NEKTAR THERAPEUTICS Income Taxes Disclosure

Note 13 — Income Taxes

Benefit for Income Taxes

As discussed in Note 1, we adopted ASU 2023-09 on a prospective basis beginning with the year ended December 31, 2025. The following table presents the reconciliation of our U.S. federal statutory tax amount and rate to our effective amount and rate for the year ended December 31, 2025 (dollars in thousands):

The Company’s effective tax rate differs from the U.S. federal statutory rate primarily due to tax credits, changes in valuation allowances, and nondeductible expenses. The rate was reduced by federal and state research and development credits generated during the year and by adjustments to prior-year credit carryforwards. Our tax payments were immaterial.

Deferred Tax Assets and Liabilities

Deferred income taxes reflect the net tax effects of loss and credit carryforwards and temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. We measure deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future. Significant components of our deferred tax assets for federal and state income taxes are as follows (in thousands):

Realization of our deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Because of our lack of U.S. earnings history and projected future losses, we have fully reserved our net U.S. deferred tax assets with a valuation allowance. The valuation allowance increased by $33.3 million for the year ended December 31, 2025 and increased by $4.6 million for the year ended December 31, 2024.

Our net deferred tax liability position reflects the provision for the withholding taxes associated with the repatriation of accumulated earnings and profits from India.

Net Operating Loss and Tax Credit Carryforwards

As of December 31, 2025, we had a net operating loss carryforward for federal income tax purposes of approximately $2.9 billion, of which $1.1 billion is subject to expiration beginning in 2026 and a total state net operating loss carryforward of approximately $1.0 billion, portions of which will begin to expire in 2027. We have federal tax credits of approximately $127.6 million, which will begin to expire in 2026 and state research credits of approximately $61.4 million which have no expiration date. Utilization of some of the federal and state net operating loss and credit carryforwards are subject to annual limitations due to the “change in ownership” provisions of the Internal Revenue Code of 1986 and similar state provisions.

Unrecognized tax benefits

We currently have a full valuation allowance against our U.S. net deferred tax asset which would impact the timing of the effective tax rate benefit should any of these uncertain tax positions be favorably settled in the future. Adjustments to the substantial majority of our uncertain tax positions would result in an adjustment of our net operating loss or tax credit carryforwards rather than resulting in a cash outlay.

We file income tax returns in the U.S., California, Alabama, certain other states and India and certain other international jurisdictions. As a result of our net operating loss and research credit carryforwards, substantially all of our domestic tax years remain open and subject to examination. We may be subject to examination in India and other jurisdictions from time to time. Pursuant to a review of an India income tax return, in January 2026, we received a demand in India, which we are in the process of appealing. We have assessed the merits of the demand and have not recorded a provision as we believe that it is more likely than not that we will prevail. We do not believe that any liability resulting from such this or other examination would have a material effect on our financial position or results of operations.

Our policy is to include interest and penalties related to unrecognized tax benefits, if any, within the benefit for income taxes in the consolidated statements of operations. During the years ended December 31, 2025 and 2024, no significant interest or penalties were recognized relating to unrecognized tax benefits.