Sarepta Therapeutics, Inc. Income Taxes Disclosure

18. INCOME TAXES

The significant items impacting the Company’s effective tax rate for each of the periods primarily includes state taxes, research and development tax credits, valuation allowance, stock-based compensation and foreign rate differential. The statutory income tax rate differential is driven by the Company’s foreign subsidiary, Sarepta Therapeutics Ireland LP, an Irish partnership that has elected to be treated as a corporation for US tax purposes. For the year ended December 31, 2023, the Company's effective tax rate was also significantly impacted by the non-deductible premium paid on the 2024 Notes Exchange.

The Tax Cuts and Jobs Act of 2017 required taxpayers to capitalize research and development costs for tax purposes. This resulted in the Company having taxable profits in 2024 and 2023 and recording federal and state tax expense of $24.8 million and $15.3 million, respectively. The state tax expense is primarily related to the temporary suspension of utilizing net operating loss carryforwards in certain states the Company operates in.

On July 4, 2025, the U.S. enacted H.R.1, titled “An Act to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14”, commonly referred to as the One Big Beautiful Bill Act (the OBBBA). The OBBBA includes a broad range of tax reform provisions and extends or modifies several provisions originally enacted under the Tax Cuts and Jobs Act of 2017. Notably, the legislation provides for permanent expensing of U.S. qualifying research and development expenses paid or incurred in tax years beginning after 2024 and allows taxpayers to elect to accelerate the deduction of previously capitalized U.S. research and development costs over a one or two year period. For the year ended December 31, 2025, the favorable research and development provisions reduced taxable income and current tax expense. These provisions did not expected impact the Company’s deferred tax expense as a result of the valuation allowance maintained against its U.S. net deferred tax assets.

The Company has evaluated the positive and negative evidence bearing upon the realizability of its U.S. net deferred tax assets, which are comprised principally of federal and state net operating loss carryforwards, research and development tax credit carryforwards, capitalized research and development costs, stock-based compensation expense, debt discount, and intangibles. Under the applicable accounting standards, management has considered the Company’s history of losses and concluded that it is more likely than not that the Company will not recognize the benefits of its net federal and state deferred tax assets. Accordingly, a full valuation allowance against the U.S. net deferred tax asset is maintained at December 31, 2025 and 2024. It is possible the Company may release a portion or all of its valuation allowance in future periods. The release of the valuation allowance, as well as the exact timing and the amount of such release, continue to be subject to, among other things, the Company’s level of profitability, revenue growth and expectations regarding future profitability. The net change in the valuation allowance for deferred tax assets was an increase of $218.6 million and $4.7 million for the years ended December 31, 2025 and 2024, respectively. This increase for the year ended December 31, 2025 was primarily due to the capitalization of license fees, increase of federal and state net operating losses and federal and state tax credits recorded in the current year.

The Company generated foreign deferred tax assets mainly consisting of net operating loss carryforwards, stock-based compensation and unrealized gain/losses. Based upon the income projections in the majority of the foreign jurisdictions, the Company believes it will realize the benefit of its future deductible differences in these jurisdictions. As such, the Company has not recorded a valuation allowance against the net deferred tax assets in these foreign jurisdictions. Brazil and the Netherlands have generated deferred tax assets, which consist primarily of net operating loss carryforwards. The Company has concluded that it is more likely than not that it will not recognize the future benefits of the deferred tax assets in these jurisdictions, and accordingly, a full valuation allowance has been recorded against these foreign deferred tax assets.

As of December 31, 2025, the Company had federal and state net operating loss carryforwards of $200.8 million and $376.9 million, respectively, available to reduce future taxable income. Federal and state net operating loss carry forwards of $68.9 million and $374.3 million will expire at various dates between 2026 and 2045. Federal and state net operating loss carryforwards of $131.9 million and $2.6 million, respectively, can be carried forward indefinitely. Utilization of these net operating losses could be limited under Section 382 of the Internal Revenue Code and similar state laws based on historical or future ownership changes and the value of the Company’s stock. Additionally, the Company has $59.0 million and $55.9 million of federal and state research and

development credits, respectively, and $308.4 million of federal orphan drug tax credits available to offset future tax liabilities. These federal and state research and development credits expire between 2034 and 2045 and between 2031 and 2040, respectively. The federal orphan drug credits expire between 2034 and 2045. The Company also has foreign net operating loss carryforwards of $15.7 million, mainly derived from the net operating loss generated by its subsidiary in Brazil, which may be carried forward indefinitely.

The Company, or one of its subsidiaries, files income tax returns in the U.S., and various state and foreign jurisdictions. The federal, state and foreign income tax returns are generally subject to tax examinations for the tax years ended December 31, 2022 through December 31, 2025. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service, state or foreign tax authorities to the extent utilized in a future period.

The balance of total unrecognized tax benefits at December 31, 2025, if recognized, would not affect the effective tax rate on income from continuing operations, due to a full valuation allowance against the Company’s U.S. deferred tax assets. The Company’s policy is to recognize interest and/or penalties related to unrecognized tax benefits in income tax expense. It had no accrual for interest or penalties on its consolidated balance sheets at December 31, 2025 or 2024. No interest and/or penalties for unrecognized tax benefits were recognized in 2025, 2024, or 2023.

The Company’s intent is to only make distributions from non-U.S. subsidiaries in the future when they can be made at no net tax cost. Otherwise, the Company considers all of its foreign earnings to be permanently reinvested outside of the U.S. and has no plans to repatriate these foreign earnings to the U.S. The Company has no material unremitted earnings from its non-U.S. subsidiaries.

* The amount of taxes paid during the year does not meet the 5% disaggregation threshold.