Viridian Therapeutics, Inc.\DEVRDN
Viridian Therapeutics, Inc.\DE Income Taxes Disclosure
INCOME TAXES
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse.
Since its inception, the Company has incurred net taxable losses, and accordingly, no current provision for income taxes has been recorded. This amount differs from the amount computed by applying the U.S. federal income tax rate of 21% to pretax loss due to the provision of a valuation allowance to the extent of the Company’s net deferred tax asset, as well as to state income taxes and nondeductible expenses.
For the year ended December 31, 2025, the Company adopted ASU 2023-09 on a prospective basis. The following table is a reconciliation of the U.S. federal statutory rate to the Company’s effective tax rate for the year ended December 31, 2025, in accordance with the guidance in ASU 2023-09 (in thousands):
| Year Ended December 31, | ||||||||||||||
| 2025 | ||||||||||||||
| Federal statutory income tax rate | 21.0 | % | $ | (71,946) | ||||||||||
| Tax credits | ||||||||||||||
| Research and development credit | 2.8 | % | (9,483) | |||||||||||
| Change in valuation allowance | (22.3) | % | 76,449 | |||||||||||
| Nontaxable or nondeductible items | (0.3) | % | 986 | |||||||||||
| Other adjustments | (1.2) | % | 3,994 | |||||||||||
| Effective income tax rate | — | % | $ | — | ||||||||||
The following table is a reconciliation of the U.S. federal statutory rate to the Company’s effective tax rate for the years ended December 31, 2024 and 2023, in accordance with the guidance prior to the prospective adoption of ASU 2023-09:
| Year Ended December 31, | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| Federal statutory income tax rate | 21.0 | % | 21.0 | % | ||||||||||
| Federal and state tax credits | 2.2 | 2.3 | ||||||||||||
| State income taxes, net of federal benefit | 5.0 | 5.4 | ||||||||||||
| Change in valuation allowance | (19.5) | (27.6) | ||||||||||||
| Other permanent items | (3.0) | (0.7) | ||||||||||||
| Stock-based compensation | (5.7) | (0.4) | ||||||||||||
| Effective income tax rate | — | % | — | % | ||||||||||
The tax effects of temporary differences that give rise to significant portions of the deferred income tax assets and liabilities are presented below:
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| (in thousands) | |||||||||||||||||
| Deferred tax assets: | |||||||||||||||||
| Net operating loss carryforwards | $ | 123,892 | $ | 77,430 | $ | 67,755 | |||||||||||
| Tax credits | 27,973 | 15,056 | 9,231 | ||||||||||||||
| Accruals and reserves | 3,999 | 9,069 | 4,891 | ||||||||||||||
| Stock-based expense | 11,868 | 7,706 | 15,013 | ||||||||||||||
| Start-up costs and amortized costs | 15,910 | 12,142 | 12,750 | ||||||||||||||
| IRC § 174 capitalized costs | 118,269 | 86,847 | 45,979 | ||||||||||||||
| Unrealized gains/losses | — | 176 | 71 | ||||||||||||||
| Sale of future revenues | 14,833 | — | — | ||||||||||||||
| Operating lease right-of-use asset, net | 79 | 85 | 44 | ||||||||||||||
| Total deferred tax assets | 316,823 | 208,511 | 155,734 | ||||||||||||||
| Valuation allowance | (316,823) | (208,511) | (155,734) | ||||||||||||||
| Net deferred tax assets | — | — | — | ||||||||||||||
| Deferred tax liabilities: | |||||||||||||||||
| Total deferred tax liabilities | — | — | — | ||||||||||||||
| Total deferred tax assets, net | $ | — | $ | — | $ | — | |||||||||||
At December 31, 2025, the Company had approximately $464.1 million of federal net operating loss carryforwards, of which $19.6 million will begin to expire in 2029, and the remainder of which do not expire but are subject to 80% limitation. At December 31, 2025, the Company had approximately $24.5 million of research and experimentation tax carryforwards which will begin to expire in 2040. At December 31, 2025, the Company had approximately $503.4 million and $4.4 million of state net operating loss and research and experimentation tax carryforwards, respectively, which will begin to expire in 2029 and 2039, respectively.
The realization of net operating losses to offset potential future taxable income and related income taxes that would otherwise be due is subject to annual limitations under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), and similar state provisions, which may result in the expiration of additional net operating losses before future utilization as a result of ownership changes. The Company completed a Section 382 analysis through December 31, 2020. As a result, the Company estimated an aggregate limitation on the utilization of net operating loss carryforwards of $59.0 million and approximately $15.3 million of research and development tax credits were derecognized due to the inability of the Company to realize a benefit from those credits in the future. The Company determines on an annual basis whether net operating loss carryforwards will be limited. A Section 382 analysis has been completed through December 31, 2024 and determined that there was an ownership change during 2024 with no material effect on the Company’s tax attributes. The Company will continue to evaluate changes in ownership and the related limitations on a go forward basis.
As of December 31, 2025 and 2024, the Company’s net deferred tax assets before valuation allowance was $316.8 million and $208.5 million, respectively. In assessing the realizability of its deferred tax assets, the Company considers whether it is more likely than not that some portion or all of its deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. As the Company does not have any historical taxable income or projections of future taxable income over the periods in which the deferred tax assets are deductible, and after consideration of its history of operating losses, the Company does not believe it is more likely than not that it will realize the benefits of its net deferred tax assets, and accordingly, has established a valuation allowance equal to 100% of its net deferred tax assets at December 31, 2025 and 2024. The valuation allowance increased by $108.3 million, $52.8 million and $69.1 million during the years ended December 31, 2025, 2024 and 2023, respectively, primarily due to the capitalization of research and development expenses, and the generation of net operating losses and tax credits in all years.
The One Big Beautiful Bill Act (“OBBBA”) was signed into law on July 4, 2025. OBBBA included many provisions such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modification 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 already in effect and others implemented through fiscal year 2027. The Company does not expect the legislation will have a material impact on its effective tax rate.
The Company concluded that there were no significant uncertain tax positions relevant to the jurisdictions where it is required to file income tax returns requiring recognition in the consolidated financial statements for the years ended 2025, 2024 and 2023. As of December 31, 2025, 2024 and 2023, the Company had no accrued interest related to uncertain tax positions.
The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to tax examinations in these jurisdictions. There are currently no pending tax examinations, and the Company’s tax returns are generally open under statute from 2020 to the present. Tax attributes such as net operating losses and tax credits generated prior to 2020 and utilized in open years may still be adjusted upon examination
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Mar 3, 2025 | |
| 2023 | Feb 27, 2024 | |
| 2022 | Mar 9, 2023 | |
| 2021 | Mar 11, 2022 | |
| 2020 | Mar 26, 2021 | |
| 2019 | Mar 13, 2020 | |
| 2018 | Mar 14, 2019 | |
| 2017 | Mar 15, 2018 | |
| 2016 | Mar 24, 2017 | |
| 2015 | Mar 21, 2016 | |
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.