|
486 |
|
|
|
(1.1 |
)% |
|
|
$ |
(350 |
) |
|
|
0.7 |
% |
(1) State taxes in California for 2025 made up the majority (greater than 50%) of the tax effect in this category.
|
|
Year ended December 31, 2024 |
|
|||
Domestic statutory rate |
|
|
|
|
21 |
% |
Foreign rate differential |
|
|
|
|
(9 |
)% |
Nondeductible expenses |
|
|
|
|
(1 |
)% |
Tax credits |
|
|
|
|
1 |
% |
Change in valuation allowance |
|
|
|
|
(12 |
)% |
Total |
|
|
|
|
— |
% |
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 tax purposes and operating losses and tax credit carryforwards. The Company has established a valuation allowance against net deferred tax assets due to the uncertainty that such assets will be realized. The Company periodically evaluates the recoverability of the deferred tax assets. At such time as it is determined that it is more likely than not that the deferred tax asset will be realized, the valuation allowance will be reduced.
|
|
Year Ended December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Deferred tax assets: |
|
|
|
|
|
|
||
Net operating losses |
|
$ |
60,906 |
|
|
$ |
26,214 |
|
Intellectual property sale |
|
|
— |
|
|
|
3,405 |
|
Capitalized R&D |
|
|
27,389 |
|
|
|
4,185 |
|
Stock compensation |
|
|
934 |
|
|
|
|
|
Other |
|
|
2,547 |
|
|
|
908 |
|
Total deferred tax assets |
|
|
91,776 |
|
|
|
34,712 |
|
Less: valuation allowance |
|
|
(91,556 |
) |
|
|
(34,573 |
) |
Total net deferred tax assets |
|
|
220 |
|
|
|
139 |
|
Deferred tax liabilities: |
|
|
|
|
|
|
||
Operating lease right-of-use assets |
|
|
(221 |
) |
|
|
(139 |
) |
Other |
|
|
1 |
|
|
|
— |
|
Total deferred tax liabilities |
|
|
(220 |
) |
|
|
(139 |
) |
Total net deferred taxes |
|
$ |
— |
|
|
$ |
— |
|
The valuation allowance increased by $57.0 million and by $10.0 million for the years ended December 31, 2025 and 2024, respectively, primarily due to the net operating losses carryforwards, research and development credits and capitalized research expenditures.
The following table summarizes the Company’s net operating losses and tax credit carryforwards by jurisdiction (in thousands):
|
|
Amount at |
|
|
Year |
|
Net operating losses: |
|
|
|
|
|
|
U.S. federal |
|
$ |
267,027 |
|
|
Indefinite |
U.S. state |
|
$ |
81,521 |
|
|
2037 |
Tax credits: |
|
|
|
|
|
|
U.S. federal |
|
$ |
1,140 |
|
|
2043 |
U.S. state |
|
$ |
402 |
|
|
Indefinite |
The NOL carryforwards and the research tax credit carryforwards are subject to an annual limitation under Section 382 and 383 of the Internal Revenue Code of 1986, and similar state provisions due to ownership change limitations that have occurred which will limit the amount of NOL and tax credit carryforwards that can be utilized to offset future taxable income and tax, respectively. In general, an ownership change, as defined by Section 382 and 383, results from
transactions increasing ownership of certain stockholders or public groups in the stock of the corporation by more than 50 percentage points over a three-year period. The Company has not completed an IRC Section 382/383 analysis regarding the limitation of net operating loss and research and development credit carryforwards. If a change in ownership were to have occurred, NOL and tax credit carryforwards could be eliminated or restricted. If eliminated, the related asset would be removed from the deferred tax asset schedule with a corresponding reduction in the valuation allowance. Due to the existence of the full valuation allowance, limitations created by future ownership changes, if any, related to the Company’s operations in the United States will not impact the Company’s effective tax rate.
The Company recognizes a tax benefit from an uncertain tax position when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits, and uncertain income tax positions must meet a more likely than not recognition threshold to be recognized. The Company recognizes interest and penalties related to unrecognized tax benefits within the income tax expense line in the consolidated statement of operations and comprehensive loss. As of December 31, 2025, and December 31, 2024, the Company accrued no material interest and penalties.
The following table summarizes the changes to the Company’s gross unrecognized tax benefits (in thousands):
Unrecognized tax benefit |
|
Amount |
|
|
Balance at December 31, 2023 |
|
$ |
238 |
|
Additions based on tax positions related to the |
|
|
75 |
|
Additions based on tax positions of prior years |
|
|
— |
|
Reductions for tax positions of prior years |
|
|
— |
|
Settlements |
|
|
— |
|
Balance at December 31, 2024 |
|
$ |
313 |
|
Additions based on tax positions related to the |
|
|
48 |
|
Additions based on tax positions of prior years |
|
|
715 |
|
Reductions for tax positions of prior years |
|
|
(13 |
) |
Reductions for lapse in statute of limitations |
|
|
(162 |
) |
Balance at December 31, 2025 |
|
$ |
901 |
|
The Company is subject to income tax examination by tax authorities since inception. As of December 31, 2025, the Company is not currently under examination by any federal, state, or foreign taxing authorities.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions, most notably Section 174 capitalization of domestic research and development costs. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. There was not a significant impact on the Company's tax expense or effective tax rate for year ended December 31, 2025 associated with the OBBBA.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 10, 2026 | Showing above |
| 2024 | Mar 6, 2025 | |
| 2023 | Mar 12, 2024 | |
| 2022 | Mar 14, 2023 | |
| 2021 | Mar 17, 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.