Income Taxes

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

13.INCOME TAXES

No provision for income taxes was recorded in the years ended December 31, 2022 and 2021. The Company remains in a cumulative loss position with a full valuation allowance recorded against its net deferred income tax assets as of December 31, 2022.

The reconciliation of federal statutory income tax rate to the Company’s effective income tax rate is as follows:

	Year Ended December 31,
	2022			2021
Expected income tax benefit at the federal statutory rate		21.0	%		21.0	%
State taxes, net of federal benefit		5.1			5.3
Research and development credit, net		5.2			5.5
Non-deductible items and others		(0.3	)		0.6
Change in valuation allowance		(31.0	)		(32.4	)
Total		0.0	%		0.0	%

Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The principal components of the Company’s deferred tax assets consisted of the following as of December 31, 2022 and 2021 (in thousands):

	As of December 31,
	2022			2021
Deferred tax assets:
Federal and state net operating loss carryforwards	$	75,795		$	73,802
Research and development tax credits		22,721			21,717
Depreciation and amortization		3,627			394
Reserves and accruals		84			96
Other		510			449
Total deferred tax assets		102,737			96,458
Less: valuation allowance		(102,737	)		(96,458	)
Net deferred tax assets		-			-
Deferred tax liability:
Net deferred tax assets and liability	$	-		$	-

The Company’s valuation allowance increased by $6.3 million and by $7.2 million for the years ended December 31, 2022 and 2021, respectively, in order to maintain a full valuation allowance against its deferred tax assets. Based on the Company’s history of losses, the Company recorded a full valuation allowance against its deferred tax assets as of December 31, 2022 and 2021. The Company intends to maintain a valuation allowance until sufficient positive evidence exists to support a reversal of the valuation allowance and the realization of the Company’s deferred tax assets.

As of December 31, 2022, the Company had federal and state operating loss carryforwards of $287.8 million and $298.9 million, which begin to expire in the years ending December 31, 2024 and 2034, respectively. The Company had federal research and development tax credit carryforwards of $22.7 million as of December 31, 2022. This credit began expiring in the year ending December 31, 2021.

Under the provisions of Sections 382 and 383 of the Internal Revenue Code (the IRC), net operating loss and credit carryforwards and other tax attributes may be subject to limitation if there has been a significant change in ownership of the Company, as defined by the IRC. Future owner or equity shifts could result in limitations on net operating loss and credit carryforwards.

The Company files income tax returns in the U.S. federal jurisdiction as well as many U.S. state jurisdictions. The tax years from January 1, 2019 to December 31, 2022 remain open to examination by the major jurisdictions in which the Company is subject to tax. Fiscal years outside the normal statute of limitations remain open to audit by tax authorities due to tax attributes generated in those early years, which have been carried forward and may be audited in subsequent years when utilized.

The Company evaluates tax positions for recognition using a more-likely-than-not recognition threshold, and those tax positions eligible for recognition are measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon the effective settlement with a taxing authority that has full knowledge of all relevant information. As of December 31, 2022, and 2021, the Company had no unrecognized income tax benefits that would affect the Company’s effective tax rate if recognized.