Income Taxes

12 Months Ended

Dec. 31, 2023

Income Tax Disclosure [Abstract]

Income Taxes

14. Income Taxes

The Company accounts for income taxes under the provision of ASC 740, Income Taxes. The Company did not report a tax provision for the years ended December 31, 2023 and 2022 due to historically incurred net operating losses.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets as of December 31, 2023 and 2022 are as follows:

	December 31,
(In thousands)	2023			2022
Deferred tax assets:
Net operating loss carryforwards	$	53,376		$	49,708
Research and other credits		7,482			5,841
R&D capitalization		16,181			8,183
Reserves and accruals		8,519			8,574
Other		270			291
Total gross deferred tax assets		85,828			72,597
Less valuation allowance		(84,039	)		(70,010	)
Total deferred tax assets		1,789			2,587
Deferred tax liability:
Depreciation		(1,789	)		(2,587	)
Other		—			—
Net deferred tax assets	$	—		$	—

In assessing the potential realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon the Company attaining future taxable income during the periods in which those temporary differences become deductible. As of December 31, 2023, and 2022, management was unable to determine if it is more likely than not that the Company’s deferred tax assets will be realized and has therefore recorded a 100% valuation allowance against deferred tax assets at such dates.

No Federal tax provision has been provided for the years ended December 31, 2023 and 2022 due to the losses incurred during such periods. A reconciliation of the difference between the income tax rate computed by applying the U.S. Federal statutory rate and the effective tax rate for the years ended December 31, 2023 and 2022 is as follows:

	December 31,
	2023			2022
U. S. federal statutory tax rate		(21	)%		(21	)%
State taxes		(6	)%		(6	)%
Change in valuation allowance		28	%		29	%
Tax credits		(3	)%		(4	)%
Stock-based compensation		2	%		1	%
Foreign withholding taxes		0	%		0	%
Other		0	%		1	%
Effective tax rate		0	%		0	%

On October 4, 2023, Massachusetts enacted tax law changes which included the adoption of a single sales apportionment factor effective on January 1, 2025. 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, which resulted in an insignificant increase in state deferred tax assets and offset with a valuation allowance.

The Company has applied the provisions of ASC 740, which clarifies the accounting for uncertainty in tax positions and requires the recognition of the impact of a tax position in the financial statements if that position is more likely than not of being sustained on a tax return, based on the technical merits of the position, upon examination by the relevant taxing authority. At December 31, 2023 and 2022, the Company had unrecognized tax benefits related to Federal and state research tax credits of approximately $2,927,000 and $2,491,000, respectively. The Company is subject to Federal and state income tax examinations by tax authorities for all years since its incorporation in 2014. The Company is currently not under examination by any tax authority.

At December 31, 2023, the Company has available net operating loss carryforwards for Federal and state income tax purposes of approximately $196.1 million and $193.5 million, respectively, which, if not utilized earlier, will begin to expire in 2035. Approximately $167.5 million of the federal net operating losses have an indefinite carryforward. The Company has Federal research credits of approximately $8.4 million, which, if not utilized earlier, will begin to expire in 2035, and state research credits of approximately $2.4 million, which, if not utilized earlier, will begin to expire in 2033. Approximately $0.1 million of the state research credits have an indefinite carryforward.

The following is a reconciliation of the Company’s gross uncertain tax position at December 31, 2023 and 2022:

	December 31,
(In thousands)	2023			2022
Balance at the beginning of year	$	2,491		$	2,068
Additions for current year tax provisions		424			401
Additions for prior year tax provisions		14			58
Reductions of prior year tax provisions		(2	)		(36	)
Balance as of end of year	$	2,927		$	2,491