Company: CNTB
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001835268-25-000035
Chunk: 50

Company: Connect Biopharma Holdings Ltd
Filing Date: 2025-05-15
Form: 10-Q
Item: Part I, Item 8
Chunk 50
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 except for (1) jurisdictions for which a loss is expected for the year and no benefit can be realized for those losses, (2) jurisdictions for which forecasted pre-tax income or loss cannot be estimated, and (3) the tax effect of discrete items occurring during the period. The tax for jurisdictions for which a forecast cannot be estimated is based on actual taxes and tax reserves for the quarter.Under the provisions of ASC 740, Income Taxes, the determination of the Company’s ability to recognize its deferred tax assets requires an assessment of both negative and positive evidence. The Company determined that it was not more likely than not that the Company could recognize its deferred tax assets. The evidence evaluated by the Company included operating results during the most recent three-year period and future projections, with more weight given to historical results than expectations of future profitability, which are inherently uncertain. Certain entities’ net losses in recent periods represented sufficient negative evidence to require a valuation allowance against its net deferred tax assets. This valuation allowance will be evaluated periodically and could be reversed partially or totally if business results sufficiently improve to support realization of deferred tax assets.As of March 31, 2025, unrecognized tax benefits were $1.3 million, of which none would affect the effective tax rate, if recognized. It is the Company’s policy to classify accrued interest and penalties to unrecognized tax benefits in the provision for income taxes. There were no accrued interest or penalties as of March 31, 2025 or December 31, 2024. The disclosures regarding uncertain tax positions included in our 2024 Annual Report continue to be accurate for the three months ended March 31, 2025.

12. Segment Reporting

The Company operates in one operating segment: treatment of respiratory diseases. Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the Chief Operating Decision-Maker (the “CODM”), our Chief Executive Officer, in making decisions regarding resource allocation and assessing performance. The CODM utilizes the Company’s consolidated financial forecast, which includes product development roadmaps, as a key input to resource allocation. The CODM makes decisions on resource allocation, assesses performance of the business, and monitors budget versus actual results using our operating expenses, cash burn and cash runway.

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The following table provides significant segment expenses, other segment items, reported segment net loss and a reconciliation of segment net loss to the Company’s total consolidated net loss for the three months ended March 31, 2025 and 2024:Three Months