XML 67 R18.htm IDEA: XBRL DOCUMENT v3.22.4
Income Taxes
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The Company had a pre-tax U.S. book loss of $123.3 million, and $97.3 million, for the years ended December 31, 2022 and 2021, respectively. During the years ended December 31, 2022 and 2021, the Company did not record an income tax provision. The Company will continue to maintain a 100% valuation allowance on total deferred tax assets. The Company believes it is more likely than not that the related deferred tax assets will not be realized.
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,
20222021
Income tax computed at federal statutory rate21.0 %21.0 %
State taxes, net of federal tax benefit7.3 %7.7 %
General business credit—federal3.6 %5.3 %
Stock-based compensation(1.0)%(0.7)%
Other permanent differences(0.4)%(0.1)%
Change in valuation allowance(30.5)%(33.2)%
Effective income tax rate0.0 %— %
Net deferred tax assets and liabilities consisted of the following (in thousands):
December 31,
20222021
Deferred tax assets:
Net operating losses$65,689 $51,554 
Research and development credits19,688 13,989 
Accrued expenses387 292 
Other1,706 775 
Capitalized research and development13,900 — 
Lease liability1,638 2,000 
Stock based compensation5,073 1,816 
Total deferred tax assets108,081 70,426 
Deferred tax liabilities:
Fixed asset basis$(258)$(61)
Prepaid expenses(630)(921)
  Right of use asset(1,509)(1,760)
Total deferred tax liabilities(2,397)(2,742)
Valuation allowance105,684 67,684 
Net deferred taxes$— $— 
Net operating losses and tax credit carryforwards were as follows (in thousands):
December 31, 2022Expiration Year
Net operating losses, federal (starting from January 1, 2018)$190,697 Does not expire
Net operating losses, federal (before January 1, 2018)$29,486 
2035-2037
Net operating losses, state$278,930 
2035-2042
Tax credits, federal$20,193 
2036-2042
Tax credits, state$5,587 Does not expire
Utilization of the net operating loss carryforwards and research credit carryforwards may be subject to an annual limitation due to the ownership percentage change limitations provided by the Internal Revenue Code (“IRC”) and similar state provisions. Annual limitations may result in the expiration of the net operating losses and tax credit carryforwards before they are utilized. The Company performed a IRC Section 382 analysis through December 31, 2022 and does not expect any previous ownership changes to result in a limitation that will reduce the total amount of net operating loss and tax credit carryforwards disclosed that can be utilized. Subsequent ownership changes may affect the limitation in future years.
During the years ended December 31, 2022 and 2021, the Company recorded a full valuation allowance on federal and state deferred balances since management does not forecast the Company to be in a profitable position in the near future. Changes in the valuation allowance for deferred tax assets during the years ended December 31, 2022 and 2021 related primarily to the increases in net operating loss carryforwards and research and development tax credit carryforwards and were as follows (in thousands):
Year Ended December 31,
20222021
Valuation allowance at the beginning of the year$67,684 $35,441 
Increases recorded to income tax provision38,000 32,243 
Valuation allowance at the end of the year$105,684 $67,684 
The Company’s U.S. federal and state income tax returns are generally subject to tax examinations for the tax years ended December 31, 2017 through December 31, 2022. There are currently no pending income tax examinations. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service and state tax authorities to the extent utilized in a future period.
The entire amount of the unrecognized tax benefits would not impact the Company’s effective tax rate if recognized. The Company's accounting policy is to include interest and penalties as a component of tax expense. During the years ended December 31, 2022 and 2021, the Company did not recognize accrued interest and penalties related to unrecognized tax benefits. The Company does not anticipate that the amount of existing unrecognized tax benefits will significantly increase or decrease during the next 12 months.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
Year Ended December 31,
20222021
January 1$3,505 $2,007 
Additions based on tax positions related to current year1,547 1,081 
Additions for tax positions of prior year144 417 
December 31$5,196 $3,505 
Effective January 1, 2022, we are subject to mandatory capitalization of Section 174 research and development expenditures. The capitalized expenses are subject to amortization over five and fifteen years for expenses incurred within the U.S. and outside of U.S., respectively.