LeonaBio, Inc. Income Taxes Disclosure
11. Income Taxes
Components of Income and Income Tax
The Company did not record a provision (benefit) for income taxes for the years ended December 31, 2025 and 2024. Net loss is attributable to the following tax jurisdictions (in thousands):
|
|
Year Ended December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
United States |
|
$ |
(105,610 |
) |
|
$ |
(96,910 |
) |
Foreign |
|
|
1 |
|
|
|
(30 |
) |
Net Loss |
|
$ |
(105,609 |
) |
|
$ |
(96,940 |
) |
The provision for income taxes differs from the amount expected by applying the federal statutory rates to the net loss before taxes as follows:
|
|
Year Ended December 31, |
|
|
|
|
2024 |
|
|
Federal statutory income tax rate |
|
|
21.0 |
% |
State taxes |
|
|
— |
|
Stock-based compensation |
|
|
(1.8 |
) |
Non-deductible expenses and others |
|
|
(0.9 |
) |
Tax credits |
|
|
3.1 |
|
Change in valuation allowance |
|
|
(21.4 |
) |
Effective income tax rate |
|
|
— |
% |
The Company adopted ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures for the year ended December 31, 2025 on a prospective basis (in thousands):
|
|
Year Ended December 31, |
|
|||||
|
|
2025 |
|
|||||
At Statutory Rate |
|
$ |
(22,178 |
) |
|
|
21 |
% |
State Income Taxes, net of Federal Effect |
|
|
— |
|
|
0 |
|
|
Change in Valuation Allowance |
|
|
20,269 |
|
|
|
(19.2 |
) |
Nontaxable or Nondeductible Items |
|
|
— |
|
|
0 |
|
|
Equity Compensation |
|
|
1,809 |
|
|
|
(1.7 |
) |
Other Nondeductible Items |
|
|
669 |
|
|
|
(0.6 |
) |
Tax credits |
|
|
(759 |
) |
|
|
0.7 |
|
Worldwide change in UTB |
|
|
190 |
|
|
|
(0.2 |
) |
Total |
|
$ |
— |
|
|
|
— |
% |
Deferred Tax Assets and Liabilities
The components of the Company’s deferred tax assets and liabilities were as follows (in thousands):
|
|
Year Ended December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Deferred tax assets: |
|
|
|
|
|
|
||
Net operating loss carryforwards |
|
$ |
56,887 |
|
|
$ |
43,414 |
|
Research and development tax credit |
|
|
12,931 |
|
|
|
12,362 |
|
Accrued liabilities |
|
|
369 |
|
|
|
538 |
|
Stock-based compensation |
|
|
2,287 |
|
|
|
2,867 |
|
Operating lease liability |
|
|
170 |
|
|
|
256 |
|
Property and equipment |
|
|
352 |
|
|
|
250 |
|
Intangibles |
|
|
14,944 |
|
|
|
8 |
|
Capitalized research and development |
|
|
24,924 |
|
|
|
32,540 |
|
Total deferred tax assets |
|
|
112,864 |
|
|
|
92,235 |
|
Deferred tax liabilities: |
|
|
|
|
|
|
||
Right of use asset |
|
|
(113 |
) |
|
|
(170 |
) |
Prepaid expenses and other |
|
|
(109 |
) |
|
|
(82 |
) |
Investments |
|
|
(19 |
) |
|
|
(34 |
) |
Total deferred tax liabilities |
|
|
(241 |
) |
|
|
(286 |
) |
Less valuation allowance |
|
|
(112,623 |
) |
|
|
(91,949 |
) |
Net deferred tax assets |
|
$ |
— |
|
|
$ |
— |
|
Deferred income taxes reflect temporary differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes, and operating losses and tax credit carryforwards. The Company considers a number of factors concerning the realizability of its net deferred tax assets, including its history of operating losses, the nature of the deferred tax assets, and the timing, likelihood and amount, if any, of future taxable income during the periods in which those temporary differences and carryforwards become deductible, all of which require significant judgment. As of December 31, 2025, the Company has recorded a full valuation allowance on its net deferred tax assets as the Company has concluded that it is not more likely than not that such losses or credits will be utilized. The valuation allowance increased by $20.7 million during 2025 and 2024.
At December 31, 2025, the Company has federal net operating loss and tax credit carryforwards of $9.5 million and $17.2 million, respectively, which expire over a period of 6 to 12 years. Net operating loss carryforwards of $259.8 million were generated after 2017, and therefore do not expire. As of December 31, 2025, the Company also had state net operating loss carryforwards of $5 million, which expire over a period of 17 to 20 years.
Uncertain Tax Positions
The Company files federal income tax returns. With few exceptions, the Company is no longer subject to income tax examinations by tax authorities for years prior to 2016. However, to the extent allowed by law, the tax authorities may have the right to examine prior periods where net operating losses or tax credits were generated and carried forward and may make adjustments to the amount of the net operating loss or credit carryforward amount. The Company is not currently under examination in any jurisdiction.
A reconciliation of the beginning and ending amount of unrecognized tax benefits for uncertain tax positions were as follows (in thousands):
|
|
Year Ended December 31, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Beginning balance |
|
$ |
4,121 |
|
|
$ |
3,109 |
|
Additions for tax positions taken in prior |
|
|
— |
|
|
|
— |
|
Additions for tax positions taken in the current |
|
|
190 |
|
|
|
1,012 |
|
Ending balance |
|
$ |
4,311 |
|
|
$ |
4,121 |
|
If the unrecognized tax benefits for uncertain tax positions as of December 31, 2025 are recognized, there will be no impact to the effective tax rate due to the valuation allowance. The Company recognizes interest and penalties related to unrecognized tax benefits within the income tax expense line in the accompanying consolidated financial statements. At December 31, 2025, there were no material interest and penalties on uncertain tax benefits. The Company does not anticipate any significant changes to its unrecognized tax benefits in the next 12 months.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 31, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 22, 2024 | |
| 2022 | Mar 23, 2023 | |
| 2021 | Mar 28, 2022 | |
| 2020 | Mar 25, 2021 | |
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.