15. Income Taxes

During the years ended December 31, 2024, 2023 and 2022, the Company recorded no income tax benefits for the net operating losses incurred or the research and development tax credits generated in each year, due to its uncertainty of realizing a benefit from those items.

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A reconciliation of the U.S. federal statutory income tax rate to the Company’s effective income tax rate is as follows:

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Changes in the valuation of the Royalty Fee Derivative Liability, except to the extent that they relate to actual royalties paid or accrued, do not provide a future tax benefit. To the extent the deferred tax asset related to the Royalty Fee Derivative Liability exceeds the deferred tax liability related to the Barings Credit Agreement, the excess is recorded as a permanent item.

Net deferred tax assets consisted of the following:

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Changes in the valuation allowance for deferred tax assets during the years ended December 31, 2024, 2023 and 2022, resulting primarily from increases in net operating loss carryforwards, additions to and amortization of capitalized research and development expenses, and increases in research and development tax credit carryforwards, were as follows:

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As of December 31, 2024, the Company had net operating loss (“NOL”) carryforwards for federal and state income tax purposes of $538,025 and $385,224, respectively. The federal and state NOLs generated for annual periods prior to January 1, 2018 begin to expire in 2026. The Company’s federal NOLs generated for the years ended on or after December 31, 2018, which amount to a total of $412,220, can be carried forward indefinitely, although the deduction for such NOLs is limited to 80% of current year taxable income. As of December 31, 2024, the Company also had available research and development tax credit carryforwards for federal and state income tax purposes of $19,666 and $11,848, respectively, which begin to expire in 2026 and 2025, respectively. Utilization of the NOL carryforwards and research and development tax credit carryforwards may be subject to a substantial annual limitation under Section 382 of the Internal Revenue Code of 1986 (“Section 382”) due to ownership changes that have occurred previously or that could occur in the future. These ownership changes may limit the amount of carryforwards that can be utilized annually to offset future taxable income. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain shareholders or public groups in the stock of a corporation by more than 50% over a three-year period. The Company has not conducted a study to assess whether a change of control has occurred or whether there have been multiple changes of control since inception due to the significant complexity and cost associated with such a study. If the Company has experienced a change of control, as defined by Section 382, at any time since inception, utilization of the NOL carryforwards or research and development tax credit carryforwards would be subject to an annual limitation under Section 382, which is determined by first multiplying the value of the Company’s stock at the time of the ownership change by the applicable long-term tax-exempt rate, and then could be subject to additional adjustments, as required. Any limitation may result in expiration of a portion of the NOL carryforwards or research and development tax credit carryforwards before utilization. Further, until a study is completed and any limitation is known, no amounts are being presented as an uncertain tax position.

The Company has evaluated the positive and negative evidence bearing upon its ability to realize the deferred tax assets. Management considered the Company’s cumulative net losses and concluded that it is more likely than not that the Company would not realize the benefits of the deferred tax assets. Accordingly, a full valuation allowance was established against the net deferred tax assets as of December 31, 2024, 2023 and 2022.

The Company has not recorded any amounts for unrecognized tax benefits as of December 31, 2024, 2023 or 2022.

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 examination by federal and state jurisdictions, where applicable. There are currently no pending income tax examinations that are expected to have a material impact on the Company’s Consolidated Financial Statements. The Company’s tax years are still open under statute from the Company’s fiscal year 2021 to the present. Earlier years may be examined to the extent that tax credit or net operating loss carryforwards are used in future periods.