Karyopharm Therapeutics Inc. Income Taxes Disclosure

17. Income Taxes

We recorded an income tax provision of less than $0.1 million in each of the years ended December 31, 2025 and 2024 and $0.3 million for the year ended December 31, 2023. Our current income tax provision consists of state income tax due from our KSC entity through its dissolution in October 2024, as well as foreign income taxes due from our German and Israel subsidiaries, both of which operate on a cost-plus profit margin. We did not have a deferred income tax provision for the years ended December 31, 2025, 2024 and 2023.

Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes. The significant components of our deferred tax assets are comprised of the following (in thousands):

Federal tax law requires taxpayers to capitalize and amortize research and development expenditures under section 174 (“174 R&D Expenditures”) incurred after December 31, 2021. From January 1, 2022 to December 31, 2024, the Company capitalized all 174 R&D Expenditures and amortized: 1) 174 R&D Expenditures performed in the U.S. over five years; and 2) 174 R&D Expenditures performed outside the U.S. over 15 years. In July 2025, federal tax law was changed to allow the immediate expensing of 174 R&D Expenditures performed in the U.S. after January 1, 2025. Beginning with the year ended December 31 2025, the Company will: 1) continue to amortize all 174 R&D Expenditures that were capitalized between January 1, 2022 and December 31, 2024 as described above; 2) continue to capitalize and amortize over 15 years all 174 R&D Expenditures performed outside the U.S after January 1, 2025; and 3) immediately expense all 174 R&D Expenditures performed in the U.S. after January 1, 2025. 174 R&D Expenditures of $50.7 million, $120.7 million, and $135.9 million were capitalized during the years ended December 31, 2025, 2024, and 2023, respectively.

On May 13, 2024, we exchanged $148.0 million aggregate principal amount of the 2025 Notes for (i) $111.0 million aggregate principal amount of the 2029 Notes and (ii) 2024 Warrants to purchase up to 3,051,750 shares of our common stock, as described in further detail in Note 10, “Long-Term Obligations”, Note 11, “Common Share Warrants” and Note 12, “Extinguishment Accounting”. This created $93.2 million of taxable income related to the cancellation of debt, which was fully offset by our net operating loss carryforwards.

In October 2025, we executed a series of transactions described in further detail in Note 10, “Long-Term Obligations”, Note 11, “Common Share Warrants” and Note 12, “Extinguishment Accounting” which created a $12.9 million tax deduction.

We have evaluated the positive and negative evidence bearing upon the realizability of our deferred tax assets. Based on our history of operating losses, we have concluded that it is more likely than not that the benefit of our deferred tax assets will not be realized. Accordingly, we have provided a full valuation allowance for deferred tax assets as of December 31, 2025 and 2024. The valuation allowance decreased by approximately $133.8 million during the year ended December 31, 2025 primarily due to the write-off of certain net operating loss carryforwards and tax credit carryforwards due to limitations resulting from certain cumulative changes in the ownership interest of significant shareholders which occurred during the year ended December 31, 2025.

As of December 31, 2025, 2024 and 2023, we had U.S. federal net operating loss carryforwards of approximately $770.3 million, $728.1 million and $768.5 million, respectively, which may be able to offset future income tax liabilities. Of the $770.3 million carryforward as of December 31, 2025, $595.8 million of the carryforward has an indefinite life and $174.5 million will expire at various dates through 2037. As of December 31, 2025, 2024 and 2023, we had U.S. state net operating loss carryforwards of approximately $349.9 million, $645.2 million and $655.7 million, respectively, which may be available to offset future state income tax liabilities and expire at various dates through 2045. As of December 31, 2025, 2024 and 2023, we did not have any foreign net operating loss carryforwards to offset future foreign income tax liabilities.

As of December 31, 2024 and 2023, we had federal research and development and orphan drug tax credit carryforwards of approximately $107.3 million and $99.3 million, respectively, available to reduce future tax liabilities, which expire at various dates through 2045. As of December 31, 2024 and 2023, we had state research and development tax credit carryforwards of approximately $13.1 million and $11.9 million, respectively, available to reduce future tax liabilities, which expire at various dates through 2040. We did not have any of these federal or state tax credit carryforwards as of December 31, 2025 due to limitations resulting from certain cumulative changes in the ownership interest of significant shareholders which occurred during the year ended December 31, 2025.

Under the provisions of the Internal Revenue Code, the net operating loss and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. Net operating loss and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50 percent, as defined under Sections 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the value of us immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. Previously, we have completed several financings since our inception, which have resulted in changes in control as defined by Sections 382 and 383 of the Internal Revenue Code. We reduced our deferred tax assets for tax attributes we believe will expire unused. In the future, we may complete financings that could result in a change in control, which will reduce our deferred tax assets for tax attributes we believe will expire unused due to the change in control limitations.

We will recognize interest and penalties related to uncertain tax positions in the income tax provision. As of December 31, 2025, 2024 and 2023, we had no accrued interest or penalties related to uncertain tax positions and no such amounts have been recognized.