Nuvation Bio Inc. Income Taxes Disclosure

NOTE 15. INCOME TAXES

The Company adopted ASU 2023-09 effective January 1, 2025 using the prospective method. Accordingly, enhanced disclosures are provided for fiscal year 2025. Comparative prior-period disclosures for 2024 are presented consistent with prior guidance, except where disclosure expansion was practicable.

The Company did not record a provision or benefit for income taxes for the years ended December 31, 2025 and 2024.

Effective Tax Rate Reconciliation (Enhanced disclosure under ASU 2023-09)

Dollar amounts for reconciling items were not previously required and are not presented for 2024 due to prospective adoption.

Income Taxes Paid

Under ASU 2023-09, income taxes paid must be disaggregated by federal, state, and foreign jurisdictions and further disaggregated by individual jurisdiction when payments exceed 5% of total income taxes paid.

Income taxes paid for the years ended December 31, 2025 and 2024 were immaterial.

As of December 31, 2025, the Company had federal net operating loss carryforwards of approximately $330.6 million and state net operating loss carryforwards of approximately $440.5 million. The federal net operating losses have an unlimited carryover period and state net operating losses begin to expire in 2038.

As of December 31, 2025, the Company had federal research and development tax credit carryforwards of approximately $18.6 million and state research and development tax credit carryforwards of approximately $3.4 million. The federal research and development tax credits begin to expire in 2039 and state research and development tax credits have an unlimited carryover period.

As of December 31, 2025, the Company had federal orphan drug tax credit carryforwards of approximately $11.3 million. The federal orphan drug tax credits begin to expire in 2042.

All of the federal and state net operating losses may be subject to change of ownership limitations provided by the Internal Revenue Code and similar state provisions. An annual loss limitation may result in the expiration or reduced utilization of the net operating losses.

Under Sections 382 and 383 of the Code, and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50 percentage-point cumulative change, by value, in its equity ownership over a three-year period, the corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income or taxes may be limited. As a result of AnHeart Therapeutics, Inc.’s previous mergers with AnHeart Hangzhou in March 2019 and AnHeart Ltd (Cayman) in September 2021, we are subject to the Section 382 limitation with respect to AnHeart’s tax attributes. Our utilization of these pre-merger NOL and tax credit carryforwards is limited to the amount of income that the related entity contributes to our consolidated taxable income.

As of December 31, 2025, the Company maintained a full valuation allowance on its net deferred tax assets. The valuation allowance was determined in accordance with the provisions of ASC 740, Accounting for Income Taxes, which requires an assessment of both positive and negative evidence when determining whether it is more likely than not that deferred tax assets are recoverable. Such assessment is required on a jurisdiction by jurisdiction basis. The Company’s history of cumulative losses, along with expected future U.S. losses required that a full valuation allowance be recorded against all net deferred tax assets. The Company intends to maintain a full valuation allowance on net deferred tax assets until sufficient positive evidence exists to support reversal of the valuation allowance.

As of December 31, 2025, the Company’s total amount of unrecognized tax benefits was $10.1 million, none of which would impact the Company’s effective tax rate, if recognized. The Company does not anticipate that the amount of unrecognized tax benefit will significantly increase within the next 12 months.

The Company is subject to taxation in the United States and various state jurisdictions. All tax years remain subject to examination for U.S. federal and state purposes. All net operating losses generated to date are subject to adjustment for U.S. federal and state purposes. The Company is not currently under examination in federal or state jurisdictions.

The One Big Beautiful Bill Act ("OBBBA") was passed by the U.S. Congress in 2025 and signed into law by President Trump on July 4, 2025. The OBBBA includes a broad range of tax reform 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. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The impacts of these provisions do not have a material impact on the consolidated financial statements.