Verastem, Inc. Income Taxes Disclosure

14. Income Taxes

There was no income tax expense for the years ended December 31, 2025 and 2023. The Company recorded income tax expense of $0.2 million for the year ended December 31, 2024 comprised of a federal income tax payment due to interest under IRC section 453A related to the $10.0 million milestone payment from Secura because it was an installment sale. This payment was made in 2025. Refer to Note. 16. License collaboration and commercial agreements for further discussion of the Secura APA

For the years ended December 31, 2025, 2024, and 2023 income tax expense consisted of the following (in thousands):

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As further described in Note 2, Summary of Significant Accounting Policies, the Company elected to prospectively adopt the guidance in ASU 2023-09. The following table is a reconciliation of our effective income tax rate to the statutory federal income tax rate for the year ended December 31, 2025 in accordance with the guidance in ASU 2023-09:

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The following table is a reconciliation of the Company’s effective income tax rate to the statutory federal income tax rate for the year ended December 31, 2024 in accordance with the guidance prior to the adoption of ASU 2023-09:

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The principal components of the Company’s deferred tax assets and liabilities are as follows (in thousands):

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The Company has recorded a valuation allowance against its deferred tax assets at December 31, 2025 and 2024 because the Company’s management believes that it is more likely than not that these assets will not be fully realized. The increase in the valuation allowance of approximately $46.0 million in the year ended December 31, 2025, primarily relates to federal and state NOLs and credits.

As of December 31, 2025, the Company had federal and state NOL carryforwards of approximately $460.5 million and $99.5 million, respectively, which are available to reduce future taxable income. The Company also had federal and state tax credits of $12.3 million and $0.7 million, respectively, which may be used to offset future tax liabilities. The NOL and tax credit carryforwards will expire at various dates through 2045, except for $423.3 million of federal NOL carryforwards which may be carried forward indefinitely. Section 382 and 383 of the IRC and similar provisions under state law limit the utilization of U.S. NOL carryforwards, state NOL carryforwards, R&D credits, and OD credits following certain cumulative changes in the ownership interest of significant stockholders over a three-year period in excess of 50%. During 2024, the Company believes it triggered ownership changes under Section 382 of the IRC and similar provisions under state law. Based on the Company’s analysis under Section 382, the Company believes that its federal NOL carryforwards, its state NOL carryforwards, R&D credits, and OD credits are limited by Section 382 and similar provisions under state law as of December 31, 2025. The portion of federal NOL carryforwards, state NOL carryforwards, R&D credits, and OD credits that were determined to be limited have been written off as of December 31, 2025. The remaining unused carryforwards and credits remain available for future periods. The Company has approximately $346.4 million of federal NOLs generated prior to such ownership changes inclusive of $309.3 million of federal NOLs which may be carried forward indefinitely. Since the $309.3 million of federal NOLs may be carried forward indefinitely, these have not been written off as of December 31, 2025, but due to the limitations under Section 382 generally the Company can only use $1.6 million per year against taxable income in the future. Due to the Company’s full valuation allowance the write off of certain NOL carryforwards and R&D and OD credits did not have any impact to the statements of operation and comprehensive loss.

The Tax Cuts and Jobs Act (“TCJA”) requires taxpayers to capitalize and amortize research and development (“R&D”) expenditures under section 174 for tax years beginning after December 31, 2021. This rule became effective for the Company during 2022. The Company is amortizing these costs for tax purposes over 5 years for R&D performed in the U.S. and over 15 years for R&D performed outside the U.S.

The One Big Beautiful Bill Act ("OBBBA") was passed and became effective for the Company during 2025. The legislation includes, among other provisions, permanent full expensing for certain business assets, changes to the interest deduction limitation under Section 163(j), amendments to international tax provisions including the global intangible low-taxed income (“GILTI”) and foreign-derived intangible income (“FDII”) regimes, the permanent extension of the controlled foreign corporation (“CFC”) look-through rule, as well as modifications to the treatment of research and development expenditures mentioned above.

Congress modified the treatment for research and development expenditures by adding new Section 174A, which applies for tax years beginning after December 31, 2024. Section 174A permits the immediate deduction of domestic R&D expenditures or, at the taxpayer’s election, capitalization and amortization over a period of at least five years beginning when the related benefits are first realized. Foreign R&D expenditures continue to be capitalized and amortized over 15 years. Transition provisions allow taxpayers either to continue amortizing amounts capitalized under the TCJA rules or to deduct remaining unamortized domestic R&D expenditures in the first tax year beginning after December 31, 2024. The Company has elected to continue amortizing previously capitalized domestic R&D expenditures over the remaining amortization period permitted under OBBBA.

On October 4, 2023, Massachusetts enacted tax law changes which included the adoption of a single sales apportionment factor effective on January 1, 2025. On December 4, 2024, Massachusetts subsequently enacted supplemental legislation modifying Massachusetts' single sales apportionment factor in certain circumstances. As required under ASC 740, the Company has accounted for the deferred tax impacts of this tax law change in the period the tax law was enacted. The impact of the tax law change is offset by a change in valuation allowance.

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 present related to the tax benefit. From inception and through December 31, 2025, the

Company had no unrecognized tax benefits or related interest, and penalties accrued. The Company has not conducted a study of R&D credit and OD credit carryforwards. A future study may result in an adjustment to the Company’s R&D credit carryforwards; however, until a study is completed and any adjustment is known, no amounts are being presented as an uncertain tax position. A full valuation allowance has been provided against the Company’s R&D credits and, if an adjustment is required, this adjustment would be offset by an adjustment to the valuation allowance. Thus, there would be no impact to the consolidated balance sheet or statement of operations if an adjustment were required. The Company would recognize both accrued interest and penalties related to unrecognized benefits in income tax expense. The Company’s uncertain tax positions are 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.