Veradermics, IncMANE
Veradermics, Inc Income Taxes Disclosure
Income Taxes
The Company did not record a provision for income taxes for the years ended December 31, 2025 and 2024, due to a full valuation allowance against its deferred tax assets.
Differences between the U.S. statutory federal tax rate and the Company's 2025 effective income tax rate presented prospectively in accordance with ASU 2023-09 are analyzed below:
| 2025 | |||||||||||
| (in thousands) | Amount | Rate | |||||||||
Federal tax at statutory rate | $ | (14,699) | 21.0 | % | |||||||
Permanent differences | 219 | (0.3) | |||||||||
Research and development credits | (2,485) | 3.5 | |||||||||
Change in valuation allowance | 16,965 | (24.2) | |||||||||
Effective tax rate | $ | — | — | % | |||||||
Differences between the U.S. statutory federal tax rate and the Company’s effective income tax rate for periods prior to the adoption of ASU 2023-09 are analyzed below:
| 2024 | ||||||||
| Rate | ||||||||
Federal tax at statutory rate | 21.0 | % | ||||||
State taxes, net of federal benefit | 5.9 | % | ||||||
| Permanent differences | 0.3 | % | ||||||
Research and development credits | 5.3 | % | ||||||
Change in valuation allowance | (32.5) | % | ||||||
Effective tax rate | — | % | ||||||
The significant components of the Company’s net deferred tax assets as of December 31, 2025 and 2024 are shown below. In determining the realizability of the Company’s net deferred tax assets, the Company considered numerous factors, including historical profitability and estimated future taxable income. Based on this information and management’s assessment, the Company has provided a valuation allowance for the full amount of its net deferred tax assets because the Company has determined that it is more likely than not it will not be realized. Significant components of the Company’s deferred tax assets are as follows:
| December 31, | |||||||||||||||||
| (in thousands) | 2025 | 2024 | |||||||||||||||
Deferred tax assets: | |||||||||||||||||
Federal and state net operating losses | $ | 24,271 | $ | 3,942 | |||||||||||||
Capitalized research and development | 6,757 | 8,795 | |||||||||||||||
Federal and state research and development tax credits | 4,720 | 2,239 | |||||||||||||||
Accrued expenses | 522 | 278 | |||||||||||||||
Other | 187 | 137 | |||||||||||||||
Valuation allowance | (36,457) | (15,391) | |||||||||||||||
Total deferred tax assets | — | — | |||||||||||||||
As of December 31, 2025 and 2024 a full valuation allowance of $36.5 million and $15.4 million, respectively was established against its deferred tax assets due to the uncertainty surrounding the realization of such assets. The valuation allowance increased $21.1 million compared to December 31, 2024 primarily due to increases in federal and state net operating losses and federal and state research and development tax credits.
As of December 31, 2025 and 2024, the Company had federal and state net operating loss carryforwards of $180.3 million and $29.3 million, respectively. Federal net operating losses carryforward indefinitely. State net operating loss carryforwards will begin to expire in 2040.
The Company had federal research and development credit carryforwards of $4.6 million and $2.1 million as of December 31, 2025 and 2024, respectively. The federal research tax credit carryforwards will begin to expire in 2041. The Company had state research and development credit carryforwards of $0.1 million and $0.1 million as of December 31, 2025 and 2024, respectively. The state research tax credit carryforwards will begin to expire in 2037.
Pursuant to Section 382 and 383 of the Internal Revenue Code (“IRC”), utilization of the Company’s federal net operating loss carryforwards and research and development credit carryforwards may be subject to annual limitations in the event of any significant future changes in its ownership structure. These annual limitations may result in the expiration of net operating loss and research and development credit carryforwards prior to utilization. As of December 31, 2025 the Company has completed a preliminary analysis under IRC Sections 382 and 383 to assess potential limitations on the utilization of its net operating loss and research and development credit carryforwards. Based on this preliminary analysis, the Company has determined that certain ownership changes during the pre-IPO period may result in limitations on the timing of utilization of a portion of its net operating losses and research and development credit carryforwards.
No liability is recorded on the financial statements related to uncertain tax positions. There are no unrecognized tax benefits as of December 31, 2025. The Company does not expect that uncertain tax benefits will materially change in the next 12 months.
The Company’s policy is to record estimated interest and penalties related to uncertain tax benefits as income tax expense. As of December 31, 2025, the Company had no accrued interest or penalties recorded related to uncertain tax positions.
On July 4, 2025, the One Big Beautiful Bill Act was signed into law. The legislation did not have a material impact on the Company's income tax expense for the year ended December 31, 2025, nor did it materially change the Company's effective income tax rate for 2025.
For the years ended December 31, 2025 and 2024, the Company paid no cash amounts related to income taxes. All payments made to taxing authorities were for non-income based tax liabilities and are outside the scope of ASC 740.
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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.