Ovid Therapeutics Inc.OVID
Ovid Therapeutics Inc. Income Taxes Disclosure
INCOME TAXES
At December 31, 2025, the Company has available $214.9 million and $202.7 million of unused net operating loss (“NOL”) carryforwards for federal and state tax purposes, respectively, that may be applied against future taxable income. The Company also has $163.8 million of unused NOL carryforwards for New York City purposes. The NOL carryforwards will begin to expire in the year 2037 if not utilized prior to that date.
Under Section 382 and Section 383 of the Internal Revenue Code of 1986, if a corporation undergoes an ownership change, the corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income may be limited. On each of August 10, 2015 and February 22, 2019 the Company experienced an ownership change. The Company anticipates a significant portion of its pre-change NOLs to be limited, however has not completed a formal Section 382 analysis subsequent to the last ownership change.
The Company maintains a full valuation allowance against its net deferred tax assets. The valuation allowance increased by $1.6 million for the year ended December 31, 2025 and decreased by $3.2 million for the year ended December 31, 2024. The increase in valuation allowance in 2025 was primarily due to increase in net operating loss carryovers, offset by decrease in various other temporary and permanent differences.
Loss before income taxes resulting from operations is as follows:
| December 31, | |||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
| Domestic | $ | (17,775) | $ | (25,058) | |||||||
| Foreign | 361 | (1,375) | |||||||||
| Pretax loss from operations | $ | (17,414) | $ | (26,433) | |||||||
The tax effects of temporary differences that gave rise to significant portions of the deferred tax assets and liabilities were as follows:
| December 31, | |||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
| Deferred tax assets/liabilities: | |||||||||||
| Net operating loss carryovers | $ | 70,229 | $ | 62,120 | |||||||
| Intangible assets | 4,550 | 5,406 | |||||||||
| Capitalized research and experimental costs | 14,289 | 14,939 | |||||||||
| Stock-based compensation | 5,089 | 5,534 | |||||||||
| Lease liability | 2,890 | 3,324 | |||||||||
| Research and development tax credits | 2,206 | 2,229 | |||||||||
| Charitable contributions | 2 | 2 | |||||||||
| Depreciation | (48) | (93) | |||||||||
| Right-of-use asset | (2,501) | (2,883) | |||||||||
Unrealized gain on long-term equity investment | (5,612) | (1,103) | |||||||||
Total net deferred tax assets/liabilities | 91,094 | 89,474 | |||||||||
| Valuation allowance | (91,094) | (89,474) | |||||||||
| Net deferred tax assets (liabilities) | $ | — | $ | — | |||||||
A reconciliation of the amounts at the U.S. federal statutory rate to the Company’s effective income tax rate is as follows:
| December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||
| (in thousands) | Amount | Percent | Amount | Percent | |||||||||||||||||||
U.S. federal statutory tax rate | $ | (3,657) | 21.0 | % | $ | (5,525) | 21.0 | % | |||||||||||||||
State and local income taxes, net of federal income tax effect | 2 | — | % | — | — | % | |||||||||||||||||
Foreign tax effects | |||||||||||||||||||||||
Australia | |||||||||||||||||||||||
Changes in valuation allowance | (55) | 0.3 | % | 370 | (1.4) | % | |||||||||||||||||
Other | (21) | 0.1 | % | (81) | 0.3 | % | |||||||||||||||||
Effect of changes in tax laws or rates enacted in the current period | |||||||||||||||||||||||
Effect of cross-border tax laws | |||||||||||||||||||||||
Other | — | — | % | 99 | (0.4) | % | |||||||||||||||||
Tax credits | |||||||||||||||||||||||
Changes in valuation allowances | 2,686 | (15.4) | % | 3,391 | (12.9) | % | |||||||||||||||||
Nontaxable or nondeductible items | |||||||||||||||||||||||
Stock-based awards | 1,188 | (6.8) | % | 1,526 | (5.8) | % | |||||||||||||||||
Other | 7 | — | % | 164 | (0.6) | % | |||||||||||||||||
Changes in unrecognized tax benefits | |||||||||||||||||||||||
Other adjustments | |||||||||||||||||||||||
| Other | (52) | 0.3 | % | 55 | (0.2) | % | |||||||||||||||||
Effective income tax rate | $ | 98 | (0.5) | % | $ | — | 0.0 | % | |||||||||||||||
The Company’s reserves related to taxes are based on a determination of whether and how much of a tax benefit taken by the Company in its tax filings or positions is more likely than not to be realized following resolution of any potential contingencies related to the tax benefit. For the years ended December 31, 2025 and 2024, the Company had no unrecognized tax benefits or related interest and penalties accrued. The Company would recognize both accrued interest
and penalties related to unrecognized benefits in provision for income taxes. The Company’s uncertain tax positions yet to be determined would be related to years that remain subject to examination by relevant tax authorities. Since the Company is in a loss carryforward position, the Company is generally subject to examination by the U.S. federal, state and local income tax authorities for all tax years in which a loss carryforward is available.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 18, 2026 | Showing above |
| 2024 | Mar 11, 2025 | |
| 2023 | Mar 8, 2024 | |
| 2022 | Mar 13, 2023 | |
| 2021 | Mar 15, 2022 | |
| 2020 | Mar 15, 2021 | |
| 2019 | Mar 11, 2020 | |
| 2018 | Mar 7, 2019 | |
| 2017 | Mar 29, 2018 | |
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.