Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

15.Income Taxes

During the years ended December 31, 2021, 2020 and 2019, the Company recorded no income tax benefits for the net operating losses incurred in each year or interim period, due to its uncertainty of realizing a benefit from those items.

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

	Year Ended December 31,
	2021			2020			2019
Federal statutory income tax rate		(21.0	)%		(21.0	)%		(21.0	)%
Research and development tax credits		(16.6	)		(6.4	)		(5.8	)
State taxes, net of federal benefit		(2.8	)		(7.8	)		(6.8	)
Stock-based compensation		(0.4	)		(5.8	)		(1.7	)
Other		0.4			0.2			(0.7	)
Change in deferred tax asset valuation allowance		40.4			40.8			36.0
Effective income tax rate		—	%		—	%		—	%

Net deferred tax assets as of December 31, 2021 and 2020 consisted of the following:

	December 31,
	2021			2020
Deferred tax assets:
Net operating loss carryforwards	$	108,189		$	106,351
Research and development tax credit carryforwards		53,133			42,311
Capitalized organization costs		181			214
Stock-based compensation expense		16,045			11,615
Lease Liability		6,635			4,283
Charitable Contributions		50			15
Deferred Revenue		36,666			29,553
Accrued expenses		2,475			1,783
Capitalized research and development expenses		43			51
Section 163(j) limitation		1,368			540
Depreciation and amortization		247			—
Total deferred tax assets	$	225,032		$	196,716
Deferred tax liabilities:
Depreciation and amortization		—			(510	)
Right of use assets		(4,918	)		(2,470	)
Total deferred tax liabilities		(4,918	)		(2,980	)
Valuation allowance	$	(220,114	)	$	(193,736	)
Net deferred tax assets	$	—		$	—

As of December 31, 2021, the Company had net operating loss carryforwards (“NOLs”) for federal and state income tax purposes of $402,500 and $394,100, respectively. Federal NOLs of $119,800, generated before 2018, will begin expiring in varying amounts in 2035 unless utilized. The remaining federal NOLs of $282,700, generated after 2017, will be carried forward indefinitely and could be used to offset up to 80% of taxable income in future tax years. Massachusetts does not follow federal time periods for NOLs and as such the Company’s Massachusetts NOLs of $394,100 will expire at various times starting in 2035. As of December 31, 2021, the Company also had available research and development tax credit carryforwards for federal and state income tax purposes of $43,700 and $11,900, respectively, which begin to expire in 2031 and 2028, respectively. The federal research and development tax credits include an orphan drug credit carryforward of $23,700.

Utilization of the NOLs and research and development tax credit carryforwards may be subject to a substantial annual limitation under Sections 382 and 383 of the Internal Revenue Code of 1986 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. Since its formation, the Company has raised capital through the issuance of capital stock on several occasions. These financings, combined with the purchasing shareholders' subsequent disposition of those shares, may have resulted in a change of control or could result in a change of control in the future upon subsequent disposition. The Company conducted an analysis to determine if historical changes in ownership through December 31, 2020 would limit or otherwise restrict its ability to utilize these NOLs and research and development credit carryforwards. As a result of this analysis, the Company does not believe there are any significant limitations on its ability to utilize these carryforwards.

However, future changes in ownership after December 31, 2020 could affect the limitation in future years. Any limitation may result in expiration of a portion of the NOLs or research and development credit carryforwards before utilization.

The Company has evaluated the positive and negative evidence bearing upon its ability to realize the deferred tax assets. Management has considered the Company’s history of cumulative net losses incurred since inception and its lack of commercialization of any products or generation of any revenue from product sales since inception and has concluded that it is more likely than not that the Company will not realize the benefits of the deferred tax assets. Accordingly, a full valuation allowance has been established against the deferred tax assets as of December 31, 2021 and 2020. Management reevaluates the positive and negative evidence at each reporting period.

Changes in the valuation allowance for deferred tax assets during the years ended December 31, 2021, 2020 and 2019 related primarily to the increases in NOLs, research and development tax credit carryforwards, and stock-based compensation were as follows:

	Year Ended December 31,
	2021			2020			2019
Valuation allowance at beginning of year	$	(193,736	)	$	(157,346	)	$	(132,009	)
Decreases recorded as benefit to income tax provision		—			—			—
Increases recorded to income tax provision		(26,378	)		(36,390	)		(25,337	)
Valuation allowance as of end of year	$	(220,114	)	$	(193,736	)	$	(157,346	)

The Company had no unrecognized tax benefits or related interest and penalties accrued for the years ended December 31, 2021 and 2020. The Company will recognize interest and penalties related to uncertain tax positions in income tax expense.

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. The Company is currently under examination by the Internal Revenue Service ("IRS") for the period ended December 31, 2018 related to its R&D tax credits. The Company's tax years are still open under statute from 2011 to present. All years may be examined to the extent the tax credit or net operating loss carryforwards are used in future periods.